International Journal of Commerce & Business Studies

Volume 1, Issue 2, October-December, 2013, pp. 01-10, IASTER 2013

www.iaster.com, ISSN Online: 2347-2847, Print 2347-8276

A Critical Review of Performance Appraisal Process at

Bharat Gears Limited

Kirti Siwach
Research Scholar, IMSAR, Maharshi Dayanand University, Rohtak, India

ABSTRACT

An effective performance appraisal system brings rationality in management. If it wants to

maximize its effectiveness then the enterprise must have tool by which it can discriminate between
an effective manager and a not-so-effective manager. In almost every company, every worker is
subjected to periodic appraisal of his performance. In this study performance appraisal system of
Bharat Gears Ltd. (BGL) has been reviewed critically by applying PESTEL analysis and to
analyze outcomes of performance appraisal and exploring factors that can make harm to the PA
effectiveness. Data were collected through a small survey of 50 employees at all levels of
management in BGL by providing them questionnaire to be filled, which consists of 10 close ended
questions.

Keywords: Performance Appraisal, Performance Effectiveness, Organisational growth,

Employee performance.

1. INTRODUCTION

Performance appraisal can be stated as a systematic assessment of an employee performance based

on various aspects such as knowledge, skills, aptitude, efficiency, vision towards own as well as
organizational growth etc. A performance appraisal 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 organizational citizenship behaviour, accomplishments, potential for
future improvement, strengths and weaknesses, etc. To collect PA data, there are three main
methods: objective production, personnel, and judgmental evaluation. Judgmental evaluations are
the most commonly used with a large variety of evaluation methods. Historically, PA has been
conducted annually (long-cycle appraisals), however many companies are moving towards shorter
cycles (every six months, every quarter), and some have been moving into short-cycle (weekly, bi-
weekly) PA. The interview could function as providing feedback to employees, counselling and
developing employees, and conveying and discussing compensation, job status, or disciplinary
decisions. PA is often included in performance management systems. PA helps the subordinate
answer two key questions; first, "What are your expectations of me?" second, "How am I doing to
meet your expectations?" Performance management systems are employed to manage and align"
all of an organization's resources in order to achieve highest possible performance. How
performance is managed in an organization determines to a large extent the success or failure of
the organization. Therefore, improving PA for everyone should be among the highest priorities of
contemporary organizations.Some applications of PA are compensation, performance
improvement, promotions, termination, test validation, and more. While there are many potential
benefits of PA, there are also some potential drawbacks. For example, PA can help facilitate
management-employee communication; however, PA may result in legal issues if not executed
International Journal of Commerce & Business Studies (O) 2347-2847
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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

appropriately as many employees tend to be unsatisfied with the PA process. PAs created in and
determined as useful in the United States are not necessarily able to be transferable cross-
culturally. -----www.wikipedia.org

A performance management system includes the following actions.

Developing clear job descriptions and employee performance plans which includes the key
result areas (KRA') and performance indicators.

Selection of right set of people by implementing an appropriate selection process.

Negotiating requirements and performance standards for measuring the outcome and
overall productivity against the predefined benchmarks.

Providing continuous coaching and feedback during the period of delivery of performance.

Identifying the training and development needs by measuring the outcomes achieved
against the set standards and implementing effective development programs for
improvement.

Holding quarterly performance development discussions and evaluating employee

performance on the basis of performance plans.

Designing effective compensation and reward systems for recognizing those employees
who excel in their jobs by achieving the set standards in accordance with the performance
plans or rather exceed the performance benchmarks.

Providing promotional/career development support and guidance to the employees.

Performing exit interviews for understanding the cause of employee discontentment and
thereafter exit from an organization.

