~ 1 ~

PREFACE

A performance appraisal (PA) or performance evaluation is a systematic and periodic
process that assesses an individual employees job performance and productivity in relation
to certain pre-established criteria and organizational objectives. Other aspects of individual
employees are considered as well, such as behaviour, accomplishments, potential for future
improvement, strengths and weaknesses, etc A central reason for the utilization of
performance appraisals (PAs) is performance improvement (initially at the level of the
individual employee, and ultimately at the level of the organization). Other fundamental
reasons include as a basis for employment decisions (e.g. promotions, terminations,
transfers), as criteria in research (e.g. test validation), to aid with communication (e.g.
allowing employees to know how they are doing and organizational expectations), to
establish personal objectives for training programs, for transmission of objective feedback
for personal development, as a means of documentation to aid in keeping track of decisions
and legal requirements and in wage and salary administration. Additionally, PAs can aid in
the formulation of job criteria and selection of individuals who are best suited to perform the
required organizational tasks.
First chapter includes the detailed company profile. It includes the companys history: its
activities and operations, organizational structure, etc. this section attempts to give detailed
information about the company and the nature of its functioning. The second chapter deals
with performance appraisal. In this section, a brief conceptual explanation to performance
appraisal is given. It contains the definition, process and significance of performance
appraisal. The third chapter is the summary of the various research methodology use for the
development of the project. Data analysis and interpretation of the survey conducted over a
group of 30 employees is providing in chapter four in this various graphs and tables are given
~ 2 ~

as per the research. Chapter 5 deals with the finding and recommendation related to the
project. These finding and recommendations are based on the data analysis and interpretation
done in the previous chapter. The conclusion of the project is provided in Chapter 6 and this
chapter also deals with the limitations of the study and research work.
We are confident that anyone who goes through the report will learn how much we have
learnt & benefited during this period.






Ravi Prakash Tiwari







~ 3 ~

ACKNOWLEDGEMENT

Before I thank anybody for the compilation of this work I would like to thank Almighty for
providing guidance and me all the necessary help. It is grace only that I have completed this
work.
An understanding of the study like this is never the outcome of the efforts of an individual;
rather it bears the imprint of a number of individuals who directly helped me in completing
the present study.
First & foremost, I would like to express my regard to Mr. Rahul Anand Singh (H.O.D. of
M.B.A.) and Dr. Neetu Singh, the training & placement-in-charge and the honorable
Readers of M.B.A. Department for this constant encouragement and support. I would also
like to express immense gratitude towards supervisor Dr. Neetu Singh, for providing the
knowledge, guidance and cooperation in research report.
I am also sincerely thankful to all my friends for giving me opportunity and resource to work
on the research report and giving me support whenever necessary.


Ravi Prakash Tiwari










~ 4 ~

INTRODUCTION


In the business world investment is made in machinery, equipment and services. Quite
naturally time and money is spent ensuring that they provide what their suppliers claim. In
other words the performance is constantly appraised against the results expected. When it
comes to one of the most expensive resources companies invest in, namely people, the job
appraising performance against results is often carried out with the same objectivity. Each
individual has a role to play and management has to ensure that the individuals objectives
translate into overall corporate objectives of the company. Performance Management
includes the performance appraisal process which in turn helps identifying the training needs
and provides a direction for career and succession planning.

What is Performance
Performance is synonymous with behavior; it is what people actually do. Performance
includes those actions that are relevant to the organizational growth and can be measured in
terms of each individuals proficiency (level of contribution). Effectiveness Performance
refers to the evaluation of results of performance that is beyond the influence or control of the
individual.

How is Performance managed?
Good performance by the employees creates a culture of excellence, which benefits the
organization in the long run. The activity includes evaluation of jobs and people both,
managing gender bias, career planning, and devising methods of employee satisfaction etc.
the efforts are to make to generate the individuals aspirations with the objectives of the
organization. Organization has to clear the way of career advancements for talented and
hardworking people. Fear of any kind from the minds of the employees should be removed so
that they give best to their organization. Allow free flow of information. Communication
~ 5 ~

network should be designed in such a way no one should be allowed to become a hurdle. This
enables the managers to take correct decisions and that too quickly.

The 4 Stage Performance Appraisal Cycle
In the diagram below you can see that the performance appraisal process is not an annual
event it is a never ending process, there is no start and no end ... just an ongoing evolution
of performance.



It is common to see the t two steps "Provide Feedback" and "Record Performance" combined
to create a three stage performance appraisal process, as shown below. Now let's start by
looking at the definition of a performance appraisal.

~ 6 ~

Performance Appraisal Definition
When thinking about employee appraisals many managers quickly picture sitting in a formal
setting, with their employee providing annual feedback on the employees past performance.
You will find that this is just one part of the overall process. The full scope of an employee
performance appraisal is the act of
Defining your employees performance expectations
Measuring and evaluating employee performance relative to those expectations
Providing feedback on performance against agreed standards
Recording or documenting your employees performance

Why Performance Appraisal:-
Todays working climate demands a great deal of commitment and effort from employees,
who in turn naturally expect a great deal more from their employers. Performance appraisal
is designed to maximize effectiveness by bringing participation to more individual level in
that it provides a forum for consultation about standards of work, potential, aspirations and
concerns. It is an opportunity for employees to have significantly greater influence upon the
quality of their working lives. In these times of emphasis on quality, there is a natural
equation: better quality goods and services from employees who enjoy better quality goods
and services from their employers. Performance appraisal must be seen as an intrinsic part
of a managers responsibility and not an unwelcome and time-consuming addition to them. It
is about improving performance and ultimate effectiveness. Performance appraisal is a
systematic means of ensuring that managers and their staff meet regularly to discuss post and
present performance issues and to agree what future is appropriate on both sides. This
meeting should be based on clear and mutual understanding of the job in question and the
~ 7 ~

standards and outcomes, which are a part of it. In normal circumstances, employees should
be appraised by their immediate managers on one to one basis. Often the distinction between
performance and appraising is not made. Assessment concerns itself only with the past and
the present. The staff is being appraised when they are encouraged to look ahead to improve
effectiveness, utilize strengths, redress weaknesses and examine how potentials and
aspirations should match up. It should also be understood that pushing a previously prepared
report across and desk cursorily inviting comments, and expecting it to be neatly signed by
the employee is not appraisal - this is merely a form filling exercise which achieves little in
terms of giving staff any positive guidance and motivation.

Developmental Background of Performance Appraisal
The history of performance appraisal is quite brief. Its roots in the early 20th century can be
traced to Taylor's pioneering Time and Motion studies. As a distinct and formal management
procedure used in the evaluation of work performance, appraisal really dates from the time of
the Second World War - not more than 60 years ago. Performance appraisals have been
increasingly implemented by most modern organization as a tool for employee assessment
(Cawley, 1998). Companies and researchers have increasingly stressed the use of employee
evaluations for motivational and organizational planning purposes. Indeed, for many
companies performance appraisal has become an important tool for maximizing the
effectiveness of all aspects of the organization, from staffing and development to production
and customer service (Moats, 1999). As Moats puts it, that shift of focus was accompanied
during the 1970s, 1980s, and 1990s by a number of changes in the design and use of
appraisals. Those changes reflected new research and attitudes about organizational behavior
and theory. Traditional appraisal systems were often closed, meaning that individuals were
not allowed to see their own reports. Since the mid-1900s, most companies have rejected
closed evaluations in favor of open appraisals that allow workers to benefit from criticism
~ 8 ~

and praise. Another change in appraisal techniques since the mid-1900s has been a move
toward greater employee participation. This includes self-analysis, employee input into
evaluations, feedback, and goal setting by workers. Appraisal systems have also become
more results-oriented, which means that appraisals are more focused on a process of
establishing benchmarks, setting individual objectives, measuring performance, and then
judging success based on the goals, standards, and accomplishments. Likewise, appraisals
have become more multifaceted, incorporating a wide range of different criteria and
approaches to ensure an effective assessment process and to help determine the reasons
behind employees' performance (Bodil, 1997). Performance appraisals and standards have
also reflected a move toward decentralization. In other words, the responsibility for managing
the entire appraisal process has moved closer to the employees who are being evaluated;
whereas past performance reviews were often developed and administered by centralized
human resources departments or upper-level managers, appraisals in the 1990s were much
more likely to be conducted by line managers directly above the appraise.

