PMS Survey Report

8/8/2019 PMS Survey Report

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A LITERATURE SURVEY

ON

PERFORMANCE APPRAISAL METHODS

DONE BY

SANTOSH.BASAVRAJ

III rd SEM, MBADON BOSCO INSTITUTE OF TECHNOLOGY, BANGALORE

IN

GOKALDAS IMAGES. PVT. LIMITED, BANGALOREAS A PART OF PROJECT WORK

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This literature report gives the insight of:

1) Various methods of Performance Appraisal.

2) Introduction of respective method.

3) How that method works (Methodology).

4) Sample Format (Blank performance appraisal sheet).

5) Relative Advantage & Disadvantage.

6) Companies using these methods.

7) Implications faced by respective companies while using that method.

8) Conclusion.

SOURCES OF DATA COLLECTION:

PRIMARY DATA:

Student survey conducted in Bangalore.

SECONDARY DATA:

1) ICFAI press published H.R.M. Review magazine.

2) Personnel &Human Resource Management, by R.Subba Rao.

3) Human Resource Management, by Dr.K.Aswathappa.

4) Human Resource Management, by Gary Dessler

5) Personnel Management, by C.B.Mamoria.

6) Global Perspective, by Herold Koontz

7) Organization Behavior, by Stephen .P. Robinson.

8) Internet www.google.com (Information regarding companies and various newmethods used by them) &

9) Project Reports from PESIT, Bangalore.

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http://www.google.com/http://www.google.com/http://www.google.com/


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LITERATURE SURVEY ON VARIOUS PERFORMANCE APPRAISAL

METHODS

Performance appraisal (PA): It is a record of outcomes on a specified job function or

activity during a specified time period.

Definitions:

Performance appraisal is a process of evaluating an employees performance of a job in

terms of its requirements.

In simple terms PA is the activity used to determine the extent to which an employeeperforms work effectively,

Edwin.B.Flippo defined as PA is a systematic periodic and so fall as humanly possible

and impartial rating of an employee excellence in matters pertaining to his present joband to its potentialities for better job.

Need for PA

Provide information about the performance ranks, decision regarding, promotion,transfer and demotions.

Provide feedback about the level of achievement and behavior of subordinate.

Provide information which helps to counsel the subordinated.

Diagnose deficiency in the employee regarding skill, knowledge, determinetraining and developmental needs.

Prevents grievances and indisciplanary activities.

METHODS OF PERFORMANCE APPRAISAL

With the evolution and development of the appraisal system, a number of methods or

techniques of performance appraisal have been developed.

TRADITIONAL METHODS

GRAPHICAL RATING SCALE

Introduction: Graphical ration scale compares individual performance to an absolute

standard.

Methodology: In this method judgments about performance are recorded on a scale. The

appraisers are supplied with printed form, one for each employee these forms contain anumber of objectives, behaviors & trait based qualities and characters to be rated like

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Advantage: It easy to conduct.

Disadvantage:

Appraisee may mark only good character which leads to bias information.

Another disadvantage is regarding the choice of employee behavior categories the

important might ones get missed out and irrelevant ones may get include.

Different people may interpret the written description in different ways .This may

Companies in which they worked:

1. National Aluminium Company limited (NALCO)/ Field of its human resources is to

attract competent persons with growth potential and develop their skills and capabilities.

2. Mphisis (call center) uses this method along with 360 degree appraisal (source:Mr. .Manu Thripathi H.R.manager, during student survey) in a congenial work and social

environment through adequate opportunity for advancement.Methodology used: For the collection of information pertaining to employees

performance, communication of goals and review of result, a questionnaire having

similar to graphic ration is used.

3. Birla Jute: Which is the group of Birla corporation ltd, have 8 decades of experience

in his two jute mills have a skilled work force for their appraisal it uses this method.(Source website)

4. Kannappa Automobile, Lalbhag road, near Al- Ameen College which is anautomobile product producers use graphic ration scale for the appraisal is his employee.

(Source: student survey)

Conclusion: this is the oldest and commonly used method, from this method employeeis thoroughly assessed by his supervisor. Even though the method is most commonly

used it is not free from bias. Some modifications are made in this method to overcome

from these problems.

RANKING METHOD OR COMPARATIVE EVALUATION METHOD

Introduction: The employees are ranked from best to worst on some characteristics. Therater first finds the employee with the highest performance and the employee with the

lowest performance in the particular job category and rates the former as the best and

latter as the poorest .Then the raters selects the next highest and next lowest and so nonuntil he rates all the employee in that group.

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There are 3 commonly used methods of ranking, namely alternation, paired comparison

and forces distribution. The first two methods are used when there is only a fiw employee

to be ranked, where as the forced distribution method is used in large companies.

I) Alternation Method: In this method the appraiser ranks his entire employee

from most valuable to lest valuable, based on their performance andcontribution to organization objectives.

This method is simply assigning rank to individual based on his past performanceand potential of development.

Sample format:

Column I (Best) Column II (Worst)

1 . .

2 . .3 . .

4 . .5 . .

Advantage: Relatively easy and inexperience.

Disadvantage:

Its reliability and validity may be open to doubt.

It may be affected by rater bias or varying performance standards.

Size of the difference between individuals is not well defined.

Companies using this method:

1) Bajaj Tempo limited: Indias largest automobile producer which produces multi

utility vehicle, light capacity vehicle, in four wheeler, three wheeler and twowheeler category extensively use this method asses its workers

2) BASF: the chemical company is the worlds leading chemical company which

supports pharmaceutical manufacturer use this method to asses its word force.

Conclusion: The main objective of this method is to segregate well performing worker

and poor performing worker, Employees who are got good ranking are get motivatedthose receive lower ranking feel bad, only few employee who have positive attitude can

accept in a positive way.

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Column I (Best) Column II (Worst)

1 . .

2 . .

3 . .4 . .

5 . .


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PAIRED COMPARISION METHOD

Introduction: This approach was designed to make the ranking process easier for thesuperior and perhaps more reliable, especially when there are many people to rank.

