Project Report On

PERFORMANCE APPRAISAL

Submitted by,

Under the Guidance of,

Academic Year: COLLEGE NAME

DECLARATION

I, (Name), student of (College name), studying in (detail). {Semester }, hereby declare that, I have completed the project on Equity Market: Indian Investment Scenario, in the academic year (------). The information submitted is genuine and practical to the best of my knowledge.

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CERTIFICATE

I, the undersigned, hereby certify that, (name) , student of (---------------------- College), studying in ---------. {semester --}, has successfully completed his project on the Study of NSE, in the academic year --------. The information submitted is true and original to the best of the knowledge.

--------------------------------------Project Guide

----------------------------------Principal

ACKNOWLEDGEMENT

BETWEEN THE CONCEPTION AND THE CREATION, BETWEEN THE EMOTION AND THE RESPONSE, BETWEEN THE HARD WORK AND THE RESULT, LIES MY THANKS TO YOU. Truly, I appreciate and admire the efforts of my steer, PROF. -------------------, who took the pains to chip in completing this project. I will be in debt towards him for contributing his valuable time and precious days of life towards this project. I also owe gratitude towards my parents, friends and all those people who were indirectly involved in the completion of this project. Last but not the least I am very much obliged to MR. ABHISHEKH RANJAN (HR MANAGER, BELMAKS SOLUTIONS PVT. LTD.) and MR. VEER KOUL (HR DIRECTOR, IBRIDGE SOLUTIONS PVT LTD.) for their support and help in the full completion of the project by answering our queries patiently.

UR name. METHODOLOGY

The project is a mix blend of primary and secondary data. The information has been collected and interpreted with the best doable approach.

Primary Sources Visited: BELMAKS SOLUTIONS PVT LTD. IBRIDGE SOLUTIONS PVT LTD..

Secondary Sources The Secondary source of information consists of: Books Journals Periodicals Magazines Web Sites The major source in this category has been the publications of different books. The information from these publications has been searched, assembled & interpreted in the best possible manner. Thus, the project swathe all the aspects that craft it as magnificent.

The report is based on the assumption that, project success is more dependent upon preventing or working with barriers as opposed to reinforce existing positive factors.

INDEX SR.NO 1. 2. 3. 4. 5. 6. 7. 8. TOPIC MEASURING ACTION PERFORMANCE PAGE NO V/S 9-11 12-22

PERFORMANCE APPRAISAL OBJECTIVES APPRAISAL OF

PERFORMANCE 23-30 AND 31-35 36-59 60-76

PERFORMANCE APPRAISAL COMPETITIVE ADVANTAGE APPRAISAL PROCESS METHODS OF APPRAISAL

MANAGEMENT BYOBJECTIVES(MBO) 76-83 LARSEN AND TOUBRO, HUMAN 84--86 RESOURCE DEVELOPMENT PERFORMANCE APPRAISAL SYSTEM ASSESSMENT CENTRES 360-DEGREE FEEDBACK APPRAISE THE PERFORMANCE PERFORMANCE INTERVIEW GUIDELINES FOR APPRAISAL INTERVIEW USE OF APPRAISAL DATA 87-90 91-97 98 99-100

9. 10. 11. 12. 13.

EFFECTIVE 100

14.

100-102

15.

EDWARD DEMING ON PERFORMANCE APPRAISAL CHALLENGES APPRAISAL PIRAMYD OUTLINE OF

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16. 17.

PERFORMANCE 103-110 STORY 111-113

MEGASTORE

18. 19.

HR VISION OF PIRAMYD MEGASTORE 114 PERFORMANCE APPRAISAL 114-123 METHODS USED AT PIRAMYD

MEASURING PERFORMANCE V/S ACTION

Come appraisal time and one of the most debated aspects of completing the fair-and-square appraisal revolves around what is 'measured' and what is 'achieved'. And the fable of the Bees and the Bee Keepers is a very popular paradigm that often gets quoted at such times. It goes thus: The Story: Once upon a time there were two beekeepers that each had a beehive. The beekeepers worked for a company called Bees, Inc. The company's customers loved its honey and demand for the product was increasing. So Bees, Inc. assigned each beekeeper a goal for increased honey production. The beekeepers had different ideas about how to meet their goal and designed different approaches to improve the performance of their hives. The first beekeeper established a bee performance management approach that measured the number of flowers each bee visited. At considerable cost to the beekeeper, an extensive measurement system was created to count the flowers each bee visited. He also provided feedback to each bee at midseason on his individual performance. He also created special awards for the bees who visited the most number of flowers. However, the bees were never told about the hive's goal to produce more honey so that the company could increase honey sales. The second beekeeper also established a bee performance management approach but this approach communicated to each bee the goal of the hive for increased honey production. The beekeeper and his bees measured two aspects of their performance the amount of nectar each bee brought back to the hive and the amount of honey the hive produced. The performance of each bee and the hive's overall performance were charted and posted on the hive's bulletin board for all the bees to see. The beekeeper created a few awards for the bees that gathered the most nectar. But he also established a hive incentive program that rewarded each

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bee in the hive based on the hive's overall honey production the more honey produced, the more recognition each bee would receive. At the end of the season, the beekeepers evaluated their approaches. The first beekeeper found that his hive had indeed increased the number of flowers visited ,but the amount of honey produced by the hive had dropped. The Queen Bee reported that because the bees were so busy trying to visit as many flowers as possible, they limited the amount of nectar they would carry so they could fly faster. Also, since only the top performers would be recognized, the bees felt they were competing against each other for awards. As a result, they would not share valuable information with each other that could have helped improve the performance of all the bees (like the location of the flower filled fields they'd spotted on the way back to the hive). As the beekeeper handed out the awards to individual bees, unhappy buzzing was heard in the background. After all was said and done, one of the high performing bees told the beekeeper that if he had known that the real goal was to make more honey, he would have worked totally differently. The second beekeeper, however, had very different results. Because each bee in his hive was focused on the hive's goal of producing more honey. This Bess had concentrated their efforts on gathering more nectar in order to produce more honey than ever before. The bees worked together to determine the highest nectar yielding flowers and to create quicker processes for depositing the nectar they had gathered. They also worked together to help increase the amount of nectar gathered by the poorer performers. Tile Queen Bee of this hive reported that the poor performers either improved their performance or transferred to hive No.1, because the hive had reached its goal. The beekeeper rewarded each bee his portion of the hive incentive. The keeper was also surprised to hear a loud, happy buzz and a jubilant flapping
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of wings as he rewarded the individual high-performing bees with special recognition. Should you measure performance or mere activities of employees? is the one who does silent work but does not show of himself/herself or the one who puts up a show but hardly performs to be recognized and rewarded? This and other related questions are answered in this chapter.

PERFORMANCE APPRAISAL
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An organizations goals can be achieved only when people put in their best efforts. How to ascertain whether an employee has shown his or her best performance on a given job? The answer is performance appraisal. Employee assessment is one of the fundamental jobs of HRM. But not an easy one though. This chapter is devoted to a detailed discussion of the nature and process of conducting performance appraisal. Meaning and Definition In simple terms, performance appraisal may be understood as the assessment of an individual's performance in a systematic way, the performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, cooperation, judgement, versatility, health, and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed. A formal definition of performance appraisal is: It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development. A more comprehensive definition is: Performance' appraisal is a formal structured system of measuring and evaluating an employees job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the

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employee can perform more effectively in the future so that the employee organization and society all benefit. The second definition includes employees behaviour as part of the assessment. Behaviour can be active or passive--do something or do nothing. Either way behaviour affects job results. The other terms used for performance appraisal arc: performance rating, employee assessment. Employees performance review, personnel appraisal, performance evaluation employee evaluation and (perhaps the oldest of the terms used) merit rating. In a formal sense, employee assessment is as old as, the concept of management and in an informal sense; it is probably as old as mankind. Nor performance appraisal is done in isolation. It is linked to job analysis as shown in Fig.

Job Analysis

Performance Standards

Performance Appraisal

Describes work and personnel requirement of a particular job

Translate job requirements I into levels of acceptable or I' unacceptable performance

Describes the jobrelevant strengths and weaknesses of each individual

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Fig. Relationship of Performance Appraisal and Job Analysis

Job analysis sets out requirements, which are translated into performance standards, which in turn from the basis for performance appraisal.

The meaning of the word appraisal is to fix a price or value for something. This is used in finance in terms such as project appraisal or financial appraisal where a value is attached to a project. Similarly performance appraisal is a process in which one values the employee contribution and worth to the organisation. The objectives of performance appraisal are: 1.To help better current performances 2. To help in development of the employee. 3.To determine training and development needs. 4. To give employee feedback and counsel them 5. To review performance for salary purposes. Employees across the entire organisation are appraised of their performance. This could be done annually, twice a year, periodically depending the need of the organisation The various kinds of performance appraisal systems are:

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1.Personality based performance appraisal system: Here the appraiser is supposed to rate the personality traits of the person being appraised. This is not in much in organisations as it very subjective and judgmental. It could also be biased and prejudiced. 2.Competence based performance appraisal system: Here the job analysis is used and the employee is appraised for the skills he exhibits. For e.g. if his job entails dealing with the clients then he is judged foe his effectiveness in dealing with them. This enables both the organisation and the employee as to what deficiencies are to be overcome and can be useful in providing training to the employee to better his performance. Result based performance appraisal system: This system concentrates on the final results achieved by the employee irrespective of his personality or deficiencies. This is totally related to the job and concentrates on the end results that are more important to the organisation. The performance appraisal system has to be transparent and the employee should be taken into full confidence. In many cases employees themselves are given a chance to conduct a self-appraisal. Performance appraisal is a case of joint problem solving by the organisation and the employee. However the organisation must also take care of future potential and not get bogged down by current performance.
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Normally the immediate supervisor does the appraisal. Some organisations also have a peer group performance appraisal where colleagues rate the performance. The HR person must also ensure that line managers are properly trained for carrying out the appraisal including interviewing techniques and on how to give feedback. The managers must also be trained to look at the cases objectively outside of their personal opinion of the candidate. Performing annual employee performance appraisals can often be one of the most challenging functions a manager may have. It is also happens to be one of the most important. Conducting a well organized and professional performance appraisal can often make a huge difference in turning around problem employees, as well as encouraging good or even average workers to perform at their best. All too often are the stories of managers that used employee performance appraisals only as a way to be critical of an underachieving employee's shortcomings. Or - even worse, managers that put off employee performance appraisals for many months, leaving the employee with strong feelings that they, and the work they perform, are not very important to the manager or the company. A variety of industry experts have looked at what elements make up a successful and productive employee appraisal. These elements include: Conducting the performance appraisal in a timely fashion, as close as possible, or even before the employee's scheduled review date.
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Offering a balanced evaluation of both the employee's strengths and of their weakness Including a review of key performance areas or projects where an employee has performed well. A bit of praise can go a long way to lifting an employee's morale and feelings of success on the job Making any criticisms of the employee's work in a productive way. Focus on ways the employee can improve or do a better job. Don't overly dwell on the negatives. Natural interaction during the performance appraisal process - give the employee a chance to speak their mind as well as help come up with future goals, as well as steer areas of improvement. Set goals for the next appraisal period that are quantifiable and achievable. If you have specific projects in mind use those as a measure of the performance. If you made a list of goals from the last review period, go over these with the employee as well and talk about how the employee achieved or failed to achieve the goals and why. Always maintain a professional demeanor and don't let any discussion get personal. Don't tie the employees performance to a salary increase. It is normal for the employee to expect that a review will also include an increase as this is traditional, but you should clearly state that the review is about performance and not about salary.

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Although these are just the basics of how to successfully perform an employee performance appraisal, and they may seem obvious at first glance, many managers still miss the basics, leading to strained employee relations, morale and dedication to the job. ELEMENTS IN THE PERFORMANCE APPRAISAL PROCESS. At one stage performance appraisal relied mainly on assessment of personality characteristics. Subordinates were being appraised by their superiors on the extent to which they exhibited characteristics like tact, willingness, enthusiasm, and maturity. Managers were being put in the position of psychologists and required to make subjective ratings without any point of reference except their own opinion. More recent thinking has resulted in an approach which says that there are two important aspects in performance appraisal namely inputs and outputs 1.Inputs: What the individual brings to the job in terms of attributes, behavior, skills and knowledge are inputs. 2.Outputs: The results achieved in terms of outputs or outcomes are referred to as outputs. Expectations are expressed in terms of objectives, standards, standards, targets or competence and appraisal is made on the basis of inputs and outputs. Methods Used in Appraisal Three different approaches exist for appraisals. Employees can be appraisal against absolute standards, relative standards and objectives. In cases where
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absolute standards are used, the employees are not compared with any other person while in the second category of appraisal methods using relative standards, individuals are compared with other individuals. The third approach makes use of objectives. Employees are evaluated by how well they accomplish a specific set of objectives that have been determined to be critical in the successful completion of the job. When Appraisals should Take Place Most large organizations hold formal appraisal discussions annually, while some fast moving organizations prefer to have them twice a year. When employees are working on projects, there may be an appraisal after each assignment has been completed. Ensuring that Appraisal is a continuous Process To ensure that appraisal is not just seen as a once-a-year event to be got over as quickly as possible it is necessary to emphasis the continuing nature of the process on briefing and training. Performance appraisal should not be imposed on managers as something special they have to do. It should be treated as a natural process which all managers carry out. Performance appraisals are an integral part of every organization and if they are properly developed and implemented, they can help the organization achieve its goals by developing productive employees. MANAGERIAL ETHICS IN PERFORMANCE APPRAISAL Performance appraisal system should be effective as a number of crucial decisions are made on the basis of score or rating given by the appraiser,
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which in turn, is heavily based on the appraisal system. Appraisal system, to be effective, should possess the following essential characteristics: Reliability and validity: Appraisal system should provide consistent, reliable and valid information and data, which can be used to defend the organization-even in legal challenges. If two appraisers are equally qualified and competent to appraise an employee with the help of same appraisal technique, their ratings should agree with each other. Then the technique satisfies the condition of interrater reliability. Appraisals must also satisfy the condition of validity be measuring what they are supposed to measure. For example, if appraisal is made for potential of an employee for promotion, it should supply the information and data relating to potentialities of the employee to take up higher responsibilities and carry on activities at higher level. Job Relatedness: The appraisal technique should measure the performance and provide information in Job related activities/areas. Standardization: Appraisal forms, procedures, administration of techniques, rating etc. should be standardized as appraisal decisions affect all employees of the group. Practical Viability: The techniques should be practically viable to administer, possible to implement and economical regarding cost aspect.