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 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 an employee.
~ 9 ~

Role of Performance Appraisal
Competent appraisal of individual performance in an organization or company serves to
improve the overall effectiveness of the entity. McGregor in Moats (1999), describes the
three main functional areas of performance appraisal systems as: administrative, informative,
and motivational. According to Addison-Wesley (2001), appraisals serve an administrative
role by facilitating an orderly means of determining salary increases and other rewards, and
by delegating authority and responsibility to the most capable individuals. Informative
function is fulfilled when the appraisal system supplies data to managers and appraises about
individual strengths and weaknesses. When effectively used, performance appraisals will be
seen to be playing a major role in helping employees and managers establish goals for the
period before the next appraisal.





~ 10 ~

PROCESS
The process of performance appraisal:
1. Establishing performance standards
2. Communicating the Standards
3. Measuring Performance
4. Comparing the actual with the standards
5. Discussing the appraisal
6. Taking Corrective Action

Why use the Appraisal Process
There are many reasons why you may complete employee performance reviews, the top five
reasons why organizations implement appraisals include
Evaluation of current performance
Identifying training or development needs
Establishing future performance goals
Determining merit pay increases or salary reviews
Determining performance based bonuses
Leadership Tip: Whilst you may pursue efficiency with your processes, you will quickly find
that leaders do not take shortcuts with their people management.

~ 11 ~

The Three Phases of Employee Performance Reviews
Good performance reviews do not just happen; they are the result of passionate leaders
following a proven process. An effective performance appraisal consists of three distinct
phases.
Setting Expectations
Measure and Monitor
Feedback and follow through
(record performance is often used as a fourth stage)



Setting Expectations:-
Determining how you are going to measure your employees performance, including what
you are going to measure and which type of rating scale you will use.

~ 12 ~

Monitor and Measure:-
Measuring employee performance, converting these measures into employee ratings. Includes
preparing for your employee performance reviews and being consistent
Feedback and follow through:-
Structuring your appraisal interview, determining which style of interview you will use.
Includes techniques for dealing with difficult people, and keeping your review credible, what
to do after your performance interview.

Advantages/Effects of Performance Appraisal
Appraisals can help to improve employees' job performance by identifying strengths and
weaknesses and determining how their strengths can be best utilized within the organization
and weaknesses overcome (Huston, 1989). They can help to reveal problems which may be
restricting employees progress and causing inefficient work practices. Some employers may
talk to their employees regularly about their problems and performance at work and may not
therefore see the need for a formal appraisal system. Regular dialogue between managers and
their staff about work performance should, of course, be encouraged (Latham, 2000).
However, in the absence of a formal appraisal scheme, much will depend on the attitude of
individual managers (Locke, 2002). Some will give regular feedback on their employees'
performance and potential while others will neglect this responsibility. An appraisal system
can develop a greater degree of consistency by ensuring that managers and employees meet
formally and regularly to discuss performance and potential. Experience shows this can
encourage better performance from employees .Appraisals can also provide information for
~ 13 ~

human resource planning to assist succession planning and to determine the suitability of
employees for promotion, for particular types of employment and training (Monga, 1983). In
addition they can improve communications by giving employees an opportunity to talk about
their ideas and expectations and to be told how they are progressing (Muchinsky, 1997). This
process can also improve the quality of working life by increasing mutual understanding
between managers and employees (Rasch, 2004). Performance Appraisal helps the
supervisors to chalk out the promotion programmes for efficient employees. In this regards,
inefficient workers can be dismissed or demoted in case. Harbour (1997), asserts that some of
the most significant advantages a successful performance assessment system offers an
enterprise are:

Determine where they are that is, establish an initial baseline as is performance
level.
Establish goals based on their current performance.
Determine the gap or delta between a set of desired goals and current performance
levels.
Track progress in achieving desired performance goals.
Compare and benchmark their competitors performance levels with their own.
Control performance levels within predetermined boundaries.
Identify problem areas and possible problem causes.


~ 14 ~

METHODS OF PERFORMANCE APPRAISAL
The foregoing list of major program pitfalls represents a formidable challenge, even
considering the available battery of appraisal techniques. But attempting to avoid these
pitfalls by doing away with appraisals themselves is like trying to solve the problems of life
by committing suicide. The more logical task is to identify those appraisal practices that are

(a) Most likely to achieve a particular objective and
(b) Least vulnerable to the obstacles already discussed.

Before relating the specific techniques to the goals of performance appraisal stated at the
outset of the article, I shall briefly review each, taking them more or less in an order of
increasing complexity.

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.

GRAPHIC RATING SCALE
This technique may not yield the depth of an essay appraisal, but it is more consistent and
reliable. Typically, a graphic scale assesses a person on the quality and quantity of his work is
~ 15 ~

he outstanding, above average, average, or unsatisfactory and on a variety of other factors
that vary with the job but usually include personal traits like reliability and cooperation. It
may also include specific performance items like oral and written communication.

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
b. Help the group arrive at a consensus, and
c. Determine that each rater conceives the standards similarly.

FORCED-CHOICE RATING
Like the field review, this technique was developed to reduce bias and establish objective
standards of comparison between individuals, but it does not involve the intervention of a
third party.

MANAGEMENT BY OBJECTIVES
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. Within the past five or six years, MBO has become something of a fad and is so
familiar to most managers that I will not dwell on it here.
~ 16 ~

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. There
is no single form or way to do this. The best approach appears to be a ranking technique
involving pooled judgment. The two most effective methods are alternation ranking and
paired comparison ranking.

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. Here subordinates to be
rated are listed and the names of those not well enough to rank are crossed. Then on a form as
shown below, the employee who is highest on the characteristic being measured and the one
who is the lowest are indicated. Then chose the next highest and the next lowest, alternating
between highest and lowest until all the employees to be rated have been ranked.

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.
Both ranking techniques, particularly when combined with multiple rankings (i.e., when two
or more people are asked to make independent rankings of the same work group and their
~ 17 ~

lists are averaged), are among the best available for generating valid order-of-merit rankings
for salary administration purposes.

ASSESSMENT CENTERS
So far, we have been talking about assessing past performance. What about the assessment of
future performance or potential, in any placement decision and even more so in promotion
decisions, some prediction of future performance is necessary. How can this kind of
prediction be made most validly and most fairly?

360 DEGREE FEEDBACKS
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,
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. Another technique that is useful for coaching purposes is, of course, MBO. Like
the critical incident method, it focuses on actual behavior and actual results, which can be
discussed objectively and constructively, with little or no need for a supervisor to "play God."

