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A PROJECT REPORT
ON
Impact of Performance Appraisal on employee motivation
SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENTS OF BANGALORE UNIVERSITY FOR THE AWARD OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BY
SWETA SINGH
REGNO: 09SKCMA078
UNDER THE GUIDANCE OF
Prof. Ranganathan
E M P O W E R I N G M I N D
ACHARYA INSTITUTE OF MANAGEMENT AND SCIENCES
1st Cross, 1st Stage, Peenya,
Bangalore 560058.
2009-11
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CERTIFICATE
Certified that this Project Report titled Impact of Performance Appraisal on employee
motivation is conducted by SWETA SINGH of 1V semester MBA under the guidance of
PROF.RANGANATHAN.
This Project Report is based on the training under gone by the student and has not formed the
basis for the award of any other degree/diploma by Bangalore University or any other
university.
Prof. RANGANATHAN (Prof. KERRON
REDDY)
(PROGRAM DIRECTOR) (CEO& Principal)
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CERTIFICATE FROM THE GUIDE
This is to certify that the Project titled Impact of Performance Appraisal on employee
motivation submitted by Miss SWETA SINGH for the award of degree in Master of Business
Administration has been completed under my supervision & guidance. It is an original piece of
work based on primary as well as secondary data.
This work is satisfactory and complete in every respect. I wish her all the success for his future
Endeavour
Place: Bangalore
Date: PROF.
RANGANATHAN
(PROJECT GUIDE)
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ACKNOWLEDGEMENT
I, SWETA SINGH, would like to convey my deep gratitude to my guide PROF.
RANGANATHAN, for hir valuable guidance imparted, which has enabled me to complete this
report in accordance with Bangalore University norms.
I feel highly delighted with the way my dissertation report on topic Impact of Performance
Appraisal on employee motivation has been completed.
I would also like to express grateful thank to all the respondents who helped me to proceed at
every step of a perfect destined life and favoured me with their valuable feedback about the
survey and cooperation
I am thankful to Prof. Kerron Reddy, Principal and CEO of A.I.M.S., who had provided all therequired facilities to carry out the report work and nurturing my skills to execute the
requirement.
Last but not least, my gratitude goes to my family members and friends, who showered upon me
their best of good wishes and help, towards successful completion of this report.
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TABLE OF CONTENTS
CHAPTER NO. NAME OF THE CHAPTER PAGE NO.
1 Introduction
1.1 Meaning of performance appraisal1.2 Performance appraisal and competitive advantage1.3 Organizational strategy and performance appraisal1.4 Appraisal process1.5 Meaning of motivation1.6 Definition of motivation1.7 Significance of motivation1.8 Types of motivation1.9 Process of motivation1.10 Intrinsic and extrinsic motivation1.11 Effects of motivation1.12 Benefits of motivation1.13 Theories of motivation1.14 Appraisals as employee motivation mechanism
1-3912-34-55-2121222323-242525-26262728-3838-39
2 Research methodology
2.1 Meaning of research methodology2.2 Introduction2.3 Statement of the problem2.4 Objective of the study2.5 Scope of the study2.6 Limitations of the study2.7 Research Methodology2.8 Sampling design2.9 Data Collection2.10 Tool of analysis
40-4240404141414142424242
3 Company profile
3.1 Introduction3.2 Financial highlights3.3 Key people3.4 Board of directors3.5Top competitors3.6 Codes of conduct3.7 Global alliances3.8 Business value for TCS clients3.9 TCS alliance partner advantage
43-4943434343-444444-45454546
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3.10 TCS alliance framework3.11 Intellectual power3.12 Sponsorships
464647-49
4 Analysis and Interpretation 50-72
5 Findings and Suggestions 73-76
6 Conclusion 77
Bibliography
Annexure
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LIST OF TABLES
Table No. Description Page No.
4.1 Gender of the employees 514.2 Age of the respondents 52
4.3 department to which the employee belongs to 534.4 working experience of the respondents in the current organization 544.5 satisfaction from the support of the hr department 554.6 performance appraisal method followed in the organization 564.7 satisfaction with the existing performance appraisal system 574.8 performance appraisal done and assessed by 584.9 performance appraisal is done periodically 59
4.10 performance appraisal help the organization in the following ways 604.11 performance appraisal is done by company to 614.12 performance appraisal system transparent to the employees 624.13 ways performance appraisal discussed with the employees 634.14 performance appraisal activities are helpful to get motivated 644.15 management is interested in motivating the employees 654.16 performance appraisal motivates the employees in the following
ways
66
4.17 factor which motivates the employees 67418 type of incentive which motivates more 684.19 training provided to employees if rated low 694.20 training helped employees to build confidence and get motivated 704.21 motivation help in improving productivity 71
4.22 how motivation impact employees productivity 72
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LIST OF CHARTS
Chart No. Description Page No.
4.1 Gender of the employees 514.2 Age of the respondents 524.3 department to which the employee belongs to 534.4 working experience of the respondents in the current organization 544.5 satisfaction from the support of the hr department 554.6 performance appraisal method followed in the organization 564.7 satisfaction with the existing performance appraisal system 574.8 performance appraisal done and assessed by 58
4.9 performance appraisal is done periodically 594.10 performance appraisal help the organization in the following ways 604.11 performance appraisal is done by company to 614.12 performance appraisal system transparent to the employees 624.13 ways performance appraisal discussed with the employees 634.14 performance appraisal activities are helpful to get motivated 644.15 management is interested in motivating the employees 65
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4.16 performance appraisal motivates the employees in the following
ways
66
4.17 factor which motivates the employees 674.18 type of incentive which motivates more 68
4.19 training provided to employees if rated low 694.20 training helped employees to build confidence and get motivated 704.21 motivation help in improving productivity 714.22 how motivation impact employees productivity 72
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CHAPTER 1
INTRODUCTION
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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.
1.1 Meaning and Definition of performance appraisal
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 jobknowledge, quality and quantity of output, initiative, leadership abilities, supervision,
dependability, co-operation, judgment, versatility, health, and the like. Assessment should not be
confined to past performance alone. Potentials of the employee for future performance must also
be assessed.
A formal definition of performance appraisal is:
It is the systematic evaluation of the individual with respect to his or her performance on the job
and his or her potential for development.
A more comprehensive definition is:
Performance' appraisal is a formal structured system of measuring and evaluating an employees
job related behaviors and outcomes to discover how and why the employee is presently
performing on the job and how the employee can perform more effectively in the future so that
the employee organization and society all benefit.