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Legal Sanction: It should have compliance with the legal provisions concerned of the country. Training and Appraisers: Because appraisal is important and sometimes difficult, it would be useful to provide training to appraisers namely insights and ideas on rating, documenting appraisals, and conducting appraisal interviews. Familiarity with rating errors can improve rater performance and this may inject the needed confidence in appraisers to look into performance ratings more objectively. Open Communication: Most employees want to know how well they are performing on the job. A good appraisal system provides the needed feedback on a continuing basis. The appraisal interviews should permit both parties to learn about the gaps and prepare themselves for future. To this end, managers should clearly explain their performance expectations to their subordinates in advance of the appraisals period. Once this is known it becomes easy for employees to learn about the yardsticks and, if possible, try to improve their performance in future.

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Employee Access to Results: Employees should know the rules of the game. They should receive adequate feedback on their performance. If performance appraisals are meant for improving employees performance, then withholding appraisals results would not serve any purpose. Employees simply could not perform better without having access to this information. Permitting employees to review the results of their appraisal allows them to detect any errors that may have been made. If they disagree with the evaluation, they can even challenge the same through formal channels. It follows then that formal procedures should be developed to enable employees who disagree with appraisal results which are considered to be inaccurate or unfair. They must have the means for pursuing their grievances and having them addressed objectively. When management uses it as a whip or fails to understand its limitations, it fails. The key is not which forms or which method is used. Performance appraisal should be used primarily to develop employees as valuable resources. Only then it would show promising results.

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OBJECTIVES OF PERFORMANCE APPRAISAL Data relating to performance assessment of employees arc recorded, stored. and used for seven purposes. The main purposes of employee assessment are: 1. To effect promotions based on competence and performance. 2. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. 3. To assess the training and development needs of employees. 4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed. 5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. 6. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee. 7. Finally, performance appraisal can be used to determine whether HR programmes such a selection, training, and transfers have been effective or not. Broadly, performance appraisal serves four objectives(i) (ii) (iii) (iv) developmental uses, administrative uses/decisions, organizational maintenance/objectives, and documentation purposes
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Table below outlines these and specific uses more clearly:Multiple Purposes of Performance Assessment General Applications Developmental Uses Specific Purpose Identification of individual needs Performance feedback Determining transfers and job assignments Identification of individual strengths and development needs Salary Promotion Retention or termination Administrative Uses/Decisions Recognition of individual performance Lay-offs Identification of poor performers HR planning Determining organization training needs Evaluation of organizational Maintenance/ goal achievement Information for goal identification Evaluation of HR systems. Reinforcement of organizational development needs Criteria for validation research Documentation for HR decisions Helping to meet legal requirements Documentation Performance Review Performance reviews are designed to both evaluate general performance and measure progress around specific goals. When well-structured, performance reviews offer an opportunity to acknowledge the work of staff, address areas

Organizational Objectives

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in need of improvement, and identify professional development and training that will further support the staff members' career growth. Purpose of Performance review Translate organizations mission into specific achievable goals Manage performance rather than react to it Reduce overlap of job duties and ineffective, inefficient use of employee skills Provide written acknowledgment of completed work Gain new information and ideas from staff Discuss skill and career development Protect organization from unfounded charges of discrimination Reduce stress for the supervisor -- managing rather than reacting Reduce stress for the employee -- what is expected is made clear Significance of Performance Review Performance reviews can prove valuable to an individual's career development. If a company conducts reviews properly, the employee should receive pertinent feedback from peers and managers and, if applicable, clients. The review usually consists of two components: the written or electronic review, and the oral review or review meeting.

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The written or electronic review should be divided into several sections: goals achieved by the employee, future goals, the employee's strengths and weaknesses, and helpful recommendations for the employee's future growth. The review process may include information on promotions, bonuses, career transfers, or an increase in job responsibilities. This will depend on factors such as the formality of the review, its intended purpose, and the frequency with which reviews are conducted. Many organizations combine performance reviews with promotions and bonuses. Some companies, however, are more concerned with providing feedback to the employee than they are with compensation and advancement issues. The review meeting can either be an asset or hindrance to the individual, depending on how effective the manager is at giving the appropriate information and feedback. It is important for the manager performing the review to show the employee that time and effort was put into the review process. Employees should be made to feel that they are an integral part of the organization in order to encourage them to address their weaknesses, work on further strengthening positive areas, and achieve future goals. If the reviews take place on an annual basis, one must inquire about future promotions, increases in job responsibilities, and any desires for transfers or new projects. CONDUCTING A PERFORMANCE REVIEW 1. Design a legally valid performance review process; consider these legal requirements of the performance review process: Performance appraisals
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should be: job-related and valid; based on a thorough analysis of the job; standardized for all employees; not biased against any race, color, sex, religion, or nationality; and performed by people who have adequate knowledge of the person or job. Be sure to build in the process, a route for recourse if an employee feels he or she has been dealt with unfairly in an appraisal process, e.g., that the employee can go to his or her supervisor's supervisor. The process should be clearly described in a personnel policy. 2. Design a standard form for performance appraisals, and include the name of the employee, date the performance form was completed, dates specifying the time interval over which the employee is being evaluated, performance dimensions (include responsibilities from the job description, any assigned goals from the strategic plan, along with needed skills, such as communications, administration, etc.), a rating system (e.g., poor, average, good, excellent), space for commentary for each dimension, a final section for overall commentary, a final section for action plans to address improvements, and lines for signatures of the supervisor and employee. Signatures may either specify that the employee accepts the appraisal or has seen it, depending on wording on the form. 3. Schedule the first performance review for six months after the employee starts employment. Schedule another six months later, and then every year on the employee's anniversary date. 4. Initiate the performance review. Tell the employee that you're initiating a scheduled performance review. Remind them of what's involved in the process. Schedule a meeting about two weeks out.
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5. Have the employee suggest any updates to the job description and provide written input to the appraisal. Have them record their input concurrent to the your recording theirs. Have them record their input on their own sheets (their feedback will be combined on the official form later on in the process). 6. Record your input to the appraisal- always reference the job description and associated formal goals for basis of review. Be sure you are familiar with the job requirements and have sufficient contact with the employee to be making valid judgments. Use examples of behaviors wherever you can in the appraisal to help avoid counting on hearsay. Always address behaviors, not characteristics of personalities. 7. Hold the performance appraisal meeting. State the meeting's goals of exchanging feedback and coming to action plans, where necessary. In the meeting, let the employee speak first and give their input. Respond with your own input. Then discuss areas where you disagree. Attempt to avoid defensiveness; admitting how you feel at the present time, helps a great deal. Discuss behaviors, not personalities. Avoid final terms such as "always," "never," etc. Encourage participation and be supportive. Come to terms on actions, where possible. Try to end the meeting on a positive note. 8. Update and finalize the performance appraisal form. Add agreed-to commentary on to the form. Note that if the employee wants to add attach written input to the final form, he or she should be able to do so.

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9. Note that if the supervisor has been doing a good job supervising, then nothing should be surprising to the employee during the appraisal. Any performance issues should have been conveyed when they occurred, so nothing should be a surprise in the review meeting.

CASE STUDY: PERFORMANCE REVIEW AT PINEHURST Pinehurst Resorts & Country club believes that its employees should learn as much as they can about their performance so that they can be even more effective in the future. Pinehurst has a structured, formalized review system that gives every associate and manager the chance for a detailed, constructive review at least once a year. We see that system as both a tremendous commitment and accomplishment considering that we have nearly 1,000 people on our staff. The resort follows several guidelines to ensure the best results. First, supervisors prepare for the process. Supervisors give associates a copy of the review form and ask them to review their performance. That encourages a healthy self criticism in associates and gives them an opportunity to familiarize themselves with the questions and categories the review will address. After this self evaluation, supervisors schedule a formal appointment with the associate. Supervisors set the appointment in advance so the review comes as no surprise. The appointment is set for a period with minimum conflict. Supervisors should not schedule review in between appointments
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on their calendars. The interview itself needs to be held in a productive climate; there should be no interruptions, and the setting should be private and comfortable. Generally the supervisors approach reviews in this way. First, they set an appointment with the associate. When the associate arrives in their office, they try to establish a comfortable atmosphere before getting started. After establishing a relatively stress free atmosphere, the supervisor conducts that evaluation a productive experience. Near the end of the review, supervisors spend time with the associate establishing goals for the upcoming year. Sometimes, these goals can be regular day day performance issues on the job; in other cases, goals could to be special project or educational opportunities. Associates leave the evaluation with an understanding of their past performance, as well as what their future performance and achievements can be. For the management end, a successful performance review means weve contributed to one of our most important responsibilities: the training and development of our staff.

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PERFORMANCE APPRAISAL AND COMPETITIVE ADVANTAGE The objectives of performance appraisal, listed above, point out the purpose which such an exercise seeks to meet. What needs emphasis is that performance evaluation contributes to firm's competitive strength. Besides encouraging high levels of performance, the evaluation system helps identify employees with potential, reward performance equitably and determine employee's need for training. Specifically, performance appraisal helps an organization gain competitive edge in the following ways (see Fig below)

Strategy and Behavior

Improving Performance

Making correct decisions

Competitive Advantage

Values and Behaviour

Minimizing dissatisfaction and turnover

Ensuring Legal Compliance

Fig: How Performance Appraisal can contribute to Firm's Competitive Advantage?

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Improving Performance An effective appraisal system can contribute to competitive advantage by improving employee job performance in two ways-by directing employee behaviour towards organizational goals, as was done by the second beekeeper (see opening case), and by monitoring that behaviour to ensure that the goals are met. Making Correct Decisions As stated above, appraisal is a critical input in making decisions on such issues as pay raise, promotion, transfer, training, discharges and completion of probationary periods. Right decision on each of these can contribute to competitive strength of an organization. If promotion, for example, is made on performance, the promotee feels motivated to enhance his or her performance. Ensuring Legal Compliance Promotions made on factors other than performance might land up a firm in a legal battle, thus diverting its focus on non-productive areas, as it happened to Williamson Magar. Organizations can minimize costly performance-related litigation by using appraisal systems that give fair and accurate ratings. Minimizing Job Dissatisfaction and Turnover Employees tend to become emotional and frustrated if they perceive that the ratings they get are unfair and inaccurate. Such employees find that the efforts they had put in became futile and obviously get de-motivated.

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Dissatisfaction in the job sets in and one of the outcomes of job dissatisfaction is increased turnover. Fair and accurate appraisal results in high motivation and increased job satisfaction. An organization having satisfied and motivated employees will have an edge over its competitors.

Consistency between Organizational Strategy and Behaviour An organization needs a strategy consistent with the behaviour of its employees if it were to realize its goals. A truism of organizational life is that people engage themselves in behaviours that they perceive will be rewarded. As employees want to be rewarded, they tend to occupy themselves more with those activities on which the organization emphasizes. For example, if the focus is on service, employees will behave in ways that will help them in gaining rewards associated with service delivery. If the focus is on cost control, employees will seek to control cost and thus be recongnised and rewarded. If the focus is on rewarding productivity, employees will strive for productivity. The performance appraisal becomes not only a means of knowing if the employees' behaviour is consistent with the overall strategic focus, but also a way of bringing to the fore any negative consequence of the strategy- behaviour fit For example, a single point productivity focus may include potential negative consequences such as decreased quality and co-operations. Thus, the performance appraisal system is an important organizational mechanism to elicit feedback on the consistency of the strategy-behaviour link.

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Organizational Strategy and Performance Appraisal The performance appraisal system serves many organizational objectives and goals. Besides encouraging high level of performance, the evaluation system is useful in identifying employees with potential, rewarding performance equitably. And determining employees' needs for development. These are all the activities that should support the organizations strategic orientation. Although these activities are clearly instrumental in achieving corporate plans and long-term growth, typical appraisal systems in most organizations have been focused on short-term goals. From the strategic management point of view, organizations can be grouped into three categories defenders, prospectors and analyzers. Performance appraisal has definite roles in all the three strategies. Typically, defenders have a narrow and relatively stable product-market domain. Because of this narrow focus, these organizations seldom need to make major adjustments in their technology. Structure or methods of operations. They devote primary attention to improving the efficiency of their existing operations. Because of the emphasis 011building skills within the organization, successful defenders use performance appraisal for identifying training needs. Performance appraisal is usually more behaviour oriented. Organizations with a prospector strategy continuously search for different product and market opportunities. In addition, these organizations regularly experiment with potential responses to new and emerging environmental trends. Prospectors are often the harbingers of change. Because of the emphasis on skills identification and acquisition of human resources from external sources, as opposed to skills building with the organization, prospectors often use the performance appraisal as a means of identifying
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staffing needs. The emphasis is on results. Finally, the focus is on division and corporate performance evaluation as they compare with other companies during the same evaluation period. Organizations with an analyzer strategy operate in two types of product-.market domains. One domain is stable while the other is changing. In their more innovative areas, managers watch their competitors closely and rapidly adopt the ideas that appear promising. In general, analyzers use cost effective technologies for stable products and project or matrix technologies for new product. Analyzers tend to emphasize both skill building and skill i1cquisilion and employ extensive training programmes. Thus, these organizations attempt to identify both training as well as staffing needs. The appraisal systems are considered at the individual, group and divisional levels. Finally, successful analyzers have a tendency to examine current performance with past performance within the organization. Crosssectional comparisons (comparisons among 'companies) may also occur. Whatever the category, a performance appraisal system has strategic importance to a firm in three ways: 1. Feedback mechanism, 2. Consistency between organizational strategy and job behaviour, and 3. Consistency between organizational values and job behaviour.

