PERFORMANCE MANAGEMENT SYSTEM AND APPRAISAL FOR

TECHNICAL STAFF

AT DREAM PLAST INDIA PVT.LTD

A PROJECT REPORT

Under Guidance of

Mr.Amit Mishra

Submitted by

Shilpa Harishchandra Walekar

in partial fulfillment o f the requirement

for the award of the degree

Of

MBA

IN

Human Resource Management

April- 2015

1

Acknowledgement

Our sincere thanks to Mr.Amit Mishra , I express our deep sense

of gratitude who has been a source of inspiration throughout

the course of this work with his inestimable advise and moral

encouragement

I would like to thank Plant Head and HR Head of M/s.Dream

Plast India Pvt Ltd who helped me completion of project.

2

BONAFIDE CERTIFICATE

Certified that this project report titled “PERFORMANCE

MANAGEMENT SYSTEM AND APPRAISAL FOR TECHNICAL STAFF

AT DREAM PLAST INDIA PVT.LTD is” is the bonafide work

of “SHILPA HARISHCHANDRA WALEKAR ” who carried out the

project work under my supervision.

Amit Mishra

3

Abstract/Executive Summary

o To study the existing Performance management system for associates at Dream Plast

India Pvt Ltd (DP)

o To design skills matrix for l Staff at DP

o To develop performance management system for the associates, at Dream Plast India

Pvt Ltd (DP)

o To study the overall effectiveness of the Performance Management system at DP

o To know the relationship between employees performance and organizational goals,

problem Statement Data Collection Judge the Performance Close monitoring of

Work, Working Hrs and Working Culture

4

LIST OF ABBREVATIONS

Sr.No

1. GDP Gross Domestic Product

2. HACCP Hazard Analysis Critical Control Point

3. ISO Indian Standard Organisation

4. QC Quality Control

5. R & D Research and Development

6. HR Human Resource

7. BOD Board Of Director

8. MD Managing Director

9. VP Vice President

10. QMS Quality Management System

11. MBO Management By Objective

12. KRA Key Result Area

13. PA Performance Appraisal

14. PAS Performance Appraisal System

15. PAF Performance Appraisal Format.

5

1.0 INTRODUCTION................................................................................................................3

2.0 COMPANY PROFILE.........................................................................................................6

3. THEORETICAL BACKGROUND OF STUDY.................................................................11

3.1 Need for the study of effectiveness of Performance Appraisal System.........................12

3.2 Performance Appraisal...................................................................................................13

3.3 Process of Performance Appraisal.................................................................................15

3.4 Performance tests & observations..................................................................................20

3.5 Rating Errors in Performance Appraisal........................................................................26

3.6 Benefits of performance appraisal system:-...................................................................28

3.7 PERFORMANCE APPRAISAL SYSTEM AT DREAM PLAST INDIA...................30

4.0 OBJECTIVES OF THE STUDY.......................................................................................33

5.0 RESEARCH METHODOLOGY.......................................................................................35

5.1 RESEARCH DESIGN...................................................................................................37

5.3 DATA COLLECTION...................................................................................................39

6.0 DATA ANALYSIS AND INTERPRETATION...............................................................41

6.0 Findings from Questionnaire..............................................................................................57

7.0 SUGGESTIONS & CONCLUSIONS...............................................................................58

7.1 SUGGESTIONS............................................................................................................59

8.0 LIMITATIONS OF THE STUDY.....................................................................................63

9.0 BIBLIOGRAPHY..............................................................................................................65

Ranjit Kumar; Research methodology: a step-by-step guide for beginners;No. 2 Vol

2005......................................................................................................................................65

ANNEXURE-I.........................................................................................................................67

ANNEXURE-II....................................................................................................................72

6

Table of Figures

Figure 1 Organization chart......................................................................................................10

Figure 2 SMART Significance.................................................................................................14

Figure 3 Flow chart..................................................................................................................15

Figure 4 Existing Performance Apprisal System.....................................................................43

Figure 5 Evaluation..................................................................................................................45

Figure 6 Evaluation of Performance........................................................................................45

Figure 7 Satisfaction Level......................................................................................................46

Figure 8 Satisfaction Level......................................................................................................46

Figure 9 Chance of Matching of Performance appraisal system.............................................48

Figure 10 Chance of Matching of Performance appraisal system...........................................48

7

LIST OF TABLES

Table No Table Name

1. Projected Growth Rate Table

2. Performance Appraisal format

3. Awareness of existing Performance Appraisal System

4. Frequency Of Evaluating Performance

5. Satisfaction level of employee with existing PAS

6. Chances of matching existing performance appraisal system to employee expectation

7. Importance Of Performance Appraisal to Employees Performance

8. Increments Based On Performance Of Employee

9. Need of improvement in existing PAS

8

1.0 INTRODUCTION

9

Human Resource Management is the backbone of an organization. The increased scale of

business operation and growing competition has made the job of a management professional

more challenging than ever before. In today’s highly competitive environment, as a student

must devote significant time, energy and resources for achieving the goals. Carrying out a

project is a chance to know about the organization and gain practical knowledge.

The performance appraisal of the employee in the organization should be effective tool for

measuring the employee performance. If the performance is not measured in real manner, it

will be a critical issue. A study on effectiveness of performance appraisal was undertaken to

study the reasons and ways to improve the condition. Performance appraisal is defined as the

process of accessing the performance and progress of an employee or a group of employees

on a given job and their potential for future development. It consists of all formal procedures

used in working organizations and potential of employees.

Performance appraisal system plays a significant role in every organization as it helps the

employee as well as organization to overcome the weaknesses and to improve over strengths.

Also it will contribute to the growth and development of the employee by creating a desirable

culture and tradition in the organization.

Thus the purpose of the project is to study the effectiveness of the performance appraisal

system of Dream Plast India by studying the existing appraisal system which helps to find the

gaps in it. This leads to define the effectiveness of the appraisal system in terms of goal

alignment, motivation, development/growth, performance assessment and reward for top

performance.

10

The descriptive design is used for the study of this project. The sampling technique adopted

for purpose of study is convenience sampling as it helps to select the particular unit of the

universe to constitute a sample. Findings were made based on the data collected from 40

employees with the help of questionnaire.