~ 18 ~

Rating Errors in Performance Appraisals
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) She/he may feel that a derogatory rating will be revealed to the rate to
detriment the relations between the rater and the rate.
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.


~ 19 ~

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 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 rate during his
early stage of the review period (primacy) or by the outcomes, or behavior exhibited by the
rate 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. One way of guarding against such an error is to ask the rater to
consider the composite performance of the rate and not to be influenced by one incident or an
achievement.
~ 20 ~

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 lo allowing past performance appraisal rating lo 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.

ROLES IN THE PERFORMANCE APPRAISAL PROCESS

a) Reporting Manager
Provide feedback to the reviewer / HOD on the employees behavioral
traits indicated in the PMS Policy Manual
Ensures that employee is aware of the normalization / performance
appraisal process
Address employee concerns / queries on performance rating, in
consultation with the reviewer


~ 21 ~


b) Reviewer (Reporting Managers reporting Manager
Discuss with the reporting managers on the behavioral traits of all the
employees for whom he / she is the reviewer
Where required, independently assess employees for the said
behavioral traits; such assessments might require collecting data
directly from other relevant employees

c) HOD (In some cases, a reviewer may not be a HOD)
Presents the proposed Performance Rating for every employee of his /
her function to the Normalization committee.
HOD also plays the role of a normalization committee member
Owns the performance rating of every employee in the department


d) HR Head
Secretary to the normalization committee
Assists HODs / Reporting Managers in communicating the
performance rating of all the employees



~ 22 ~


e) Normalization Committee
Decides on the final bell curve for each function in the respective
Business Unit / Circle
Reviews the performance ratings proposed by the HODs, specifically
on the upward / downward shift in ratings, to ensure an unbiased
relative ranking of employees on overall performance, and thus finalize
the performance rating of each employee


KEY CONCEPTS IN PERFORMANCE MANAGEMENT SYETEM
In order to understand the Performance Management System at BHARTI, some concepts
need to be explained which play a very important role in using the PMS successfully. They
are:

KRAS (KEY RESULT AREAS):
The performance of an employee is largely dependent on the KRA score achieved by the
employee during that particular year. Thus, it is necessary to answer a few basic questions i.e.




~ 23 ~

What are the guidelines for setting the KRAs for an employee?
How does an employee write down his KRAs for a particular financial
year?
KRAs: The Four Perspectives.
How is the KRA score calculated for an employee on the basis of the
targets sets and targets achieved.

BEHAVIORAL TRAITS:
Some of the qualitative aspects of an employees performance combined with the general
behavioural traits displayed by the employee during a year constitutes his behaviour traits. An
employee is assigned the rating on the basis of the intensity of the behaviour displayed by
him. They play a very important role in the deciding the final performance rating for an
employee as is even capable of shifting the rating one level upwards/downwards.

LEADERSHIP COMPETENCY FRAMEWORK:
This competency framework is a simple and structured way to describe the elements of
behaviours required to perform a role effectively. This framework also tries to assess the
performance of an employee objectively.

THE PERFORMANCE RATING PROCESS:
The rating process tries to explain the four different types of rating that an employee achieves
i.e. EC, SC, C and PC. It also explains the criteria, which is considered for awarding any of
these ratings to the employee.
~ 24 ~


Career Development as a Part of Performance Appraisal
One of the fundamental factors for bringing about an effective performance management
program is often one of the most forgotten. All too often supervisor will mistakenly focus all
of his or her resources entirely on rating and ranking the workforce, dolling out promotions or
laying off workers as need be. While these steps are an essential element of performance
management, they fall short in the long run. To begin with, employees are left feeling as
though their company has neglected their individual career needs. This ultimately leads to
higher employee turnover and makes it difficult for an organization to retain top quality
talent. This is why effective performance management incorporates the workers needs with
that of the company. When engaging an employee base on the level of their performance, the
successful manager will work to align the companys goals with those of the individualized
career paths to ensure a high level of worker loyalty and long term productivity. One area of
particular concern for performance management is a large and growing population of
employees whose careers have reached the half way marker. For many employees, this is a
crucial time for climbing up a few more steps on the corporate ladder. Unfortunately, the
gaping absence of motivating organizational structure present in many business environments
kills the career momentum for these people. This negatively affects the contribution made by
these employees to the overall output and productivity on a corporate level. There are a
variety of causes behind the lack of momentum within the halfway crowd. As mentioned
before, lack of organization is a major culprit. This really stems from having little or no
management at the top. Unfortunately, these important causes for the slowdown are seldom
recognized, and the fault becomes that of the employees rather than the faulty system under
which they work. In order to combat this dilemma, one approach that has enjoyed widespread
success is the organized setting of goals. If an employee can visualize the steps it takes to
~ 25 ~

achieve a promotion, he or she will proactively take up the challenge to improve his or her
status. Another way to add to the challenge is to transfer an employee to a different job area.
This allows the workers to learn new skills and become reignited in the process of
advancement. A performance manger can even knock the employee down a rung or two
before making a transfer. However, the supervisor should do so by showing the worker long
term benefits of advancement and thus not packaging the transfer as a demotion that would
lead to lower moral and productivity. Employees want to work hard and develop their
careers, but they must be given the right incentive. By making the companys increased
productivity a shared goal between the employer and the employee, then positive results will
be achieved on both sides.


THE APPRAISAL OF PERFORMANCE SHOULD BE GEARED TO:
Improving the ability of the jobholder;
Identifying obstacles which are restricting performance
Agreeing a plan of action, that will lead to improved performance.
It is widely accepted that the most important factor in organization effectiveness is the
effectiveness of the individuals who make up the organization. If every individual in the
organization becomes more effective, then the organization itself will become more effective.
The task of reviewing situations and improving individual performance must therefore be a
key task for all managers. For appraisal to be effective, which means producing results for the
company, each manager has to develop and apply the skills of appraisal these are: -
Setting standards on the performance required, which will contribute to the
achievement of specific objectives
Monitoring performance in a cost effective manner, to ensure that previously agreed
performance standards are actually being achieved on an ongoing basis
~ 26 ~

Analyzing any differences between the actual performance and the required
performance to establish the real cause of a shortfall rather than assume the fault to be
in the jot holder. Interviewing having a discussion with the jobholder to verify the true
cause of a shortfall, a developing a plan of action, which will provide the
performance, required

Appraisal can then become a way of life, not concerned simply with the regulation of rewards
and the identification of potential, but concerned with improving the performance of the
company. The benefits of appraisal in these terms are immediate and accrue to the appraising
manager, the subordinate manager/employee, and to the company as a whole.

How to Use Performance Appraisals to Motivate Employees
Motivation is the process that energizes employees and propels them to pursue their goals.
Well-designed and well-executed performance appraisals have a strong motivational impact.
Appraisals have the power to motivate employees because they provide a number of
interconnected benefits:

They demonstrate the need for improvement. If employees dont have a clear
understanding of how theyve been performing, they cant be motivated to make any
improvements.

They meet higher-level psychological needs. Researchers continue to find that
recognition is one of the most powerful forms of motivation for large numbers of
employees. Although you can find numerous possible sources of recognition on the job,
~ 27 ~

performance appraisals are an opportunity for employees to receive formal, significant,
and enduring recognition from their manager.


They build a sense of personal value. When managers take the time and effort to
carefully review, analyze, document, and discuss performance with employees, the
underlying message to the employees is that theyre important and valuable, and this
alone is quite rewarding, whether the feedback is positive or not.