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APPRAISAL PROCESS Figure below outlines the performance- appraisal process. Each step in the process is crucial and is arranged logically. The process as shown in Fig. Below is somewhat idea1ised. Many organizations make every effort to approximate the ideal process, resulting in first-rate appraisal systems. Unfortunately, many others fail to consider one or more of the steps and, therefore, have less-effective appraisal system.
Objectives of Appraisal Establish job Expectation

Design an appraisal performance

Performance interview

Use appraisal data for appropriate purposes

1. Objectives of Appraisal Objectives of appraisal as stated above include effecting promotions and transfers, assessing training needs, awarding pay increases, and the like. The emphasis in all these is to correct problems. Theses objectives are appropriate as long as the approach in appraisal is individual. Appraisal in

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future, would assume systems orientations. In the systems approach, the objectives of appraisal stretch beyond the traditional ones. In the systems approach, appraisal aims at improving the performance, instead of merely assessing it. Towards this end, an appraisal system seeks to evaluate opportunity factors. Opportunity factors include the physical environment such as noise, ventilation and lightings, available resources such as human and computer assistance and social processes such as leadership effectiveness. These opportunity variables are more important than individual abilities in determining work performance. In the systems approach the emphasis is not on individual assessment and rewards or punishments. But it is on how work the work system affects an individuals. In the systems approach the emphasis is not on individual assessment and rewards or punishments. But it is on how the work systems affect an individuals performance. In order to use a systems approach, managers must learn to appreciate the impact that systems levels factors have on individual performance and subordinates must adjust to lack of competition among individuals. Thus, if a systems approach is going to be successful, the employee must believe that by working towards shared goals, everyone will benefit. Not that the role of the individual is undermined. The individual is responsible for a large percentage of his or her work performance. Employees should not be encouraged to seek organizational reasons for his failures. The identifications of systems obstacles should be used to facilitate development and motivation, not as an excuse to poor performance. The following table displays some of the differences between the traditional approach and the systems-oriented one.
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PERFORMANCE SYSTEMS Guiding value Primary roles Leadership practices Appraisal frequency Degree of formality Reward practices

APPRAISAL Systems Attribution to systems Development, problem solving Facilitative, coaching Frequent Low Group orientation

Traditional Attribution to individual Control, documentation Directional, evaluative Occasional High Individual orientation

2. Establish Job Expectations The second step in the appraisal process is to establish job expectations. This includes informing the employee what is expected of him or her on the job. Normally, a discussion is held with his or her superior to review the major duties contained in the job place of formal performance evaluation. 3. Design Appraisal Programme Designing an appraisal programme poses several questions which we need to answers. They are: 1. Formals versus informal appraisal 2. Whose performance is to be assessed? 3. Who are the raters? 4. What problems are encountered? 5. How to solve the problems? 6. What should be evaluated? 7. When to evaluate? 8. What methods of appraisal are to be used?
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What methods? Formal V/s Informal Whose performan ce

When to evaluate?

Appraisal design

What are the raters?

What to evaluate? How to solve?

What problems

1. Whose performance should be rated? To the question as to whose

performance should be rated, the answer is obviousemployees, is it individual or teams? Specifically the rate may be defined as the individual, work group, division, or organizations. It is also possible to define the rate at multiple levels. For example, under some condition, it may be desirable to appraise performance both at workgroup level for merit-pay increases and at the individual level to assess training needs. Two conditions necessitate a group level appraisalgroup cohesiveness and difficulty in identifying individual

40

performance. Description. Individual should not be expected to begin the job until they understand what is expected out of them.
2. Formal V/s informal appraisal: - the first step in designing an

appraisal programme is to decide whether the appraisal should be formal or informal. Formal appraisal usually occurs at specified time periodsonce or twice year. Formal appraisals are most often required by the organizations for the purposes of employee evaluation. Informal performance appraisal can occur whenever the superior feels the need for communication. For example, if the employee has been consistently meeting or executing standards, an informal appraisal may be in order to simply recognize this fact. Discussions can take place anywhere in the organizations, ranging from the managers office to the canteen. But care needs to be taken to ensure that the discussion is held in private. Many organizations encourage a mixture of both formal and informal appraisal. The formal appraisal is most often used as primary evaluation. However, the informal appraisal is very helpful for more performance feedback. Informal appraisal should not take the Group cohesiveness refers to shared feeling among work-team members. There is cooperation and clear understanding to accomplish tasks which are interdependent. Any attempt to assess individual performance shall undermine group cohesiveness and tend to promote individualistic or even competitive orientation. The difficulty in identifying individual contribution is also important to consider. In some cases, interdependent of tasks is so complete that it is difficult to identify who has contributed what. There is no other choice but to view that task as a team effort. But the
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point to be remembered is that the performance of all employees must be rated. All must become raters.

3. Who are Raters? Raters can be immediate supervisors, specialist

from the HR department, subordinates. Peers, committees, clients, self appraisal, or a combination of several.
a. Immediate supervisor is the fit candidate to appraise the

performance of his or her subordinate. There are 3 reasons in support of this choice. No one is familiar with the subordinates performance than his or her superior. Another reason is that the superior has the responsibility of managing a particular unit. When the tasks of evaluating a subordinate is given to another person, the superior authority may be undermined seriously. Finally, training and development of subordinate is am portent element in every mangers job. Since appraisal programme are often clearly linked to training and development, the immediate superior may be the legal choice to conduct the performance evaluation.
b. Subordinate can assess the performance of their superiors. The

use of this choice may be useful in assessing an employee ability to communicate, delegate work, allocate resources, disseminate information, resolve intra-personal conflict, and deal with employees on a fair basis. But the problem with the subordinate evaluation is that supervisors tend to become popular, not by effective leadership, but by mere gimmicks.
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c. Peers are in better position to evaluate certain facts of job

performance which the subordinates or supervisors cannot do. Such facts include contribution skills, reliability and initiative. Closeness of the working relationships and the amount of personal contacts place peers in a better position to make accurate assessments. Unfortunately friendship or animosity may result in distortion of evaluation. Further when reward allocation is based on peer evaluation, series conflicts among co-workers may develop. Finally join together to rate each other high.
d. Although clients are seldom used for rating employee

performance, nothing prevents an organization from using this source. Clients may be members within the organization who have direct contact with the rate and make use of an output (goods or services) this employee provides. Interest, courtesy, dependability and innovativeness are but a few of the qualities for which clients can offer rating information. Clients, external to the organization can also offer similar kinds of information. Where appraisal is made by the superior, peers, subordinates and clients, it is called the 360-degree system of appraisal. First developed at General Electric, US in 1992 the system has become popular in our country too. GE (India). Reliance Industries, Crompton Greaves, Godrej Soaps, Wipro, Infosys, Thermax and Thomas Cook are using the method with greater benefits. The Arthur Anderson Survey 1997 reveals that 20%
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of the organization use 360 degree method. In the 360 degree method, besides assessing performance. Other attributes of the assesstalents, behavioral quirks, values, ethical standards, tempers and loyalty are evaluated by the people who are best placed to do it. Many employees use rating committees to evaluate employees. These committees are often composed of the employees immediate supervisor and three or four other supervisors who come in contact with the employee. This choice is welcome when an employee in the course of his or her job performs a variety of tasks in different environment. For e.g. 1supervisor may work with the employee when technical aspects of a job are being performed and another supervisor may deal with the same employee in situations where communications skills are crucial. There are several benefits in using multiple raters. First there may be objectivity in rating as more than rater is involved in the assessment. Furthermore where there are differences in the rater ought ratings they usually stem from the fact that raters at different level in the organization often observe different facets of an employee performance-the appraisal to reflect these differences. The disadvantages of committee rating are that it diminishes the role of the immediate supervisor in the area of training and development.
e. In self appraisal employee himself or herself evaluates his or

her own performance. Indian Telephone Industries has been following the self-appraisal system for executives in grade I to
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IV. Hewlett-Packard and Texas Instruments too ask their performance to prepare their own appraisal. On the positive side it may be stated that in self-appraisal there is an opportunity to participate in evaluation particularly if it is combine with goal setti9ng and this should be improve the mangers motivation. Managers are less defensive in selfevaluation than when supervisors tell them what they are. Selfappraisal is best suited where executive development is the main purpose of evaluation as the approach enablers managers to clearly assess their areas of differences. Unfortunately selfappraisal falls short almost by any criterion. They tend to be more lenient compared to other sources of evaluation, even that of peers who are more lenient than their superiors. Selfappraisal is also more likely to be less biased and less in agreement with judgment of others. In practice a combination of methods is followed for employee. For example evaluation by self may be followed by a superior, the personal department or the HR department (following diagram).

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Different Raters of Performance- L&T, Bangalore works PROCEDURE AND SCHEDULE FOR PERFORMANCE APPRAISL PROCESS Action by/Date Activities Form/Section Brief description of

Annual Performance Review Form 2 Sec:

Employee by 15.4.1999 Describes actual results against objectives set earlier. Not more than five Carries out self-review highlighting significant contributions and factors influencing performance Keeps himself or herself ready for appraisal interview by analyzing his performance, strengths and weakness and development needs.

Form 2 Sec: B, C

From 1 From 2 Sec C Sec D 46

From 3

Prepares for the appraisal interview by analyzing results against objectives, strengths and weakness and recalling significant incidents. Related to critical attributes. Discusses with the employees and provides feedback on critical attributes and rate on performance and attributes. Carries out development planning with the employee Carries out performance planning for 1994-1995 with employee, selects and describes role related attributes. Describes strengths and weakness and comments on potential areas for growth Records training needs and apecific developments plans.

 From 2 Sec E Next superior(s) By 15.6.1994

Comments on specific developments plans Makes overall observations on the employees performance Forwards the forms if necessary to his superior to ensure:

1. Covenants are reviewed by a superiors at least at DGM level 2. Superiors/ executives are reviewed by covenanted officers.

Immediate superior(s) By 15.6.1994

From 2 From 2

Notes the comments by the next superiors and conveys significant observations to employee Forwards for convents to HRD depts. and for superiors/executives to concerned Personnel Dept. Analyses rating and comments and furnishes data to all concerned for necessary actions Co-ordinates Development Action Proposals at Respective Group/ unit level

From 2 Personnel/ HRD dept. By 15.7.1994

HRD dept. By 30.7.1994

From 2

Plans training programme and other actions Complies Pa data for aggregate analysis Comments on Pa exercise and send report to GMs and corporate management

Immediate Superior

From 1 From 3 47 Reviews performance and objectives and writes comments as necessary Reviews development action taken and records status.

2. PERIODIC REVIEW (during the year) Whoever may be the rater two requisites must be fulfilled. First the rater must be free from bias. Second the rater must have an opportunity to observe the full spectrum of activities and behavior of the rate over an extended time period.] 4. Problems of Rating: - Performance appraisals are subject to a wide variety of inaccurate and biases referred to as rating errors. These errors occur in the raters observations, judgments and information processing and can seriously affect assessment result. The most common rating errors are leniency or severity, central tendency, halo effect, primary and recency effects, perceptual set, performance dimension behavior, spill over effect and status effect. 5. Leniency or Severity: - Leniency or severity on the part of the rater makes the assessment subjective. Subjective assessments defeat the very purpose of performance appraisal. Ratings are lenient for the following reasons. The rater may feel that anyone under his or her jurisdictions who is rated unfavorably will reflect poorly on his or her own worthiness. He or she may feel that anyone who could have been rated unfavorably has already been discharged from the organization He or she may feel that a derogatory rating will be revealed to the rate to the determinant of the relations between the rater and rate.
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 He or she may rate leniently in order to win promotions for the subordinates and therefore indirectly increase his or her hold over them. He or she may be projecting He or she feels it necessary to always approve of others in order to gain approval for him or herself. He or she may be operating on the premise, whoever associates with me is meritorious therefore, and I am meritorious. He or she may rate leniently because there exists, in the culture, a response set approve rather than disapprove.