The second definition includes employees behavior as part of the assessment. Behavior can be
active or passive--do something or do nothing. Either way behavior 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
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(perhaps the oldest of the terms used) merit rating. Job analysis sets out requirements, which are
translated into performance standards, which in turn from the basis for performance appraisal.
1.2 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)
Fig: How Performance Appraisal can contribute to Firm's Competitive Advantage?
1.2.1 Improving Performance
13
Strategy and
Behavior
Improving
PerformanceMaking
correct
decisions
Competitive
Advantage
Minimizing
dissatisfaction
and turnover
Ensuring
Legal
Compliance
Values and
Behavior
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An effective appraisal system can contribute to competitive advantage by improving employee
job performance in two ways-by directing employee behavior towards organizational goals, as
was done by the second beekeeper (see opening case), and by monitoring that behavior to ensure
that the goals are met.
1.2.2 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.
1.2.3 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.
1.2.4 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.
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.
1.2.5 Consistency between Organizational Strategy and Behavior
An organization needs a strategy consistent with the behavior of its employees if it were to
realize its goals. A truism of organizational life is that people engage themselves in behaviors
that they perceive will be rewarded. As employees want to be rewarded, they tend to occupy
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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- behavior fit.
1.3 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 fordevelopment. 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.
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 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
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use cost effective technologies for stable products and project or matrix technologies for new
product. 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. Cross-sectional 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.
1.4 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.
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oo
17
Objective of
performance
Establish job
Expectation
Design an
appraisal
Appraise
Performance
Performance
interview
Archive appraisal
data
Use appraisal data
for appropriate
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The performance appraisal process
1.4.1 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. These objectives are appropriate as long as the approach in appraisal is individual.
Appraisal in 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.
1.4.2. 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.
1.4.3. 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?
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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?
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.
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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.
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 givento another person, the superior authority may be undermined seriously. Finally, training and
development of subordinate is am portent element in every mangers job.
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.
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.
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
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similar kinds of information. Where appraisal is made by the superior, peers, subordinates and
clients, it is called the 360-degree system of appraisal.
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 toIV. 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 self-evaluation than when
supervisors tell them what they are.
4. Problems of rating: Performance appraisals are subject to a wide variety of inaccuracies and
biases referred to as rating errors. These errors occur in the raters observations, judgment, andinformation processing, and can seriously affect assessment results. The most common rating
errors are leniency or severity, central tendency, halo effect, primacy and recency effects,
perceptual set, performance dimension behavior, spillover effect, and status effect.
5. Solving raters problem: The best way to overcome the problems is to provide training to
the raters.
6. What should be rated: The seven criteria for assessing performance are:
a) Quality: The degree to which the process or result of carrying out an activity approaches
perfection in terms of their conforming to some ideal way of performing the activity, or
fulfilling the activitys intended purpose.
b) Quantity: The amount produced, expressed in monetary terms, number of units, or number
of completed activity cycles.
c) Timeliness: The degree to which an activity is completed or a result produced, at the earliesttime desirable from the standpoints of both co-ordinating with the outputs of others and of
maximizing the time available for other activities.
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d) Cost effectiveness: The degree to which the use of the organizations resources is maximized
in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a
resource.
e) Need for supervision: The degree to which a job performer can carry out a job functionwithout either having to request supervisory assistance or requiring supervisory intervention to
prevent an adverse outcome.
f) Interpersonal impact: The degree to which a performer promotes feeling of self-esteem,
goodwill and co-operation among co-workers and subordinates
g) Community service: Firms are increasingly emphasizing on employees community
involvement. This is particularly true in educational institutions. One of the criteria for
accreditation by National Assessment and Accreditation Council (NAAC) of any college or
university is the involvement of staff in social activities.
7. Timing of evaluation: Performance appraisal can be conducted once in three months, six
months or once in a year. Majority of the firms, however, conduct appraisal once in a year.
8. METHODS OF PERFORMANCE APPRAISAL
The performance appraisal methods may be classified into three categories, as shown in Figure
below.
PERFORMANCE APPRAISAL TECHNIQUE
Individual evaluation methods Multiple- person evaluation methods Other Methods
Confidential report Ranking Performance
tests
Essay evaluation Paired comparison method Field review
Critical incidents Forced distribution technique
Checklists
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Graphic rating scale
BARS
Forced choice method
MBO
Individual Evaluation Methods
Under the individual evaluation methods of merit rating, employees are evaluated one at a time
without comparing them with other employees in the organization.
(a) Confidential report: It is mostly used in government organizations. It is a descriptive
report prepared, generally at the end of every year, by the employees immediate superior. Thereport highlights the strengths and weaknesses of the subordinate. The report is not databased.
The impressions of the superior about the subordinate are merely recorded there. It does not
offer any feedback to the appraisee. The appraisee is not very sure about why his ratings have
fallen despite his best efforts, why others are rated high when compared to him, how to rectify
his mistakes, if any; on what basis he is going to be evaluated next year, etc. Since the report is
generally not made public and hence no feedback is available, the subjective analysis of the
superior is likely to be hotly contested. In recent years, due to pressure from courts and trade
unions, the details of a negative confidential report are given to the appraisee.
(b) Essay evaluation: Under this method, the rater is asked to express the strong as well as
weak points of the employees behavior. This technique is normally used with a combination of
the graphic rating scale because the rater can elaborately present the scale by substantiating an
explanation for his rating. While preparing the essay on the employee, the rater considers the
following factors: (i) Job knowledge and potential of the employee; (ii) Employees
understanding of the companys programmes, policies, objectives, etc.; (iii) The employeesrelations with co-workers and superiors; (iv) The employees general planning, organizing and
controlling ability; (v) The attitudes and perceptions of the employee, in general.
Essay evaluation is a non-quantitative technique. This method is advantageous in at least one
sense, i.e., the essay provides a good deal of information about the employee and also reveals
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more about the evaluator. The essay evaluation method however, suffers from the following
limitations:
It is highly subjective; the supervisor may write a biased essay. The employees who are
sycophants will be evaluated more favorably then other employees. Some evaluators may bepoor in writing essays on employee performance. Others may be superficial in explanation and
use flowery language which may not reflect the actual performance of the employee. It is very
difficult to find effective writers nowadays. The appraiser is required to find time to prepare the
essay. A busy appraiser may write the essay hurriedly without properly assessing the actual
performance of the worker. On the other hand, appraiser takes a long time, this becomes
uneconomical from the view point of the firm, because the time of the evaluator (supervisor) is
costly.
