Human Resource Management

Term Paper

On Performance Appraisal
(A Modern HRM Practice)

East West University Course: Introduction to Human Resource Management Course ID: HRM 301 Semester: Fall, 2013

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Human Resource Management

Term PaperOn Performance Appraisal

(A Modern HRM Practice)
Submitted To:
Silvia Akter Senior Lecturer Department of Business Administration East West University

Submitted By:
Group name: The Mermaids Suchita Roy Choudhury(2012-1-10-153) Nafisa Anjum Era(2012-1-10-190) Nayeema Siddiqua(2012-1-10-162) Nishat Jahan(2011-3-10-046) Aysha Aziz Badhan (2012-1-10-170)

Submission Date:
December17, 2013

East West University Dhaka

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Human Resource Management December17, 2013

Silvia Akter Senior Lecturer Department of Business Administration East West University Aftab Nagar, Rampura, Dhaka Madam, With due respect here we present ourassignmenton Performance Appraisal- A Modern HRM Practice'. This report focuseson the effectiveness of performance appraisal and the methods which are being currently used in various organizations in Bangladesh. We would like to thank you for your guidance and support. We have tried our best in preparing this report. In spite our lack of experience in this field of work, we hope that we have been able to present a realistic and substantial report. We will be glad to clarify any queries you may have regarding this report. Sincerely Suchita Roy Choudhury (2012-1-10-153) NafisaAnjum Era (2012-1-10-190) NayeemaSiddiqua (2012-1-10-162) NishatJahan (2011-3-10-046) Aysha Aziz Badhan (2012-1-10-170)

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Acknowledgement
We would like to express our deepest gratitude and humble submission to the almighty but for whose support wewould not be able to complete the huge task of preparing this term paper within the scheduled time. We would also like to pay our gratitude to ourcourse instructor Mrs. Silvia Akter, Senior Lecturer,Department of Business Administration, East West University, for her guidelines and cordial cooperation in preparing this report. We acknowledge our indebtedness to her for giving us the opportunity to acquire great deal of knowledge regarding the Performance appraisal as well as other HRM practices. We would like convey our sincere thanksto Mr. Shonjoy Deb, Operations Manager, IMpulse(BD) Ltd.and Mr. Subash Chandra Roy Choudhury, General Manager, Silver Line Composite Textile Ltd. for their cordial help. They have made our task easy by answering our questions to the point, we are thankful to them. We would also like to apologize on the fact that some of the information in this report has been quoted directly from respective sources. These actions have been adopted only to clarify our expressions and are only confined to the academic purposes. Thank you.

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Executive Summary
The outcomes that result from this study focus on the Performance Appraisal' process of two different Dhaka based companies. The analysis was carried out based on personal interview, information from the companys website and studying the modern HR practices. In this study we have two different organizations of Bangladesh as our subjects. Among the two companies we have observe, we found for the first company (IMpulse)the performance appraisal process is a regular practice and treated as anindispensible part of the organization. Whereas for the other company (Silver Line) performance appraisal is not a formal process, the management decides on the compensation and other aspects of performance appraisal from their own observation and perception. The study reveals that few obvious findings for us. Firstly, we feel that formal performance appraisal brings a lot of value to the organization in terms of compensation management, training and development, and career planning. It is highly recommended to any organization that wants to excel in this area. Secondly, it mostly depends on the management ability to foresee the value in formal HR practices. If the management can embrace it, they will eventually get benefited from it.

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Table of Contents
Introduction __________________________________________________________ 1 Objective of the study _________________________________________________ 2
Scope and Methodology ______________________________________________________ 2 Limitations ________________________________________________________________ 2 Contact person _____________________________________________________________ 2 What is Performance Appraisal? ______________________________________________ 3 Steps in appraising performance ______________________________________________ 3

How Job Standards are Set ____________________________________________ 4

IMpulse vs. Silver Line ______________________________________________________ 4

Performance Appraisal Methods _______________________________________ 4

Performance appraisal methods _______________________________________________ 4 Silver Line vs. IMpulse ______________________________________________________ 4 Graphic Rating Scale used in IMpulse __________________________________________ 5