Methodology: The Paired Comparison Method presents the supervisor with a series ofcards each of which contains only two subordinates names. The supervisor is thin asked

to choose which of these two persons is the high performer, final ranking is then

determined by counting how many times a given employee was choose as the betterperformer.

The number of comparison required N (N-1)/2

Where n equals to number of people to be ranked. Thus, with only 10 subordinates a

supervisor will go through 10(10-1)/2 or 45 pair of name.

Sample formant:

Paired comparison ranking for employees in a marketing research unit.

Employees to ranked:

Leslie Moore Eddie Dorsey

Tina LittleArt Willis

Rating cards filled out by supervisor

________ Leslie Moore ___________Leslie Moore _______Leslie Moore

_______Eddie Dorsey __ ________ Tina Little ________Art Willis

_______ Tina Little _________Art Willis _______Tina Little

_______ Eddie Dorsey _________Eddie Dorsey ________Art Willis

Final ranking1. Tina Little.

2. Art Wills.

3. Leslie Moore.4. Eddie Dorsey.

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Paired comparison ranking for employees in a marketing research unit.

Employees to rank:

Leslie Moore Eddie DorseyTina Little

Art Willis

Rating cards filled out by supervisor

________ Leslie Moore ___________Leslie Moore _______Leslie Moore

_______Eddie Dorsey __ ________ Tina Little ________Art Willis

_______ Tina Little _________Art Willis _______Tina Little _______ Eddie Dorsey _________Eddie Dorsey ________Art Willis

Final ranking1. Tina Little.

2. Art Wills.3. Leslie Moore.

4. Eddie Dorsey.


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Advantage:

When employee number is less.

Simple to use

Avoids central tendency and other problems.

Disadvantage:

Rating may still not be precise

Time consuming.

In this method employee are simply compared to each other on total performance

rather than specific fob criteria.

Companies using this method

1) KOPRAN: Promoted by Parijat enterprises KOPRN currently an integrated

health care company, International pharmaceutical company extensively use this

method to asses department wise workers.

2) NOANIC CHEMICAL INDUSTRIES LTD: ( NOCIL) A Rubber chemicalDivision: Indias largest manufactures and suppliers of Rubber chemicals, they

are know for world class product quality, use this tool to rank his employee from

best to worst.

3) OTIS elevator Co: A wholly- owned subsidiary of united Technologys

corporation is the worlds larges manufacturer, installer and maintainer ofelevators, escalators, for his highly skilled workforce to segregate from poor

performer to good performer use this method.

4) Godrej Soaps: A well known manufacturer of soaps of various categories usesthis method.

Conclusion: Some companies using this method remove the employee from currentposition and keep them in some other position. Rather than comparing his performance

with his colleague employees compare their salaries which adversely affect work

environment.

FORCED DISTRIBUTION METHOD:

Introduction: The rater may rate his employees at the higher or at the lower end of thescale under earlier methods. Forced distribution method is developed to prevent the raters

from rating too high or too low

Methodology: Under this method. The rater after assigning the points to the performance

of each employee has to distribute his rating in a pattern to conform to normal frequency

distribution.Sample format Forced Distributions on a Bell- Shaped

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.

10% 20% 40% 20% 10%Excellent Good Average Below Unsatisfactory

Good

A variation of forced distribution is the point allocation Technique (PAT). In PAT each

rater is given a number of points per employee in the group to be evaluated, and the total

points for all employees evaluated cannot exceed the number of points per employeetimes the number of employee evaluated, The points are allocated on criterion bases.

Advantage:

Designed to prevent central Tendency error and clustering of ranking at high orlow end of the distribution.

Often a whole person technique.

Disadvantage:

In this method employee are placed in certain ranked categories but not rankedwith in the categories

If one department has all extraordinary employee it would be difficult for rater to

decide who should be placed in the lower categories

Difficult can also arise when the rater must explain why a individual placed in onegroup.


1) Ford motor: Ford motor has used forced distribution grading system tat

resulted in many complaints. The HR journal Wall street Journal

discusses the Ford Motor informal system.After years of use, Ford Motors Co. eliminated its grading on a curve

performance evaluation system. A number of current and former Ford

executive field lawsuits claiming the system is discrimination. Ford used aprocedure in which executive were graded as A, B, and C. Ten percent of the

manger being evaluate had to receive a C or unsatisfactory performance

grade. Manager who received a C were required to receive coaching andcounseling.

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The feeling among many mangers at Ford is that a quota system that forces

evaluators to rate at least 10 percent of those being rated as unsatisfactory iscausing morale problems. The Ford appraisal system was copied form

GeneralElectric (GE) which had to deal with their own problems.

GE revised its system, which has a 1 (unsatisfactory) to 5 (excellent) rating

scales. At GE almost everyone except the top 10 percent felt demoralized.GE

streamlined its system to three grades, assigning 70 percent, or the vastmajority, the middle grades and rewarding some of them with stock options.

At Ford, when a manager receives a C is no bonus.

3) USHA: A pioneer manufacturer in home appliances product contains Fans,Sewing, machines, Air-conditions, Auto competent etc, use this method to

distribute its employee in to Bell-shaped curve,

4) Sound Performance Lab( SPL): Produces wide range of electronic goods

adopted forced distribution to segregate its employees,5) Mento ware, (call centre), Bangalore: Used this method to segregate its

workforce ( source: Student survey )6) HBL Global Pvt. Ltd: ( HDFC marketing division), Bangalore. Uses this

method.

Conclusion: The key to this system is that the determined distribution must be followed

by rater, regardless of how well the employee performed. This system bas both pros andcons and it is widely used by manufacturing sector.

Forced Ranking Method:

Introduction: Forced distribution is a person-to- standard distribution comparison whereforce ranking is person-to-person comparison.

There are several differences between these two methods. First, while almost every

organization has some performance appraisal mechanism, only the big boys tend to have

a forced ranking system. A surprisingly large number of companies use this method.Fortunate estimates that a Quarter of Fortunate 500 companies have institute forced

ranking program.