(c) Critical incident technique: Under this method, the manager prepares lists of statements of
very effective and ineffective behavior of an employee. These critical incidents or events
represent the outstanding or poor behavior of employees on the job. The manager maintains logs
on each employee, whereby he periodically records critical incidents of the workers behavior. At
the end of the rating period, these recorded critical incidents are used in the evaluation of the
workers performance. An example of a good critical incident of a sales assistant is the
following:
July 20 The sales clerk patiently attended to the customers complaint. He is polite, prompt,
enthusiastic in solving the customers problem.
On the other hand the bad critical incident may appear as under:
July 20 The sales assistant stayed 45 minutes over on his break during the busiest part of the
day. He failed to answer the store managers call thrice. He is lazy, negligent, stubborn and
uninterested in work.
This method provides an objective basis for conducting a thorough discussion of an employees
performance. This method avoids recency bias (most recent incidents get too much emphasis).
This method suffers however from the following limitations:
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Negative incidents may be more noticeable than positive incidents. The supervisors have a
tendency to unload a series of complaints about incidents during an annual performance review
session.It results in very close supervision which may not be liked by the employee. The
recording of incidents may be a chore for the manager concerned, who may be too busy or
forget to do it.
Most frequently, the critical incidents technique of evaluation is applied to evaluate the
performance of superiors rather than of peers of subordinates.
(d) Checklists and weighted checklists: Another simple type of individual evaluation method
is the checklist. A checklist represents, in its simplest form, a set of objectives or descriptive
statements about the employee and his behavior. If the rater believes strongly that the employee
possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank. Amore recent variation of the checklist method is the weighted list. Under this, the value of each
question may be weighted equally or certain questions may be weighted more heavily than
others. The following are some of the sample questions in the checklist.
l Is the employee really interested in the task assigned? Yes/No
l Is he respected by his colleagues (co-workers) Yes/No
l Does he give respect to his superiors? Yes/No
l Does he follow instructions properly? Yes/No
l Does he make mistakes frequently? Yes/No
A rating score from the checklist helps the manager in evaluation of the performance of the
employee. The checklist method has a serious limitation. The rater may be biased indistinguishing the positive and negative questions. He may assign biased weights to the
questions. Another limitation could be that this method is expensive and time consuming.
Finally, it becomes difficult for the manager to assemble, analyze and weigh a number of
statements about the employees characteristics, contributions and behaviors. In spite of these
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limitations, the checklist method is most frequently used in the employees performance
evaluation.
(e) Graphic rating scale: Perhaps the most commonly used method of performance evaluation
is the graphic rating scale. Of course, it is also one of the oldest methods of evaluation in use.Under this method, a printed form, as shown below, is used to evaluate the performance of an
employee. A variety of traits may be used in these types of rating devices, the most common
being the quantity and quality of work. The rating scales can also be adapted by including traits
that the company considers important for effectiveness on the job.
The rating scale is the most common method of evaluation of an employees performance today.
One positive point in favor of the rating scale is that it is easy to understand, easy to use and
permits a statistical tabulation of scores of employees. When ratings are objective in nature theycan be effectively used as evaluators. The graphic rating scale may however suffer from a long
standing disadvantage, i.e., it may be arbitrary and the rating may be subjective. Another pitfall
is that each characteristic is equally important in evaluation of the employees performance and
so on.
(f) Behaviorally anchored rating scales: Also known as the behavioral expectations scale, this
method represents the latest innovation in performance appraisal. It is a combination of the
rating scale and critical incident techniques of employee performance evaluation. The critical
incidents serve as anchor statements on a scale and the rating form usually contains six to eight
specifically defined performance dimensions. The following chart represents an example of a
sales trainees competence and a behaviorally anchored rating scale.
How to construct BARS? Developing a BARS follows a general format which combines
techniques employed in the critical incident method and weighted checklist ratings scales.
Emphasis is pinpointed on pooling the thinking of people who will use the scales as both
evaluators and evaluees.
Step 1: Collect critical incidents: People with knowledge of the job to be probed, such as job
holders and supervisors, describe specific examples of effective and ineffective behavior related
to job performance.
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Step 2: Identify performance dimensions: The people assigned the task of developing the
instrument cluster the incidents into a small set of key performance dimensions. Generally
between five and ten dimensions account for most of the performance. Examples of
performance dimensions include technical competence, relationships with customers, handling
of paper work and meeting day-to-day deadlines. While developing varying levels of
performance for each dimension (anchors), specific examples of behavior should be used, which
could later be scaled in terms of good, average or below average performance.
Step 3: Reclassification of incidents: Another group of participants who are knowledgeable
about the job is instructed to retranslate or reclassify the critical incidents generated (in Step II)
previously. They are given the definition of job dimension and told to assign each critical
incident to the dimension that it best describes. At this stage, incidents for which there is not 75
per cent agreement are discarded as being too subjective.
Step 4: Assigning scale values to the incidents: Each incident is then rated on a one-to-seven or
one-to-nine scale with respect of how well it represents performance on the appropriate
dimension. A rating of one represents ineffective performance; the top scale value indicates very
effective performance. The second group of participants usually assigns the scale values. Means
and standard deviations are then calculated for the scale values assigned to each incident.
Typically incidents that have standard deviations of 1.50 or less (on a 7-point scale) are retained.
Step 5: Producing the final instrument: About six or seven incidents for each performance
dimension all having met both the retranslating and standard deviation criteria will be used
as behavioral anchors. The final BARS instrument consists of a series of vertical scales (one for
each dimension) anchored (or measured) by the final incidents. Each incident is positioned on
the scale according to its mean value.
Because the above process typically requires considerable employee participation, its
acceptance by both supervisors and their subordinates may be greater. Proponents of BARS also
claim that such a system differentiates among behavior, performance and results and
consequently is able to provide a basis for setting developmental goals for the employee.
Because it is job-specific and identifies observable and measurable behavior, it is a more reliable
and valid method for performance appraisal.
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Researchers, after surveying several studies on BARS, concluded that despite the intuitive
appeal of BARS, findings from research have not been encouraging. It has not proved to be
superior to other methods in overcoming rater errors or in achieving psychometric soundness. A
specific deficiency is that the behaviors used are activity oriented rather than results oriented.
This creates a potential problem for supervisors doing the evaluation, who may be forced to deal
with employees who are performing the activity but not accomplishing the desired goals.
Further, it is time consuming and expensive to create BARS. They also demand several
appraisal forms to accommodate different types of jobs in an organization. In a college,
lecturers, office clerks, library staff, technical staff and gardening staff all have different jobs;
separate BARS forms would need to be developed for each. In view of the lack of compelling
evidence demonstrating the superiority of BARS over traditional techniques such as graphic
rating scales. Decotis concluded that: It may be time to quit hedging about the efficacy of
behavioral scaling strategies and conclude that this method has no clear-cut advantages over
more traditional and easier methods of performance evaluation.