The overall analysis found that the performance appraisal system of Dream Plast India is not

effective as it is intensive. The average employee satisfaction and the rare employee

growth/development show that the current appraisal system is not effective. Also there is a

need of improvement in performance appraisal system. The performance gaps found in

existing performance appraisal system are related with the period, methodology and

standardization of the appraisal system. The organization is interested in improving the

efficiency and utility of performance appraisal system to succeed in today’s dynamic

environment. So there is a need of improvement in existing performance appraisal system

which plays a catalytic role for the organization.

11

2.0 COMPANY PROFILE

12

We are one of the most trusted manufacturers, suppliers and exporters of a wide range of

Plastic Toys, Indoor Plastic Toys, Outdoor Plastic Toys. The product range includes a wide

gamut of Toys, which can be useful to the children of different age group. Manufactured

from high density polythene and tested as per the industry standardized guidelines lines, these

Toys are in compliance with international standard and are assured of being completely safe

for children.

Toys are the best ally of kids. Playing with their favourite toy is perhaps the happiest moment

for kids. To bring that competent smile in every kid' face, we, Dream Plast India, one of the

leading manufacturers and exporters, are offering a wide range of Plastic Toys like Plastic

Balls, Indoor Plastic Toy, Outdoor Plastic Toys, etc. In our wide range, there are almost every

types of Toys. Manufactured from industrially prescribed High Density Polythene, these

Toys are safe for children use. Further, these Toys are durable and come in proper

packagings. Besides, available in completive costings, these toys can be availed by one and

all.

Our main objective is to offer our clients with a quality range of Plastic Toys. Hence, we

strive to bring more improvement in the quality standard of our products. Accordingly, we

keep ourselves abreast with the new technologies and innovations of the plastic industry.

Further, we possess a world class manufacturing facilities to support our production process.

Also, we have an advanced quality testing unit, designing unit, packaging unit and a

warehouse.

In achieving our present day market position, our mentor Mr. Amit Mishra has made a major

contribution. He has laid down such effective company policies, under which, we earn

maximum profit and also provide best products to our customers.

Why Us?

13

We are well known global brand of Plastic toys. Customers have highly appreciated the

product range for its quality and cost effectiveness. Some of the other highlighting aspects of

us are as follows.

Optimum quality and variety of products

Years of experienced

Team of expert professionals

Business Type Exporter , Manufacturer , Supplier

Primary Competitive Advantages State of the art infrastructure

Safe for children 

Team of experts

Products with International standards

Commitment to 100% client satisfaction

Sales Volume 40 Lacs

No of Staff 15

Year of Establishment 2000

Investment on Manufacturing Equipment 50 Lacs

No of Engineers 1

Monthly Production Capacity 5.5 Tons

Product Range Indoor Plastic Toys  

Outdoor Plastic Toys

Plastic Balls

And all kind of Popular Plastic Toys

14

Some of Our Products

15

Organization Chart

Figure 1 Organization chart

16

BOD

MD

ICE-CREAM DIVISION

VP-SALES

NORTH

VP OPERAT

ION

VP-SALES CENTRAL & SOUTH

DAIRY DIVISION

VP-PROCUREMENT

VP-DAIRY

VP-SALES &

MARKETING

3. THEORETICAL

BACKGROUND OF

STUDY

17

3.1 Need for the study of effectiveness of Performance Appraisal System

Through Organization’s Perspective:-

To study the assessment of performance as well as potential for the development of

employee.

To make the improvement in the existing performance appraisal system.

To check the employee satisfaction level with current performance appraisal system.

To look after the needs of both employee as well as organization.

To generate the information for personnel development and organization planning.

To promote better understanding of employees role and clarity about his/her function.

To establish common ground between employee and supervisor, this helps to create

the efficient work environment.

To provide more objective basis for promotion and transfer decisions.

To facilitate decisions about incentives, merits and awards.

To identify training and development needs and facilitate improvement of skills and

knowledge.

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Through Employee’s Perspective:-

To overcome his weaknesses, improve over his strengths, and thus enable him to

improve his performance and that of the department.

Contribute to the growth and development of the employee through helping him in

realistic goal setting.

To encourage high level of employee performance.

To motivate employee.

Generate significant, relevant, free, and valid information about employees.

3.2 Performance Appraisal

Performance Appraisal is defined as the process of assessing the performance and progress of

an employee or a group of employees on a given job and his / their potential for future

development. It consists of all formal procedures used in working organizations and potential

of employees. According to Flippo, “Performance Appraisal is the systematic, periodic and

an important rating of an employee’s excellence in matters pertaining to his present job and

his potential for a better job.” Performance appraisal system should evaluate, audit, motivate,

identify training needs, develop the individual and plan for future performance.

Performance appraisal is objective assessment of an individual’s performance against well

defined benchmarks. Performance appraisal offers competitive advantage to a firm by

improving performance, helping to make correct decisions, ensuring legal compliance,

19

minimizing job dissatisfaction and employee turnover and ensuring consistency between

organizational strategy and behavior.

Performance Appraisal System should be base on following criteria:-

Figure 2 SMART Significance

Characteristics:-

1.    Performance Appraisal is a process.

2.    It is the systematic examination of the strengths and weakness of an employee in terms of

his/her job.

3.    It is scientific and objective study. Formal procedures are used in the study.

4.    It is an ongoing and continuous process wherein the evaluations are arranged periodically

according to a definite plan.

5.    The main purpose of Performance Appraisal is to secure information necessary for

making objective and correct decision of an employee.

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3.3 Process of Performance Appraisal

The process of performance appraisal is as follows:

Figure 3 Flow chart

21

METHODS OF PERFORMANCE APPRAISAL:-

METHODS OF PERFORMANCE APPRAISAL

PAST ORIENTED METHODS FUTURE ORIENTED METHODS

Rating scales

Checklist

Forced choice method

Forced distribution method

Critical incident method

Behaviorally anchored rating scale

Field review

Performance tests & observations

Confidential records

Essay method

Cost accounting method

Comparative evaluation approaches

Ranking method

Paired comparison method

Management by objectives

Psychological appraisals

360º appraisals

Assessment centers

Table 1 Appraisal System

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Rating Scales

This is the simplest & most popular technique for appraising employee performance. The

typical rating scale system consist of several numerical scales, each representing a job related

performance criterion such as dependability, initiative, output, attendance,

attitude ,cooperation etc. Each scale ranges from excellent to poor. The raters checks the

appropriate performance level on each criterion then computes the employees total numerical

score. The number of points scored may be linked to salary increases.