Other performance appraisal focuses on past but forced ranking focuses exclusively on

the future. Forced ranking process usually only examine people at the top of the

organization

Methodology: Some companies in Fortune 500 practiced this method in this way.

The top leadership group analyzed five critical area

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Criteria for evaluation: - Their criteria for assessing are execute with excellence.

Passion for results, succeed with people and make tough decisions.

Organization level: - How far down in the organization would the ranking process

extend? And would this executive group also be included in the forced ranking

population, latter they decided and vice presidential; group and their direct report wouldbe included in the process.

Outcomes and consequences: - The question such as arises what will happen once theranking process is complete? What will we do with those who are assessed to be the

companies A player? More worrisome to the group what to do this group. They decide to

go like this to reverse development efforts for A player who would enormously benefit

both their fobs moving to another fob that he could handle in an outstanding way orexisted from the company in a dignified way.

Critics about forced ranking method: - Critics of the procedure argue that forced

ranking is discriminatory, subjective, divisive, arbitrary and unfair, actually its not true.Fork, Conoco, and Microsoft have been hit with class action suits charging that their

ranking systems were used to illegally favour some employees over others.

The Microsoft suit alleges that the system, bolstering a good-old-boy mentality,

encourages white managers to favour their white friends against the organizations black

employees.

The Ford suit, conversely argues the opposite there the middle-aged white men suing

Fork argue that the companies diversity push has forced managers to disproportionately

assign white men to the bottom 10%

Conocos unusual suit the American plaintiffs claimed citizenship discrimination,

arguing that the company illegally favoured Britons and almost all cases are dismissed in

respective courtsCritics also say that these programs run counter to the belief held by many, that almost

any worker is salvageable.

Benefits of forced ranking method:

It creates and sustains a high performance, high talent culture,

Since corporate budgets for management and executive development can bedetermined

An effective forced ranking procedure helps to Performance Management a

corporate priority and lets employee know where they stand.

Companies in which the method is worked: - Companies that use a forced ranking

system require their manager to assign employee in to different categories based on bothpast performance and leadership potential.

1) General Electric(GE): The company best known for the procedure, sorts

employees in to three groups A top 20% on whom rewards, promotion & stock

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options are showered a high performing middle 70% with good future, and a 10%

are not likely to stay. GE removes these 10% and deep removing it every year.

Highly admired companies like, Microsoft, Cisco system, Hewlett-Packard andSun Micro systems

2) Hewlett-Packard uses a 1-5 scale with 15% receiving the best grade of 5%

receiving other grades3) Microsoft uses a 2.4-5 scale

4) PepsiCo. Uses a quartling approach where managers allocate their troops in to

one of four quartiles.5) All 18,000 ofFord Motors managers undergo this process. These managers are

divided into groups of 30 to 50 then rated. For each groups 10 percent have to get

and A, 80 percent B, and 10 of C. Anyone receiving a C is restricted from a pay

raise and two consecutive years of a rating result in either a demotion ortransmission.

Conclusion: - This method is extensively used by software industries and manufacturing

sector. Proponents of this method feel that, it eliminates weak performers and make wayfor organization to continually increase quality of its work force and reward those who

deserve most.

Checklist Method

The checklist is a simple rating technique in which the supervisor is given a list ofstatements or works and asked to check statements representing the characteristic and

performance of each employee.

1) Simple Checklist method:

Introduction: The checklist consists of large number of statements concerning employeebehaviour. This is the very easiest method compare to other method and different type of

organization use this method asses its employee.

Methodology: The rater checks to indicate if the behaviour of an employee is positive or

negative to each statement. Employee performance is rated on the basis of the number of

positive checks and negative checks are not considered. And sometimes checklist is a set

of objectives or descriptive statements, if the rater believes that the employee possess atraits list, the rater checks the item, if not, the rater leaves it blank, A rating score form

the checklist equals the number of checks.

Advantage: If is easy conduct and analysis.

Disadvantages:

Some statements may appear to be identical in describing the employee.

The words or statements may have different meaning to different rater.

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Companies in which the method is used:

1) Human base India Incorporation ( Software industry) uses this method toassess its workforce (Source: Student survey )

2) Leela Scottish Lace Ltd: In its unit it use simple checklist method along with the

critical incidents method and group appraisal method and field review method toasses it worker. It is textile Industry ( Source: Student survey)

Conclusion: This is easiest used along with other methods is very convenient tool toassess his employee by his/her immediate supervisor. A wise knowledge is needed to

prepare checklist.

3) Weighted Checklist:

Introduction: - It is a slight modification of simple checklist method; weight is

assigned to statements in this method.

Methodology: The weighted checklist method involves weighting different items in

the checklist, having a series of statements about an individuals to indicate some aremore important than others, employees has to tick those traits that closely describe

their behaviour an then computed and tabulated by someone else, such as a member

of the personnel unit. The performance ratings of the employee are multiplied by the

weights of statements and the coefficients are added up. The cumulative co-efficientis the weighted performance score of the employee.

Sample format:

Weighted checklist for a lead technician position

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Check all those statements that are accurate descriptions of the behavior and activities

of______________ for the period from ___________ to ________

Check many or a few as apply WEIGHTS

______ Is a decisive decision maker 10.0

______ Seems to be focused in addressing problems 8.7_____Is concerned about the quality of the work completed 10.0

_____Review care fully the work of technicians whose report to him /her 7.4

_____ Is able to delegate a job to subordinate technician. 6.3______Is sensitive to the needs of follow workers 7.9


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Advantage:

This method is evaluative as will as developmental.

Reduce rate bias because he does not know the weights associated withstatements.

Disadvantage:

It is expensive to design, since the checklist for each different job in the

organization must be prepared

Time consuming.

Companies in which the method is used:

1) Text port Industries, Rajgopal nagar, Bangalore: A Garment industry uses thismethod to asses its worker( Source: Student survey)

Conclusion: In this method the weight and relative importance of the statement is hided,

employee only tick the statement which is relevant to him. So from this employee is

assessed which reduces bias information, It is very widely used traditional method.