(g) Forced choice method: This method was developed to eliminate bias and the preponderance
of high ratings that might occur in some organizations. The primary purpose of the forced
choice method is to correct the tendency of a rater to give consistently high or low ratings to all
the employees. This method makes use of several sets of pair phrases, two of which may be
positive and two negative and the rater is asked to indicate which of the four phrases is the most
and least descriptive of a particular worker. Actually, the statement items are grounded in such a
way that the rater cannot easily judge which statements apply to the most effective employee.
They overall objectivity is increased by using this method in evaluation of employees
performance, because the rater does not know how high or low he is evaluating the individual as
he has no access to the scoring key. This method, however, has a strong limitation. In the
preparation of sets of phrases trained technicians are needed and as such the method becomes
very expensive. Further, managers may feel frustrated rating the employees in the dark.
Finally, the results of the forced choice method may not be useful for training employees
because the rater himself does not know how he is evaluating the worker. In spite of these
limitations, the forced choice techniques is quite popular.
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(h) Management by Objectives (MBO): MBO represents a modern method of evaluating the
performance of personnel. Thoughtful managers have become increasingly aware that the
traditional performance evaluation systems are characterized by somewhat antagonistic
judgments on the part of the rater. There is a growing feeling nowadays that it is better to make
the superior work with subordinates in fixing goals. This would inevitably enable subordinates
to exercise self-control over their performance behaviors. The concept of management by
objectives is actually the outcome of the pioneering works of Drucker, McGregor and Odiorne
in management science. Management by objectives can be described as a process whereby the
superior and subordinate managers of an organization jointly identify its common goals, define
each individuals major areas of responsibility in terms of results expected of him and use these
measures as guides for operating the unit and assessing the contributions of each of its
members. MBO thus represents more than an evaluation programme and process. Practicing
management scientists and pedagogues view it as a philosophy of managerial practice; it is a
method by which managers and subordinates plan, organize, control, communicate and debate.
Features
MBO emphasizes participatively set goals that are tangible, verifiable and measurable.
MBO focuses attention on what must be accomplished (goals) rather than how it is to be
accomplished (methods).
MBO, by concentrating on key result areas translates the abstract philosophy of
management into concrete phraseology. The technique can be put to general use (non-
specialist technique). Further it is a dynamic system which seeks to integrate the
companys need to clarify and achieve its profit and growth targets with the managers
need to contribute and develop himself.
MBO is a systematic and rational technique that allows management to attain maximum
results from available resources by focusing on achievable goals. It allows the
subordinate plenty of room to make creative decisions on his own.
MULTIPLE PERSON EVALUATION METHODS
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test to be job related, observations should be made under circumstances likely to be
encountered. Practicality may suffer if costs of test development or administration
b) 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 outsiderreviews 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:-
An outsider is usually not familiar with conditions in an employees work environmentwhich may affect the employees ability or motivation to perform.
An outsider review does not have the opportunity to observe employee behavior of
performance over a period of time and in a variety of situations. But only in an artificially
structured interview situation which extends over a very short period of time.
1.4.4. Appraise the performance: The next step in the appraisal process is to measure the
performance. 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:
Quality of output
Quantity of output
Timeliness of output
Presence at work
Cooperativeness
In addition to these, other elements that deserve assessment, are job knowledge, leadership
abilities, judgement, supervisors, versatility, and health. Assessment should also include ones
potential to perform and not just actual performance.
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1.4.5. Performance Management: Performance appraisal provides feedback about employee
job performance. Getting feedback is not enough.Three more activities need to be undertaken to
complete the process: performance interview, archiving performance data and use of appraisal
data. These three activities constitute the core of performance management.
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 eye of superiors.
Feedback is necessary to effect improvement in performance, specially when it is inadequate.
Speciafically, performance interview has three goals: (i) to change behaviour of employees
whose performance does not meet organizational requirements or their own personal goals, (ii)
to maintain the behaviour of employees who perform in an acceptable manner, and (iii) to
recognise superior performance behaviours so that they will be continues.
1.4.6. Archiving Performance Data: Organization need to archive or store the appraisal data so
that at any point in future, the information can be retrieved and used. For example, if an
employee has been told that he or she was not promoted because of below average performance
and he or she would consider favorably for a jump in status and remuneration provided the
performance improves. The HR manager should have those details to convince the employee
concerned when he or she joins issue with the management on matters relating to promotion.Other issues such as pay hale, confirmation of probationary services, affirmative action and the
like deserve reference to the past information. Archiving appraisal data is not just desirable but
essential too.
1.4.7.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.
1.5 MEANING OF MOTIVATION
To the behavioral scientists, the word motivation is something stemming from within a person.
According to them, motivation refers to a dynamic driving force, which stems from within. It is
an inner striving condition, which activates or moves individual into action and continues him
in the course of action enthusiastically. Thus, motivation is defined as an inner state that
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activates, energizes or moves behaviour towards goals. And, the forces inside the individual that
inspire him to continue work are variously called as wishes, drives, needs etc.
According to Rensis Likert motivation is the core of management. Motivation is an important
function performed by manager for actuating the people to work for the accomplishment oforganizational objectives. Issuance of well-conceived instructions and orders does not mean that
they will be followed. A manager has to make appropriate use of various techniques of
motivation to enthuse the employees to follow them. Effective motivation succeeds not only in
having an order accepted but also in gaining a determination to see that it is executed efficiently
and effectively.
Motivation is an effective and dynamic instrument in the hands of a manager for inspiring the
workforce and creating confidence in them. Through the motivation of the workforce,management creates will to work which is necessary for the achievement of organisational
goals and objectives. Motivation is the process of getting the members or the group to pull
weight effectively, to give their loyalty to the group and to carry out properly the purpose of the
organization.
1.6Meaning and definition of motivation
The term motivation has its origin in the Latin word mover which means to move. Thus,motivation stands for movement. One can get a donkey to move by using a carrot or a stick,
with people one can use incentives, or threats or reprimands. However, these only have a limited
effect. These work for a while and then need to be repeated, increased or reinforced to secure
further movement. The term motivation may be defined as the managerial function of
ascertaining the motives of subordinates and helping them to realize those motives.
According to Dubin motivation could be defined as the complex of forces starting and keeping
a person at work in an organization. Motivation is something that moves the person to action,and continues him in the course of action already initiated. Motivation refers to the way a
person is enthused at work to intensify his/her desire and willingness to use and channelize
his/her energy for the achievement of organizational objectives. It is something that moves a
person into action wand continue him in the course of action enthusiastically. The role of
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motivation is to develop and intensify the desire in every member of the organization to work
effectively and efficiently in his position.