Difference in Appraisal Methods _______________________________________ 7 Ensuring Fair and Equitable Evaluation ________________________________ 7 Appraisal Interview ___________________________________________________ 8 Findings and Analysis ________________________________________________ 8 Recommendations and End note ______________________________________ 9 Appendix ___________________________________________________________ 10

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Introduction
The report has been undertaken to assess the Performance Appraisalprocess of two different organizations based in Dhaka. For our case study we have chosen two companies. The first company we have chosen is IMpulse (BD) Ltd.IMpulse is a software development company providing software development service to their European clients. The second company is Silver Line Composite Textiles Ltd.Silver Line is Textile company producing yarn and fabrics.For our study we had to look at the performance appraisal process following by the two companys and compare the findings. The information needed for this report has been collected from personal interview with the management In order to prepare the report, we have implemented our knowledge on contemporary HR practices and theories we have learnt during the course.

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Objective of the study

The objective of the study is to analyze the effectiveness of performance appraisal and the methods which are being currently used in various organizations in Bangladesh. In this study we have two different organizations of Bangladesh as our subjects. Among the two companies we have observed for this study, we foundin one of the organizations performance appraisal is a regular practice and treated one of the mandatory and very important part of the human resource management. On the other hand we have another organization which has never practiced performance appraisal and doesnt even count it as an important segment of human resource management. We will try to find out the differences between these two organizations and how performance analysis affects the whole organizations culture.

Scope and Methodology

In order to produce this report, we contacted with two mid-level managers of two different organizations. We had an interview with both of them asking about the performance appraisal practice in their organization and other related questions. We have collected the performance appraisal form from Impulse BD Ltd. The performance appraisal form was the primary source of information for this study; there are no secondary sources of information. After data collection, the existing system was analyzed.

Limitations
The main limitation of the study is our lack of experience on this field of human resource management. We used our little knowledge to produce this report and tried our best to keep the quality.

Contact person
We have contacted with two mid-level managers of two different companies of Bangladesh. Their Business card or contact information is attached with report. Term paper on Performance Appraisal Page | 2

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What is Performance Appraisal?

Performance appraisal is a process that involves 1)setting work standards, 2)assessing the employees actual performance relative to those standards, 3)providing feedback to the employee with the aim of motivating him or her to eliminate performance deficiencies or to continue to perform above par. Overall performance appraisal means evaluating an employees current or past performance relative to his or her performance standards. There are four reasons why performance appraisals are done. And they are First, from a practical point of view, most employers still base pay and promotional decisions on the employees appraisal. Second, appraisals play an integral role in the employers performance management process. It does little good to translate the employers strategic goals into specific employees goals, if you dont periodically review performance. Third, the appraisal lets the boss and the subordinate to develop a plan for correcting any deficiency and to reinforce the things the subordinates does right. Fourth, appraisals should serve a useful career planning purpose. They provide an opportunity to review the employees career plans in light of his/her exhibit strengths and weaknesses.

Steps in appraising performance

The performance appraisal process itself contains three steps; define the job, appraise performance and provide feedback. Defining the job means making sure that you and your subordinate agree on his/her duties and job standards. Appraising performance means comparing your subordinates actual performance to the standards that have been set; this usually involves some type of rating form. Third, performance appraisal usually requires one or more feedback sessions.

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How Job Standards are Set

IMpulsevs. Silver Line
Since Silver Line doesnt have any formal HR process in place, the job standards are purely set based on the job title. And there is no clear definition of what is expected of an employee at a given time period. Conversely, for IMpulse, the job standards are set based on the following factors: Seniority of the employee Expected productivity Technical competency Client focus Quality awareness Overall communication skills

Performance Appraisal Methods

Performance appraisal methods
There are various methods of appraising performance. The most common and widely used methods are: Graphic rating scale method Alternation ranking method Paired comparison method Forced distribution method Critical incident method Behaviorally anchored rating scale method Management by objectives

Silver Line vs.IMpulse

Here, in our study, we have two pilot companies. In Silver Line Composite Textiles Ltd, we have found that they dont use any of the methods named Term paper on Performance Appraisal Page | 4

Human Resource Management above as they dont practice performance appraisal in their organization. Whereas, we have found Impulse Bd Ltd. using the Graphic rating scale method for their performance appraisal.