Forced-Choice Method:

Introduction: In this method appraiser assign ranks to different attributes of employee.These attributes seemingly positive have different weight which not known to

appraiser, the human resource department applies weight and arrive at final score.Methodology: In this method rater must choose from a set of descriptive statementsabout an employee. Forced choice items are usually prepared by an HR specialist, and

then supervisors or others familiar with ratees performance evaluate how applicable

each statement is that is they determine which statements describe effective orineffective behavior.

Then supervisors evaluate their employee and check statements thatdescribes the employee and then rank the statement from most to least descriptive,

then they adds up the number of each statement to come to conclusion.

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Sample formant

Advantage:

The elements of subjectivity in this mehod are minimized as the appraiser hasto assign unique rank for each of the attribute.

Eliminates or greatly reduces the raters bias, specifically the tendency to

assign all high or low rating.

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1) Example of force choice ration method

Descriptions of AttributeRank

The employee is very sociable and normally gets along well with colleges

_________ The employee is a fast decision-maker

__________

The employee is open to feedback and criticism_________

The employee is a good team-player

_________

The employee is motivated by rewards________

The employee exhibits good leadership skills__________

Sample format 2:

Instructions: Rank from 1 to 4 the following sets of statements according tohow they describe the manner in which (name of the employee)

Performs the job, A rank of 1 should be used for the most descriptivestatement, and a rank of 4 should be give for the least descriptive. No ties are

allowed.

________Does not anticipate difficulties. ______ Grasps explanations quickly

______ Rarely waste time

______ Easy to talk to_______ A leader in group activities

_______ Wastes time on unimportant things.

________Cool and calm at all times.

________ Hard worker.


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Disadvantage:

Difficult to construct and validate the statements under forced choice method

it may be time consuming to prepare statement that suit the demands of a

particular job.

Conclusion: Rater is not allowed to rank his subordinate based on his wimps and

fancies, personal prejudice, halo effect reduced in this method, it is suitable asses clerical

worker and supervisor, HR depart wisely use this method to asses its employees.

Companies which are using this method:

1) WIDIA, Bangalore: uses this method to asses its worker.

2) CEAT: CEAT is among Indias top tyre companies, with strong presence in the

domestic and export market it recently acquired Rado tyres helped it become

leading Indian tyre exporters to USA & German uses forced choice method toasses its employees.

Critical Incident Technique:

Introduction: Appraiser note down in a note book how well apprise done andhandled in critical incidence in this method. Which also provide documentation for

annual appraisal process.

Methodology: Supervisor continuously records the critical incidents of the employee

performance or behavior relating to all characteristics (both positive and negative)

and these are recorded as and when they occur in a specially designed note book. Inthat note book rater maintain a log of behavior incidents that represent either effectiveor ineffective performance for each employee being rated. The supervisor rates the

performance of his subordinates on the bases of notes taken by him and it can be

fruitfully employed as documentation of reasons why and employee was rated in acertain way.

Sample formant 1:

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An example of a good critical incident for a sales clerk is as follows:

May 1: Girish listened patiently to the customers complaint, answered the

womans questions, and then took back the merchandise; given the customer full

credit for the returned product He was polite, prompt, and interested in herproblem.

On the other hand, a bad critical incident might read as follows:

August 12: Girish stayed eight minutes over on his break during the busiest part

of the day. He failed to answer three store managers calls on the intercom to

report to cash registrar 4 immediately.


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Advantage:

In this method rater considers the records of performance rather than thesubjective points of opinion for example.

Disadvantage:

What constitutes a critical incident is not defined in the same manner by all

raters.

Rewarding events continually over a period of time may be resented by theraters.

Time consuming.

Companies follow this method:

1) ITC classic finance: It was incorporated in 1986 classic was a non-banking

finance company predominantly engaged in hire purchase and leasingoperation uses this method asses its employee.

2) Voltas Limited: A TATA enterprises subgroup which is Indias largest

projects exporters in mechanical, electrical and public health works adoptedthis method it asses its employee, they feel that not happy with this method

and say that manager Track and record their performance and begin to

fear about the book managers black book

3) Vazir Sultan Tobacco company ( VST): Some successful brands such asCharminar, Charminar special Filter, cigarette producer whose plant located

in Secunderabad uses these method, Manager and raters feels that if suchlogs are used, the critical incidents that are recorded arte valuable forperformance evaluation interviews.

(Source: HR Review. ICFAI press)

4) Leela Scottish Lace Ltd: A Garment industries having various plants

spread in Bangalore uses this method along with field review and group

appraisal.(Source: Student survey)

Conclusion: Appraiser not down as and when incident happens, it is a most reliable

source asses an individual compare to other method. Information gathered form thismethod used for both annual appraisal and PA interview.

Essay or free Form Appraisal

Introduction: This method requires the manager to write a short essay describing each

employees performance during the rating period. This format emphasizes evaluation ofoverall performance, based on strengths/weakness.

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Methodology: Under this method, the appraisers prepare documents describing the

performance of the employee questions or guidelines are provided to the appraiser. Based

on which he analyses and describes the employees performance. In some organization theessay is combined with another form such as graphic rating. In this scale essay

summarize the scale elaborates on some of the ratings or discusses additional dimensions

that are not on the scale.Sample formant:

Marge has been absolutely dynamic in perking up the San Antonio regions sales. She

has increased sales an average of 8 percent for the last 11 months, while cutting costs ofacquiring a sale by 8000 Rs

The customer respects her work and style. She also trained three new sales

trainees in the use of the new spreadsheet inventory control system.

Advantage:

The essay technique minimizes supervisory bias and the halo effect. This method is flexible.

Disadvantage:

Comparing essay written by the same or different rater is difficult.

Different rater define same incident in different way.

This method not used when employee number is very large.

Skilled writer can write a better picture than unskilled writers.

Companies follow this method:

1) Arvind Mills Limited: An Indian Multinational; has grown to become one of Indiasmost diversified business houses with a significant presence in the textiles, they have

an effective PMS, which is a combination of MBO and Essay type.