In the words of Dalton E. McFarland, motivation is the way in which urges, desires, aspiration,
striving or needs direct, control or explain the behavior of human being. Motivation has veryclose relationship with the behavior. It explains how and way the human behavior is caused.
According to McFarland motivation is a form of tension occurring within individual, with
resulting behavior aimed at reducing, eliminating or diverting the tension. Understanding the
needs and drives and their resulting tensions helps to explain and predict human behavior
ultimately providing a sound basis for managerial decision and action. Thus, motivation is the
term, which applies to the entire class of urges, drives, desires, needs and similar forces.
1.7 Significance of Motivation
Motivation involves getting the members of the group to pull weight effectively, to give their
loyalty to the group, to carry out properly the purpose of the organization. The following results
may be expected if the employees are properly motivated.
1. The workforce will be better satisfied if the management provides them with opportunities to
fulfill their physiological and psychological needs. The workers will cooperate voluntarily with
the management and will contribute their maximum towards the goals of the enterprise.
2. Workers will tend to be as efficient as possible by improving upon their skills and knowledge
so that they are able to contribute to the progress of the organization. This will also result in
increased productivity.
3. The rates of labors turnover and absenteeism among the workers will be low.
4. There will be good human relations in the organization as friction among the workers
themselves and between the workers and the management will decrease.
5. The number of complaints and grievances will come down. Accident will also be low.
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6. There will be increase in the quantity and quality of products. Wastage and scrap will be less.
Better quality of products will also increase the public image of the business.
1.8 TYPES OF MOTIVATION
1.8.1 Achievement Motivation
It is the drive to pursue and attain goals. An individual with achievement motivation wishes to
achieve objectives and advance up on the ladder of success. Here, accomplishment is important
for its own shake and not for the rewards that accompany it. It is similar to Kaizen approach of
Japanese Management.
1.8.2 Affiliation Motivation
It is a drive to relate to people on a social basis. Persons with affiliation motivation perform
work better when they are complimented for their favorable attitudes and co-operation.
1.8.3 Competence Motivation
It is the drive to be good at something, allowing the individual to perform high quality work.
Competence motivated people seek job mastery, take pride in developing and using their
problem-solving skills and strive to be creative when confronted with obstacles. They learn from
their experience.
1.8.4 Power Motivation
It is the drive to influence people and change situations. Power motivated people wish to create
an impact on their organization and are willing to take risks to do so.
1.8.5 Attitude Motivation
Attitude motivation is how people think and feel. It is their self confidence, their belief in them,their attitude to life. It is how they feel about the future and how they react to the past.
1.8.6 Incentive Motivation
It is where a person or a team reaps a reward from an activity. It is You do this and you get
that, attitude. It is the types of awards and prizes that drive people to work a little harder.
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1.8.7 Fear Motivation
Fear motivation coercions a person to act against will. It is instantaneous and gets the job done
quickly. It is helpful in the short run.
1.9
1.10 INTRINSIC AND EXTRINSIC MOTIVATION
Motivation may be intrinsic when one is involved in an activity without any external help. A
very good example of intrinsic motivation is a hobby. Presently there are no theories that
determine the source or origin of intrinsic motivation.
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Since the 1970s, intrinsic motivation has been dealt with by educational psychologists who have
found out it is essentially associated with high educational achievement and is therefore enjoyed
by students at large. Combining Bernard Weiner's attribution theory, Bandura's work on self-
efficacy and other studies, it has been found out that students are likely to be intrinsically
motivated if they
Feel that their results have an important bearing on internal factors that they can control like
the amount of effort they put in
Believe that they themselves are the primary agents to reach their goals and no other factors
like luck has any role to play in it
Think that it is more important to have an in-depth understanding of a subject rather than
engage in simple rote-learning to achieve good grades.
Altruistic reasons often serve as the motivation for people while participating in knowledge-
sharing communities and other organizations. Such reasons may include sentiments like
contribution for a good cause, a moral obligation or simply giving back to society. In work
environments, however, extrinsic motivation is more powerful than intrinsic motivation. Here
the external motivating factor is, of course money.
Coercion or force is seen as the most obvious form of motivation as escaping pain or negative
consequences is a common human instinctive action, which leads to immediate effects.
Successful coercion, supposedly can take priority over other types of motivation at times.
However, when coercion is used in its extreme form leads to slavery, which is rejected by many
philosophies. It is in use for prisoners, students in mandatory schooling, on children in a nuclear
family unit and in the form of conscription.
Although many capitalists such as Ayn Rand have raised their voice against coercion, critics
argue that wage slavery is unavoidable in the absence of proper social safety networks.
1.11 EFFECTS OF MOTIVATION
There can be several effects of motivation and one of the most significant efforts is the direct
behavior toward particular goals that at the same time can lead to increased effort and energy as
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well as increase initiation of, and persistence in, activities and also enhance cognitive
processing. At the same time this can also determine what consequences are reinforcing and
hence lead to improved performance. A fact that should be kept in mind is that the students are
not always internally motivated. This fact has been clearly proved by both Abraham Maslow's
theory of motivation and Douglas McGregor's Theory. A recent research done of Maslow theory
clearly shows that he has placed money at the lowest level of the hierarchy while at the same
time he has shown other needs are better motivators to staff. Similarly the other experts on
motivation McGregor places money in his Theory X category while he places praise and
recognition on the Theory Y category. As a consequence it can be hence determined that these
are the people who need situated motivation. This often is found in environmental conditions
that the teacher creates. In fact there can be several kinds of motivation and one of the prime
among them is the intrinsic motivation, which occurs when people are internally motivated to do
something. This is because such a form of motivation either brings them pleasure, they think it
is important, or they feel that what they are learning is morally significant and hence it is much
different from extrinsic motivation that comes into play when a student is compelled to do
something or act a certain way because of factors external to him or her. Money is also a great
motivator that allows people to drive themselves to the limit. What sets this apart if that the
motivating effect of money that lasts only for a short period and in fact in higher levels of the
hierarchy, praise, recognition, and a sense of belonging are far more powerful motivators thanmoney.
1.12 BENEFITS OF MOTIVATION
A basic benefit of motivation is that the motivated employees always look for better ways to do
a job and at the same time they are more quality oriented, apart from being more productive.
What is significant is that the workplace is about midway between the extremes of high threat
and high opportunity. Motivation by threat is a dead-end strategy. This thus basically makes the
staff more attracted to the opportunity side of the motivation curve than the threat side.