WC according to a Severe rater

WC according to a lenient rater True amount WC

LOW

written communication HIGH Skills (WC)

4. Central tendency: - this occurs when employees are incorrectly

rated near the average or middle of the scale. The attitude of the rate is to play safe. This safe-playing attitude stems from certain doubts and anxieties which the raters have while assessing the ratees. Such doubts and anxieties are :

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 Do I know the man sufficiently well to be able to give a fair assessment of him? If I rate him the way I think I should what will be its influence on his relations with me and on his performance in the future? If I rate him the way I think I should what will be its effect on my relations with the others subordinates? If I rate him the way I think I should what will be its effect on his relationship within the group or subordinates? Will I able to be objective in view of pressures from peers, subordinates and trade union? If I rate him the way I think I should will be accused to being partial? How will my boss view the appraisal I make and how will that influences the way he appraises the man? What standards will my peers adopt to appreciate their subordinates? And in view of this am I likely to affect adversely the future of my subordinates? Naturally the rates use such expressions as satisfactory and average to describe the performance of the rates. For example the principal of a college while giving character certificates to the outgoing students describe the character of each student as satisfactory. Obviously its become difficult to distinguish between excellent performance and poor performance. In small organization it is common to label all employees as an average. But in large companies errors of this type tend to obviate the value of evaluations. Close to error of central tendency is the problem of range restriction. Range restriction may involve clustering all employees around any point on

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a scale, often in combination with leniency errors at very top. What is distinctive in the error of central tendency and the error of range restriction is a failure to note real performance differences, either intentionally or due to insufficient attention. Halo Error - it takes place when one aspect of an individual performance influences the evaluation of the entire performance of the individual just as the assessment of the performance of a student in his or her examination being influence by the opening paragraph of every answer. If the introductory paragraph is poorly written the chances of scoring high marks in that answer are diminished however good the subsequent portion of the essay may be In an organization a halo error occurs when an emplopuee who work late constantly might be rated high on productivity and quality of output as well as on motivation. Similarly an attractive or popular employee might be given a high overall rating. Rating employees separately can each of a number of performance and encouraging raters to guard against the halo effect are two ways to reduce halo effect. Rater effect: this includes favoritism, stereotyping and hostility. Excessively high or low scores are given only to certain individual or groups based on the raters attitude towards the rate, not on actual outcomes or behavior. Sex, age, race and friendship biases are example of this type of error. Primary and recency effects: - the raters ratings are heavily influenced either by behavior exhibited by the rate during the early stage of the review
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period or by outcomes or behavior exhibited by the rate near the end of the review period (recency). For example if a salesperson captures an important contract/ sales just before the completion of the appraisal the timing of the incident may inflate his or her standing even though the overall performance of the salesperson may not have been encouraging. Likewise a blunder committed just before the appraisal period may diminish chance of securing a favorable rating even if the performance is good. One way of guarding against such an error is to ask rater to consider the composite performance of the ratee and not to be influenced by one incident or own achievement. The rater must also be aware of tendency on the part of the rates to improve odds in their favors or suppress weak points during the rating period. Perceptual Set: - this occurs when the raters assessment is influenced by previously held beliefs. If the supervisors for example have a belief that employee hailing from 1 particular region is intelligent and hard working his subsequent rating of an employee hailing from that region tends to be favorably high. Performance Dimension order: 2 or more dimensions on a performance instrument follows or closely follow each other and both describe or rotate to a similar quality. The rater rates first dimension accurately and then rates the second dimension similar to the first because of their proximity. If the dimension had been arranged in a significant different order the rating might have been different.

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Spillover effect: This refers to allowing past performance appraisal ratings to unjustifiably influence current ratings. Past ratings, good or bad result for the period although the demonstrated behavior does not deserve the rating good or bad. Status effect: - it refers to overrating of employee in higher-level jobs held in high esteem, and underrating employees in lower-level-job or jobs held in low esteem. It is not the raters errors alone that are barriers to accurate and valid measurement of employee performance. Barriers lie deep within the genetic and acquired make-up of all people concerned with performance appraisal. A wide variety of emotional, psychological, intellectual and physical factors that at first glance may appear to be separate and irrelevant may combine in any numbers of ways during the appraisal process. Exhibit 10.2 Here is a bizarre case of performance appraisal. A pulp making unit located at Harihae in Karnataka, hired 40 engineers in 1994, as management trainees. The new hires were fresh from, REC, Suratkal, and other prestigious institutions. Obviously they were toppers in their respective branches and institutions. The management of the plant adopted a freakish policy with regard to performance appraisal 10 percent of all the employees were to be rated below average. The management did not want all the employees to be ranked high, notwithstanding their excellent performance. The axe fell on the trainees. The raters rated all the 40 trainees below average. Humiliated, these 40 put in their papers even before their training period expired.
53

Solving Raters Problems the best way to overcome the problems is to provide training to the raters. At Hewlett-Packard, a 2 day training course is organized every year to prepare managers to handle appraisals better. Not that training is a cure-all for all the ills of appraisal systems. From a practical point of view, several factors, including the extent which pay is related to performance ratings, union pressure, turnover rates, time constraints and the need to justify ratings may be more important than training, influencing the ratings they actually give. This means that improving rating systems involves not just training the raters but remedying outside factors such ass union pressure. And it means that rater training, to be effective, should also add real life problems such as the fact that union representatives will try to influence supervisors to rate everyone high. But training can help improve the appraisal system to the extent of distortion that occurs due to the raters error such as halo, leniency, central tendency and bias. In a typical training, raters are shown a video-tape of jobs being performed and are asked to rate the workers. Ratings made by each participant are then placed on a flip chart and the various charts are explained. For e.g., a trainee is rated on all criteria (such as quantity and quality) about the same, the trainer might explain that halo error had occurred. If, on the other hand, a trainer rated all video-taped workers very high, this might be explained as a leniency error. Typically, the trainer gives the correct rating and then illustrates the rating errors made. In effect, training of raters must help strengthen the factors that tend to improve accuracy of ratings and weaken those that lower the accuracy of the performance measurement.

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Factors that help improve accuracy: 1. The rater has observed and is familiar with behaviors to be appraised. 2. The rater has documented the behaviors to improve the recall. 3. The rater has a checklist to obtain and review job-related information. 4. The rater is aware of personal biases and is willing to take action to minimize their effect. 5. Rating scores by raters of one group or organization are summarized and compared with those by other raters. 6. The rater focuses attention on performance-related behaviors over which the rater has better control than in other aspects of evaluation. 7. Higher levels of management are held accountable for reviewing all ratings. 8. The raters own performance ratings are related to the quality of rating given and the performance of units. 9. Performance factors are properly defined. Factors that may lower accuracy: 1. The rater rates ratees only when administrative actions are contemplated. 2. The rater tends to inflate ratings when the ratees receive scores and results of appraisals. 3. The rater tends to recall more behaviours known to be of particular interest to higher level managers, whether or not they are pertinent, when his or her ratings are reviewed by such authorities. 4. The rater is unable to express him or herself honestly and unambiguously. 5. Appraisal systems, processes and instruments fail to support the rater.
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6. The rater has to rate employees on factors that are poorly defined. 7. Finally, the supervisor/rater must be trained to conduct the appraisal interview. For many raters, this is a difficult task, especially when the appraisal is unfavorable to the rater. Favorable or unfavorable rating, it is the job of the rater to convince the ratee about the appraisal, and advise him or her about the future course of action the rate should take. What should be rated? One of the steps in designing an appraisal programme is to determine the evaluation criteria. It is obvious that the criteria should be related to the job. The six criteria for assessing performance are: 1. Quality: The degree to which the result or process of carrying out an activity approaches perfection in terms of either conforming to some ideal way of performing the activity, or fulfilling the activitys intended purpose. 2. Quantity: The amount produced, expressed in monetary terms, number of units, or number of completed activity cycles. 3. Timeliness: the degree to which an activity is completed or a result produced, at the earliest time desirable from the standpoints of both co-coordinating with the outputs of others and of maximizing the time available for other activities. 4. Cost Effectiveness: the degree to which the use of the organizations resources (e.g. human, monetary, technological and material) is maximized in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a resource. 5. Need for supervision: the degree to which a job performer can carry out a job function without either having to request supervisory
56

assistance or requiring supervisory intervention to prevent an adverse outcome. 6. Interpersonal impact: the degree to which as performer promotes feeling of self-esteem, goodwill and co-operation among co-workers and sub-ordinates. These criteria relate to past performance and behavior of an employee. There is also the need for assessing, as was pointed out earlier, the potential of an employee for future performance, particularly when the employee is tipped for assuming greater responsibilities.

Exhibit 10.3 Appraisal of Potential at Philips More and more number of organizations are trying to assess potential of their employees, particularly at the managerial level. Cadbury India, Sandoz, Pfizer, Mafatlal, Philips, National Organic Chemical Industries, Glaxo and P&G are a few of the companies which seek to top managerial potential. At Philips a 2 by 2 matrix is used to assess performance and potential to perform. The vertical axis measures potential while the horizontal, actual performance. Both are further subdivided into parameters high and low resulting in 4 quadrants of classification.

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High Potential Low

Problem Children Problem Separation

Low Performance

Stars Solid Citizens

High

The Philips Model Low Potential-Low Performance: these employees are categorized as question marks. The company asks such employees to improve their performance levels. Failure to improve would result in their planned separation. High Potential-Low Performance: these are the problem children. In order to help them improve their performance, these employees are shifted to new locations to work and are closely monitored. If performance levels do not improve, these employees are reclassified as question marks and the separation process initiated. High Potential-High Performance: these are the star performers. They have to be kept engaged with complex assignments all the time and groomed to take up the top positions. Otherwise, they might leave. Low Potential-High Performance: these are called as solid citizens and constitute 70 to 75 % of the total number of employees in any organization. They have skills but lack the potential to grow beyond their current jobprofile. The organization has to constantly recognize their limitations and take care of their needs.

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In order to assess employee potential, Philips has adopted the system that prevails at Philips NV, Holland. The system at Philips NV uses 4 broad attributes conceptual effectiveness, operational effectiveness, interpersonal effectiveness and achievement effectiveness and achievement motivation. Each attribute has a 5-point grading scale excellent, very good, good/adequate, weak and insufficient. Coming to the six criteria, it may be stated that the first 4 quality, quantity, timeliness and cost effectiveness are objective in nature; and the last 2 need for supervision and interpersonal impact are subjective. Objective measures are quantifiable and are therefore highly useful in measuring the performance of an employee. But performance of employees should not always be evaluated against the amount of deposits mobilized for his or her bank. The effort put in by him/her, the contacts he/she has established, the image about the bank he/she has created in the eyes of public, and if relationships he/she has maintained with subordinates speak more reliably about the managers performance. Here comes the relevance of the subjective criteria. However, as subjective measures are dependent upon human judgments, they are prone to the kinds of errors we noted earlier leniency or severity, central tendency, halo and the like. To be useful, subjective measures must be based on a careful analysis of the behaviors viewed as necessary and important for job performance. Of late, there has been a shift in focus of appraisals. This shift is from performance of the individual to the systems approach. As stated earlier, in the systems approach the emphasis is on improving ones performance. Work performance of an individual depends on organizational factors in

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addition to his or her abilities. The focus in the systems approach is, therefore, the entire organization.

Timing of Evaluation How often should an employee be assessed? The general trend is to evaluate once in 3 months, or six months, or once in a year. According to a survey conducted in 1997 by Arthur Anderson, 70 percent of the organizations conduct performance appraisal once a year. Newly hired employees are rated more frequently than the older ones. Frequent assessment is better than phased evaluation. Feedback in the latter is delayed and the advantage of timely remedial measures by the employee is lost. Frequent evaluation gives constant feedback to the rate, thus enabling him or her to improve performance if there is any deficiency. The performance of trainees and probationers should be evaluated at the end of respective programmes.

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METHODS OF APPRAISAL The last to be addressed in the process of designing an appraisal programme is to determine methods of evaluation. Numerous methods have been devised to measure the quantity and quality of employees job performance. Each of the methods discussed could be effective for some purposes, for some organizations. None should be dismissed or accepted as appropriate except as they relate to the particular needs of the organization or of a particular type of employees. Broadly, all the approaches to appraisal can be identified into (i) past-oriented methods, and (ii) future-oriented methods. Each group has several techniques as shown in the figure below:

Appr aisal Meth ods

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Past-Oriented Methods Rating Scales: This is the simplest and most popular technique for appraising employee performance; the typical rating-scale system consists of several numerical scales, each representing a job-related performance criterion such as dependability, initiative, output, attendance, attitude, cooperation, and the like. Each scale ranges from excellent to poor. The rater checks the appropriate performance level on each criterion, then computes the employees total numerical score. The number of points scored may be linked to salary increases, whereby so many points equal a rise of some percentage.

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RATING SCALE Instructions: For the following performances factors, please indicate on the rating Scale your evaluation of the employee named below:
Employees Name: Raters Name Excellent 5 1. 2. 3. 4. 5. 6. Dependability Initiative Overall Output Attendance Attitude Co-Operation ---------------------------------------------20. Quality of Work TOTAL -----+ Good 4 --------------------------------------------------+ + Department Date. Acceptable 3 --------------------------------------------------+ Fair 2 ----------------------------------------Poor 1 -----------------------------------------

TOTAL SCORE

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Rating scales offer the advantages of adaptability, relatively easy use and low cost. Nearly every type of job can be evaluated in a short time, and the rater does not need any training to use the scale. The disadvantages of this method are several. The raters biases are likely to influence evaluation, and the biases are particularly pronounced on subjective criteria such as co-operation, attitude and initiative. Furthermore, numerical scoring gives an illusion of precision that is really unfounded. Checklist: Under this method a checklist of statements on the traits of the employee and his or her job is prepared in 2 columns viz., a Yes column and a No column. All that the rater (immediate superior) should is tick the Yes column if the answer to the statement is positive and in column No if the answer is negative. A typical checklist is given in the table below. After ticking off against each item, the rater forwards the list to the HR department. The HR department assigns certain points to each Yes ticked. Depending upon the number of Yes the total score is arrived at. When points are allotted to the checklist, the technique becomes a weighted checklist. The advantages of as checklist are economy, ease of administration, limited training of rater, and standardization. The disadvantages include susceptibility to raters biases (especially the halo effect), use of personality criteria instead of performance criteria, misinterpretation of checklist items, and the use of improper weights by the HR department. Another disadvantage of this approach is that it does not allow the rater to give up relative ratings.