2) Wheels India Ltd: Wheels India is promoted by TVS group and was started in theearly 60s to manufacture automobile wheel. Today wheel India has grown as a

leading manufacturer of Steel Wheels for different type of vehicles. It has three

plants one in Padi, Pune and Rampur having 1400 employees uses essay technique toappraisee.

3) Bata: A leading manufacturer and retailer of footwear. Womens shoes, mens

shoes, the company many plants across the words. In India in its plants it uses essay

appraisal method.

Conclusion: Result of this method only depends o a skilled writer. A skilled writer can

write a rosy picture and it is not free from personal bias, appraiser can change or writeanything he wish.Morever this method solely cannot be used. This can only support

other technique result

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Group Appraisal

Introduction: Under this method an employee is appraised by a group0 of appraisers.

This group consists of the immediate supervisor of the employee is appraised by a group

of appraisers.

Methodology: This group consists of the immediate supervisor of the employee to other

supervisor who have choose contact with the employees work, manager or head of the

department and consultants. In this method supervisor may act as the coordinator for thegroup activities. This group uses any or multiple techniques discussed earlier, the

supervisor enlightens other member abut job characters, etc. The group appraisers the

employee and compare his performance with set standards.

Advantages:

It is more reliable way of using one method by a group.

Absolutely reduces personal bias, leniency bias and personal prejudice.

Reduces conflicts because group involves assessors who are very well acquaintedwith his work.

Disadvantage:

Very difficult to bring group harmony.

Some time in a group one can emerge as leader and dominates the other groupmember.

Companies which are using this method:

1) Kinetic Honda: Pioneer of the two-wheeler Revolution in India, who creating

products of superior quality for the consumer and offering the best servicesbelieves in quality creativity and productivity improved by their committed work

force. To evaluate them it use this method.

Conclusion: In this method a group is involved in assign em0ployee for his

improvement, to prepare action plans, studies the need for change in the job analysisand standards and recommends change.

Confidential Reports

Introduction: To maintain the report about his subordinates strengths, weakness,intelligence, attitude to work, sincerity, commitment, punctuality, attendance,

conduct, character, friendliness.

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Methodology: It is a Traditional method, under this method superior appraises his

subordinates based on his observations, judgments and intuitions. The supervisorkeeps his judgments not allow the report confidentially. In other words, the superior

does not allow the employee to know the report and his performance.

Companies in which method are worked: Though the confidential report is

traditional method ,most public sector use these method such as Karnataka Soaps and

Detergent Ltd(KSDL)

Advantage:

Employee behavioral traits are documented as and when they occur and make

a PA process a continuous process.

Provide documented during Appraisal.

Disadvantage:

Personal prejudice may prevail in some cases.

Keeping maintaining confidentiality report is cumbersome job for managers.

Conclusion: This method is somewhat similar to essay writing only difference isratee might not know someone is observing and documenting his performance ,which

doesnt affect employee regular work

MODERN METHODS

Behaviorally Anchored rating scales:

Introduction: Smith and Kendall developed what is referred to as behaviorally anchored

rating scale (BARS) or the behavioral expectation scale (BES). This method combineselements of the traditional rating scales like graphic rating scale and checklist method

combines with critical incident methods. Using BARS, job behaviors are descried more

objectively. The method employs individuals who are familiar with a particular job toidentify its major components.

Methodology: A BARS rating form usually contains 6 to 10 specifically defined

performance dimensions each with five or six critical incident anchors

1) Six to ten performance are identified and defined by raters and ratees ( a group is

selected to construct the form)2) The dimensions are anchored with positive and negative critical incidents.

3) Each rate is then rated on the dimensions.

4) Rating is fed back using the terms displayed on the form.

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Usually two to four days are needed to develop BARS.

Sample format 1:

Sample formant 2: This formant present one performance dimension for engineering

competence. For example anchor statement for a rating of 9 is This engineer applies a

full rage of technical skills and con be expected to perform all assignments in an

excellent manner. The rater would read the anchor & place an X at some point on thescales for the ratee.

A BARS for Police officer.

Job knowledge: Awareness of procedures laws , and court rulings and changes in them.Very high

Could be expected to follow correct

procedures for evidence preservation at thescence of crime.

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Dimension: Planning and organizing

Scale value Anchor5( ) Excellent

Develops a comprehensive plan,

documents well, obtains approval &

distributes to all concerned.4( ) Good

Lays out all plans and allows for slack.

Satisfies customer time constraints and

overruns are infrequent.3( ) Average.

Revises due dates as project progress andinvestigates customer complaints. Does

not report slippages in plan.

2( ) Below averagePoor plans and unrealistic time schedules

are common. Cannot plan for more a day

or two ahead.

1( ) UnacceptableSeldom completes a project and does not

bother. Fails due to lack of planning andis not interest in improving.


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Could be expected to know he could break

down a locked door while in hot pursuit and

thus arrest a fleeing suspect

Could be expected occasionally have to ask

other officers about point of law

Could be expected to misinform the public

on legal matters through lack of knowledge.

Very low

Ratee__________ Ratee_________

Advantage:

Both the manager and the employee are actively participate in the appraisal process. This

increases the relevant of the system to each job and also improves its acceptance byemployee.

Disadvantage:It is tedious and needs considerable time and commitment to develop.

Conclusion: This method was developed in the hope that they would yield more objective

rating than other rating scales, formants because they were behaviorally based. And alsothey provide some in-depth feeling of employee.

Behavioral Observation scales:

Introduction: It is in developing stage, it uses critical incidents technique to identify a

series of behaviors covering the domain of the job. The difference b/w BARS and BOS isthat instead of identifying those behaviors exhibited by the ratee during a rating period,

the rater indicates on a scale how often the ratee was actually observed engaging in the

specific behaviors identifies in the BOS.