A good manager understands the need for motivation and for this it is a must for them to
comprehend how company employees see them. This thus helps them to manage the impression
they make, not just their intentions. Many researchers however agree that a worker's motivation
is solely determined by pay thus making it must for the management to take care of
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psychological or social aspects of work. Thus to sum up the scientific research clearly ensures
that human motivation is based completely on extrinsic rewards; nonetheless many still believe
that workers could not be motivated by the mere need for money, though money could be used
as an indicator of success for various motives. Other researchers have emphasized that the social
contacts a worker has at the workplace are very important and that boredom and repetitiveness
of tasks lead to reduced motivation; thus leading many to believe that workers could be
motivated by acknowledging their social needs . This at the same time made them feel important
and hence when employees were given freedom to make decisions on the job and greater
attention was paid to informal work groups the productivity was more; this model was later
named as the Hawthorne effect. However this model has a basic drawback and that is that the
model places is undue reliance on social contacts at work situations for motivating employees.
[Motivation, thus is a must and it has been well established that a learned behavior will not
occur unless it is energized. Over the ages the psychologists have tried to find out if changes in
behavior better explained by principles of environmental/ecological influences, perception,
memory among other factors
1.13 THEORIES OF MOTIVATION
1.13.1 Contribution of Robert Owen:
Though Owen is considered to be paternalistic in his view, his contribution is of a considerable
significance in the theories of Motivation. During the early years of the nineteenth century,
Owens textile mill at New Lanark in Scotland was the scene of some novel ways of treating
people. His view was that people were similar to machines. A machine that is looked after
properly, cared for and maintained well, performs efficiently, reliably and lastingly, similarly
people are likely to be more efficient if they are taken care of. Robert Owen practiced what he
preached and introduced such things as employee housing and company shop. His ideas on this
and other matters were considered to be too revolutionary for that time.
1.13.2 Jeremy Benthams The Carrot and the Stick Approach:
Possibly the essence of the traditional view of people at work can be best appreciated by a brief
look at the work of this English philosopher, whose ideas were also developed in the early years
of the Industrial Revolution, around 1800. Benthams view was that all people are self-interested
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and are motivated by the desire to avoid pain and find pleasure. Any worker will work only if
the reward is big enough, or the punishment sufficiently unpleasant. This view - the carrot and
stick approach - was built into the philosophies of the age and is still to be found, especially in
the older, more traditional sectors of industry.
The various leading theories of motivation and motivators seldom make reference to the carrot
and the stick. This metaphor relates, of course, to the use of rewards and penalties in order to
induce desired behavior. It comes from the old story that to make a donkey move, one must put
a carrot in front of him or dab him with a stick from behind. Despite all the research on the
theories of motivation, reward and punishment are still considered strong motivators. For
centuries, however, they were too often thought of as the only forces that could motivate people.
At the same time, in all theories of motivation, the inducements of some kind of carrot arerecognized. Often this is money in the form of pay or bonuses. Even though money is not the
only motivating force, it has been and will continue to be an important one. The trouble with the
money carrot approach is that too often everyone gets a carrot, regardless of performance
through such practices as salary increase and promotion by seniority, automatic merit
increases, and executive bonuses not based on individual manager performance. It is as simple
as this : If a person put a donkey in a pen full of carrots and then stood outside with a carrot,
would the donkey be encouraged to come out of the pen ?
The stick, in the form of fearfear of loss of job, loss of income, reduction of bonus, demotion,
or some other penaltyhas been and continues to be a strong motivator. Yet it is admittedly not
the best kind. It often gives rise to defensive or retaliatory behavior, such as union organization,
poor-quality work, executive indifference, failure of a manager to take any risks in decision
making or even dishonesty. But fear of penalty cannot be overlooked. Whether managers are
first-level supervisors or chief executives, the power of their position to give or with hold
rewards or impose penalties of various kinds gives them an ability to control, to a very greatextent, the economic and social well-being of their subordinates.
1.13.3 Abraham Maslows Need Hierarchy Theory:
One of the most widely mentioned theories of motivation is the hierarchy of needs theory put
forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a hierarchy,
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ascending from the lowest to the highest, and he concluded that when one set of needs is
satisfied, this kind of need ceases to be a motivator.
As per his theory this needs are :
(i) Physiological needs:
These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep,
medicine and education are the basic physiological needs which fall in the primary list of need
satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to
maintain life, no other motivating factors can work.
(ii) Security or Safety needs: These are the needs to be free of physical danger and of the fear of
losing a job, property, food or shelter. It also includes protection against any emotional harm.
(iii) Social needs:
Since people are social beings, they need to belong and be accepted by others. People try to
satisfy their need for affection, acceptance and friendship.
(iv) Esteem needs:
According to Maslow, once people begin to satisfy their need to belong, they tend to want to be
held in esteem both by themselves and by others. This kind of need produces such satisfaction as
power, prestige status and self-confidence. It includes both internal esteem factors like self-
respect, autonomy and achievements and external esteem factors such as states, recognition and
attention.
(v) Need for self-actualization:
Maslow regards this as the highest need in his hierarchy. It is the drive to become what one is
capable of becoming, it includes growth, achieving ones potential and self-fulfillment. It is to
maximize ones potential and to accomplish something.
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As each of these needs is substantially satisfied, the next need becomes dominant. From the
standpoint of motivation, the theory would say that although no need is ever fully gratified, asubstantially satisfied need no longer motivates. So if you want to motivate someone, you need
to understand what level of the hierarchy that person is on and focus on satisfying those needs or
needs above that level.
Maslows need theory has received wide recognition, particularly among practicing managers.
This can be attributed to the theorys intuitive logic and ease of understanding. However,
research does not validate this theory. Maslow provided no empirical evidence and other several
studies that sought to validate the theory found no support for it.
1.13.4 Theory X and Theory Y of Douglas McGregor:
McGregor, in his book The Human side of Enterprise states that people inside the
organization can be managed in two ways. The first is basically negative, which falls under the
category X and the other is basically positive, which falls under the category Y. After viewing
the way in which the manager dealt with employees, McGregor concluded that a managers
view of the nature of human beings is based on a certain grouping of assumptions and that he orshe tends to mold his or her behavior towards subordinates according to these assumptions.
Under the assumptions of theory X:
Employees inherently do not like work and whenever possible, will attempt to avoid it.
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Because employees dislike work, they have to be forced, coerced or threatened with punishment
to achieve goals.
Employees avoid responsibilities and do not work fill formal directions are issued.
Most workers place a greater importance on security over all other factors and display little
ambition.
In contrast under the assumptions of theory Y:
Physical and mental effort at work is as natural as rest or play.
People do exercise self-control and self-direction and if they are committed to those goals.
Average human beings are willing to take responsibility and exercise imagination, ingenuity andcreativity in solving the problems of the organization.