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Table: - Checklist for Operators SR. NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. QUESTIONS YES NO -

Is the employee really interested in the job? Does he or she possess adequate knowledge about the job Is his or her attendance satisfactory? Does he/she maintain his/her equipment in good condition? Does he/she co-operate with co-workers? Does he/she keep his/her temper? Does he/she obey orders? Does he/she observe safety precautions? Does he/she complete what he/she commences? Does he/she evade responsibility? -

Forced Choice Method: In this, the rater is given a series of statements about an employee. These statements are arranged in blocks of 2 or more, and the rater indicates which statement is most or least descriptive of the employee. Typical statements are : 1. Learns fast _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ works hard 2. Work is reliable_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ performance is a good example for 3. Absents often_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ others usually tardy. As in the checklist method, the rater is simply expected to select the statements that describe the rate. Actual assessment is done by the HR Department. This approach is known as the forced choice method because the rater is forced to select statements, which are readymade. The advantage of this method is the absence of personal bias in rating. The disadvantage is that the

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statements may not be properly framed they may not be precisely descriptive of the ratees traits. Forced Distribution Method: One of the errors in rating is leniency clustering a large number of employees around a high point on a rating scale. The forced distribution method seeks to overcome the problem by compelling the rater to distribute the ratees on all points on the rating scale. The method operates under an assumption that the employee performance level conforms to a normal statistical distribution. Generally, it is assumed that employee performance levels conform to a bell shaped curve. For example, the following distribution might be assumed to exist excellent 10 %, good 20 %, average 40 %, below average 20 %, and unsatisfactory 10 %. The major weakness of the forced distribution method lies in the assumption that the employee performance levels always conform to a normal distribution. In organizations that have done a good job of selecting and retaining only the good performers, the use of forced distribution approach would be unrealistic, as well as possibly destructive to the employee morale. The error of central tendency may also occur, as the rater resists from placing an employee in the lowest or in the highest group. Difficulties also arise for the rater to explain to the rate why he or she has been placed in a particular group. One merit of this approach is that it seeks to eliminate the error of leniency. However, the forced choice method is not acceptable to raters and ratees, especially, in small groups or when group members are of high ability.

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Critical Incidents Method: The critical incidents method of employee assessment has generated a lot of interest these days. The approach focuses on certain critical behaviors of an employee that make all the difference between effective and non-effective performance of a job. The supervisors as and when they occur record such incidents. Examples of critical incidents of a plant manager are given in the following table:

Examples of Critical Incidents for an Assistant Plant Manager

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One of the advantages of the critical incidents methods is that the evaluation

CONTINUING DUTIES
Schedule Plant Production

TARGETS
for Full Utilization of personnel and machinery in the plant, order delivered on time

CRITICAL INCIDENTS

Instituted new production scheduling system; decreased late orders by 10% last month; increased machine utilization in plant by20% last month Supervise procurement of Minimize inventory Let inventory storage raw materials and inventory costs while keeping costs rise 15% last control adequate supplies on month; hand Over Ordered parts A and B by 20%; Under Ordered part C by30% Supervise machinery No shutdowns due Instituted new maintenance to faulty machinery preventive maintenance system for plant; Prevented a machine breakdown by discovering faulty part. is based on actual job behavior. Further, the approach has descriptions in support of particular ratings of an employee. Giving job-related feedback to the ratee is also easy. It also reduces the personal biases, if raters record incidents throughout the rating period. Finally, this approach can increase the chances that the subordinates will improve because they learn more precisely what is expected of them. The method however has significant limitations. These include: 1. Negative incidents are generally more noticeable that positive ones.

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2. The recording of incidents is a chore to the supervisor and may be put off an easily forgotten. 3. Overly close supervision may result. 4. Managers may unload a series of complaints about incidents during an annual performance review session. The feedback may be too much at one time and thus appearing as a punishment to the rate. More appropriately, the management should use incidents of poor performance as opportunities for immediate training and counseling. Behaviorally Anchored Rating Scales: Behaviorally Anchored Scales, sometimes called behavioral expectation scales, are rating scales whose scale points are determined by statements of effective and ineffective behaviors. They are said to be behaviorally anchored in that the scales represent a range of descriptive statements of behavior varying from the least to the most effective. A rater must indicate which behavior on each scale best describes an employees performance. Behaviorally anchored rating scales (BARS) have the following features: 1. Areas of performance to be evaluated are identified and defined by people who will use the scales. 2. The scales are anchored by descriptions of actual job behavior that, supervisors agree, represent specific levels of performance. The result is a set of rating scales in which both dimensions and anchors are precisely defined. 3. All dimensions of performance to be evaluated are based on observable behaviors and are relevant to the job being evaluated since BARS are tailor-made for the job.

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4. Since the raters who will actually use the scales are actively involved in the development process. They are more likely to be committed to the final product. BARS were developed to provide results which subordinates could use to improve performance. Superiors would feel comfortable to give feedback to the rates. Further, BARS help overcome rating errors. Unfortunately, this method too suffers from distortion inherent in most rating techniques.

Field Review Method This is an appraisal by someone outside the, assessors own department. Usually someone from the corporate office or the HR department. The outsider reviews Employee records and holds interviews with the ratee and his or her superior. This method is primarily used for making promotional decision at the managerial level. Field reviews are also useful when comparable information is needed from employees in different units or locations. Two disadvantage of this method are:1. An "outsider" is usually not familiar with conditions in an employees work environment which may affect the employee's ability or motivation to perform. 2. An 'outsider' review dose not have the opportunity to observe employee behavior of performance over a period of time and in a variety of situations.

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But only in an artificially structured interview situation which extends over a very short period of time.

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Extremely good 7 performance Good performance Slightly good performance

By knowing the price of items. This checker would be expected to look for mismarked and unmarked items. You can expect this checker to be aware of items that constantly fluctuate in price. When in doubt. This checker would ask the other clerk if the item is taxable. This checker can be expected to verify with another checker a discrepancy between the shelf and the marked price before ringing up that Item. When operating the quick check. If the lights are flashing this checker can be expected to check out a customer with 15 items. You could expect this checker to ask the customer the price of an Item that he or she does not know. In the daily course of personal relationships, he or she may be expected to linger in long conversations with a customer or with another checker. In order to take a break. this checker can be expected to block off the check stand while people wait in line.

6 5

Neither poor nor good performance Slightly poor performance Poor performance

Extremely poor performance

A BARS Scale for the Knowledge and Judgement Dimension of a Grocery Checker's Job. Raters, making field reviews normally receive training on how to conduct the interview and develop their writing skills. Being independent of the work scene they normally have less bias for or against the ratee than docs the immediate supervisor. Even when a supervisor or others concerned supply

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biased information the rater may he able to pinpoint areas requiring training and development assistance. Performance Tests and Observations With limited number of jobs, employee assessment may be based upon a test of knowledge or skills. The test may he of the paper-and-pencil variety or an actual demonstration of skills. The test must he reliable and validated to be useful. Even then, performance tests are apt to measure potential more than actual performance. In order for the test to be job related, observations should he made under circumstances likely to be encountered. Practicality may suffer if costs of test development or administration arc high. Confidential Records Confidential records arc maintained mostly in government Departments. though its application in the industry .not ruled out. ITI. for example. had followed this method for a long time. Called the Annual Confidential Report (ACR). the approach had 14 items-(i) attendance. (ii) self-expression (written or oral). (iii) ability to work with others. (iv) leadership. (v) initiative. (vi) technical ability (job knowledge). (vii) ability to understand new material. (viii) ability to reason, (ix) originality and resourcefulness. (x) areas of work that suits the person best. (xi) judgement. (xii) integrity. (xiii) responsibility and. (xiv) and defect-indebtedness. Memo served. etc. Twelve of these were filled on a four-point grade scale (Excellent. Good. Fair and Poor). For integrity. there were special instructions from the management. Justification was required for outstanding or poor rating. Over:!!! rating on a five-point scale was separately given (Outstanding. Very good. Good.

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Average, Poor). again with justification for rating as outstanding or poor. Recommendations for promotion were also given. The ACR contained recommendations and signature of the rater. the head of the department and the CMD. The system was highly secretive and confidential Feedback to the assessee was given only in case of an adverse entry. The AC'R was highly subjective. Ratings were easily manipulated because the evaluation was linked to promotion. Even ITI has discontinued ACR system for these reasons.

Essay Method In the essay method the rater must describe the employee within a number of broad categories such as (i) the rater's overall impression of the employee's performance. (ii), the promo ability of the employee (iii) the jobs that the employee is now able or qualified to perform (.iv) the strengths and weaknesses of the employee. and (v)the training and the development assistance required by the employee. Although this method may be used independently, it is most frequently found in combination with others. It is extremely useful in filing information gaps about the employees that often occur in the better structured checklist method. The strength of the essay method depends on the writing skills and analytical ability of the rater. However many raters do not have good writing skills. They become confused about what to say. How much they should state and the depth of the narrative The essay method can consume much time because the rater must collect the information necessary to develop the essay and then he or
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she must write it The essay method also depends on the memory power of the rater. A problem with this method is that the rate may be rated on the quality of the appraisals that they give. The quality standard for the appraisal may be unduly influenced by appearance rather than content. Thus. a 'high quality' appraisal may provide little useful information about the performance of the rate. Cost Accounting Method This method evaluates performance from the monetary returns the employee yields to his or her organisation. A relationship is established between the cost included in keeping the employee and the benefit the organization derives from him or her. Performance of the employee is then evaluated based on the established relationship between the cost and the benefit.

Comparative Evaluation Approaches These are a collection of different methods that compare one worker's performance with that of his/her co-workers. Comparative appraisals are usually conducted by supervisors. As these appraisals can result in a ranking from best to worst, they are useful in deciding merit-pay increases, promotions and organisational rewards. The usual comparative forms used in this kind of evaluation are the ranking method and the paired comparison method.

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Ranking Method In this, the superior ranks his or her subordinates in the order of their merit, starting from the best to the worst. All that the HR department knows is that A is better than B. The, 'how' and 'why' are not questioned, nor answered. No attempt, is made to fractionalise what is being appraised into component elements. This method is subject to the halo and recency effects, although rankings by two or more raters can be averaged to help reduce biases. Its advantages include ease of administration and explanation. Paired-comparison Method Under this method the appraiser compares each employee with every other employee one at a time. For example there are five employees named A, B. C. D and E. The performance of A is first compared with the performance of B and a decision is made about whose performance is better. Then A is compared with C. D and E in that order. The same procedure is repeated for other employees. The number of comparisons may be calculated with the help of a formula which reads thus: N(N-1)/ 2 where N stands for the number of employees to be compared. If there are 10 employees, the number of comparisons will be 10(10-1)/2 = 45. After the completion of comparison, the results can be tabulated and a rank is created from the number of times each person is considered to be superior.

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Future-oriented Appraisals Is it not enough if only the past performance is assessed . How an employee can perform in the days to come is equally important. This can be assessed by focusing on employee potential or setting future performance goals. The commonly used future-oriented techniques are MBO, psychological appraisals, and assessment centres.

MANAGEMENT BY OBJECTIVES EVOLVING CONCEPTS IN MBO MBO known as management by objectives is a familiar field in the managing field. No one person can be called the originator of an approach that emphasizes objectives. Common sense has told people for many centuries that groups and individuals expect to accomplish some end results. However, certain individuals have long placed emphasis on management by objectives and, by doing so, needed its development as a systematic process. One of these is Peter F. Drucker. In 1954 he acted as a catalyst by emphasizing that objectives must be set in all areas where performance affects the health of the enterprise. He laid down a philosophy that emphasizes self-control and self-direction. About the same-time, if not earlier, the General Electric Company was using elements of MBO in its reorganization efforts to decentralize managerial decision making. The company implemented this philosophy of appraisal by identifying key result areas and undertaking considerable research on the measurement of performance.
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Emphasis on Performance Appraisal In 1957, in his classic article in the Harvard Business Review Douglas McGregor, a major contributor to the behavioral sciences criticized traditional appraisal programs that focused on personality trait criteria for evaluating subordinates. In the traditional approach, managers are required to pass judgment on the personal worth of subordinates. Consequently, McGregor suggested new approach to appraisal based on Druckers concept of management by objectives. Specially, subordinates assume the responsibility of setting short-term objectives for themselves, and then they review those objectives with their superior. Of course, the superior has veto power over those objectives, but in the appropriate environment it will hardly need to be used. Performance is then evaluated against the present objectives, primarily by subordinates themselves. In this new approach, which encourages selfappraisal and self-development, the emphasis is where it ought to be: on performance rather than on personality. The active involvement of subordinates in the appraisal process leads to commitment and creates an environment for motivation. Emphasis on Short-Term Objectives and Motivation Researchers, consultants, and practitioners have long recognized the importance of individual goal setting. Early studies at the University of Maryland found that performance was higher when people had specific objectives than when they were simply asked to do their best. Although goal setting is not the only factor I motivating employees, it is an important one

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(other factors are incentives, participation, and autonomy). Certainly the importance of goal setting as a motivational technique is not restricted to business but is also useful in public organizations. The general vagueness of objectives in many public organizations is a challenge for managers, but there is evidence that this challenge can be met. Inclusion of Long-Range Planning in the MBO Process In MBO programs that emphasize performance appraisal and motivation, the focus tends to be on short-term objectives. This orientation, unfortunately, may result in undesirable managerial behavior. For example, a production manager, in an effort to reduce maintenance costs, may neglect the necessary expenses for keeping the machines in good working order. The breakdown of machinery may not be evident at first, but it can result in costly repairs much later. In an effort to show a good return on investment in a given year, the nurturing of good customer relations may be neglected. Similarly, a manager may not invest in new products that would take several years before contributing to profit. Recognizing these shortcomings, many organizations now include long-range and strategic planning in MBO programs EXPECTANCY THEORY Expectancy theory argues that the strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual. In more practical terms, expectancy theory says that an employee will be motivated to exert a high-level of effort.