Methodology: In BOS Appraisal 25 behavior items are identified. The maximum score is

125 (25 X 5), and the minimum score is 25. Supervisors with scores above 115 are

considered excellent performers, while a score in the 25 to 35 range is consideredextremely poor. Each firm using a BOS must determine the meaning and im0lortance of

the total scores for its ratee.

Advantage:

Both supervisor and subordinates are involved in the development of the scales, thescales are better received.

It helps focus manager attention on important critical incidents for effective job

performance and allows superior discuss good & bad performance with ratee and make

feedback most acceptable.

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Conclusion : This method is developed in the hope that they would yield more objective

rating than other rating scale formants ( most notably graphice rating scales ) becausethey are behaviourly rank based this mehtos is suitable to appraising first lin supervisor.

Sample Formant: Sample BOS items for supervisor

I

Assessment centers:

Introduction: An assessment center is not a place where one gets evaluated, it is a

technique to measure individual competency.( competency= Intelligence + education +experience+ Ethics + interest) . A group of people undergo a series of work related or

unrelated exercises simulations & psychometric tests, their behavior under such situations

is observed by trained and experience observers. The observations thus made arerecorded and integrates dot measure individual compliances.

Methodology: Various activities that would normally form a part of the assessment areGroup Exercise To test qualifies of leadership, teamwork

Presentations: To test communication skills, domain knowledge.

Writing exercise and case studies: To test analytical abilities, time management.

Psychometric Tests: To identify personal attribute.

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For each behavior listed use the following .

5 represents 95- 100% of the time.

4 represents 85- 94% of the time.3 represents 75- 84% of the time.



Is accurate in preparing cost reports for Johnson project crew

Almost never 1 2 3 4 5 Almost always

Is available for technical consultation when needed


Develops fair and equitable work schedule.



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Role play: To test adaptability, influencing skills.

Advantage:

The exercise and tests can be tailored to the requirements of the organization.

Research evidence proves that people chosen by this method prove better than

those chosen by other methods. All assesees get an equal opportunity to show their talents and capabilities and

secure promotion based on merit; it improves morale of promising candidates

working in less important positions.

Disadvantages:

Time consuming and costly to operate.

Conclusion: To make the assessment centre successful Top management should be

committed to it and also have to set clear and well-defined objectives. It has to provide

proper two way communication. Which are essential, moreover there should faith in

management by appraisers.

Human Resource Accounting:

Introduction: This technique has not developed and is still in the transition stage. This

method deals with cost and contribution of human resources to the organization.

Methodology: In his method, cost of the employee includes cost of manpower planning,

recruitment, selection, induction, placement, training, development, wages etc. Employee

contribution is the money value of employee service which can be measured by laborproductivity or value added by human resources.

Employee performance can be taken as positive when contribution is more than the costand performance can be viewed as negative if cost is more than contribution.

Sample Formant:

Employee cost and contribution.

Rank Rating Percentage of surplus/deficit ofContribution to cost of employee

i) Extremely good performer over 200

ii) Good performance 150-200iii) Slightly good performance 100-1500

iv) Neither poor nor good 0-100

v) Slightly poor performance 0vi) Poor performance 0 to (-50)

vii) Extremely poor performance (-50) to (-100)

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Conclusion: This method even though necessary for organization but it treats human as

an economical man and it affects adverse on employee performance.


1) Steel Authority of India Ltd (SAIL): is the leading steel madding company in

India. It is a fully integrated iron and steel makers producing both basic & special

steel for domestic constructions, uses this method to asses its employees.

2) ITC Limited: Which pioneer in cigarette, vagitable oil, extensively use this

method to asses its work force.

3) Bank of Baroda: Pioneer in banking sector use this method appraise its workers

quarterly.

Management by Objectives (MBO)

Introduction: MBO is more than just an evaluation program and process, the main

aspects of MBO are clear and well-defined goals, a definite time-span to achieve the

goals, on action plan and finally, timely and constructive feedback. Also called goalsetting approach, these goals are set with the active participation of the employee and his

supervisor.

Methodology: MBO is a cyclical process consists of four steps.

1) Objective setting: Set by manager Y^& employee with in the context of overallgoals for next calendar year.

2) Action planning: Participative or even independent planning by the employee asto how to reach those objectives. Employees are their ingenuity and feel more

committed to the plans success.

3) Periodic review: Joint assessment of progress towards objectives by manager and

employee, performed informally and sometime spontaneously.

4) Annual evaluation: Formal assessment of success in achieving the employees

annual objectives, coupled with renewal of the planning.

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Sample formant: Examples of MBO Evaluation objectives.

OCCUPATION IN TYPE OF OBJECTIVE STATMENT

ORGANIZATION ORGANIZATION

Sales respective Medium: Petrochemical Contact six new clients in West

Firm AVA region and sell to at least

Two of these new clients withNext semi-annual cycle.

Accountant Small: CDA firm Attend two auditing seminars to

improve and update audit knowledgeby end of summer (Sept 15)

Skilled machinist Small: Job shop Reduce flange rejects by 8 percent by

Aug 15

Engineer Large: Construction Complete power plant tower project with i

Company in 30 days of government specified target

Date (Nov 10)

Advantage:

Both supervisor and subordinates set goals; results are accepted by subordinates.

Hence rater are involved in process this obviously enhance their morale.

This discus about subordinates performance centered on results.

Disadvantage:

Too much paper work is involved

If too many objective set, confusion may arise.

It emphasis too much on the short term goals.

MBO used as a rigid control device that intimate rather than motivates.


1) Arvind Mills Ltd: The Arvind Mills Ltd. Is the flagship company worth Rs 20

bn of Lalbhai group found in the year 1908 with a significant presence in

textiles ready-to wear clothes uses performance management as combinationof MBO and essay type.

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2) American Manufacturing find that some MBO programs are to result oriented

and insufficiently process. Oriented. W.Edward Deming has argued that focus

on numerical goals, managing by results & taking immediate action on error hasled to dysfunctional management style in America Corporation.

Conclusion: MBO is most suitable and commonly used for managers and

professionals. The MBO should be viewed also as impetus for changing the system.