That the way the things are organized, the average human beings brainpower is only partly
used.
On analysis of the assumptions it can be detected that theory X assumes that lower-order needs
dominate individuals and theory Y assumes that higher-order needs dominate individuals. An
organization that is run on Theory X lines tends to be authoritarian in nature, the word
authoritarian suggests such ideas as the power to enforce obedience and the right to
command. In contrast Theory Y organizations can be described as participative, where the
aims of the organization and of the individuals in it are integrated; individuals can achieve their
own goals best by directing their efforts towards the success of the organization.
However, this theory has been criticized widely for generalization of work and human behavior.
1.13.5 Contribution of Rensis Likert :
Likert developed a refined classification, breaking down organizations into four management
systems.
1st System Primitive authoritarian
2nd System Benevolent authoritarian
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3rd System Consultative
4th System Participative
As per the opinion of Likert, the 4th system is the best, not only for profit organizations, but also
for non-profit firms.
1.13.6 Frederick Herzbergs motivation-hygiene theory:
Frederick has tried to modify Maslows need Hierarchy theory. His theory is also known as two-
factor theory or Hygiene theory. He stated that there are certain satisfiers and dissatisfiers for
employees at work. In- trinsic factors are related to job satisfaction, while extrinsic factors are
associated with dissatisfaction. He devised his theory on the question : What do people want
from their jobs ? He asked people to describe in detail, such situations when they feltexceptionally good or exceptionally bad. From the responses that he received, he concluded that
opposite of satisfaction is not dissatisfaction. Removing dissatisfying characteristics from a job
does not necessarily make the job satisfying. He states that presence of certain factors in the
organization is natural and the presence of the same does not lead to motivation. However, their
nonpresence leads to demotivation. In similar manner there are certain factors, the absence of
which causes no dissatisfaction, but their presence has motivational impact.
Examples of Hygiene factors are:
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Security, status, relationship with subordinates, personal life, salary, work conditions,
relationship with supervisor and company policy and administration.
Examples of Motivational factors are :
Growth prospectus job advancement, responsibility, challenges, recognition and achievements.
1.13.7 Contributions of Elton Mayo:
The work of Elton Mayo is famously known as Hawthorne Experiments. He conducted
behavioral experiments at the Hawthorne Works of the American Western Electric Company in
Chicago. He made some illumination experiments, introduced breaks in between the work
performance and also introduced refreshments during the pauses. On the basis of this he drew
the conclusions that motivation was a very complex subject. It was not only about pay, workcondition and morale but also included psychological and social factors. Although this research
has been criticized from many angles, the central conclusions drawn were :
People are motivated by more than pay and conditions.
The need for recognition and a sense of belonging are very important.
Attitudes towards work are strongly influenced by the group.
1.13.8 Vrooms Valence x Expectancy theory:
The most widely accepted explanations of motivation have been propounded by Victor Vroom.
His theory is commonly known as expectancy theory. The theory argues that the strength of a
tendency to act in a specific 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 to make
this simple, expectancy theory says that an employee can be motivated to perform better when
their is a belief that the better performance will lead to good performance appraisal and that thisshall result into realization of personal goal in form of some reward. Therefore an employee is :
Motivation = Valence x Expectancy.
The theory focuses on three things :
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Efforts and performance relationship
Performance and reward relationship
Rewards and personal goal relationship
This leads us to a conclusion that :
1.13.9 The Porter and Lawler Model:
Lyman W. Porter and Edward E. Lawler developed a more complete version of motivation
depending upon expectancy theory.
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Actual performance in a job is primarily determined by the effort spent. But it is also affected by
the persons ability to do the job and also by individuals perception of what the required task is.
So performance is the responsible factor that leads to intrinsic as well as extrinsic rewards.
These rewards, along with the equity of individual leads to satisfaction. Hence, satisfaction of
the individual depends upon the fairness of the reward.
1.13.10 Clayton Alderfers ERG Theory:
Alderfer has tried to rebuild the hierarchy of needs of Maslow into another model named ERG
i.e. Existence Relatedness Growth. According to him there are 3 groups of core needs as
mentioned above. The existence group is concerned mainly with providing basic material
existence. The second group is the individuals need to maintain interpersonal relationship with
other members in the group. The final group is the intrinsic desire to grow and develop
personally. The major conclusions of this theory are :
1. In an individual, more than one need may be operative at the same time.
2. If a higher need goes unsatisfied than the desire to satisfy a lower need intensifies.
3. It also contains the frustration-regression dimension.
1.13.11 McClellands Theory of Needs :
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David McClelland has developed a theory on three types of motivating needs:
Need for Power
Need for Affiliation
Need for Achievement
Basically people for high need for power are inclined towards influence and control. They like
to be at the center and are good orators. They are demanding in nature, forceful in manners and
ambitious in life. They can be motivated to perform if they are given key positions or power
positions.
In the second category are the people who are social in nature. They try to affiliate themselves
with individuals and groups. They are driven by love and faith. They like to build a friendly
environment around themselves. Social recognition and affiliation with others provides them
motivation.
People in the third area are driven by the challenge of success and the fear of failure. Their need
for achievement is moderate and they set for themselves moderately difficult tasks. They are
analytical in nature and take calculated risks. Such people are motivated to perform when they
see atleast some chances of success.
McClelland observed that with the advancement in hierarchy the need for power and
achievement increased rather than Affiliation. He also observed that people who were at the top,
later ceased to be motivated by this drives.
1.13.12 Equity Theory:
As per the equity theory of J. Stacey Adams, people are motivated by their beliefs about the
reward structure as being fair or unfair, relative to the inputs. People have a tendency to use
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subjective judgment to balance the outcomes and inputs in the relationship for comparisons
between different individuals. Accordingly:
If people feel that they are not equally rewarded they either reduce the quantity or quality of
work or migrate to some other organization. However, if people perceive that they are rewarded
higher, they may be motivated to work harder.
1.13.13 Reinforcement Theory:
B.F. Skinner, who propounded the reinforcement theory, holds that by designing the
environment properly, individuals can be motivated. Instead of considering internal factors like
impressions, feelings, attitudes and other cognitive behavior, individuals are directed by what
happens in the environment external to them. Skinner states that work environment should be
made suitable to the individuals and that punishment actually leads to frustration and de-motivation. Hence, the only way to motivate is to keep on making positive changes in the
external environment of the organization.