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This theory is now one of the most widely accepted explanation of motivation from Victor Vroom. Although it has its critics, most of the evidence is supportive of the theory. When an employee is motivated to exert a high level of effort, he or she believes that effort will lead to a good performance appraisal. A good appraisal will lead to organizational rewards such as a bonus, a salary increase, or a promotion; and that the rewards will satisfy the employees personal goals. The theory, therefore, focuses on three relationships. 1.Effort-performance relationship: he probability perceived by the individual that exerting a given amount of effort will lead to performance. 2.Performance-reward relationship:

The degree to which the individual believes, that performing at a particular level he or she will attain the desired outcome or expectations of his employer. 3.Rewards-personal goals relationship:

The degree to which organizational rewards satisfy individual personal goals or needs and the attractiveness is of those potential rewards for the individual. Expectancy theory helps explain why a lot of workers arent motivated on their jobs and do only the minimum necessary to get by. This is evident when we look at the theorys three relationships in a little more detail. We

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present them as questions employees need to answer in the affirmative if their motivation is to be maximized. First, a lot of employees think their maximum effort will not be recognized in their performance appraisal. The reasons are their skill level may be deficient, which means that no matter how hard they try, they are not likely to be a performer. The organizations performance appraisal system may be designed to assess nonperformance factors such as loyalty, initiative, or courage, which means more effort will not necessarily result in a higher evaluation. Another possibility is that the employee, rightly or wrongly, perceives that her boss does not like her and as a result, he or she expects to get a poor appraisal regardless of her level of effort. These examples suggest that one possible source of low employee motivation is the belief by the employee that no matter how hard he or she works, the likelihood of getting a good performance appraisal is low. Second, if I get a good performance appraisal, will it lead to organizational rewards? Many employees see the performance-reward relationship in their job as weak. The reason is that organizations reward a lot of things other than just performance. When pay is allocated to employees based on factors such as seniority, being cooperative, or for kissing up to the boss, employees are likely to see the performances reward relationship as weak and not motivating. Finally, the employee thinks even if he / she is rewarded the rewards may not be personally attractive. The employee works hard in hope of getting a

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promotion but gets a pay raise instead. Or the employee wants a more interesting and challenging job but receives only a few words of praise. Or the employee puts in extra effort to be relocated to the companys London office but instead is transferred to Bangkok. These examples illustrate the importance of the rewards being tailored to individual employee needs. Many managers have limitation in the rewards they can distribute, which makes it difficult to individualize rewards. Moreover, some managers incorrectly assume that all employees want the same thing thus overlooking the motivational effects of differentiating rewards. In either case, employee motivation is undermined.

Four Steps in the MBO Process How MBO works can be described in four steps: The first step is to establish the goals each subordinate is to attain. In some organisations, superiors and subordinates work together to establish goals. In others. Superiors establish goals for subordinates. The goals typically refer to the desired outcome to be achieved. These goals can then be used to evaluate employee performance. The second step involves setting the performance standard for the subordinates in a previously arranged time period. As subordinates perform, they know fairly well what there is to do, what has been done, and what remains to be done.

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In the third step, the actual level of goal attainment is compared with the goals agreed upon. The evaluator explores reasons for the goals that were not met and for the goals that were exceeded. This step helps determine possible training needs. It also alerts the superior to conditions in the organization that may affect a subordinate but over which the subordinate has no control. The final step involves establishing new goals and, possibly new strategies for goals not previously attained. At this point, subordinate and superior involvement in goal-setting may change. Subordinates who successfully reach the established goals may be allowed to participate more in the goal setting process the next time. The process is repeated. As with other approaches. MBO too has been criticised. One comment made against the approach is that it is not applicable to all jobs in all organisations. Jobs with little or no flexibility. Such as assembly-line work, are not compatible with MBO. An assembly-line worker usually has so little job flexibility that the performance standards and objectives are already determined. The MBO process seems to be most useful with managerial personnel 'and employees who have a fairly wide range of flexibility and self-control in their jobs. Besides, when the result of an MBO system are to be used to allocate organisational rewards, employees may be less likely to establish challenging goals-goals they are confident that they can accomplish. Further, the allocation of merit pay on a semi-annual or annual basis may encourage the setting up of goals with short time horizons to the disadvantage of important long-term goals. The performance appraisal presently followed in L&T reflects the principles of MBO.

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Psychological Appraisals Large organization employs full-time industrial psychologists. When psychologists are used for evaluations. They assess an individuals future potential and past performance. The appraisal normally consists of in-depth interviews, psycho1ogical tests. Discussions with supervisors and a review' of other evaluations. The psychologist then write an evaluation of the employee's intellectual, emotional, motivational and other-related characteristics that suggest individual potential and may predict future performance. The evaluation by the psychologist may be for a specific job opening for which the person is being considered. Or it may be a global assessment of his or her future potential. From these evaluations. Placement and development decisions may be made to shape the person's career. Because this approach is slow and costly, it is usually required for bright young members who, others think. May have considerable potential within the organisation. Since the quality of the appraisal depends largely on the skills of the psychologists, some employees object to this type of evaluation, especially if cross-cultural differences exist.

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LARSEN AND TOUBRO, HUMAN RESOURCE DEVELOPMENT PERFORMANCE APPRAISAL SYSTEM

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A2]

SELF REVIEW (by employee)

SIGNIFICANT CONTRIBUTORS (JOBS OR PROFESSION RELATED NOT COVERED ABOVE) IMPORTANT FACTORS FACILITATING PERFORMANCE IMPORTANT FACTORS HINDERING PERFORMANCE CONFIDENTIA NAME EMS. PS. NO CADRE GROUP L PA FORM:28

DEPT.

OUTSTANDING

V. GOOD

GOOD

ADEQUATE

C2] 1.

CRITICAL ATTRIBUTES NAME INNOVATIVENESS EMPLOYEE

DATE

SIGNATURE

2.

3.

Ability to think new and better ways of doing things that results in introduction of ideas or IMMEDIATE SUPERVISOR new improvements of the systems and operations. NEXT SUPERIOR 1. 2. INITIATIVE Ability to determine and initiate actions that result PERSONNEL/ HRD DEPT. in improve handling of jobs, without waiting to be A]PERFORMANCE REVIEW AGAINST B1] BY IMMEDIATE SUPERIOR told. OBJECTIVES INADEQUATE OUTSTANDIN G INTERPERSONAL & Ability to interact TEAM effectively with people at A1] BY EMPLOYEE RELATIONSHIP all levels to gain their confidence and respect and AGREED RESULTS work in a collaborative and OBJECTIVES AND ACHIEVED participative manner. TARGETS RESOURCEFULNESS 1. 2. 3. V. GOOD GOOD ADEQUATE

4.

Ability to muster resources to achieve desired results and device ways and means of solving problems in difficult situations. 5. Ability to convey thoughts COMMUNICATION and feelings clearly both SKILLS through oral as well as written expressions for better understanding. C2] AREAS OF STRENGTH AND IMPROVEMENTS (by immediate superior)

C3] Potential Areas Of Growth (By Immediate Superior) 86

INADEQUATE

EXECUTIVES & B2] PERFORMANCE AGAINST OBJECTIVES(BY IMMEDIATE SUPERIOR) SUPERVISORS LARSEN &TOUBRO LIMITED OUTSTANDING V. GOOD GOOD ADEQUATE INADEQUATE HUMAN RESOURCE DEVELOPMENT-PERFORMANCE APPRAISAL SYSTEM PERFORMANCE ANALYSIS AND REVIEW C1] Appraisal of Critical Attributes(by immediate superior) APRIL 1993 TO MARCH 1994

ASSESSMENT CENTRES Mainly used for executive hiring, assessment centre are now "being used for evaluating executive or supervisory potential. An assessment centre is a central location where managers may come together to have their participation in job-related exercise evaluated by trained observers. The principal idea is to evaluate managers over a period of time say one to three days, by observing (and later evaluating) their behaviour across a series of select exercises or work samples. Assesses are requested to participate in inbasket exercises, work groups (without leaders), computer simulations, role paying, and other similar activities which require the same attributes for successful performance, as in the actual job. After recording their observations of ratee behaviors, the raters meet to discuss these observations. The decision regarding the performance of each assessee is based upon this discussion of observations. Self-appraisal and peer evaluation are also thrown In for final rating. The characteristics assessed in a typical assessment centre include assertiveness, persuasive ability, communicating ability, planning and organisational ability, self confidence, resistance to stress, energy level, decision making, sensitivity to the feelings of others, administrative ability, creativity and mental alertness. It is a formidable list which is quite difficult to measure accurately over three days, though there would be sizable number of trained observers and psychologists. First developed in the US and the UK in 1943, the assessment centre is gaining popularity in our country, Crompton greaves, Facher, HLL and Modi Xerox are using the technique with results being highly positive.

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Assessment Centre - Many Takers Ranbaxy retained the services of a team of psychologists

from the UK-based Kelly& King to take the executives (of Ranbaxy) through an assessment center. 20 star manager went through the exercise. Santrupt Misra, Director- Birla Management Corporation

had plans for a similar exercise to be held at Gyanodaya, the Aditya Birla learning centre. Misra first used the assessment centre concept four years ago on 150 middle and senior level managers. Old timers like Tata have created their own assessment

centers, and so have the talent centric companies' like Wipro and Cognizant. SHL, a HR consulting firm has worked with over 100

companies conducting dose to 1,000 assessment centers. Consulting firm ECS (formerly known as Eicher Consulting

Services) does a number of assessments in a month for a variety of clients like Tata Steel, ING Vysya and the host of BPO outfits. ICICI Bank uses assessment centre as a recruitment and

selection tool to find the best talent, while GE India subsidiary GECIS has used it on 20% of it5 middle managers.

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The problem with the assessment centres is their cost Not only are the asses sees away from their jobs while the company pays for their travel and lodging, but the evaluators are often company managers who are assigned to the assessment centre for short durations. These managers are often supplemented by psychologists and HR specialists who run the centre and also make evaluations. Hence this approach is cost - effective only in large organisations. Assessment-centre staff is often influenced by subjective element; such as personality of the candidates: Raters tend to evaluate the quality of the individual's social skills rather than the quality of the decisions he/she makes. Assessment -centre ratings seem to be strongly influenced by the participant's interpersonal skills. The approach also involves real hazards. One of the most obvious is the examination-taking syndrome. Solid performers in day-to-day operations feel suffocated in the simulated environment. Another drawback is its potential adverse effect on those not selected to participate in the exercise. Employees who receive a poor report from the centre may react in negative ways. Ideally, a rejected employee would return to his or her former job, satisfied that he or she would not be promoted to a job he or she could not handle. However, a good performer at one level may leave the organisation in order to remove the bad assessment report from his or her work record. Thus, a poor report can demoralize an employee who was once an asset. Other problems include-strong and unhealthy sense of competition among assesses; Difficulty of conducting the test frequently; and the possibility of overemphasizing the test performance.
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But a well-conducted assessment centre can and does achieve better forecasts of future performance and progress than other methods of appraisal. Also, reliability, content validity, and predictive validity are said to be high in the assessment centres. The test also makes sure that the wrong people are not hired or promoted. Finally, the Assessment centre test clearly defines the criteria for selection and promotion.

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360-DEGREE FEEDBACK As stated earlier, where multiple raters are involved in evaluating performance, the technique is called 360 degree appraisal. The 360 degree technique is understood as systematic collection of performance data on an individual or group, derived from a number of stakeholders--the stakeholders being the immediate supervisors. team members, customers, peers, and self. In fact, anyone who has useful information on how an employee does the job may be one of the appraisers. The 360-degree appraisal provides a broader perspective about an employee's performance. In addition, the technique facilitates greater selfdevelopment of the employees. For one's development, multi-source feedback is highly useful. It enables an employee to compare his or her perceptions about self with perceptions of others. Besides, the 360-dcgree appraisal provides formalized communication links between an employee and his or her customers. It makes the employee feel much more accountable to his or her internal or external customers. The technique is particularly helpful in assessing soft skills possessed by employees. By design, the 360degree appraisal is effective in identifying and measuring interpersonal skill, customer satisfaction, and team-building skills. However, there are drawbacks associated with the 360-degree feedback. Receiving feedback on performance from multiple sources can be intimidating. It is essential that the organisation create a non - threatening
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environment by emphasizing the positive impact of the technique on an employee's performance and development. Further, firms that use the technique take a long time on selecting the rater, designing questionnaires, and analyzing the data. In addition; multiple raters are less adept at providing a balanced and objective feedback than the supervisors who are sought to be replaced. Raters can have enormous problems separating honest observations from personal differences and biases. Pitfalls notwithstanding, more and more number of firms are using the 36Odegree appraisal technique to assess the performance of their employees. Most of the younger Group Organisations and Software Industries have started implementing 360 Degree Appraisals. 360 Degree Means that all round. The employee concerned at the central Point and he is appraised by all the officials who are all connected with him on the job. I am afraid in most of the organizations, this new concept is being followed very religiously and systematically. May be the acceptance level or maturity level is not as aimed. What I want you if you want to implement, then try at the senior level first. If it is successful at their levels, then try to percolate downwards. Higher the Maturity level higher the acceptance level is. OBJECTIVE: To evaluate an employee by all the officials whoever connected with him on the job for his Attitude as well as Job Performance. And to study the following: 1) 2) 3) 4) To have an evaluation system very effectively. To nullify biased approach To view a person at different angles and utilize the same for gowth. To have a consistent behavioural approach and job performance
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5) To improve the quality in performance

TRAITS: Before designing a 360 Degree Appraisals, decide what are the Attitudinal Traits and Job performance characteristics are required at each level when the person is evaluated. For example, an Engineer is evaluated by his Manager, Workmen, lateral Level of functional officials, customers or vendors and so on and so forth. MANAGEMENT OR APPROVAL AUTHORITY EXPECT: 1. Value Addition 2. Scope for Development 3. Result-oriented

Manager expects from his Engineer the following: 1. Organisation Culture practices 2. Value Addition by control of Man, Material, Time, Training 3. Continuous Improvement on Work Methods, Data Control, Safety, etc. 4. Effectiveness of Communication on work execution, MIS system, etc. 5. Leadership Skills like Personality, Attendance & Punctuality, Team Work, etc. 6. Time Planning 7. Stress Control 8. Scope for Development 9. Learning Skills 10.Training Needs Lateral Level Departments expect: 1) Co-ordination
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2) 3) 4) 5) 6)

Communication Team Work Sharing Knowledge Flexible Approach (You add as per Your Job Details)