Advantages:-

Adaptable

Easy to use

Low cost

Every type of job can be evaluated, the only requirement being that the job-

performance criteria should be changed.

Large number of employees can be evaluated in short time so time consuming.

Disadvantages:-

The rater biases are likely to influence evaluation

Numerical scoring gives an illustration of precision that is really unfounded.

23

Checklist

This method describes a performance appraisal method where rater familiar with the jobs

being evaluated prepared a large list of descriptive statements about effective and ineffective

behavior on jobs. Thus the checklists of statements on the traits of the employee and his/her

job is prepared in 2 columns- viz. Yes/No.

Disadvantages:-

Leads to the Halo effect.

Does not allow raters to give relative ratings.

Forced Choice Method

In this method the rater is forced to select statements which are readymade. Its advantage is

absence of personal bias in rating. The disadvantage is that the statements may not be

properly framed.

Forced distribution method

One of the error in rating is leniency- clustering a large number of employees around a high

point on rating scale. The forced distribution method seeks to overcome the problem by

compelling the rater to distribute the rates on all points on the rating scale. The method

operates under the assumption that the employee performance level conforms to normal

statistical distribution.

24

Critical incident method

The critical incident for performance appraisal is a method in which the manager writes down

positive and negative performance behavior of employees throughout the performance

period.

Advantages:-

Evaluation is based on actual job behavior

Giving job related feedback to ratee is easy.

Behaviorally anchored rating scales

This method used to describe a performance rating that focused on specific behaviors or sets

as indicators of effective or ineffective performance. It is a combination of the rating scale

and critical incident techniques of employee performance evaluation. BARS are said to be

behaviorally anchored as the scales represent a range of descriptive statements of behavior

varying from the least to the most effective.

Field review

The field review is one of several techniques for doing this. A member of the personnel or

central administrative staff meets with small groups of raters from each supervisory unit and

goes over each employee's rating with them to (a) identify areas of inter-rater disagreement,

25

(b) help the group arrive at a consensus, and (c) determine that each rater conceives the

standards similarly.

3.4 Performance tests & observations

With the limited number of jobs, employee assessment may be based upon a test of

knowledge or skills. The test must be reliable and validated to be useful.

Confidential Records

Confidential records are maintained mostly in the government departments, though its

application in the industry is not ruled out. Justification is required for outstanding and poor

rating. Overall rating is given on 5 point rating scale. The confidential reports are highly

secretive.

Essay appraisal

In its simplest form, this technique asks the rater to write a paragraph or more covering an

individual's strengths, weaknesses, potential, and so on. In most selection situations,

particularly those involving professional, sales, or managerial positions, essay appraisals

from former employers, teachers, or associates carry significant weight.

Cost Accounting Method

This method evaluates performance from the monetary returns the employee yields to his or

her company. A relationship is established between the cost included in keeping the

26

employee and the benefits the firm drives from him/her. This method has vast potential as

increasingly firms are converting their training departments into profit centres.

Comparative Evaluation Approach

It compares one workers performance with his co-workers. These appraisals are usually

conducted by superiors. As this appraisal can result in a ranking from best to worst, they are

useful in deciding merit pay increases, promotions and organizational rewards. The usual

comparative forms used in this kind of evaluation are the ranking method and paired

comparison method.

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Ranking methods

For comparative purposes, particularly when it is necessary to compare people who work for

different supervisors, individual statements, ratings, or appraisal forms are not particularly

useful. Instead, it is necessary to recognize that comparisons involve an overall subjective

judgment to which a host of additional facts and impressions must somehow be added.

The best approach appears to be a ranking technique involving pooled judgment. The two

most effective methods are alternation ranking and paired comparison ranking.

1.    Alternation ranking:

Ranking of employees from best to worst on a trait or traits is another method for evaluating

employees. Since it is usually easier to distinguish between the worst and the best employees

than to rank them, an alternation ranking method is most popular.

2.   Paired-comparison ranking:

 This technique is probably just as accurate as alternation ranking and might be more so. But

with large numbers of employees it becomes extremely time consuming and cumbersome.

Paired comparison method

Paired comparison analysis is a good way of weighing up the relative importance of options.

A range of plausible options is listed. Each option is compared against each of the other

options. The results are tallied and the option with the highest score is the preferred option.

Management by objectives

28

To avoid, or to deal with, the feeling that they are being judged by unfairly high standards,

employees in some organizations are being asked to set - or help set - their own performance

goals.

Psychological appraisals

Psychological appraisals focus on future potential and not actual performance. Industrial

psychologists are employed for conducting the appraisal. The appraisal normally consists of

in-depth interviews, psychological tests, discussions with supervisors and a review of other

evaluation. The psychologist then writes an evaluation of the employee’s intellectual,

emotional, motivational and related characteristics that suggest individual potential and may

predict future performance.

29

Assessment centers

An assessment center is a central location where managers may come together to have their

participation in job related exercises evaluated by trained observers. Mostly used for

executive hiring, evaluating executive or supervisory potential. Assessment centre refers to a

method to objectively observe and assess the people in action by experts or HR professionals

with the help of various assessment tools and instruments. Assessment centers simulate the

employee’s on-the-job environment and facilitate the assessment of their on-the-job

performance. An assessment centre typically involves the use of methods like social/informal

events, tests and exercises, assignments being given to a group of employees to assess their

competencies and on-the-job behavior and potential to take higher responsibilities in the

future. Generally, employees are given an assignment similar to the job they would be

expected to perform if promoted. The trained evaluators observe and evaluate employees as

they perform the assigned jobs and are evaluated on job related characteristics. It is costly

method.

360 Degree Feedback

Many firms have expanded the idea of upward feedback into what the call 360-degree

feedback. The feedback is generally used for training and development, rather than for pay

increases.

Most 360 Degree Feedback system contains several common features. Appropriate parties –

peers, supervisors, subordinates and customers, for instance – complete survey,

30

questionnaires on an individual. 360 degree feedback is also known as the multi-rater

feedback, whereby ratings are not given just by the next manager up in the organizational

hierarchy, but also by peers and subordinates. Appropriates customer ratings are also

included, along with the element of self appraisal. Once gathered in, the assessment from the

various quarters are compared with one another and the results communicated to the manager

concerned.