A performance management process sets the platform for rewarding excellence by aligning
individual employee accomplishments with the organizations mission and objectives and making
the employee and the organization understand the importance of a specific job in realizing
outcomes. By establishing clear performance expectations which includes results, actions and
behaviours, it helps the employees in understanding what exactly is expected out of their jobs and
setting of standards help in eliminating those jobs which are of no use any longer. Through regular
feedback and coaching, it provides an advantage of diagnosing the problems at an early stage and
taking corrective actions. --- www.managementstudyguide.com

Company Profile: Bharat Gears Limited was founded by the tireless

Dr. Raunaq Singh, a man who aspired to take on the challenges of the liberalization of the Indian
economy and the opportunities of the 21st Century. With his dynamic leadership, Dr. Raunaq
Singh was instrumental in strengthening Bharat Gears to leadership position it is in today.
Incorporated on 23rd December 1971, BGL is India's largest gear manufacturer. Since
commencing business in 1974, BGL entered into the technical knowhow with Folcroft for
manufacturing Furnaces from May 1983 to Dec 2006. BGL manufactures a wide range of gears for
HCV, MCV, LCV, and utility and off-highway vehicles. The products include bevel, straight bevel
and transmission gears. BGL combines a modern line of machinery from all over the world. BGL

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manufactures a wide range of hypoid/spiral gears, differential gears and shafts, complete
automotive transmissions, gearbox sub-assemblies and differential assemblies. BGL's customer list
includes almost all the players in the automobile industry in the tractors, trucks and buses and
utility vehicle segments like TML, JDEPL, Escorts, Carraro India, Mahindra & Mahindra, JCB
and Hero Motors, Axle India, VST Tillers, TAFE, Ashok Leyland, Spicer India and Toyota
Kirloskar. For several of the players, BGL is the single source supplier for gears. In the export
market, BGL's clients include Carraro Spa Italy, JDCW-USA, TMA-USA, DANA Corp.-USA and
Tech Development. BGL is a major global supplier of automotive gears and heat treatment
furnaces. The company manufactures a wide range of Ring Gears and Pinions, Transmission Gears
and Shafts, Differential Gears, Gear Boxes majorly for the automotive industry.Objectives of
Performance Appraisal in BGL are as follows:

To enable each employee to understand his role better and become more effective on the
job.

To understand his own strength and weakness with respect to his role in the organization.

To identify the developmental needs of each employee.

To improve relationship between the superior and the subordinate through the realization
that each is dependent on the other for good performance and success.

To serve as mechanisms for improving communication between the superior and his
subordinates.

To provide an opportunity to the employee for introspection, self evaluation and goal
setting so that he remains on the path of development.

To prepare employees for higher job by continuously reinforcing development of behavior

and qualities for these higher level positions.

To be an instrument for creating a positive and healthy climate in the organization that
moves people to give their best and enjoy doing so.

2. REVIEW OF LITERATURE

McGregor (1957), coined some basic facts about the PA process that it provides systematic
judgment to the organization to back up salary increases. Also, it is a means of telling a
subordinate how he is doing and suggesting needed changes in his behaviour, attitude and skill or
job knowledge. It lets him know where he stands with the boss. Therefore it is being used as a base
for coaching and counselling the individual by the superior. Ishaq et al., (2009), highlighted the
facts that are more aware about outcomes of effective performance appraisal than factors that can
make harm to the effectiveness of performance appraisal. And regarding performance appraisal
effectiveness, it has different views for Managers, Employees as well as different on being a male
and female. Monis and Sreedhara (2010), shows correlation between employees satisfaction with
performance appraisal system in foreign MNC BPOs operating in India and highlighted various
types of appraisal system in India such as Confidential appraisal, Open appraisal, Semi Open and
Semi Secret appraisal, Psychological appraisal. Obisi (2011), discussed some PA methods and
basic approaches for communicating the same like Essay appraisal, Graphic Rating Scale

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International Journal of Commerce & Business Studies (O) 2347-2847
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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

method, Checklist method, Critical incident method, Ranking method, Management By Objective,
Tel and sell method, Tel and listen method, Problem solving method, 3600 appraisal method. Nair
(2011), examined different performance measurement systems (other than the Balanced Score
Cards) adopted by Indian Companies by applying various financial and non financial parameters
through interviewing both Managers and Academicians and found that mostly 360 degree
appraisal was followed which was followed by TQM and Activity Based Costing. Pradhan and
Chaudhury (2012), highlighted some pitfalls in the path of PA as it requires more materials and
equipments to work with, the job should be made more interesting apart from the routine work,
effective training programs are required to develop within the organizations for evaluating the
actual performances of employees.

3. OBJECTIVE OF THE STUDY

To study how performance is measured and appraisals conducted at BGL

To study pros and cons of the appraisal system followed.

4. HYPOTHESIS FORMULATION

H1 : All the employees are satisfied with the Performance Appraisal System followed by BGL and
it does not have any shortcoming.

