SARASWATI COLLEGE OF ENGINEERING

DEPARTMENT OF MASTER OF MANAGEMENT STUDIES.

Kharghar, Navi Mumbai – 410 210

Research Paper

Title: Performance Appraisal.

Guide: Prof. Priyadarshani Poddar Author: Rekha Gaikwad.

Date: 17nd March 2010

ABSTRACT:

This research is conducted to identify how the top level management do or identifies the potential of the employee. Performance appraisals of Employees are necessary to understand each employee’s abilities.Conduct market survey on a sample selected from the entire population and derived opinion on that research. According the market survey come know about how much methods or technics used by the top level management.

PURPOSE:

To understand the exact nature of performance appraisal process which tend to provide or motivate employees of an organization for their self development as well as organizational growth and development.

Research Methodology:

Literature review, qualitative as quantitative method of research are been

carried out. By referring journals, for website.

PROBABLE OUTCOME :

It was found that subjectivity and appraiser bias were most common apprehensions regarding performance appraisal system. Correspondingly, objectivity and measurable performance were found to be most desirable for improving performance appraisal system.

KEY WORDS:

Training of appraisers and importance of performance review discussion have also been furnished.

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:INTRODUCTION:

Performance appraisal is one of the most important processes in human resource management. Organizations rate their employees’ abilities to perform through this process and assess their worth for organizational rewards. Various researchers have noted at different points of time that many employees are not satisfied with their performance appraisal system. Rudrabasavaraj (1977) found that only one of the 12 organizations that were investigated in that particular study, seemed to be satisfied with the appraisal system. Bolar (1978) states,”Most managers and supervisors have at some time or other questioned the basis or relevance of employee evaluation practices or performance appraisal [and] the difficulties, the doubts and the lack of credibility about the various systems appear to have increased”.

Employee differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different employee. Performance appraisals of Employees are necessary to understand each employee’s abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance.

Employee assessment is one of the fundamental jobs of HRM. An organisation’s goals can be achieved only when employee 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.

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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, 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.

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.

:RESEARCH METODOLOGY:

This study was carried out as an exercise to understand the requirements of performance appraisal as perceived by organizations. It was attempted to collect data from different types of organizations so as to give a sufficient representative indication of the requirements of performance appraisal system. Industry were elicited about performance appraisal, bias and treatment, desired improvements to the system. All the questions were open – ended, leaving executives free to express their perceptions and views. Organizations were selected based on size, type, nature of business. Care is taken to cover a different kind of industries.

Research always starts with a question or a problem. Its purpose is to question through the application of the scientific method. It is a systematic and intensive study directed towards a more complete knowledge of the subject studied.

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:Collection of data:

After the research methodology, the next step is together the requisite data. There are two types of data collection method – primary data and secondary data.

In our live project, we decided primary data collection method because our study nature does not permit to apply observational method. In survey approach we had selected a questionnaire method for taking a customer view because it is feasible from the point of view of our subject & survey purpose. I conducted 50 sample of survey in our project and I have collected the data of employee of Navi Mumbai. and for secondary data i collected from website ,referring articles and bye text book.

Importance of Performance Appraisal:

Performance appraisals are necessary. It may be informal or formal, documented or undocumented, scheduled or unscheduled .Due to performance appraisal employee will earn consistent promotions, obtain attendant salary increases and lead a successful organization goes up every time you conduct a thorough performance-boosting employee evaluation.

Specifically, performance appraisal helps an organization gain competitive edge in the following ways:

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

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1 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, and by monitoring that behaviour to ensure that the goals are met.

2 Making Correct Decisions:

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 promote feels motivated to enhance his or her performance.

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 . Organizations can minimize costly performance-related litigation by using appraisal systems that give fair and accurate ratings.

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.

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5 Strategy and Behaviour:

An organization needs a strategy consistent with the behaviour of its employees if it were to realize its goals. Organizational life is that employee 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 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, 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.

6 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 organization’s 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.

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,3. Consistency between organizational values and job behaviour.

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E ffective purpose / Objective of performance appraisal includes following elements:

1. Career Development

• This provides an opportunity for discussion of career objectives, and creation of a strategy designed to maximize career potential.• To provide an opportunity for career counseling• To help in succession planning.• To assess training needs• To plan for career development• To assess and develop individual abilities• To provide an objective basis on which to base decisions about training and promotion

2. Feedback

• As well, feedback is encouraged in both directions: as such, employees are encouraged to prepare ratings of their supervisors.• To provide constructive feedback to the individual regarding how their performance is seen.• This provides a structured format for the discussion of performance issues• on a regular basis.• Feedback either reinforces performance strengths, or provides the opportunity to discuss resolution of performance deficiencies.

3. Administrative Uses of Performance appraisal

• Salary• Promotion• Retention/termination• Recognition of performance• Layoffs• Identification of poor performers.

4. Performance History

• This provides a performance history which is not dependent upon human memory, and which may be useful in the full range of personnel decisions, including compensation decision-making.• To review past and present performance, identifying strengths and weaknesses.

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5. Organizational Goals

• To clarify, for the individual, organizational expectations• To set objectives for the next period• This provides an opportunity to view one’s performance in the context of broader organizational goals.• To assess future promotion prospects and potential.

6. Job Standards

This provides an opportunity for clearer articulation and definition of performance expectations.