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3.5 Rating Errors in Performance Appraisal

Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as

'rating errors'. These errors can seriously affect assessment results. Some of the most common

rating errors are: -

Leniency or severity: - Leniency or severity on the part of the rater makes the assessment

subjective. Subjective assessment defeats the very purpose of performance appraisal. Ratings

are lenient for the following reasons:

a)    The rater may feel that anyone under his or her jurisdiction who is rated unfavorably will

reflect poorly on his or her own worthiness.

b)    His/her may feel that a derogatory rating will be revealed to the rate to detriment the

relations between the rater and the ratee.

c)     She/he may rate leniently in order to win promotions for the subordinates and therefore,

indirectly increase his/her hold over him.

Central tendency: - This occurs when employees are incorrectly rated near the average or

middle of the scale. The attitude of the rater is to play safe. This safe playing attitude stems

from certain doubts and anxieties, which the raters have been assessing the rates.

Halo error: - A halo error takes place when one aspect of an individual's performance

influences the evaluation of the entire performance of the individual. The halo error occurs

when an employee who works late constantly might be rated high on productivity and quality

of output as well as on motivation. Similarly, an attractive or popular personality might be

given a high overall rating. Rating employees separately on each of the performance

32

measures and encouraging raters to guard against the halo effect are the two ways to reduce

the halo effect.

Rater effect: -This includes favoritism, stereotyping, and hostility. Extensively high or low

score are given only to certain individuals or groups based on the rater's attitude towards

them and not on actual outcomes or behaviors; sex, age, race and friendship biases are

examples of this type of error.

Primacy and Regency effects: - The rater's rating is heavily influenced either by behavior

exhibited by the ratee during his early stage of the review period (primacy) or by the

outcomes, or behavior exhibited by the ratee near the end of the review period (regency). For

example, if a salesperson captures an important contract/sale just before the completion of the

appraisal, the timing of the incident may inflate his or her standing, even though the overall

performance of the sales person may not have been encouraging.

Performance dimension order: - Two or more dimensions on a performance instrument

follow each other and both describe or rotate to a similar quality. The rater rates the first

dimensions accurately and then rates the second dimension to the first because of the

proximity. If the dimensions had been arranged in a significantly different order, the ratings

might have been different.

Spillover effect: - This refers to allowing past performance appraisal rating to unjustifiably

influence current ratings. Past ratings, good or bad, result in similar rating for current period

although the demonstrated behavior does not deserve the rating, good or bad.

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3.6 Benefits of performance appraisal system:-

Motivation and satisfaction

Performance appraisal can have a profound effect on levels of employee motivation and

satisfaction - for better as well as for worse. Performance appraisal provides employees with

recognition for their work efforts. The power of social recognition as an incentive has been

long noted. If nothing else, the existence of an appraisal program indicates to an employee

that the organization is genuinely interested in their individual performance and development.

This alone can have a positive influence on the individual's sense of worth, commitment and

belonging. Absenteeism and turnover rates in some organizations might be greatly reduced if

more attention were paid to it.

Training and development

Performance appraisal offers an excellent opportunity - perhaps the best that will ever occur -

for a supervisor and subordinate to recognize and agree upon individual training and

development needs. Performance appraisal can make the need for training more pressing and

relevant by linking it clearly to performance outcomes and future career aspirations.

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Recruitment and Induction

Appraisal data can be used to monitor the success of the organization's recruitment and

induction practices. For example, how well are the employees performing who were hired in

the past two years?

Appraisal data can also be used to monitor the effectiveness of changes in recruitment

strategies. By following the yearly data related to new hires (and given sufficient numbers on

which to base the analysis) it is possible to assess whether the general quality of the

workforce is improving, staying steady, or declining.

Employee Evaluation

Though often understated or even denied, evaluation is a legitimate and major objective of

performance appraisal. Performance appraisal is the process of examining and evaluating the

performance of an individual. There may be an acceptable middle ground, where the need to

evaluate employees objectively, and the need to encourage and develop them, can be

balanced.

 

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3.7 PERFORMANCE APPRAISAL SYSTEM AT DREAM PLAST INDIA

The Performance Appraisal System at Dream Plast Indiais used for assessing the performance

and progress of employee on a given job responsibilities. At Dream Plast Indiathe appraisal is

done on the yearly basis e.g. from March 2009-April 2010. In this increments are given to the

employee on the basis of his/her performance. The performance appraisal system at Dream

Plast India is based on the Rating scale methodology.

The description of existing performance appraisal system is as follows:-

HR/Personnel Department distributes performance appraisal format to all department.

The format has various parameters for which the employee is judge for performance

The HOD gives ratings for his team members.

Filled format are returned to HR department.

HR/Personnel department discuss the same with each other for final ratings. Final decision is based on MD.

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The format of performance appraisal form is as follows:-

Sr.no Name Of

Employee

Parameter

1

(20)

Parameter

2

(20)

Parameter

3

(20)

Parameter

4

(20)

Parameter

5

(20)

Total

(100)

1.

2.

3.

4.

5.

Table 2 Performance Apprisal Format

37

After the assessment of the performance of the employee according to above form the grades

are given to the employee and on the basis of that grade the respective increments are given

to the employee.

Total Marks Grades Increments Given

80-95 above * % on basic is calculated for increment.

70-80 A % on basic is calculated for increment

60-70 B % on basic is calculated for increment

Below 60 C % on basic is calculated for increment

38

4.0 OBJECTIVES OF THE STUDY

The present study on the effectiveness of performance appraisal system is based on the

following:-

1. To study the existing performance appraisal system.

2. To identify the gaps in existing performance appraisal system.

3. To study the effectiveness of an existing performance appraisal system.

39

SIGNIFICANCE OF PROJECT WORK:-

The project is significant as it helps in:-

To the organisation:-

Helps in the evaluation of performance appraisal system

Helps the organization in improving the existing performance appraisal system.

Reducing the biasing developed in the organization

Encouraging performance improvement

Determining compensation changes

Encouraging coaching and mentoring

Supporting manpower planning or succession planning

Improving overall organizational performance

To the employee:-

Help them to get the efficient method of performance appraisal.

Contribute to the growth and development of the employee through helping him in

realistic goal setting.