Graphic Rating Scale used in IMpulse

Impulse (BD) Ltd. uses only the graphic rating scale method for their performance appraisal which is the simplest and most popular method for appraising performance around the world. A graphic rating scale lists traits and a range of performance values for each trait. First the form is filled out by the employee himself and then the supervisor rates by checking the score that best describes his/her performance for each trait. The assigned values for the traits are then totaled.

Image 1: Performance Appraisal Form First Two Pages

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Image 2: Self-Assessment Form

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Difference in Appraisal Methods

Appraisal method may vary depending on where the employee fit within the organization structure. For instance, the appraisal method for junior or mid-level employee will not necessary match with those of senior management employees. In our case IMpulse (BD) Ltd. however doesntuse different appraisal methods at this moment. This is mainly attributed to the fact, that IMpulse is a relatively new company, and they do not have too a big management team yet. However, a company may use different appraisal methods when it is necessary. In large companies, different appraisal methods are used for different departments or managers and non-managers. A single appraisal method often doesnt work for all the departments, because different departments may have different appraisal criteria and performance goals.

EnsuringFair and Equitable Evaluation

To understanding, we think the company management and organization culture has a vital role to play in ensuring fair and equitable evaluation. If an organization really wants to evaluate their employees fairly, it is highly possible for them to manage an equitable evaluation. It depends on how the company prioritizes these issues. If an organization is very much serious about this particular HRM practice and if they really want to judge the productivity level of the employees through the evaluation, they will make sure that the evaluation method is completely fair. On the other hand, performance appraisal is merely a formality in many organizations andthose organizations dont put that much effort to make the evaluation fair and equitable. In our case, we have found that the company (IMpulse) we have chosen is very serious about performance appraisal. They treat this practice as one of the key element of their success. In this regard, the Operations Manager of the organization says: We do believe that Performance Appraisal is an important aspect of our organization. As our jobneeds high technical competency, we need to make sure all the team members are up to speed with all the tools and techniques that they need to learn. We also take team-work very seriously and make sure we have a good team understanding, and hence interpersonal skills are important criteria for us to judge on top of the technical abilities of the employees.

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Appraisal Interview
An appraisal typically culminates in an appraisal interview. In this interview, supervisor and subordinates review the appraisal and make plans to remedy deficiencies and reinforce strengths. There are four basic types of appraisal interviews based on employeesperformance. They are; 1) satisfactory and promotable, 2) satisfactory but not promotable, 3) unsatisfactory but correctable, 4) unsatisfactory and uncorrectable. In our case, Impulse (BD) organizes appraisal interviews where they give feedback to their employees and make future plans to correct deficiencies or to reinforce strengths.

Findings and Analysis

We have discovered some important findings while analyzing the information we have collected form the two companies. Firstly, it is up to the management to decide how the want to manage the performance appraisal. If the management doesnt understand the value of this so called process overhead, they may not pursue it. However, we have see n in our study that, IMpulse being a relatively new and small company, has been successfully executing formal performance appraisal process and they do appreciate the value of it. On the other hand, Silver Line being a large and relatively old company do not follow any HR practices. From our understanding, we think this purely because Silver Line is not well structured and do not understand the benefits of formal performance appraisal methods. Secondly, performance appraisal plays an important role for any company in deciding on compensation, training and development and career planning of employees. So is the case with IMpulse. As mentioned earlier, IMpulsedo follow formal performance appraisal process and they do appreciate the benefits of it. Conversely for Silver Line, we havent seen any such thing and the compensation is set purely based on managements will and there are no such training and development plan for targeted employees. Lastly, we do understand that, formal performance appraisal may introduce some process overhead to the organization. However, if a company is open enough and ready to embrace the formal HR practices, it will eventually pay off. Term paper on Performance Appraisal Page | 8

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Recommendations and End note

To summarize our findings, we do think that performance appraisal is an important process to follow for any organization that want to improve their compensation management, training and development, and career planning/progression. We do recommend Silver Line to start following formal performance appraisal processes. This will certainly have a positive impact on the whole organization culture.

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Appendix
Human Resource Management, 11/E Gary Dessler Impulse (BD) Ltd. Website - http://www.impulsebdltd.com/

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