DOWN-LINE Personnel expect: 1. 2. 3. 4. 5. 6. 7. 8. Personal Cleanliness & Personality Attendance & Punctuality Team Work Communication Training Concern for their developments Sharing Knowledge and Skill Listening Skills

CUSTOMER OR VENDOR LEVEL EXPECT: (Wherever applicable) 1. 2. 3. 4. 5. Corporate Culture Effective Communication thro information and product knowledge Flexible Approach Follow-up Attitude Listening Skills

SELF LEVEL EXPECT: 1. 2. 3. 4. 5. 6. 7. 8. Knowledge Job Satisfaction Training Needs Problems that were prevented him to perform Positive Points that contributed in his Job Performance Suggestions for Improvement Suggestions for Welfare Intra and Inter-personal relationships (All three levels viz. upward, horizontal & down level) 9. Needs if any of infra-structure facilities 10.Suggestions for Organisation Growth overall

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I have given you some examples only. If you design your organization 360 Pas, you decide properly the Job Details, Attitude Details and Levels by whom the concerned is to be evaluated. FREQUENCY: May be Annual/Half-yearly/Quarterly/Project-wise/Target-wise FORMAT DESIGN: It can be a single format starting from Down Level as follows: Level 1. By Sub-ordinates Level 2. - By Co-ordinating Departments/Officials while executing a job Level 3. - By Vendors/Customers (if applicable) Level 4. - Self Appraisal Level 5. By HOD (will refer all levels upto 5) Level 6. - By APPROVING AUTHORITY (will refer comments of all levels) IMPORTANT INSTRUCTIONS: 1. If you design a one single format, arrange the comments in such a way i.e. starting from down level to top-level. 2. Separate the forms of Customers/Vendors and Self Appraisal. 3. It is better to have separate Format at each level to avoid influences. 4. All comments are kept as confidential. RATINGS: Rating should always be NUMERICAL only. In such a way, you design the Behaviour/Job Performance Descriptions. For example: Job Performance:
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Rejections (as per allowed terms) Nil - 100% - Excellent Rating is 5 If achievement is 90%-100% - Very Good Rating can be 5 4 80% to 90%, Good Rating can be 4 3.5 and so on Customer Complaint: If it is Nil Rating is 5 And so on Planning: Successful execution as per Planning Rating is 5 and It gets reduced as per ratings of the Execution. ATTITUDES; HR Manager must know the skill of giving ratings to Attitudes also. For this first define the Job and Man who is executing. You give expected level as Rating 5 and so on the Performance or Achieved Level. The difference will give you the TNI (Training Need Identification). SUCCESS OF IMPLEMENTATION OF 360 DEGREE APPRAISALS DEPEND ON THE EFFECTIVENESS OF ROLE OF HR MANAGERS. It is not an easy task to implement and maintain 360 Degree Appraisals. For this you have to Train all your personnel whoever involved in executing the 360 Degree Appraisals. In the initial stage, you take the help of out-side Consultants help and expertise. COMPETENCY MAPPING: It is not nothing but another form Job Description Manual. If you enrich the job description details, then you will get Job Enrichment Manual. If you implement it property and evaluate and map the competency of a person with expected level of Attitudes and Job Performance parameters. Different Functions have different job details and different levels of Attitude expectations.

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For Corporate Culture Practices, weightage is more at higher level. Attendance and Punctuality weightage is more in down-level. Weightage of Housekeeping is more in Production and Engg. Departments than EDP and Personnel Departments. Safety Awareness is more in Technical Departments than non-technical Departments. Sharing of Communication, the weightage is more in middle level than the lower level. Stress Level more in Project-oriented and target-fixed Personnel than the Service Departments such as Accounts, HRD, etc. FIRST YOU TRY TO DRAW COMPETENCY MODEL FOR DEPARTMENTS/SECTIONS AND THEN TO THE DEALING PERSONNELS GROUP-WISE AS WELL AS INDIVIDUAL-WISE. Competency Models can be drawn in Graph and Charts. This you keep as a Model for your future Man-power Planning and Recruitment. Competency data are available from the Job Performance of Star Performers of the Organisation. Take their data available from their job and Attitude and Plot it. This a Competency Model for you or Bench-Mark or Standard. Again success of implementing Competency Mapping depend upon the EFFECTIVENESS AND INNOVATIVE SKILLS OF HR MANAGERS.

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APPRAISE THE PERFORMANCE The next step in the appraisal process is to measure the performance. We revert to the moral of the story narrated in the beginning of this chapter. The moral taught us that we need to measure the performance and not mere activities. What then is performance? Performance is essentially what an employee does or does not do. Employee performance common to most jobs include the following elements: Quantity of output Quality of output Timeliness of output Presence at work Cooperativeness In addition to these, other elements that deserve assessment are job knowledge, leadership abilities, judgement, supervision, versatility and health. Assessment should also include one's potential to perform and not just actual performance. Performance measurement needs to be based on the benchmarks listed above. These benchmarks vary from job to job. The job of a professor needs to be assessed against parameters that are different to those used to evaluate the performance of a sales representative.

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PERFORMANCE INTERVIEW Performance interview is another step in the appraisal process. Once appraisal has been made of employees, the raters should discuss and review the performance with the ratees, so that they will receive feedback about where they stand in the eyes of superior. Feedback is necessary to effect improvement in performance, especially when it is inadequate. Specifically, performance interview has three goals: (i) to change behaviour of employees whose performance does not meet organisational requirements or their own personal goals. (ii) To maintain the behaviour of employees who perform in an acceptable manner and (iii) to recognize superior performance behaviours so that they will be continued. Raters offer feedback to the ratees through several methods-tell and sell, tell and listen, problem solving and mixed. In tell and sell, also called directive interview, the interviewer let assesses know how well they are doing and sells them on the merits of setting specific goals for improvement, if needed. The tell and listen interview provides the subordinates with chances to participate and establish a dialogue with their superiors. Its purpose is to communicate the rater's perceptions about the ratee's strength and weaknesses and let the subordinates respond to these perceptions. In the problem -solving or participative interview, an active and open dialogue is established between the superior and the subordinate. Not only are perceptions shared, but also solutions to problems are presented, discussed, and sought. Mixed interview is a combination of tell and sell and problem solving interviews.
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Whatever be the approach followed, the emphasis in the interview should be on counseling and development and not on criticism, witch-hunting and buck passing. Because of the significance of appraisal interview, every effort must be made to make it effective. Guidelines given in Table below will help make the interview successful.

GUIDELINES FOR EFFECTIVE APPRAISAL INTERVIEW Select a good time Minimize interruptions Welcome, set at ease Start with something positive Ask open ended questions to encourage discussion Listen Manage eye contact and body language Be specific Rate behaviour, not personality Layout development plan Encourage subordinate participation Complete form Set mutually agreeable goals for improvement End in a positive, encouraging note Set time for any follow up meetings

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USE OF APPRAISAL DATA The final step in the evaluation process is the use of evaluation data. The data and information generated through performance evaluation must be used by the HR department. It may be recollected that the most significant rewards employers offer to employees are: 1. Money to purchase goods and services required not only for current and future survival, but also for the luxuries modern life has to offer. 2. The opportunity to use innate and learned skills and talents in a productive manner that the individual and his or her managers and co-workers recognize as valuable. 3. Opportunities to interact with other people in a favorable working environment. 4. Opportunities to learn, grow, and make full use of their potential. 5. A sense of performance and stability through the continuing existence of the organisation and the job. 6. The opportunity to perform work assignments within an environment that not only protects. But promotes physiological, emotional and psychological health. In one way or another, data and information outputs of a performanceappraisal programme can critically influence these coveted employeremployee reward opportunities. Specifically, the data and information will be useful in the following areas of HRM:
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I. Remuneration administration 2. Validation of selection programmes 3. Employee training and development programmes 4. Promotion, transfer and lay-off decisions 5. Grievance and discipline programmes 6. HR planning

EDWARD DEMING ON PERFORMANCE APPRAISAL Towards the end of this section, it is worthwhile to note Edward Deming's views on performance evaluation. Deming is opposed to employee assessment, because it: I. Rewards people for manipulating the system rather than improving it, 2. Is often self-defeating, 3. Is inconsistent with team-work, 4. Acts as a substitute for proper management, and 5. Is inherently unfair. His alternatives to performance appraisal are: 1. Meticulous selection of leaders, 2. Educating workers about their obligations, and improved training and education after selection, 3. Getting leaders to function as colleagues rather than as judges, 4. Subordinate performance to be assessed using statistical data, 5. Three to four hours interview annually, with subordinates aimed at support and encouragement, and
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6. Accommodation to lone workers.

CHALLENGES OF PERFORMANCE APPRAISAL The problem with subjective measure is the rating which is not verifiable by others and has the opportunity for bias. The rate biases include: (a) halo effect (b) the error of central tendency, (c) the leniency and strictness biases (d) personal prejudice, and (e) the recent performance effect (a) Halo Effect: It is the tendency of the raters to depend excessively on the rating of one trait or behavioral consideration in rating all others traits or behavioral considerations. One way of minimizing the halo effect is appraising all the employees by one trait before going to rate on the basis of another trait. (b) The error of Central Tendency: Some raters follow play safe policy in rating by rating all the employees around the middle point of the rating scale and they avoid rating the people at both the extremes of the scale. They

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follow play safe policy because of answerability to management or lack of knowledge about the job and person he is rating or least interest in his job. (c) The Leniency and Strictness: The leniency bias crops when some raters have a tendency to be liberal in their rating by assigning higher rates consistently. Such ratings do not serve any purpose. Equally damaging one is assigning consistently low rates. (d) Personal Prejudice: If the rater dislikes any employee or any group, he may rate them at the lower end, which may distort the rating purpose and affect the career of these employees. (e) The Recent performance Effect: The raters generally remember the recent actions, of the employee at the time of rating and rate on the basis of these recent actions favorable or unfavorable than on the whole activities. Other factors that are considered as problems are Failure of the superiors in conducting performance appraisal and post performance appraisal interview. Most part of the appraisal is based on subjectivity. Less reliability and validity of the performance appraisal techniques. Negative ratings affect interpersonal relations and industrial relations system. Influence of external environmental factors and uncontrollable internal factors.

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 Feedback and post appraisal interview may have a setback on production. Management emphasizes on punishment rather than development of an employee in performance appraisal. Some ratings particularly about the potential appraisal are purely based on guess work. The other problems of performance appraisal reported by various studies are: Relationship between appraisal rates and performances after promotions was not significant. Some superiors completed appraisal reports within a few minutes. Absence of inter-rater reliability. The situation was unpleasant in feedback interview. Superiors lack that tact of offering the suggestions constructively to subordinates. Supervisors were often confused due to too many objectives of performance appraisal. With the increased significance of performance appraisal, challenges confronting the system are mounting. One serious challenge facing the performance appraisal system relates to assessment of self-managed teams. Popularly called empowered teams, these self-managed teams create special challenges for performance appraisal-empowered teams perform without supervisors. Historically, if one recalls, it is the supervisor who assesses the

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performance of his or her subordinates. Another challenge is that both, individual and team performance, need to be measured. A suitable device needs to be developed to assess the performance of empowered teams because more and more firms use such teams to enhance productivity. Figure below contains a typical model of team appraisal.

Identify KRAs critical to business during the year

Set tangible targets for each KRA. Incorporate stretch elements for each target. Fix the minimum acceptable target

Determine intangible parameters (like initiative), which indicate pockets of individual excellence with the team

Evaluate performance of the team against predetermined targets

Communicate the results to ensure transparency

Measure the performance of the team (actual versus targets) every month

Identify individuals who have excelled. Discount subjective factors by including assessors from outside the team to identify outstanding individuals.

Figure: Appraising Teams The Following table contains challenges of Performance Appraisal Challenges of Appraisal: Create a culture of excellence that inspires every employee to improve and lend himself or herself to be assessed
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 failing

Align organizational objectives to individual aspirations Clear growth paths for talented individuals Provide new challenges to rejuvenate careers that have Forge a partnership with people for managing their careers Empower employees to make decisions without the fear of Embed teamwork in all operational processes Debureaucratise the organization structure for ease of flow

reached the plateau stage

of information.

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LEGAL

ISSUES

ASSOCIATED

WITH

PERFORMANCE

APPRAISAL Performance appraisal data as stated earlier, are used to make many important HR decisions (e.g. Pay, promotion, training, transfer and termination). The appraisal system is a common target of legal disputes by employees involving charges of unfairness and bias. An employee may seek the legal recourse to obtain relief from a discriminatory performance appraisal. One such case goes back to 1980s. In 1981, three junior employees of Williamsons Magor were promoted superseding 15 of their senior workmen. The basis for promotion was recommendations of the departmental heads and other authorities. The 15 workmen challenged the promotion to the three workmen in the Supreme Court and the court upheld the contention of the petitioners on the ground that he said recommendations of departmental heads and authorities were arbitrary and could not be the main basis for effecting promotions. There are several recommendations 10 assist employees in conducting fair performance appraisal and avoiding legal suits. Gleaned from case laws, these recommendations are intended to be prescriptive measures that employers should take to develop fair and legally defensible performance appraisal systems. 1. Legally Defensible Appraisal Procedures All personnel decisions should be based on a formal Any performance appraisal process should be uniform for all

standardized performance appraisal system. employees within a job group, and decisions based on those
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performance appraisals should he monitored for differences according o race, sex. national origin. Religion or age of the employees. While obtained differences as a function of these variables are not necessarily illegal. an organization will have more difficulty defending an appraisal system with ratings related to these variables. All specific performance standards should be formally All employees should be able to review their appraisal results. There should be a formal appeal process for the rate to rebut All raters should be provided with written instructions and appraisals properly to facilitate communicated to employees.

rater judgments. training on how to conduct systematic, unbiased appraisals. All personnel decision-makers should be well informed of antidiscrimination laws.They should be made aware of the fine distinctions between legal and illegal activities regarding decisions based on appraisals. 2. Legally Defensible Appraisal Content Any performance appraisal content should be based on a job Appraisals based on traits should be avoided. Objectively verifiable performance data (e.g. sales,

analysis.

productivity, not ratings) should be used whenever possible.