Providing feedback to employees about their performance

Motivating superior performance

Setting and measuring goals

Counseling the poor performers

40

5.0 RESEARCH

METHODOLOGY

41

In order to accomplish the objectives of the study, it is essential to articulate the manner in

which it is to be conducted, i.e., the research process is to be carried-out in a certain

framework. The research methodology, which follows, is the backbone of the study.

Research is structured inquiry that utilises acceptable scientific methodology to solve

the problem and creates new knowledge that is generally applicable.

Characteristics of research:-

The research undertaken is to be

Controlled (includes cause and effect analysis)

Rigorous (Accurate)

Systematic (Regular)

Valid and verifiable

STATEMENT OF THE PROBLEM

The performance appraisal of the employees in the organization should be an effective tool

for measuring the employee’s performance. If the performance not measured in a real manner

it will be a critical issue. A study on effectiveness of performance appraisal was undertaken

to study the reasons and ways to improve the performance appraisal system of organization.

42

5.1 RESEARCH DESIGN

Research design aids the researcher in the allocation of limited resources by posing crucial

choices in methodology.

Research design is the plan and structure of investigation so conceived as to obtain answers

to research questions. The plan is the overall scheme or program of the research. It includes

an outline of what the investigator will do from writing hypothesis and their operational

implications to the final analysis of data.

RESEARCH DESIGN USED FOR THIS STUDY IS:-

Descriptive research design;-

The design for this study is descriptive research design. This design was chosen as it

describes accurately the characteristics of a particular system as well as the views held by

individuals about the system. The views and opinions of employees about the system help to

study the suitability of the system as well as the constraints that might restrict its

effectiveness. Thus this design is used as it helps to describe what is prevalent regarding

group of people, community, phenomenon, situation and outcome.

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5.2 SCOPE OF THE STUDY

The scope of the project is fully dependent upon the objectives of the project.

This study can be helpful to the organisation for conducting any further research.

It is helpful in the study of existing performance appraisal system.

It is also helpful in finding out the effectiveness of the performance appraisal system.

This study also serves as a base for understanding the perception about the employees

regarding their performance appraisal.

With the results of the study the company can improve their standards of their

appraisal system

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5.3 DATA COLLECTION

Data collection is a term used to describe a process of preparing and collecting data. The

purpose of data collection is to obtain information to keep on record, to make decisions about

important issues, to pass information on to others. Primarily, data is collected to provide

information regarding this topic.

SECONDARY SOURCE:

The secondary source of information is based on the various details retrieved from

Books

Websites

Project Reports

PRIMARY SOURCE:-

The primary source of collection of data is through Questionnaire & Interview.

The interview of HR is conducted to get the information of the existing performance

appraisal system and their policies for the improvement in it. The opinion on existing

Performance Appraisal practices and their affectivity were collected through questionnaire

which was circulated to all the employees at all levels and the results have been analyzed on

the basis of agree and disagree.

SAMPLING:-

45

The sampling technique adopted for the purpose of the study is convenience

sampling. As the name implies a convenience sample means selecting particular units of the

universe to constitute a sample.

SAMPLE SIZE:-

The sample size of the study is 40. This sample is considered as representative. The samples

are selected as the staff employee of ice-cream division.

TOOLS OF THE DATA COLLECTION

The tool used for collecting the data is through the Questionnaire .

The main reason for selecting the questionnaire method for the study is:

Respondents have adequate time to give well thought out answers.

The time of the study was also a limiting factor.

Another tool used for data collection is Interview.

The main reason for selecting this tool is to get the detail information about the existing

appraisal system by interviewing the HR of the organisation.

Statistical tools used

Statistical tools like Tabulation, Graphic Representations, and Percentage analysis are used in

the compilation and computation of data.

46

6.0 DATA ANALYSIS AND

INTERPRETATION

47

This chapter deals in tabular presentation results and their analysis. For the purpose of easy

reading the section has been divided into three parts.

Tabular form of Response

Findings

Remarks on each question

Q1. Are you aware of existing Performance Appraisal system in your organization?

Awareness of existing performance appraisal system

No of respondents

% Awareness Of existing performance appraisal system

Yes 26 65No 14 35Total 40 100

Table 3 Performance Apprisal System

FINDINGS :-

48

Figure 4 Existing Performance Apprisal System

The table 3 above shows that 65% of the respondents are aware of the existing

performance appraisal system of the organization.

While remaining 35% of the respondents are not aware of the existing system of

performance appraisal.

REMARKS:-

The findings regarding the awareness for the existing appraisal system helps to

examine the percentage figure regarding the awareness of performance appraisal.

This reflects that the current need of organization is to create awareness of

performance appraisal system which can be made familiarize during the probation of

employee as well as by conducting the small workshop for the employee.

49

Q2. What should be the frequency of evaluating the performance?

(Periodically/ quarterly /half yearly/Yearly)

Frequency Of Evaluating Performance

No of Respondents

% importance of Performance Appraisal To Employee Performance

Periodically 0 0

Quarterly 0 0

Half Yearly 0 0

Yearly 40 100

Total 40 100

Figure 5 Evaluation

Period-ically

Quaterly Half Yearly

Yearly0

20

40

60

80

100

120

0 0 0

40

0 0 0

100

Frequency Of Evaluating Performance

No of Respondents% importance of Per-formance Appraisal To Employee Performance

Frequency Of Evaluating Performance

No.

Of

Res

pond

ents

Figure 6 Evaluation of Performance

50

FINDINGS:-

The table 4 of above shows that all respondent responded that the performance evaluation

should be conducted on yearly basis.

Q3.What is your satisfaction level with the existing performance appraisal system?

Satisfaction level with existing performance appraisal system

No of respondents

% Satisfaction level with existing performance appraisal system

Very low 2 5

Low 14 35

Average 20 50

High 4 10

Very high 0 0

Total 40 100

51

Figure 7 Satisfaction Level

Very low Low Average High Very high

0102030405060

2

1420

4 05

35

50

100

Satisfaction level of Employee with existing Per-formance Appraisal system

No of respondents% Satisfaction level with existing performance appraisal system

Satisfaction level

No

of r

esp

ond

ents

Figure 8 Satisfaction Level

FINDINGS:-

The table 5 shows that 5% of the respondents have very low satisfaction level. While 35% of

the respondent have low satisfaction level,50% of the respondents are having average

satisfaction and the 10 % of the remaining respondents are highly satisfied from the existing

performance appraisal system.