7. Documentation use of Performance appraisal

• Documentation for HR decisions• Helping to meet legal requirements

Contents Of Performance Appraisal

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Generally the content to be appraised is determined on the basis of job analysis. The content to be appraised may vary with the purpose of appraisal and level of employees.

For officer’s the content should be:

Regularity of attendance Ability to work with others Leadership styles Initiative Technical skill Ability to grasp new things Creative skills Honesty and Sincerity Capability of assuming responsibility Judgment skill Quality of suggestions offered for improvement.

Process Of Performance Appraisal:

1. ESTABLISHING PERFORMANCE STANDARDS The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.

2. COMMUNICATING THE STANDARDS Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.

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3. MEASURING THE ACTUAL PERFORMANCE The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work.

4. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE The actual performance is compared with the desired or the

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standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees’ performance.

5. DISCUSSING RESULTS The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.

6. DECISION MAKING The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc.

Problem Occurs In Performance Appraisal The problems inherent in performance appraisal may be listed thus:

1 Rating biases: Is that rating which is not verifiable by others. The rater biases include : a)Halo: The Halo error occurs when one aspect of the subordinate’s performance affects the rate’s evaluation of other performance dimensions. Eg: an employee might be rated high on performance simply because he has a good dress sense and comes to office punctually!

b) Horn effect: The rate’s bias is in the other direction, where one negative

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quality of the employee is being rated harshly. For example, the rate rarely smiles, so he cannot get along with employee! c) Leniency: Depending on rater’s own mental make-up at the time of appraisal, raters may be rated very strictly or very leniently. Appraisers generally find evaluating others difficult, especially where negative ratings have to be given.The leniency error can render an appraisal system ineffective.

d) Central tendency: An alternative to the leniency effect is the central tendency, which occurs when appraisers rate all employees as average.

e) Personal Prejudice : If the rater dislikes any employee or any one group, he may rate them at the lower end , which may distort the rating purpose and affect the career of these employees.

2) Supervisors were often confused due to too many objectives of performance appraisal.

3) Management emphasises punishment rather than development of an employee in performance appraisal.

4) Most part of the appraisal based on subjectivity.

5) Less reliability and validity of the performance appraisal techniques.

6) Absence of inter-rater reliability.

7) Some superiors completed appraisal reports within a few minutes.

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How To Minimise The Problem Of Performance Appraisal

By convening an open meeting with the appraises to discuss the performance of all employees before, during and after performance review discussion.

By encouraging everyone one to comment on each other’s achievements and areas requiring improvement.

The appraisal should tell the truth and reality behind the curtains to this subordinate.

By conducting counselling meetings with the appraisees to appraise them of the reasons for their performance and its consequences.

Objectives Of Hypothesis:

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Hypotheses are tentative, intelligent guesses as to the solution of the problem. Hypothesis is a specific statement of prediction. It describes in concrete terms

what you expect to happen in the study. Hypothesis is an assumption about the population of the study. It delimits the area of research and keeps the researcher on the right track.

So, Hypothesis of research is as follows:

Null Hypothesis:

Ho: There can be increase in the number of employee/organization who is satisfied or benefited with appraisal.

Alternative Hypothesis:

Ha: There cannot be increase in the number of employee/organization who is dissatisfied or not benefited with appraisal.

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Questionnaire:

I am Rekha Gaikwad student of MMS working on a Project, performance appraisal is play important role for organization and employee in Navi Mumbai Region. I would be Thankful to you if you could kindly share some valuable time of yours to give your opinion on mention subject.

1) Name:

2) Gender: male female

3) Your Age: Below 25 Bet 25 to 40 Above 40

4) Work Experience:

0 to 5 years Bet 5 to 20 more than 25

5) Job Profile : Executive manager M.D. Other

6) company name:

7) whether appraisal motivates you to work?

Yes No

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8) In what terms they want appraisal & why?

increment in salary designation both

______________________________________________________________________________

9) Due to appraisal whether organization are benefited?

Yes No

10) Do u work hard for performance appraisal?

Yes No

11) due to appraisal are you committed with organization?

Yes No

12) Does appraisal satisfies you with job?

Yes No

13) do you like responsibilities which you get from appraisal?

Yes No

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14) Dose age play vital role for performance appraisal?

Yes No

15) Due to appraisal you get growth or opportunity in your job?

Yes No

16) Does your organization really appraise you on your performance?

Yes No

17) Their is any partiality or politics during appraisal?

Yes No

Thank you.

Analysis of Questionnaires

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60%

30%

10%

Motivatied Employee

Motivatied Partially MotivatiedNot at All Motivatied

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65%

25%

10%

Benifited for Organisation

Benifited PratialyNot At All Benifited

Derived From Research

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From the research it is clear that most of the employee like the appraisal in terms of money as well as designation .It is also understand that employee work more hard for the appraisal which directly help the employees growth and development which is indirectly benefited organizations.

Conclusion

This research result shows that performance appraisals its help to motivated employee and their growth..Also an organisation’s goals can be achieved only when employee put in their best efforts. so that performance of employee improve in aspect of organisational l growth.

BIBLIOGRAPHY

Article on performance appraisal system by Arvind Sudarsan.

Text book of Personal and Human Resource Managment by P. Subba Rao

WEBLIOGRAPHY

http://www.HR.com

http://www.Mnagmentparadise.com

http://www.google.com

http://www.scridd.com

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