They enhance personal development. Performance evaluations are motivational for
employees who are looking to enhance their personal learning, growth, and development.
Appraisals are a highly valuable source of information, insights, and tools necessary for
such progress. Performance appraisals are similarly motivational for employees whose
needs are centered on achievement, goal attainment, and sensing personal effectiveness,
respect, and trust.


They turn employees around. When employees are performing poorly, performance
appraisals can provide the wakeup call that they need to get refocused and reenergized.
With performance appraisal, however, the purpose of the session is not strictly
disciplinary, so the employee is more likely to walk in with a more receptive and open
mind. As a result, your comments regarding an employees questionable performance
have an excellent chance of being heard and generating action as a result.
~ 28 ~

They increase satisfaction. When performance appraisals meet the employees needs in
such areas as gaining recognition, sensing achievement and competence, experiencing
growth, and meeting objectives, theyre also contributing to the employees job
satisfaction, and this is one of the most important elements at work today. When
employees are satisfied, some of the most visible indicators are reduced turnover,
absenteeism, and tardiness.

On the flip side, when employees are subjected to a shoddy or even nonexistent performance
appraisal system, the opportunities to fulfill these higher-level employee needs are
substantially reduced.

PERFORMANCE APPRAISAL SYSTEM AND PERFORMANCE
IMPROVEMENT:-
Performance management focuses on ways to motivate employees to improve their
performance. The goal of the performance management process is performance improvement,
initially at the level of the individual employee, and ultimately at the level of the
organization. The performance appraisal is a technique that has been credited with
improving performance and building both job satisfaction and organizational. Although the
relationship between appraisals and performance may not be a direct and causal one, their
impact on performance may be attributed to their ability to enhance: role clarity,
communication effectiveness, merit pay and administration, expectancy and instrumentality
estimates, and perceptions of equity. Duhinsky, Jolson, Michaels, Kotahe, and Lim (1993)
discuss the concept that increases in role clarity can affect both the effort/performance
expectancy and performance/reward instrumentality estimates. Thus, by reducing ambiguity
~ 29 ~

performance appraisals may positively influence the levels of motivation exhibited by
employees. More frequent appraisals and feedback help employees to see how they are
improving, and this should increase their motivation to improve further. Appraisals are
generally considered to have a positive influence on performance, hut they also may have a
negative impact on motivation, role perceptions, and turnover when they are poorly designed
or administered (Churchill et al., 1985). The ultimate goal of performance appraisal should be
to provide information that will best enable managers to improve employee performance.
Thus, ideally, the performance appraisal provides information to help managers manage in
such a way that employee performance improves. Providing the employee with feedback is
widely recognized as a crucial activity. Such feedback may encourage and enable self-
development, and thus will be instrumental for the organization as a whole Yehuda Baruch.
Larson supports the importance of evaluations in terms of their effect on organizational
effectiveness, stating that feedback is a critical portion of an organization's control system.

Impact on Employees Satisfaction and Work Performance
Every performance appraisal has to be done fairly where no bias happens during the
evaluation. How far this issue is followed is a concern because not every manager or superior
is evaluating their subordinates fairly; sometimes it depends upon their relationship between
each other. Performance appraisal has to be executed fairly so that the organization can get
affective and actual appraisal. According to Cook and Crossman people will only be satisfied
with the performance appraisal process if it fulfills the criteria of fairness. An appraisal can
be doomed to failure if the feelings of unfairness in the process and inequity occur during
evaluations. These show the importance of an appraisal because by using appraisal result the
human resource department can evaluate and do the necessary activities such as preparing the
~ 30 ~

development plans, rewards, succession plans, bonus, promotion, increment and so on.
Employees are satisfied with their performance appraisal systems when there is trust in the
supervisor and when the supervisors are supportive of their subordinates feedback,
particularly in the area of skill development, pay for performance, etc. Career advancement
occurs during the appraisal session, and subordinates feel that they are given enough time to
express their perspectives, have opportunity to influence the outcome and sufficient
explanation of their ratings is provided. Furthermore, a study was conducted by Kelly, Ang,
Chong, and Hu (2008), on teacher appraisal and its outcomes in Singapore primary schools.
The objective of this study was to examine the attributes of the performance appraisal system,
how those attributes affect satisfaction; stress experienced with appraisal system, attitudes
towards performance bonus, job satisfaction, and motivation, and perceived cooperativeness
among teachers. The study was conducted via the questionnaire method and was distributed
to 125 teachers but only 85 were retrieved because they responded to the survey on a
voluntary basis. The questionnaire asked about their demographic data, attitudes towards job,
desirability of having performance appraisal system, current performance appraisal system,
and satisfaction of the system. Researchers used factor analysis to identify factors of appraisal
system attributes and factors of teachers attitude and perception, step wise multiple
regression were used. The results from the finding indicated that fairness and clarity of
performance appraisal system are related to greater satisfaction with the appraisal system. In
conclusion, this study gave insight on how various attributes of the performance appraisal
system are related to important outcomes such as job satisfaction and motivation. The finding
may help to design and implement more effective performance appraisal system. Another
study had been carry out on procedural justice and supervisors personal power bases effects
on employees perceptions of performance appraisal sessions, commitment and motivation
This study was done to predict personal power bases of supervisors contributed to employee
~ 31 ~

procedural justice perceptions, perceived procedural justice correlated positively with
satisfaction with performance appraisal session, organization commitment, and motivation. A
sample was drawn from employees of the Dutch treasury department. From 399 employees
who were approached, only 178 participated. A five point liker scale format was used. The
questionnaire is about performance appraisal sessions, several procedural justice aspects,
personal power bases of supervisors who administer the performance appraisal session,
motivation, satisfaction, commitment and a few demographic variables. The findings of the
study reveal that perceived procedural justice of performance appraisal sessions correlated
positively with subordinates satisfaction with the performance appraisal sessions,
organizational commitment, and motivation of subordinates to perform well. The strongest
correlation was found with satisfaction, meanwhile correlation between procedural justice
and commitment. In the conclusion people are motivated by two social laws, which are
selfishness and considerations of fairness. From the observation, organization which use fair
performance appraisal procedures do not only get good valuable information but also succeed
in promoting feelings of satisfaction, commitment and motivation of their employees. A
performance appraisal system will not be effective unless it is perceived to be fair by all those
involved in the process. This was indicated by Cook and Crossman (2004). The levels of
stated satisfaction with performance appraisal system are clearly related to the perceived
fairness to the system. The concept of fairness within organizations has been defined as
organizational justice. The fairness of any organizational system which provides a reward is
related to two main components, namely distributive justice which is an individuals
perception about their rewards in relation to their contributed effort and comparison with
others effort and procedural justice which is an individuals perception about the fairness of
the procedures used to make decisions about rewards. Distributive and procedural justice
contributed equally to perceptions of fairness in performance appraisal system. It is based on
~ 32 ~

the previous study to identify the level of satisfaction of performance appraisal which had
discovered the relationship between a persons function within a performance appraisal
system and the expressed level of satisfaction. The study examines two aspects of procedural
justice and combined with the level of satisfaction with the appraisal interview process and
interactions with supervisor An important element affecting fairness perceptions is the
judgment bases on evidence, where raters must be seen to apply performance standards
consistently across employees without distortion by external pressure, corruption or personal
biases There is past evidence that procedural justice is related to employee satisfaction and
turnover intention. There had been a lot of studies already done regarding the application of
performance appraisal system satisfaction in the organization and its effect to work
performance. Despite all of the studies, there is still no clear understanding of performance
appraisal system satisfaction that its existence has created a lot of perceptions. Even there do
not have clear picture on how this performance appraisal satisfaction will affect work
performance.