REMARKS:-

The findings show that there is average satisfaction level for existing performance appraisal

system in the organization. So there is a need of re-examination existing performance

appraisal system .Thus the existing system will be improve which leads to better performance

of employee as well as organization.

52

Q4.How often does the current performance assessment match to your expectation?

Chances of matching existing performance appraisal system to employee expectation

No of Respondents

% of chance of matching existing performance appraisal system to employee expectation

Never 0 0

Rarely 20 50

Often 4 10

Sometime 14 35

Everytime 2 5

Total 40 100

53Figure 9 Chance of Matching of Performance appraisal system

Never

Rarely

Ofte

n

Somet

ime

Everytim

e0

10

20

30

40

50

60

0

20

4

14

20

50

10

35

5

Chance Of matching existing Performance Appraisal Sys-tem To Employee Expectation

No of Respondents% of chance of matching existing performance appraisal system to em-ployee expectation

Employee expectation

No

of R

espo

nden

tsA

xis

Figure 10 Chance of Matching of Performance appraisal system

FINDINGS:-

The table 6 above shows that

There are rare chances to match the existing performance appraisal system to

expectation of 50% of respondents.

Existing performance appraisal system often matches to the expectation of 10% of

respondent.

Also the existing performance appraisal system sometimes matches to the expectation

of 35% of respondent.

While existing performance appraisal system matches to the expectation of remaining

5% of respondent.

54

REMARKS:-

The findings show that there is rare chance of matching the existing performance appraisal

system to the employee expectation. So there is a need to improve the existing performance

appraisal system by taking the feedback from the employee as well as by conducting the

performance appraisal interview.

Q5.How important do you think is the performance appraisal to your performance?

TABLE 7

Importance Of Performance Appraisal to Employees Performance

No of Respondents

% importance of Performance Appraisal To Employee Performance

Not Important 0 0

Important 8 20

Very Important 20 50

Most Important 12 30

Total 40 100

55

Not Im

porta

nt

Impo

rtant

Very I

mpo

rtant

Mos

t Im

porta

nt0

10

20

30

40

50

60

0

8

20

12

0

20

50

30

Importance Of Performance Appraisal To Employee Performance

No of Respondents% importance of Per-formance Appraisal To Employee Performance

Importance Of Performance Appraisal To Employee Performance

No

Of

Res

pon

den

ts

FINDINGS:-

The table 7 above shows that 20% of the respondents believe that the performance appraisal

system is important to their performance. While 50% of the respondents believe that the

performance appraisal system is very important to their performance and remaining 30% of

respondent believe that the performance appraisal is most important to their performance.

REMARKS:-

The findings show that every employee of the organization feels the need of the performance

appraisal to their performance to know their current level of performance as well as for the

sake of increments and promotions.

56

Q6. Is Increments based on performance of the Employee? (Yes/No)

TABLE 8

Increments Based On Performance Of Employee

No Of respondents% Of Employee Responded On Increments

Yes 40 100

No 0 0

Total 40 100

57

Yes No0

20

40

60

80

100

120

40

0

100

0

Increments Based On Performance Of Empolyee

No Of respondents% Of Employee Re-sponded On Increments

Increments Based On Performance Of Empolyee

No

Of

Res

pond

ents

FINDINGS:-

The table 8 of above shows that all the respondents know that their increments are based on

performance appraisal of the employee.

REMARKS: -

The above findings conclude that the increments are given to the employee on the

basis of the performance.

As the increments are based on performance, the work effectiveness is maintained

which leads to positive outcome to the organization in the form of profits etc.

Importance of performance appraisal linked to increment can be observed.

58

59

Q7. Is there any need of improvement in existing performance appraisal

system?(Yes/No)

TABLE 9

Need for improvement in performance appraisal

system

No Of respondent

s

Need of improvement in existing performance appraisal

system

Yes 40 100

No 0 0

Total 40 100

Yes No0

20

40

60

80

100

120

40

0

100

0

Need for improvement in existing per-formance appraisal system

No Of respondents

Need of improvement in ex-isting performance appraisal system

need for improvement in existing PAS

No

of R

espo

mde

nts

FINDINGS:-

The table 9 of above shows that all the respondents feels the need of improvement in the

existing performance appraisal system.

60

FINDINGS

Findings from Interview:-

Dream Plast Indiauses the rating scale method for its performance appraisal.(Ref:

Annexure -1 Q3)

The appraisal system is implemented for the staff employees.(Ref: Annexure -1 Q2)

There is a need to improve the performance appraisal system of the organization as it

doesn’t follow the systematic approach and is not standardised.(Ref: Annexure -1

Q5,Q6)

There is a need to sort the existing performance appraisal system gradewise.(Ref:

Annexure -1 Q7,Q8)

Performance appraisal is evaluated on yearly basis. But it is found that there is need

to assessed the performance of employee quarterly. So there is a need of improvement

of period in existing performance appraisal system.(Ref: Annexure -1 Q9,Q10)

The performance appraisal format of the existing performance appraisal system is

different for different departments. But organization feels the need of unique format

for all departments with the consideration of the KRA as well as general attributes.

(Ref: Annexure -1 Q11,Q12,Q13)

Managers are given training regarding the performance evaluation.(Ref: Annexure -1

Q15)

Performance of employee is being accessed by the Superior but there is a need of self

rating to reduce the biasing in the appraisal process.(Ref: Annexure -1 Q14,Q16)61

The appraisal ratings are needed to be communicated. .(Ref: Annexure -1 Q17,Q18)

The appraisal interviews are not conducted so there is a need to conduct it for analysis

of employee and taking their feedback. Thus the appraisal interview is a tool that

helps for improving the performance appraisal system.(Ref: Annexure -1 Q20)

There is average satisfaction level with existing performance appraisal system which

shows that it is not effective. (Ref: Annexure -1 Q22)

The employee gets the increments on the basis of the performance appraisal.(Ref:

Annexure -1 Q23)

There is need to count the promotion, demotion and transfer on the basis of the

performance. (Ref: Annexure -1 Q24)

There is a need of reward recognition system on the basis of the performance which

helps to motivate the employee.(Ref: Annexure -1 Q25,Q26)