Psychological Appraisal:

Introduction: Large organization uses this full time industrial psychologist, whenpsychologists are used for evaluation they assess on individuals future potential and

not past performance. The appraisal normally consists of in-depth interviews,

psychological test discussions with supervisor and review of other evaluation.

Methodology: After conducting various test, interviews and discussions,

psychologist write about an evaluation of employee intellectual motivational,

emotional, and other work related, characteristics, which suggest individual

performance.

Advantage:

From this method in-depth feeling of employee could be known

Rather than the past performance it concentrates on potential performance by

employee.

Disadvantage:

Time consuming & expensive to hire psychologist.

Conclusion: This method is used to make decision regarding employee placement,

career planning and development and training programs. In this method employeethoroughly assessed compare to any other method, thus results obtained are reliable.

360 degree Appraisal

Introduction: It aims at a comprehensive and objective appraisal of employee

performance. The 360-degree feedback is understood as systematic collection of

performance data on an individual or group, derived from a number of stake holderthe stake holders being the immediate, supervisors, team members, customers, peers

and self, any one who has use full information on how an employee does the job may

be one of the appraisers.

Objectivity:

Initially it started as fact finding self-development technique perhaps in future

it linked to reward system.

To find the personality of each manager his talents, behavioral traits, tempers

and other work related qualities.

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Methodology: The methodology involves collecting responses through standard

assessment from about a manager from his bosses, peers and subordinates. They cover

several parameters of performance as well as behavior.

The forms are designed in a way to elect one of the three responses to the subjects

rating on the parameter, strength, weakness and improvement required. Data collected isanalyzed and graphed by computer. The responses are presented collectively to the

appraiser. Depending on the interpretations of the data and findings, counseling sessions

are held to solve the specific problem and the weaknesses are identified by 360-degreeappraisal.

Advantage:

The organization gains from heightened self awareness of the top managers. If

reveals strength & weakness of their managing style.

The gap between self-assessment and the views of ones colleges is reduced.

Empowerment is facilitated.

Inflexible managers are forced to imitate self-change.

Disadvantage:

The system may be used to humiliate people.

Responses from the people tend to biased.


1) Hewlett-Packard (call centre), Bangalore: Use this method to asses its skilledworkforce (Source: student survey)

2) Accenture (Software industry), Bangalore: uses this method to assess itsemployees. (Source: student survey)

3) Corporations like General Electric India ( GE), Reliance Industry Ltd (RIL),

Crompton graves, Godrej soaps, Wipro, Infosys, Thermanx and Thomus cook,HCL, Infosystems, Tata Infotech, Ashok Leyland and Asian paints, Ponds,

Colgate-Palmolive uses this method to asses its employees.

4) 360 degree feedback mechanism at Wipro: Wipro believes that feedback is

very important to enable to make necessary changes either to our, attitude or

work structure.

Wipro GM-HR Prathik Kumar says they amongst the first feworganization in India to introduce the 360 degree appraisal system. They believe it

is very effective since it is well institutionalized, According to them people look

forward it and every manager has to go through it , At regular intervals, teams tooget together to give feedback and an outsider facilitates the process. All managers

go through this. The management makes sure that managers go through a rotation

process whereby they can keep a tab on how the person gets along with other

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teams. Wipro has adopted competency route to leadership development with

focus on people.

5) Motorola has developed a performance-led leadership development model

called Totality of Motorola Leadership (TOML) ( Sharma 2002). At Motorola it

was done by pre-defining competencies and providing customized ( individual),development planning based on 360-degree feedback to enhance organization

performance.

6) Johnson and Johnson introduced model of leadership called Standard ofleadership based on 360- degree feedback in 1996 to ensure business success

and market leadership. It was introduced at the top level.

7) Phillips also used the full circle feedback for identifying Top potential

category employee: It developed leadership competency model focusing sixcompetencies including determination for high quality result, search for better

methods, etc. The leadership model has been linked with organization values

and goals.

8) GE introduced 360-degree feedback during 1980, with Jack Welch taking overas the CEO of corporation. Questionnaire and open reviews are largely used.

Conclusion: The 360-degree feedback provides a broader perspective about

employee strength and weakness. It facilitates greater self development to employees.

It enables an employee to compare his or her perception about self with theperceptions of the assessors. Besides, 360-degree feedback creates and atmosphere of

more openness, improved interpersonal relation and team work.

SOME LATEST THEORIES IN PERFORMANCE MANAGEMENT SYSTEM

Balance Scorecard Approach:

Introduction: The Balance Scorecard Approach (BSC) concept developed in the early

1990s by Robert.S. Kalpan and David Nerton. The BSC is revolutionary tool that

motivates staff to make the organizations vision happen. It doesnt more than just

measure performance. It is a management system that focuses on the efforts of peoplethrough out the organization toward achieving strategic objectives. It gives feedback

on current performance and targets future performance levels. Putting in other way,

the balanced scorecard converts an organization vision and strategy in to acomprehensive set of performance and action measures that provide the bases for a

strategic measurement and management system.

Methodology: Implementing balance scorecard involves.

1) Translating strategies in to objectives and measures.

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2) Cascading objective and measure through the various level of organization

3) Communication strategies, objectives and measures to all levels.

4) Designing BCSs and related performance reporting and analytical application

(Individual responsibility assigned on the strategy )

5) Assigning with project management and speeding implementation and

tracking for achievement of objective and this is called HR Scorecard.


1) Arvind Brands Limited: Arvind brands Ltd uses this method whose plant located

in Bangalore.

2) Many Top Indian companies like Infosys,i2 Technologies ,Godrej consumer

products, GTL, ITC.LTD, Mahindra & Mahindra used this method to convert

their organization vision and strategy in to a comprehensive set of performanceand action measures that provide the basis for strategic measurement and

management system.

And some MNCs such as Unilever, Fed Express uses this method.

3) BSC method at i2 Technologies India: i2 is the leader in solutions that allow

companies to dynamically manage their extended supply chain, also known asvalue chain.