IMPORTANCE OF PERFORMANCE APPRAISAL IN TODAYS ORGANISATION:
Performance appraisal is a most valuable human resource tool. It is a vital component for the
development of company as well as for individual employee. The system of performance
appraisal motivates the sincere employees and in certain cases it punishes the dishonest
employees. This is benefited to employees as well as for the organization. Productivity
increases if there is a fair performance appraisal system implemented in the organization.
Performance appraisal plays critical role in organizations ability to achieve its strategic goals.
Organization and the HR department has to design and implement Performance appraisal
system in an organization is a core managerial function. The challenge faced by the present
days organization is absolutely depending on the effectiveness of its performance
~ 33 ~

management system which ultimately acts as a catalyst for Employees effective
performance. The true goal of performance appraisal is employees development &
organizational improvement. Ultimately competitive asset of any organization is it human
resources, thus organization should develop employee competencies which should be aligned
with the organizations business goals. This can be achieved through performance
management system which also acts as behavioral change tool and it can also enable
performance management system which can improve overall organizations performance.
In India there are large manufacturing firms where there is a co-existence of two different
systems in a same organization e.g. MBO and 360degree Performance appraisal system,
Open ended system, Semi-open, closed system. The intention of Performance appraisal is to
evaluate the employee at all levels in organization. There are many advantages of
Performance appraisal system; firstly organization comes to know who high performer is and
who is not. This helps organization to take some sort of disciplinary action against low
performer or recommended them for further training. Performance appraisal is very important
for the employee, as he comes to know about the work areas which he is lacking in and has to
do improvement on the same. Employees come to know about the expectation of organization
from him. The evaluation of employees is done by the superiors, on the basis of some
predicated criteria and if gaps are found in the employees performance the superior in the
organization will know and decide which employee in the organization requires training. To
achieve organizational objective Training need analysis is essential which would be identified
only by performance appraisal. Generally employees need to train to move the organization
forward. To move organization further the owner and management should have some idea,
some strategy for solving organizations current problems. Organization experiences some
deficiencies so to bridge a gap between these capabilities. It needs to achieve its objective and
what it currently has. Based on performance appraisal one should try to conduct Training
~ 34 ~

need analysis to find out a gap in its people capability. It can be short fall in knowledge,
attitude and skills of our employees. So to bridge this gap by providing training program to
employees, ask every single individual to be perfect and get a maximum productivity which
will directly indirectly motivate employee so that he will give good and better product which
will be benefited and profitable for organization. A survey was conducted in Industrial area
in Pune and adjoining area regarding the performance appraisal system which the companies
are following .Among the company survey they were asked which performance appraisal
system are implemented. Most of the companies said that they followed KRA and 360 degree
performance appraisal system. It was seen except for very few, all the employees of the
companies are satisfied with the performance appraisal system. That most of the companies
are conducting performance review interview and the training need is communicated to the
employees. While most of the companies are following the method of on the job/off the job
training, some are following the method of training by experts. As far as motivation is
concern the companies are following monetary / non monetary/job expansion. Interview
conducted with various levels of employees has reviled that better performance and increased
productivity depends on work culture and employees satisfaction. Ethical aspects of
performance appraisal are to actually look into different process like judgment and
observation .It is a task of every manager to observe the performance and to keep a check on
every employees performance. There should be the certain standard framed by the HR
department and with the consultation of HODs of various departments for the performance.
Legally and scientifically, the key requirement of any appraisal system are relevance implies
that clear links between the performance standards for particular job and organizational
objectives, sensitivity states that a performance appraisal system is capable of distinguishing
effective from ineffective performers. And reliability is a consistency of judgment to provide
~ 35 ~

reliable data by raters with different perspective will see same individual employee job
related performance and individual behavior very differently.

Career Development as a Part of Performance Management Program
One of the fundamental factors for bringing about an effective performance management
program is often one of the most forgotten. All too often supervisor will mistakenly focus all
of his or her resources entirely on rating and ranking the workforce, dolling out promotions or
laying off workers as need be. While these steps are an essential element of performance
management, they fall short in the long run. To begin with, employees are left feeling as
though their company has neglected their individual career needs. This ultimately leads to
higher employee turnover and makes it difficult for an organization to retain top quality
talent. This is why effective performance management incorporates the workers needs with
that of the company. When engaging an employee base on the level of their performance, the
successful manager will work to align the companys goals with those of the individualized
career paths to ensure a high level of worker loyalty and long term productivity. One area of
particular concern for performance management is a large and growing population of
employees whose careers have reached the half way marker. For many employees, this is a
crucial time for climbing up a few more steps on the corporate ladder. Unfortunately, the
gaping absence of motivating organizational structure present in many business environments
kills the career momentum for these people. This negatively affects the contribution made by
these employees to the overall output and productivity on a corporate level. There are a
variety of causes behind the lack of momentum within the halfway crowd. As mentioned
before, lack of organization is a major culprit. This really stems from having little or no
management at the top. Unfortunately, these important causes for the slowdown are seldom
~ 36 ~

recognized, and the fault becomes that of the employees rather than the faulty system under
which they work. In order to combat this dilemma, one approach that has enjoyed
widespread success is the organized setting of goals. If an employee can visualize the steps it
takes to achieve a promotion, he or she will proactively take up the challenge to Improve his
or her status. Another way to add to the challenge is to transfer an employee to a different job
area. This allows the workers to learn new skills and become reignited in the process of
advancement. A performance manger can even knock the employee down a rung or two
before making a transfer. However, the supervisor should do so by showing the worker long
term benefits of advancement and thus not packaging the transfer as a demotion that would
lead to lower moral and productivity.
Employees want to work hard and develop their careers, but they must be given the right
incentive. By making the companys increased productivity a shared goal between the
employer and the employee, then positive results will be achieved on both sides.

Technology: Electronic Performance Monitoring
Electronic Performance Monitoring (EPM) is the process of observing ongoing employee
actions using computers or other nonhuman methods. The number of employees monitored
through EPM has increased drastically in the past 20 years. In the early 1990s, about one
third of employees were being monitored electronically. By 2001, approximately 78% were
monitored electronically,59 and in 2010 that number more than likely increased even more.
The reason for this steep increase is that EPM apparently is an effective means of increasing
productivity.60 EPM allows management to know if employees are actually working or
doing personal things during work hours. The biggest upside to EPM seems to be that it
provides information for concrete results-based performance evaluations. Certainly, this is a
~ 37 ~

valuable, outcome. However, some researchers and practitioners argue against EPM because
of a number of factors including ethical questions concerning such monitoring, legal concerns
over employee privacy, and apparent increases in stress due to constant monitoring of
performance. So, the question is whether or not organizations should use EPM systems.
Theres no simple answer to such a question. Again, EPM has been shown to increase
productivity, and organizations need to maximize employee productivity. However, increases
in stress are known to decrease productivity if the stress level becomes too significant. So
theres an obvious trade-off between more employee monitoring and controlling stress levels
in our workforce. Management must understand this trade-off in order to successfully
improve productivity in the organization overall. In addition, the ethical and legal questions
noted in the previous paragraph may be significant enough in some cases to cause individual
employees to leave the organization. If these individuals are our more productive workers,
and especially if they are knowledge workers, what does the loss of these knowledgeable
individuals do to organizational pro- ductility? There doesnt appear to be any current
research-based answer to these questions. Therefore, because these questions exist,
organizations must be very careful in how they implement EPM processes so that they
improve their chances of reaching the stated goal of EPMimproving organizational
productivity. Finally, as these programs are rolled out in the organization, managers must be
acutely aware of the potential for increased levels of stress as well as employee feelings
concerning invasion of privacy that could lead to decreases in productivity and higher rates of
turnover as well.61 In other words, management must work to overcome the potential
problems and costs in order to gain the benefits.