Performance appraisal system should be objective.(Ref: Annexure -1 Q31)

The existing performance appraisal system is intensive as it only considers the

increments but not the feedback for the employee. This leads to the stagnant growth

of the employee and reduces the effectiveness of existing appraisal system. Thus there

is a need to give the feedback to the employee which makes them aware regarding

their areas of improvement.(Ref: Annexure -1 Q29,Q30,Q31)

The organization needs to implement the phenomenon like Job Rotation, Job

Enrichment, Job Engineering and Job Enlargement for making the appraisal system

more effective.(Ref: Annexure -1 Q31)

62

6.0 Findings from Questionnaire

65% of the respondents are aware of the existing performance appraisal system of the

organization. (Ref: table 3 )

All respondents responded that there is a performance appraisal on yearly basis. (Ref:

table 4 )

50% of the respondents are having average satisfaction level from the existing

performance appraisal system. It shows that the performance appraisal system is not

effective and needs the improvement. (Ref: table 5 )

There are rare chances to match the existing performance appraisal system to the

expectation of 50% of the respondent. So it is a need to improve the appraisal system.

(Ref: table 6 )

50% of respondents think that the performance appraisal system is very important to

their performance. (Ref: table 7 )

All respondents responded that in existing performance appraisal system increments

are to be based on performance. (Ref: table 8 )

All the respondents feels the need of improvement in performance appraisal system.

(Ref: table 9 )

63

7.0 SUGGESTIONS &

CONCLUSIONS

64

7.1 SUGGESTIONS

The current need of organization is to create awareness of performance appraisal

system which can be made familiarize during the probation period of the employee or

by conducting an awareness programs.

The performance appraisal system should be based on quarterly evaluation which

helps to fill the performance gap as well as to achieve the targets.

Thus the organization should implement the unique (measurable) performance

appraisal format which is accessed both by self as well as superior including the KRA

as well as general attributes which helps to increase the effectiveness with the

increment in the productivity.

Appraisal ratings need to be communicated to the employees which lead to prevent

bias in the appraisal system.

Once an employee is evaluated, he/she has to be informed about their strengths and

weaknesses. An employee should aware of the above, he/she will improve their

strengths and weaknesses and also it helps to increase the productivity of the

organization. This helps to increase effectiveness of appraisal system.

The performance appraisal system should be based on objective basis as it helps to

take the decision regarding the incentives, merits & awards. This all helps to reduce

the bias in the appraisal system.

Also there is need of reward recognition system as it helps to motivate the employee

towards their work.

There is need to introduce the feedback mechanism for employees which helps in

development/ growth of employee and leads to an effective appraisal system.

65

The organization should implement the phenomenon like Job Rotation, Job

Enlargement, Job Engineering and Job Enrichment which helps in increasing the

effectiveness of the appraisal system.

The effectiveness of performance appraisal system depends on employee satisfaction

level as well as employee growth. Thus, to make the performance appraisal system

more effective the organization should consider the following:-

1. Goal Alignment

2. Motivation

3. Standardized Performance Assessment

4. Reward for Top Performance

66

7.2 CONCLUSION

1. This study shows a major amount of work towards developing an effective and

efficient performance appraisal system has not been accomplished to the fullest.

2. It seems that the organization is striving to improve the efficiency and utility of

performance appraisal system to succeed in today’s dynamic environment.

3. To make improvement in performance appraisal system there is a need to consider the

following:-

Outward Orientation of Performance Appraisal System

The appraisal system should be more sensitive and responsive to current competitive

environment. This is possible through making the organization.

Quality conscious in products and services to match international standards.

Customer oriented (internally as well as externally)

Cost effective

Technology oriented

Focused towards collaboration and teamwork

People oriented

Focused towards performance standards

In achieving the above, the performance appraisal system has a catalytic role to play.

67

Periodic Performance Review and Planning:

There should be some aspect in the PA forms, which deals with the effect of Internal

Influences, organizational influences and external influences on performance of employee to

make the PA system more sensitive to changes.

Increase awareness of company goals in order to integrate company and individual

expectations.

Conducting training workshops for appraisers to remove biases and errors in appraisal.

Increasing transparency and open communication and minimizing confidentiality in

performance review discussions.

The work done towards modifying and developing performance appraisal systems, time to

time should be continued.

Linkage with Rewards

Good performers should be recognized and rewarded, whereas weak performers need to be

encouraged to become better performers. PA systems when liked with individual rewards and

promotions create more problems than they help in motivating people. They encourage fewer

employees and discourage more. They do not develop the team spirit but rather enhance

interpersonal comparisons and power politics. The focus should be shifted from rewarding

the performance of few to development of performance of many.

68

However there is also a need for recognition and rewarding good work. Alternative systems

of rewarding with multiple reward/recognition mechanism are needed. But these systems

should be separated from other systems (like career planning).

69

8.0 LIMITATIONS OF THE

STUDY

70

The respondents are limited to Staff Employees of Ice-cream Division .

The respondents were selected inside the organization only. So it cannot be generalized

as a whole.

The human behavior is dynamic and hence the results may not hold good for a long time.

The results of the survey are totally dependent on the accuracy and authenticity of the

information provided by the respondents.

71

9.0 BIBLIOGRAPHY

72

a) Books:-

Aswathappa K; Human Resource management; No.5 Vol.2008; pp 243-272

Ranjit Kumar; Research methodology: a step-by-step guide for beginners;No. 2

Vol 2005

b) Internet sites:-

<http://www.citehr.com/33173-performance-appraisal-performance

management-system.html >

<http://performance-appraisals.org/faq/difpapm.htm

<http://performance-appraisals.org/faq/whatispm.htm >

<http://performance-appraisals.org/faq/whatcomponents.htm >

<http://performance-appraisals.org/faq/performancereview.htm>

<http://www.allprojectreports.com/Performance%20Appraisal%20system%20at

%20bsnl/performance%20Appraisal%20system%20at%20bsnl.htm>

<

http://changingminds.org/explanations/research/sampling/convenience_sampling.

htm >

<http://www.humanresources.hrvinet.com/what-are-key-result-areas-kra/

#comment-4490 >

<http://www.Indian Agricultural Resources - Dairy Milk Products.htm >

<http://www.performance appraisals and sample appraisal form templates and

360 degree appraisals free tips, performance evaluation, employee evaluation

tips.htm >

73

<http://www.fao.org/docrep/w7505e/w7505e06.htm#TopOfPage.htm>

<http://www.performance-appraisal.com/intro.htm>

<http://www.performance-appraisal.com/benefits.htm>

<http://performance-appraisals.org/faq/stplan.htm > <http://performance-

appraisals.org/faq/performancepurpose.htm> <http://performance-

appraisals.org/faq/legal.htm >

<http://performance-appraisals.org/faq/failure.htm >

<http://performance-appraisals.org/faq/communication.htm>

74

75

ANNEXURE-I

INTERVIEW OF MANAGER

Q1. Do you have implemented the Performance Appraisal System for Dream Plast India?