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Constraints on an employee's performance that are beyond the

employee's control should be prevented from influencing the appraisal to ensure that the employee has an equal opportunity to achieve any given performance level. Specific job-related performance dimensions should be used The performance dimensions should be assigned weights to rather than global measures or single overall measures. reflect their relative importance in calculating the composite performance score.

3. Legally Defensible Documentation of Appraisal Results A thoroughly written record of evidence leading to decisions should be maintained(e.g. performance

termination

appraisal and performance counseling to advise employees of performance deficit, and to assist poor performers in making needed improvements) Written documentation (e.g. specific behavioural examples) for extreme ratings should he required and they must be consistent with the numerical ratings. Documentation requirements should he consistent among the raters. 4. Legally Defensive Raters system The raters should be trained in how to use an appraisal

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The raters must have the opportunity to observe the ratee Use of more than rater is desirable in order to lessen the

first hand or to review important ratee performance products amount of influence of any one rater and to reduce the effects of biases. Peers, subordinates, customers, and clients are possible sources.

PIRAMYD MEGASTORE - STORY OUTLINE Crossroads at Mumbai created a revolution pioneering the concept of shoppertainment in the country. It was an attempt to give the citizens of Mumbai a truly international shopping experience, a destination where the entire family can enjoy a day together shopping or browsing, eating and playing games in an unmatched ambience. Of the three ingredients, i.e. shopping, dining and entertainment, Shopping was the main ingredient. It had to be world class and had to incorporate
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global standards in terms of retail management, technology and design. Mrs Urvi Piramal, Vice Chair person of Piramal Group, had a strong viewpoint on shopping- True shopping is browsing, enjoying, indulging and making choices. It is an expression of lifestyle and makes an affirmative statement. This was the thought, which translated into Piramyd, India's first Megastore for lifestyle products. Piramyd spreads across 3 levels in the mall and has over 30000 sqft of space in Crossroads. To a typical Mumbai Women, shopping normally meant endless rounds of bargaining, endless trips back and forth from store to store, pushy sales people and scarcely enough space to push their elbow. Piramyd Megastore broke all these conventional hassles of shopping for women. In terms of product offering, Piramyd has everything that a woman would want to buy and more less than one roof. It has the widest range ethnic wear, western wear, lingerie, nightwear, leather accessories, sunglasses, fine jewelry, and saris. The idea is to provide her with a complete basket of shopping. In a single visit she can choose to pick up apparels, go over to the footwear section to pick up complimenting footwear, browse for that matching leather bag, and end up her buying with some matching jewelry. No longer has she had to visit different shops at times in different location. To extend her shopping she can also look out for groceries and foodstuff from the Supermarket which is just a bridge away. Today's working women wants products, which are fashionable and yet affordable. All the products in Piramyd are showcased keeping in mind the price-conscious Indian buyer. Projecting a dynamic image for the youth, Piramyd reflects the latest trend in style and includes new range of clothing on an ongoing basis.

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The store targets the upwardly mobile women of today who lays emphasis on quality. She is particular about grooming standards and spends on keeping herself and her family well groomed. Dressing right is no longer a fashion statement. It is a revelation of her personality and that is lodged deep within her. A woman can express herself with a choice of apparels and accessories from Piramyd that essentially speaks for her. This does not come at a very high price. For a mere Rs 1200 she can choose to pick up a decent Salwar Kurta set, a footwear starting from Rs. 400, a leather bag at Rs 400 etc. However depending on the spending mood, she can indulge in luxury and choose a Linarika designer wear label at even Rs. 4500. To keep her family well groomed too, the Indian woman need not go looking beyond. For the man or the big kid in her life, she can just climb up one floor and buy the exclusive shirt, the gorgeous ethnic suit, the top of the line blazer or just a beautiful tie to match. Not only does Piramyd offer the finest brands available in India, but it also offers a world-class ambience and service, with the widest choice. A woman can browse through the offerings to her hearts content without any pressure of buying through serene ambience in the classy glass and marble interiors designed by International architects. There is enough space for her to rest, take a break while shopping and then continue again. The staff at Piramyd is trained to be unobtrusive. They are there to help one make a choice or simply serve quietly and efficiently. With constant in-depth product raining, the Piramyd Staff offers service to all customers with a positive attitude, pleasant disposition and good communication skills translated into a motto, which reads we believe in service, we do it with pride.

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HR VISION Employee Value Proposition Since inception in 1999 we as an organization have been through various phases of business. We created a mark for ourselves in a the Organized retail sector and now are known as a retailing brand .The single most factor that will act as a catalyst to our growth are the Human Resources To attract and retain the best people, we add value to the life of our employee at every instant. We are constantly designing, refining and implementing HR processes and activities which touch our employees. Our HR Proposition: WONDERFUL PLACE TO BE, AN EXCITING PLACE TO WORK As far as the Human Resource Department of Piramyd Retail Limited is concerned, it consists of highly qualified people who have achieved their

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specialization in this very field. The organization Structure for Human Resource development and Personnel Department is as follows:

Manager - Human Resources

Assistant ManagerHuman Resources Executive - Human Resource Executive - Human Resource Executive - Human Resource Executive - Human Resource

Executive - Human Resource

We, as a group met Mr. Paresh Patel who is one of the executives from the H.R. Department. When asked about the need for the H.R. Department in a firm, he explained that as Piramyd Retail Limited is a company dealing with its customers directly and there is a direct interaction with the customer in the service industry, it needed its employees to speak and interact with the customer in an efficient manner in order to know the requirements and then suggest the merchandises accordingly. In order to that it was necessary for the sales staff to be more effective and hence to achieve this very target they need good people with good inter personal communication skills, good knowledge and
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a sound sense of humor. And this can be done only when an effective H.R. Department is in place. Coming back to the topic, according to him, out of the 6 factors involved in the 360 degree appraisal system, they considered only 3 which are the colleagues, the supervisors and the sub-ordinates. Out of the pre-decided and the pre-defined methods & techniques for performance appraisal; it was identified by our project group that they used a combination of 2 different methods. The 2 methods are The Grading Method & The Graphic Rating Scale Method. Before going ahead lets understand the above 2 methods in brief as to what they are all about:1. The Grading Method: In the grading method, a number of grades or classes are first established and carefully defined. The rater evaluates the performance of an individual employee against these standards and places him in one of these grades. The grades are related to qualities of employees and grades are given to such qualities. The qualities may be like job knowledge, judgement, leadership, co-operative attitude and so on. The grades may be like A (for outstanding), B (for very good), C (for Good), D (for fair) and E (for poor). The rater judges the performance of an employee and puts him under a suitable category. This method is simple and quick but the rating of employees may not be accurate particularly when the rater has to complete the rating of large number of employees within a short period. 2. Graphic rating Scale Method: This is one of the oldest and the most widely used methods of performance appraisal. Here, four to twelve factors are selected, depending upon the
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category to which the employee belongs. Some of these factors are quantity of output, quality of output, initiative, integrity, dependability, etc. these factors and their degrees are marked on a graph paper provided in the appraisal form. The rater has merely to check on the scale where he thinks the employee belongs. The following table gives us an idea about the Graphic Rating Scale Method Quantity Quality of Integrity Initiative

Factors/Considerations of Output Output Excellent Very Good Good Average Below Average

Advantages of Graphic rating Scale Method: (a) It is simple to understand and easy to operate, (b) It is also not a time-consuming method, (c) It is economical and ensures uniformity in the assessment of employees. Comparison among the employees is easy as the details are clearly noted on the paper by the rater. Disadvantages of Graphic rating Scale Method:

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(a) It puts heavy pressure on the rater as he has to consider four to twelve different factors with five degrees for each factor. It is therefore, not possible to guarantee the accuracy of the raters decision. (b) The rater may be biased, (c) The rater has to do a lot of paper work in the graphic rating scale method. He may do marking mechanically, if he has to make appraisal of large number of ratees. (d) Accurate rating may not be done as there is a very thin gap between two considerations (e.g., very good and good). After discussing about what the two different methods mean we now see how Piramyd Retail Limited (PRL) actually implements these 2 methods in their organization. According to Mr. Paresh Patel, it takes nearly 2 months for the H.R. Department complete the whole process of performance and potential appraisal of all the employees right from the Store Manger to the Trainee Sales Associate of the firm. The foremost condition of the performance appraisal of an employee in PRL is that he / she should have completed at least a year in the organization. And also there are no performance appraisals for Part-timers in PRL. The appraisals take place in the months of April - May and the results are announced through a meeting which sees the attendance of the Manager Human Resources as well as the Store Manager of that particular branch store. There are 3 grades designed for the employees of PRL which are
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A OUTSTANDING B AVERAGE / GOOD C ADEQUATE. On the basis of the above 3 grades, all the employees are divided and placed among the above slots. Any positive or negative feedback from an individuals colleague, supervisor or sub-ordinate sees him / her in the respective column. The Organization Structure for Piramyds Operations Department

1 Store Manager

2 Assistant Store Managers

4 Floor Managers

Senior Sales Associates

Junior Sales Associates

Trainee Sales Associates

From the above given grades, only the individuals obtaining the topmost grade i.e. the A grade gets a rise in the post or only those individuals can
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climb the ladder of this organization structure. Although, most number of employees settle in the second grade i.e. the Average grade. However, these employees are only given a nominal increment of Rs. 450/- in their monthly salaries. On the other hand, for the apex achievers apart from the rise in the post in the organization, they are awarded with an increment of Rs.750/- in their monthly salaries. Whereas there is bad news for the employees at the bottom level, by terming them as the Adequate people in the firm. They are not given any sort of incentives or increments for that particular year and also are allowed to leave PRL at their request without any further hesitation. The process of appraisal is as follows: First of all, before the appraisal period, there is a meeting held, which all the employees on the lower or the higher post have to attend and it is mandatory for all. This meeting takes place at least a week before the original appraisal period starts. In this very week all the employees are informed individually about the date of his / her performance appraisal and hence his / her attendance on that very appraisal day becomes compulsory. On a day nearly 4-5 employees are appraised. The employees are asked to be prepared for any sort of situations during the appraisals. As an important step of their career, employees also take it very seriously and do their work seriously before and after appraisals. The appraisals in Piramyd Megastore are conducted by 2 Executives Human Resources, alternatively. These 2 executives are a part of the 3 man committee formed for the purpose of appraisals. The 3 man Committee for the current years appraisal process consisted of : 1. Mr. Bosco Menezes Store Manager, 2. Ms. Amrapali Shahdeo Executive (Human Resources),
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3. Mr. Paresh Patel Executive (Human Resources). The employees are called for the appraisals along with their managers for his / her appraisal. 1. Self Evaluation: This is the first step in the appraisal process at PRL, where an employee has to rate himself from 1 6, where 1 is the lowest point, whereas 6 is the highest grade. The employee is actually given a questionnaire which contains approx. 30 questions. On these questions the employee has to award the points to himself. The questions in the questionnaire are based on the following important aspects of his Job Responsibility in Piramyd Retail Limited. Each aspect under this job responsibility is given a different weightage. The chart showing the different aspects of the Job Responsibility in PRL and their weightage is given below: Sr. No. 1. 2. 3. 4. 5. 6. Aspects of Job Responsibility Target Cover Customer Focus Visual Merchandising & House Keeping Discipline & Attendance Honesty & Integrity Other Factors Weightage Given 35 % 15 % 15 % 10 % 10 % 15 %

2. Argument Starts: After the employee rates himself in the questionnaire on the above mentioned aspects from 1 6, the same report is given to his superior in this case the Floor Manager. There is an argument between the floor manager and the employee, if the floor manager feels that the employee has overrated himself in any of the questions.
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for instance, if a question is, How Clean Do I Keep My Section?, and if the employee awards himself full points i.e. 6 which means that his section is always clean and there is no dust in his section, his floor manager may argue in the point and interfere that his section is not always clean and he has found bits of paper on the floor of his section several number of times, then the employee mat argue on that point or even go ahead without having any sort of arguments by saying the words, I Agree. At this stage the employee has full liberty to argue and repeatedly try and prove his point without affecting or losing any points on it. And it is observed that the employees take full advantage of this liberty at PRL. 3. Job Related Questions: The employees are then asked the questions relating to their jobs, for instance, about the fabric knowledge, any extra knowledge that the employee shares while selling the merchandises to the customers, any further developments he would suggest towards the betterment of his own section, brand, or the store. The best suggestions are also given bonus points. The employee is also enquired about his mbility to move to any other branch of Piramyd Megastore at any point of time. The positive response is given good points. he is also asked about the ultimate post that he would strive for in this particular organization and the ways of achieving it. if he is found capable and his means and ways to reach that position effective enough then he is given good ratings which fall under the Other Factors category in the above table.
4. The Results: The employees are rated accordingly from the

questionnaires, the out comes of the arguments are also given significance and lastly the abilities of the employee judged on the basis of the Job Related Questions. the employees are

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judged on the following basis or distribution and cut-off percentages which are stated below: Percentage cut-off 90 % and Above 80 % - 90 % 80 % and Below Rating Outstanding Good Adequate

And accordingly the increments are given in the salaries of the employees at PRL. personally as a group we feel that the performance appraisal standards at PRL are quite dicey and difficult as well, as a person in order to come true to these standards of the appraisal committee is very difficult as we inquired with a few of the sales staff deployed on the different levels of Piramyd Megastore. The response to the appraisal techniques had many people saying that they found in difficult to make it to the top 2 levels of repute and most of them landed up in the 3rd category which is of a bit embarrassing position.

THE END

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