~ 38 ~

Is It Time to Do Away With Performance Appraisals?
Samuel Culbert, a clinical psychologist at the University of California at Los Angeles, has
written a book called Get Rid of the Performance Review!58 His premise is that performance
appraisals are one-sided analyses by the manager of what the subordinate is doing wrong. He
notes that if the process can become a two-way communication between the manager and the
subordinate, a performance review becomes a performance preview. The boss and the
subordinate have conversations that allows the manager to become a coach and tutor for the
subordinate. However, if you take note of the purposes for performance appraisals that we
identified early in this chapter, communication is one of the three main aims of the process.
As we discussed, we need two-way communication between the supervisor and the
subordinate. If its one-way, the process has very little chance of improving the subordinates
performance over time. In addition, one of our other purposesmotivationalso requires a
continuing conversation between the supervisor and the subordinate coaching. The
performance management process does not occur one day a year. If it is going to be
successful, it has to occur continuously throughout the year as the supervisor and the
subordinate have conversations about ongoing performance. The most significant problem, if
organizations were to get rid of performance reviews, is that these appraisals are used
legitimately by organizations in order to make good decisions about their employees and their
development. If performance appraisals are not completed, the organization doesnt have
valid and reliable information about the human resources in the organization and therefore
has no ability to make good decisions about things such as training, promotions, pay raises,
and other factors. Going back to the OUCH and Blanchard tests, in any personnel action
within the organization we need to attempt to be as objective as possible. An appraisal
process that is done correctly (and most arent) is an absolutely necessary piece if the
organization is going to be objective in management of its human resourcesone of the most
~ 39 ~

critical pieces of organizational success today. In fact, what Culbert is really saying is if you
are not going to do it right with accurate measures and coaching, dont do performance
reviews. This is what good managers have been saying for the last 40 years. If were going to
be successful in improving employee performance over time, two-way conversations have to
occur that allow employees to identify problems and issues that prevent them from being as
successful as possiblecoaching. If coaching occurs, individual performance is almost
certain to increase, and as a result organizational performance will increase overall over the
course of time.

Performance Appraisal Process in GlaxoSmithKline India Ltd

GSK Bangladesh Ltd. has four functional sub-department of HR department. The
departments are HR Development, HR Services, Compensation, Industrial Relations.
Performance appraisal is practiced under Operation of HR Services. GSK has divided its total
employees into 2 categories for appraisal:
(1) Management employees and
(2) Non-management employees. For management employees,
It has been divided into director, manager and officer. There are two categories of officer.
One is office based officer and another is field force officer. Office based officers are also of
two types, one is commercial officer and another is global manufacturing & supply (GMS)/
factory officer. Covering the above categories in total six types of appraisal system is used in
GSK India Ltd. such as: (1) director, (2) manager, (3) commercial officer, (4) global
manufacturing & supply (GMS)/ factory officer, (5) field force officer, and (6) non-
management staff. All this appraisal process has been conducted once in a year with a
midyear review option.
~ 40 ~

Sales Force Officers Appraisal Process in GSK

In case of measuring the performance of sales force officer following adjectives are
considered: target achievement (give percentage if available), product knowledge, market
knowledge, customer relations (doctors, chemists etc.), selling skills (detailing, listening &
closing), knowledge of competition, achievement of work assigned (doctors/chemist calls),
ability to organize work, initiative, quality of reporting, attitude towards superiors &
colleagues, active participation in conference & meeting, effective utilization of promotional
materials, trustworthiness and integrity and, attention to safe working.











~ 41 ~

Objectives of the Research
Any survey report begins with stating the objectives of the study: therefore, the first step in
the survey analysis deals with the objectives. Next, the methodology adopted to collect the
information required will be dealt with, that is, the survey design will be described.
Generally, data sources include primary and secondary sources. Primary data sources can
provide a range of information and therefore should be consulted first. If they dont provide
necessary information for the research then secondary data is to be collected.

To study the current performance appraisal system of the organization and identify the
gaps between the current state and the desired state.
To find out the performance dimensions relevant to the strategic plan of the company.
To identify the potential areas for the scope of improvement in the current system and
thereby in the organizational performance.
To study the implications of an effective performance appraisal system on the
productivity of employees and the organizational performance as a whole.
To identify the key performance indicators and critical success factors for achieving
organizational effectiveness.







~ 42 ~

Satisfaction with Interpersonal Relations [sales representative]


Table-1


Level of
Satisfaction
Local
Organization
Multinational
Organization
Total Organization
Number Percent Number Percent Number Percent
Highly
Dissatisfied
3 6 Nil Nil 3 4
Dissatisfied 2 4 02 13 4 6
Undecided 4 8 01 7 5 8
Satisfied 10 20 05 33 15 23
Highly
Satisfied
32 62 07 47 39 59
Total 51 100 15 100 66 100










~ 43 ~

Chart- 1





Analysis
Table-1 Shows the satisfaction level of entry level officers with factor of interpersonal
relations. Tale shows that majority of the respondents 82% (62% highly satisfied and 20%
satisfied) in local and 80% (47% highly satisfied and 33 satisfied) in multinational are
satisfied with interpersonal relations in organizations. In summing up it can be inferred that
both local and multinational organizations are having good culture offering interpersonal
relations.

Interpretation
From the analysis researcher comes to know that maximum multinational organizations stff
are more satisfied in comparison to local company.
0%
10%
20%
30%
40%
50%
60%
10%
12%
16%
24%
38%
0%
13%
13%
20%
54%
Local Organization
MultinationalOrganization
~ 44 ~

Satisfaction with Compensation Package (salary & fringe benefits)


Table-2


Level of
Satisfaction
Local
Organization
Multinational
Organization
Total Organization
Number % Number % Number %
Highly
Dissatisfied
18 35 2 13 20 30
Dissatisfied 14 27 5 33 19 28
Undecided 07 14 2 14 9 14
Satisfied 06 12 3 20 9 14
Highly
Satisfied
06 12 3 20 9 14
Total 51 100 15 100 66 100








~ 45 ~

Chart- 2




Analysis
Table 2 reveals the results of satisfaction of middle & entry level managers regarding
compensation and reward packages being offered by the organizations. It reveals that
managers of both local and multinational organizations are not happy with the rewards
offered by the organizations; as dissatisfied managers are 63% (35% highly dissatisfied and
27% are dissatisfied) in local and 46% (13% highly dissatisfied and 33% dissatisfied) in
multinational organizations. It reveals that compensation packages are not sufficient in both
organizations, but local organizations are relatively low paying organizations. When we look
at the satisfied mangers, the satisfied managers are 40% in multinational organizations, while
that ratio is only 24% in local organizations. This proves that multinational organizations are
relatively offering better packages.