Ans:- Yes.

Q2. Who are the Part of the performance Appraisal?(Staff employee/Workers)

Ans:- Staff Employee.

Q3. Which method of performance appraisal is being used in Dream Plast India?

Ans:- Rating Scale Method.

Q4. Do you feel that there is a need to change the method of performance appraisal Ans:- No.

Q5. Do you feel that there should be any need to change or improve the Performance

Appraisal System of the Dream Plast India?

Ans:- Yes, it is needed to improve the system.

Q6. Why there is need to change or improve the Performance Appraisal System of Dream

Plast India?

Ans:- As in Dream Plast India the performance appraisal system which is implemented does

not follow the formal approach for performance appraisal. Thus there is a need of

standardised performance appraisal system.

Q7. Is the existing performance appraisal system based on grades?

Ans:- No.

Q8.Do you feel that there is need to sort the PAS gradewise?

Ans:- Yes.

Q9. What should be the frequency of evaluating the performance of employee?

76

Ans:- The performance of employee is evaluated on the yearly basis.

Q10. Do you feel that there is a need to change the frequency of evaluating the performance

of employee?

Ans:-Yes , it need to be change from yearly to quarterly basis.

Q11. Is Performance Appraisal Format same for all departments?

Ans:- No. As the parameters for the Performance Appraisal are different for different

departments.

Q12. Do you feel that there is a need to improve the performance appraisal format?

Ans:- Yes, we are on the way of improving the format for performance appraisal which is

unique for all the departments.

Q13. What kind of improvements you actually going to make in the existing performance

appraisal Format?

Ans:-

Implement the unique format for all the departments.

Performance Appraisal format should be based on the KRA.

Performance Appraisal Format should consider some general attributes also.

Q14. How should performance of the employee is being accessed?(Self/Superior)

Ans:- The performance of employee is being accessed by the Superior. The HOD of each

department can appraise the employee of respective department. Finally the appraisal is

recommended by the Managing Director.

Q15. Are managers given training in the rating of performance appraisal?

Ans:- Yes.

77

Q16. Is there any need to count the self rating in the performance appraisal system of Dream

Plast India?

Ans:- Yes . As it helps to reduce the biasing developed in the performance appraisal.

Q17. Are appraisal ratings communicated to the employees?

Ans:- No

Q18. Do you feel that there is a need to communicate the appraisal ratings to the employee?

Ans:- Yes, it is the need if self rating is implemented.

Q19. Are appraisal interviews being conducted?

Ans:- No.

Q20. Is there any need to conduct the appraisal interview for improving the performance

appraisal system?

Ans:- Yes,it is needed. Because it helps in the analysis of the employee against the various

parameters and take their feedback regarding the appraisal.

Q21. Is target achievement be the only criteria for performance appraisal?

Ans:- No.

Q22. What is your satisfaction level with existing performance appraisal system?

Ans:- Average.

Q23. How the performance appraisal system of Dream Plast India is beneficial to the

employees?

Ans:- The employee gets the increments on the basis of the performance appraisal.

Q24.Do you feel that there is a need to count the promotion, demotion and transfers on the

basis of the performance of the employee?

78

Ans:- Yes, it is needed.

Q25. Is there any reward recognition system on the basis of performance appraisal?

Ans:- No.

Q26. Do you feel that there is need to implement the reward recognition system in your

organization on the basis of performance?

Ans:- Yes, it is needed as it helps to motivate the employee .

Q27. Is training to be given on the basis of performance appraisal?

Ans:- No.

Q28. Do you feel that there is a need to give the training on the basis of performance

appraisal?

Ans:- No ,there is no any need. As the organization has not able to invest on the training cost.

This links with the cost control.

Q 29. Is current appraisal system gives feedback to the employee regarding his/her

performance?

Ans:- No.

Q30. Do you feel that there is a need to implement the feedback mechanisam in current

appraisal system?

Ans:- Yes, it is needed. As employees are unaware of the areas of the improvement which

leads to the stagnant growth of the employee. This leads to the stagnant growth of the

employees and reduces organizational effectiveness.

Q31. What kind of improvement you are looking for in the existing appraisal system?

Ans:-

It should be objective.

79

Performance Appraisal System should facilitate decisions about incentives, merits and

awards.

The performance appraisal system should help in the improving the work

environment.

The existing appraisal system is intensive as it only considers increments on the basis

of performance. But there is a need of performance appraisal system which helps to

give feedback to the employee for improvement in performance.

Also organization needs to implement the concepts like Job Rotation, Job Enrichment,

Job Engineering and Job Enlargement for making it more effective.

80

ANNEXURE-II

QUESTIONNAIRE FOR STAFF EMPLOYEES

Dear Respondent,

It would be grateful for me if you share your views regarding the performance appraisal

system. Information provided by you will be kept confidential.

Q1. Are you aware of existing Performance Appraisal system in your organization?

Yes No

Q2. What should be the frequency of evaluating the performance?

(Periodically/ quarterly /half yearly/Yearly)

Ans:-

Periodically Quarterly Half Yearly Yearly

Q3.What is your satisfaction level with the existing performance appraisal system?

Ans:-

Very Low Low Average High Very High

Q4.How often does the current performance assessment match to your expectation?

Ans:-

Never Rarely Often Sometime Every time

81

Q5.How important do you think is the performance appraisal to your performance?

Ans:-

Not Important As Important

Very Important Most Important

Q6. Is Increments based on performance of the Employee? (Yes/No)

Ans:-

Yes No

Q7. Is there any need of improvement in existing performance appraisal system?

(Yes/No)

Ans:-

Yes No

82