1.13.14 Goal Setting Theory of Edwin Locke:
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Instead of giving vague tasks to people, specific and pronounced objectives, help in achieving
them faster. As the clarity is high, a goal orientation also avoids any misunderstandings in the
work of the employees. The goal setting theory states that when the goals to be achieved are set
at a higher standard than in that case employees are motivated to perform better and put in
maximum effort. It revolves around the concept of Self-efficacy i.e. individuals belief that he
or she is capable of performing a hard task.
1.13.15 Cognitive Evaluation Theory:
As per this theory a shift from external rewards to internal rewards results into motivation. It
believes that even after the stoppage of external stimulus, internal stimulus survives. It relates to
the pay structure in the organization. Instead of treating external factors like pay, incentives,
promotion etc and internal factors like interests, drives, responsibility etc, separately, theyshould be treated as contemporary to each other. The cognition is to be such that even when
external motivators are not there the internal motivation continues. However, practically
extrinsic rewards are given much more weight age.
1.14 APPRAISALS AS EMPLOYEE MOTIVATION MECHANISM
Keeping in mind the growing attrition rates and the employee dissatisfaction among the
employees, the HR professionals are approaching and using the performance appraisal as a fuelto motivate employees. The latest trend being followed by the HR professionals is to use the
performance appraisal and review process as a motivating mechanism. Various surveys and
studies have testified the relationship between performance review, pay and motivation.
Other than the traditional goal of accessing the performance of the employees, Performance
appraisals and reviews can be used as a tool to reinforce the desired behaviour and competent
performance of the employees.
One of the most motivating factors for the employees, in the Performance appraisal processes is
to receive a fair an accurate assessment of their performance. Inaccurate evaluation is one reason
because of which most employees dread going through performance appraisals. An employee
always expects his appraiser to recognize and appreciate his achievements, support him to
overcome the problems and failures.
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The discrepancies and the inaccuracies in the performance review can demotivate the
employees, even if there has been an increase in the salary. Such inaccuracies can kill the
innovating and risk taking enthusiasm and spirit in the employees. Similarly, inaccurate reviews
with no hike in compensation can increase the attrition rate in the organisation, forcing the
employees to look out for other options.
An employee prefers an accurate performance review with no increase in the salary over
inaccurate performance review with an increase in salary.
Employees, who receive both accuracy and a pay increase during their performance review, are
likely to be the most motivated. Therefore, performance appraisal (review and its consequence
in the form of compensation adjustments) has the potential of motivating employees and
increasing their job satisfaction.
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CHAPTER 2
RESEARCH
METHODOLOGY
2.1 Research Methodology
Research Methodology in common parlance refers to a search for knowledge. One can also
define also research as a scientific and systematic research for pertinent information a specific
topic. Research is an art of systematic investigation. Some people consider research as a
movement, a movement to the known to the unknown.
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According to Clifford Woody: - Research comprises defining and redefining problems,
formulating hypothesis or suggested solutions, collecting, organizing and evaluating data,
making deductions mil reaching conclusion, and at last carefully testing the conclusion to
determine whether they fit the formulating hypothesis.
According to Clover and Basley, it is the process of systematically obtaining accurate answers
to significant pertinent questions by the use of scientific method gathering and interpreting
information.
Marketing research is defined as a systematic gathering and analysis of the data concern with an
objective. The whole activity is divided into various parts and after compilation of that we reach
at certain findings, which enable us to marketing decision. It involves the diagnosis of
information needed and the selection of the relevant and inter-related variables.
2.2 INTRODUCTION
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. 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, co-operation, judgment, versatility, health, and
the like. Assessment should not be confined to past performance alone. Potentials of the
employee for future performance must also be assessed.
2.3 STATEMENT OF THE PROBLEM
This study investigates the methods of performance appraisal and its impact on employee
motivation. Thus a research titled Impact of performance appraisal on employee motivation
was carried on.
2.4 OBJECTIVE OF THE STUDY
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i.. To examine the method of performance appraisal used in the organization
ii.. To analyze the significance and benefits of having a strong performance management
iii. To understand the concept in detail of how a good performance appraisal leads to employee
motivation
iv. To analyze the impact of motivation on employee productivity
2.5 SCOPE OF THE STUDY
It will help the company in understanding its employees.
It will help in understanding that which method of performance appraisal is effective
It will help in understanding to know as to how to motivate its employees through
Performance appraisal.
2.6 LIMITATIONS OF THE STUDY
Sample size is small because of the time constraint
Respondent may provide data from their memory recall, there may only be through
rough
estimates.
Survey will be limited in particular area
The sample size is small hence arriving at an overall opinion is difficult
2.7 RESEARCH METHODOLOGY
Research design
Research design is a detailed blue print used to guide the research study towards its objectives.
Descriptive research is used for this study. The major purpose of descriptive research is
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description of the state of affairs, as it exists as present. Which means asking questions to people
who are believed to possess the desired information.
2.8 SAMPLING DESIGN
SAMPLING TECHNIQUE
Stratified random sampling
Under this sampling design item has an equal chance of inclusion in the sample. All choices
being independent of one another. It gives each possible sample combination an equal
probability of being chosen. In this technique the population is stratified in to a number of non
overlapping sub population or strata and sample items are selected from each stratum. Items
selected from each stratum are based on simple random sampling. First stratification and thensimple random sampling is known as stratified random sampling.
Sample size
100 Respondents
2.9 SOURCE OF DATA COLLECTION
Primary Data: Primary data was collected through questionnaire administration
Secondary Data: Secondary data were collected from company resources, internet resources,
books.
2.10 TOOLS OF ANALYSIS
Data collected were analyzed by using quantitative tools and techniques
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CHAPTER 3
COMPANY PROFILE
3.1 INTRODUCTION
Tata Consultancy Services (TCS) is a leading IT services, consulting and business solutions
organization that delivers real results to global businesses, ensuring a level of certainty no other
firm can match. We offer a consulting-led, integrated portfolio of IT and IT-enabled services
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delivered through our unique Global Network Delivery Model, recognized as the benchmark of
excellence in software development.
A part of the Tata group, Indias largest industrial conglomerate, TCS has over 186,500 of the
worlds best-trained IT consultants in 42 countries. The company generated consolidatedrevenues of over US $6.3 billion for fiscal year ended March 31, 2010 and is listed on the
National Stock Exchange and Bombay Stock Exchange in India.
3.2 FINANCIAL HIGHLIGHTS
Fiscal Year End: March 2010
Revenue (2010): 6669.40 M
Revenue Growth (1 yr): 25.10%
3.3 KEY PEOPLE
Chairman: Ratan N. Tata
CEO and Managing Director: N. (Chandra) Chandrasekaran
CFO and Executive Director: Seturaman (Maha) Mahalingam
3.4 BOARD OF DIRECTORS
Non-Executive Board Members
Rata