Employees are assessed on quarterly basis. There different parameters tojudge performance at different levels. The first one is on the performance of the

company as a whose; the second is based on the performance of at particular business

unit with in organization and third is at the individual level. All employees have toreach a certain level of performance based on their position. These quarterly appraisal

form part of the annual appraisal, that shape the salary of an employee.

4) A number of Japanese companies have implemented the BSC. Some of those

companies include Ricohco.Ltd, Takara Shuqo Ltd. Kensai Electric power Co.

Phillips Japan Ltd. Oki Electric Industry. Based on the Japanese experience aJapanese-type BSC model is emerging.

Some software are available for BSC implementation one of them is eHalogen software

companies such as Truro (oil industry), OSULLIVAN CREEL LLP (full- service and

accounting & consulting firms, Oil States (manufacturer of diversified products for the

oil industry changed their traditional appraisal system to BSC.

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Conclusion: It is a innovative technique of PMS it includes financial as well as non-

financial out comes. Since the introduction BSC evolved as a result of improvisations tosuits the needs of different users. First generation of BSC focuses on evaluating

performance, second as a management system & third as a framework for organization

change.

People Capability Maturity Model (PCMM)

Introduction: PCMM is an organization development framework that can be used to

build competences and is being adopted by leading software companies. This concept isdirect offshoot of the capability maturity model (CMM) it was developed to asses

software standards.

Methodology: PCMM is aimed at assessing the capability of an organization to attract,retain, and nurture competent individuals. It operates at 5 level of maturity. An

organization can be assessed on these levels based on the achievement of specifiedobjectives; level 5 is the highest level of achievement.


Ericsson and Boeing have acquired the PCMM certification. In India Wipro and Sitara

Technologies have had the honor of achieving PCMM level 5

Pay for Performance (PFP)

Introduction: To drive employee performance to high-level and reward them for meetingor exceeding performance goals, are growing in popularity across organization, they are

not only used in traditional, production oriented organization or sales professional but

also in service and public sector.

Methodology:

i) Set the objectives or standards.ii) Review whether employee achieved or not.

iii) Pay based on his performance.

In certain circumstances this method is not suitable

If in an organization employees mostly professional, implementing a PFP is risky.

PFP increases pressure on employees who are doing well on their job it is better

to let the employee enjoy their job with out putting them under pressure.

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Companies which use this method:

At GE (general Electric): workers get paid for performance: they are paid bonuses whenthey achieve challenging goals instead of tenure of service.

The GE medical system group has a quick thanks program that lets employee nominate

colleagues for an exceptional performance.At Lincon Electric incentive plan has been the model for other companies for years. The

pressure to perform is great at Lincon.

Conclusion: PFP is know a days widely used by manufacturing sectors and IT sector, no

doubts that it create pressure on employee but its essential for any organization to achieve

its objectives in a determined time span.

Benchmarking:

Introduction: This is a form of goal setting though it is meant to be more inclusive and

is often portrayed as part of comparing work and service methods against the bestpractices and outcomes for the purposes of identifying changes stated as specific goals

that well result in higher-quality output.

Benchmarking incorporates the use of goal setting to set targets that are pursued,

identified, and then used as the basis for future action.

The Benchmarking process involves looking both inside an outside the organization for a

way of improving performance.

Companies using this method: IBM and Magnavox, IBM benchmarked its efforts in

comparison to Xerox, Motorola, 3M, Heweltt-Packard,

Magnavox benchmarked a series of HR practices.

Conclusion: Benchmarking provides a means of determining how well a business unit or

organization is perform compared with similar units in the organization or externally.

The ACHIEVE model:

Introduction: May manager are strong in problem but are much weaker in problemanalysis, or diagnosis. The ACHIEVE model was designed by Paul Hersey and Marshall

Goldsmith to help managers determine why performance problem may have occurred and

then developed change strategies aimed at solving those problems.

Methodology: In using the ACHIEVE model, the manager evaluates how each factor

will affect the current or potential performance of followers for a given task. Then themanager should take the steps that fit the unique cause(s) of the performance problem.

The seven factors in the ACHIEVE model, along with typical problem solving

alternatives are listed below.

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A-Ability (knowledge and skills): The manager study follower knowledge, skill and

experience to complete the task successfully, if the problem, solutions may include

specific training, coaching, formal educational courses.

C-Clarity (Understanding or Role-Perception)

The follower needs to understand clearly what the major goals and objectives are howthey should be accomplished and their priorities.

H-Help (Organizational Support)

Some organization supports factors include adequate budget and personnel suitable

equipment and facilities, and necessary supports form other departments. If there is lack

in support manager should clearly identify where the problem exists and has to work on

that.

I-Incentive (Motivation and willingness)

People have a natural tendency to pursue tasks that are rewarded and avoid tasks that are

not manager has to motivate employee by providing proper incentive plans.

E-Evaluation (Coaching and performance Feedback)

Evaluation refers to informal day-to-day performance feedback as well as formal periodic

reviews. An effective feedback process lets followers know-how well their doing the job.

V-Validity (Valid and Legal personnel practices)

The term validity refers to the appropriateness and legality of human resources decision

made by the manager. Manager need to make sure that decision about people is

appropriate in light of laws, court divisions and company policies.

E-Environment: This term refers to the external factors that influence performance such

as competition, chanting market condition.

Conclusion: ACHIEVE model is totally different from all other models it focuses mainly

on manager what has to take the steps during PMS process, still the process is indeveloping process.

SOME OTHER COMPANIES HAVING THEIR OWN PMS

Xerox: Provide a core set of metrics for use across the organization.

Toyota: Focus performance reviews on goals gather than numbers to ensure employ

alignmentToyota: Measure newer reps more frequently to concentrate coaching effort.

Fiber Mark: Conduct frequent review of employee performance.

Xerox Corporation: Promote manger-rep coaching sessions.Dupont: Monitor reps calls periodically to facilitate coaching.

Unilever: Design a scorecard to evaluate performance and target improvement

opportunities.

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PMS Survey Report

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