0
0.1
0.2
0.3
0.4
0.5
0.6
1 2 3 4 5 6 7
10%
12%
16%
24%
38%
0%
13% 13%
20%
54%
Level ofSatisfaction
Local Organization
MultinationalOrganizat
ion
~ 46 ~

Interpretation
From the analysis researcher comes to know that maximum multinational
organizations are relatively offering better packages in comparison to local company.






























~ 47 ~

Overall Job Satisfaction



Table-3



Level of
Local
Organizations
Multinational
Organizations
Total
Organizations
Satisfaction Number Percent Number Percent Number Percent
Highly
Dissatisfied
5 10 Nil Nil 5 8
Dissatisfied 6 12 2 13 8 12
Undecided 8 16 2 13 10 15
Satisfied 12 24 3 20 5 23
Highly
Satisfied
20 38 8 54 28 42
Total 51 100 15 100 66 100






~ 48 ~

Chart- 3





Analysis
Table-3 shows the overall job satisfaction of middle level mangers. It reveals that 62% (38%
highly satisfied and 24% satisfied) in local and 74% (54% highly satisfied and 20% satisfied)
in multinational organizations are satisfied with their job. It shows that majority of middle
level managers are satisfied but the satisfaction level of middle level managers is slightly
high in the multinational organizations. This table also shows that none of the middle level
mangers was highly dissatisfied in the multinationals but 10% of the middle level managers
were highly dissatisfied in the local organizations.
Interpretation
From the analysis researcher comes to know that middle level mangers was highly
dissatisfied in the multinationals but 10% of the middle level managers were highly
dissatisfied in the local organizations.
0 0.2 0.4 0.6
1
2
3
4
5
6
7
8
MultinationalOrganizatio
n
Local Organization
Level ofSatisfaction
~ 49 ~

Importance of the study

The importance of a project report is following.


The study will help to know that what additional features & what facilities should be
to increase.
The procedure of human resource development in pharmaceutical sector.
It helps in identify reason behind problems.
The importance of project study is that it is helpful to make good knowledge about the
human resource management and human resource development.
It is important to know challenges & prospects in view of future with unique
suggestions& HRD facilities that will be preferred by the industries.
Environmental factors of HR are prime influencing elements of change in HR
strategy.
It gives HR professionals time to anticipate opportunities in HR area and time to
Plan optional responses to these opportunities.
It helps HR professionals to develop an early warning system to prevent threats
Emerging out from HR scenario, or to develop strategies, which can turn a threat.
It forms a basis of aligning the organization strengths to the changes in the
environment.
It enables the entry of the latest national/international HR developments
~ 50 ~

Scope of the Study

The scope of the study for the Study on Performance Appraisal System and its effect on
Employee Motivation is very broad in nature and it shows its effect on the marketing and
personnel researches of the industrial enterprise. This study is also very important from
research point of view because it develops an insight in the researcher and knowledge about
various aspects of a research and also the researcher has got experience about the subject.
The purpose of this study is to obtain information about recent trends of performance
appraisal system in the industrial enterprises. MNC Company in India.









~ 51 ~

Research Methodology

Research as A systematic investigation, including- research development, testing and
evaluation, designed to develop or contribute to generalizable knowledge. Activities which
meet this definition constitute research for purposes of this policy, whether or not they are
conducted or supported under a program which is considered research for other purposes. For
example, some demonstration and service programs may include research activities
Introduction
According to Cassel, C. & Symon, G., (2004), all research involves data collection
and analysis, whether through observation, reading, measurement, asking question or a
combination of these or other strategies. The collection of the data and for research may,
however vary considerably in its characteristics. In simple words research can be primary or
secondary. In primary research the collection of data is specifically for study at hand. It can
be obtained by communicating directly or indirectly with the subject or directly by the
investigator. Qualitative research and quantitative research are included in the direct
communication techniques. For the purpose of this research, a combination of primary and
secondary data has been used; and, under primary, although largely quantitative data was
collected, room for qualitative data was made available whenever thought necessary.
Methods of Collection of Data
Flower (1985) opines the choice of collection of data mode-mail, personal interview,
group administration, or telephone is directly related to the sample frame, research topic,
characteristics of sample and the resources available; it has implication of rates of response,
question form, and survey costs. As mentioned earlier, that there are two main researches
which are primary and secondary research
~ 52 ~

Primary Research
Primary research is conducting original research to obtain a variety of social indicators that
can help to determine the risk of community and protective factors identify community
resources, and determine community readiness for prevention efforts. For instance primary
research can involve researching community laws and surveys to determine norms, gaps,
attitudes or social services. Some methods of conducting primary research are as follows:
Questionnaires
Experimentation
Observation
Documentary Sources
Secondary Research
Secondary research as data which already exist in some form, having been collected for a
different purpose, perhaps even by a different organization, and which might be useful in
solving a current problem. Although secondary research less expensive than primary
research, it is not always accurate, useful, as specific, custom-made research. There are
various sources available to the marketer, and the following list is by no means conclusive:
Census data
Public records
Business libraries
Trade directories
Trade Associations
Websites
Omnibus surveys
Published company accounts
previously gathered marketing research
~ 53 ~

Informal contracts
National/ International governments
Professional institutes and organizations
National and local press Industry magazines

Types of Secondary data include:
There are basically two types of research of research methods, qualitative and
quantitative. Silverman (2000) opines that the danger in the title, however, is it seems to
assume a fixed preference or pre-defined evaluation of what is good (i.e. qualitative) and bad
(i.e. quantitative) research.
Research Process
The research process is the step-by-step procedure of developing one's research
and research paper. However, one can seldom progress in step-by-step fashion as such. It is
often necessary to revise an initial research plan. The research process involves identifying,
locating, assessing, analyzing, and then developing and expressing your ideas. These are the
same skills that will be needed in the post-university "real world" when you produce reports,
proposals, or other research for your employer. All of these activities will be based on
primary and secondary sources from which recommendations or plans are formulated. There
is no fixed number of stages to be followed since it varies from research to research. At the
same time every research process does in reality follow a common trend in its completion.
This includes formulating and clarifying a topic, reviewing the literature, choosing a strategy,
collecting the data, analyzing the data collected and finally writing up.


~ 54 ~

Research Design
Naresh K. Malhotra (2004) opines that research design is a blueprint or framework for
conducting the research project. It is in simple words, a plan for study that guides the
collection and analysis of data. It, in fact, is the central part of any activity involving any
work of research. It serves as a guide to the investigation methods, the instruments in
research used, nature of data with the sampling frame and plan. One of its key features should
be to hold the parts and phases of the enquiry together. It should be comprehensive in its
coverage of the work i.e. it should allow for logic, tight-ness, precision, and effective use of
resources. A research design lays the foundation for conducting the project. A good research
design will ensure that the research plan is conducted efficiently and effectively.

Sampling
Various company performance appraisal reports and its impact on motivation of
employees.








~ 55 ~

Findings

The company should appraise the performance of the workers by giving them some
incentives, which would motivate them to work to their fullest capacity and to
encourage them to work more and show good and better results.

For the top management of the company it should offer them holiday package,
appraise performance by recognizing their work in their meetings etc. this will help in
raising their morale and therefore they will work harder. Most of the employees dont
want financial help rather they would like some recognition for their work.


For the lower income earning group the company should increase their wages, offer
them pension schemes, and also provide them medical facilities etc. because they
want financial help from the company to insure their proper living.

The company should also keep changing the ratters for performance appraisal system
from time to time so that they dont become bias at any time for any employee.


The method of the company should be changed periodically so that the employees
have no chance to complain for the method.

The criteria decided upon which the performance has to be rated should not be fixed,
it should be changed from time to time.


~ 56 ~

The standards of the rating should be very specific, clear and concise.

There should be a feeling of team work in the organization.


The system should be cost effective and it should suit the budget of the company




























~ 57 ~

Recommendations

After completion of the research work the researcher came to some conclusions which could
help in development & improvement of performance appraisal and motivating empolyees.
This is helpful in future development of the any company position by improvement in
employees. The following points come in the suggestion parts which came after the analysis
and conclusion of the research:-

Further Research in this area after a span of years time would be worthwhile to do
because the human resource developments are not stable.
Since human resource development depends on company on a large scale and they are
of a very fluctuating nature, further research on exchange rate would be prudent.
At the same time, research on the interest rate would be sensible; because, as human
resource have a fluctuating nature, variables depends upon the manpower of any country for
its progress and on the whole interest rate are co-related with the human resource
management.
To have a consistent method of performance appraisal for losses and gains from the
HRM, a proper framework to motivation for needs to be developed. .
Harmonization of regulations is required.
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The company should appraise the performance of the workers by giving them some
incentives, which would motivate them to work to their fullest capacity and to encourage
them to work more and show good and better results.
For the top management of the company it should offer them holiday package,
appraise performance by recognizing their work in their meetings etc. this will help in raising
their morale and therefore they will work harder. Most of the employees dont want financial
help rather they would like some recognition for their work.
For the lower income earning group the company should increase their wages, offer
them pension schemes, and also provide them medical facilities etc. because they want
financial help from the company to insure their proper living.
The company should also keep changing the raters for performance appraisal system
from time to time so that they dont become bias at any time for any employee.
The method of the company should be changed periodically so that the employees
have no chance to complain for the method.
The criteria decided upon which the performance has to be rated should not be fixed,
it should be changed from time to time.
The standards of the rating should be very specific, clear and concise.
There should be a feeling of team work in the organization.
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Conclusion


Employee job satisfaction can improve service quality and increase employee satisfaction. In
this circumstance, policy makers and managers have turned their attention to provide
different kinds of facilities to their employees in order to satisfy their employees. This study
tested factors affecting job satisfaction for pharmaceuticals companies. The results suggest
that the factors had satisfactorily explained job satisfaction and that the policy makers and
managers should focus on the factors that affect employee job satisfaction, if they want to
enhance their businesses. Based on the results for the standardized values, we are able to see
that work conditions, fairness, promotion, and pay, are key factors affecting pharmaceuticals
companies employees job satisfaction. Money is a good motivator, actually all employees
work for money, employees need the money, a good salary and good compensations are key
factors in satisfying the employee. The factor of work conditions is also proven to have
significant influence over the pharmaceuticals companies. The physical design of the place
does have certain impacts on job satisfaction. Because the work conditions in the
pharmaceuticals companies include the employee relationships and work environment, all
these factors relate to employee job satisfaction. A good performance appraisal system, work
environment and good work conditions can increase employee job satisfaction and the
employees will try to give their best which can increase the employee work performance.
Results of the study reveal that middle level managers are satisfied in both local and
multinational organizations; but mangers of multinational organizations are slightly more
satisfied then the local organization managers. When mangers were inquired for all the
dimensions of organizational climate it was found that there was not much difference in both
local and multinational organizations on the facets of organizational climate except for pay
and reward system. Middle level mangers of local organizations were not satisfied with the
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pay and reward system but the employees of the multinational organizations show that pay
and reward system in their organizations are good and fair.
In many organizations, annual performance appraisals form the basis for the rewards
employees get. In this paper, we have investigated how a managers performance appraisal an
employees future performance. A key feature of our model is that both the manager and the
employee have a perception of the employees past performance. We have derived a couple of
results. First, we have shown that even though a performance appraisal is cheap-talk, it may
contain information that irrelevant for the employee. Second, for a wide range of parameters
the manager tends to give positive appraisals. Third, on average, a positive appraisal
motivates an employee more than a negative appraisal. Fourth, the appraisals on an
employees future performance depend on the employees perception of the ability of the
manager to assess his performance. Finally, our analysis suggests an explanation for the
centrality bias. The driving force behind most of our results is that the manager wants to
come across as a person who is able to assess the performance of the agent correctly. This
gives incentives to good managers to separate themselves from bad managers by giving
informative feedback. As usual, the results of our paper are derived from a model that is
based on many assumptions. We have made some of these assumptions to drive home our
results in a simple way. For instance, we have assumed that the good manager observes the
employees performance, while the bad manager does not have a clue. Qualitatively, assuming
that a good manager is better in assessing the employees performance than a bad manager
would have succeed .A more restrictive assumption is that the manager is assumed to reward
the employee on the basis of his perceived performance. As always, this is a restrictive
assumption in case the manager is the residual claimant. Essential for our result is that the
relationship between performance and pay depends on the managers ability to assess the
employees performance. A limitation of our model is that it does not consider long working
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relationships between the manager and the employee. This probably would make it hard for a
bad manager to maintain a good reputation. The employee would gradually learn the
managers type. As we have shown that performance appraisals only matter when the
employee is uncertain about the managers type, we expect that in a multi-period model the
eects of performance appraisals diminish over time.
The immediate boss who has been observing the immediate subordinate throughout the year
rates him according to the self appraisal form filled and also through personal observation
under following factors:
a. Quality of work
b. Quantity of work c. Job knowledge
c. Dependability
d. Innovation and creativity
e. Ability to learn
f. Attendance
g. Reaction to criticism
h. Discipline
i. Customer relations
j. Subordinate development







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Limitation
The time available to conduct the study is little; it being a wide topic has a limited
time.

Limited resources are available to collect the information about the human resource
development.


Pharmaceutical market is so much volatile and it is difficult to forecast anything about
it whether you trade online or offline.

Some of the aspects may not be covered in my study, its gives knowledge about
human resource development small prospects and its challenges.

In a rapidly changing industry, analysis on one day or in one segment can change very
quickly. The environmental changes are vital to be considered in order to assimilate
the findings.

The foremost limitation is regarding the sources of information. The information
contained has been obtained from sources believed to be reliable and in good faith,
but which may not be verified independently.

The limitation is that some of the calculations are based on certain assumptions
considered appropriate.

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Bibliography & References


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Alan C. Shapiro (2000), Prentice- Hall Multinational Financial
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Bharti V (1999).Pathak, Pearson Education Indian Financial
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Blaxter (1997) How to Research.
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Dr. NarendraJhadav (2000) Indian Banking.
Donald S. Tull and Del I. Hawkins (1993)- Marketing Research
E. Sirisha (2001) Stock Market Derivatives: Role of Indices (
2
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G R K Murty (2000) Indian Derivatives Market: Issues at Stake.
Hathaway (1995) Qualitative VS Qualitative research analysis.
Hull J. (1995) Introduction to Futures and Options Market (1st
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J Marlowe (2000) Hedging Currency Risk and Options and Futures.
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Dhingra G. (2010), An understanding of financial derivatives of financial
derivatives, The Chartered Accountant, March
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Chartered Financial Analyst, December
Gulati S. (2011)Curreny Options, Chartered Financial Analyst,
November
Sisodiya A.S.(2008)Credit Derivatives: Is Indian Banking Sector
Ready, Chartered Financial Analyst, July


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