H0 : All employees are not satisfied with the current Performance Appraisal System followed by
BGL and it requires some improvements.

5. RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the problem. It may be understand as a

science of studying research problem. In it, we study the various steps that are generally adapted
by a researcher in studying his research problem along with the logic behind them. It is a carefully
investigation or inquiry especially through search for new facts in any branch of knowledge. The
nature of the study is descriptive, so it is a Descriptive Research that studies the preferences and
opinions of individuals and their behaviour pattern at work place. It describes the human ability &
work efficiency of the employees. Here I have prepared questionnaires and all the questionnaires
were handed through personal visit to the employees of BGL. 50 Questionnaires having 11
Questions were distributed to various departments present in BGL to every respondent. And finally
got the response from each respondent but responses were in the raw form, which were then
converted into meaningful data for further analysis.

Primary Data Collection: It was collected with the help of a questionnaire to be filled by the
respondents.

Secondary Data Collection: It was collected from reference books, online books, Journals,
magazines, and the Internet.

Sampling Technique and Tool for Analysis: The technique used here is non-probability sampling
as the researcher has chosen the fix known numbers of respondents from various departments and
for the Analysis of data simple PESTEL analysis tool is implemented.

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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

6. DATA ANALYSIS & INTERPRETATION

1. Performance appraisal is well planned and given adequate importance in this

organization to improvise the performance and output of the employees?

Strongly Agree Strongly Agree Disagree

Disagree
5 21 19 5

5 5 Strongly Disagree
Agree
21 Strongly Agree
19

2. Organization has a clear, unambiguous and transparent process of performance appraisal ?

Strongly Disagree Agree Strongly Agree Disagree

6 28 11 5

5 6 Strongly Disagree
11 Agree

28
3. Problem solving (seek innovative / creative methods to solve any problem and is able to
get into the root of the problem) and Practical Judgment ability helps an employee to
perform well in every task?

Strongly Disagree Agree Strongly Agree Disagree

1 30 17 2

Disagree
2
Strongly Agree 17
Agree 30 Series1
Strongly Disagree 1
0 10 20 30 40

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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

4. Organization provides training to improve the performance and skills of the existing
employees and an excellent opportunity for new comers to learn comprehensive about his
organization?

Strongly Disagree Agree Strongly Agree Disagree

5 26 12 7

7 5 Strongly Disagree
Agree
Strongly Agree
12
26

5. Performance appraisal reports in the organization are based on objective assessment of

performance?

Strongly Disagree Agree Strongly Agree Disagree

6 23 13 8

8 6
Strongly Disagree
Agree
13 Strongly Agree
23 Disagree

6. HR departments performance is satisfactory towards its responsibility for performance

appraisal of employees in the organization?

Strongly Disagree Agree Strongly Agree Disagree

4 22 20 4

4 4
Strongly Disagree
Agree
Strongly Agree
20 22 Disagree

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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

7. Colleagues are co-operative and co-ordinate with each other while performing any special
task?

Strongly Disagree Agree Strongly Agree Disagree

3 22 15 10

Disagree
10
Strongly Agree 15
Agree 22 Series1
Strongly Disagree 3
0 10 20 30

8. The organization provides enough facility (e.g. assistance for training, transport, medical, meal
etc.) so that the employees can save a lot of energy and time to perform well in the organization?

Strongly Disagree Agree Strongly Agree Disagree

20 14 10

9. Top management is willing to invest a considerable part of its time, money and other
resources to ensure the development of employees?

Strongly Disagree Agree Strongly Agree Disagree

4 25 14 7

4
7 Strongly Disagree
Agree
Strongly Agree
Disagree
14
25

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International Journal of Commerce & Business Studies (O) 2347-2847
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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

10. New ideas, suggestions, innovations and recommendations are appreciated by management in
this organization?

Strongly Disagree Agree Strongly Agree Disagree

6 22 10 12

12 6
Strongly Disagree
Agree

10 22

11. Loyalty, punctuality, competency, hard work, good performance and honesty are
rewarded equally without any partiality, in this organization?

Strongly Disagree Agree Strongly Agree Disagree

2 22 19 7

7. PESTEL ANALYSIS

POLITICAL: In every organization including BGL. There are some political factors that affect the
Performance Appraisal system by indulging in NEPOTISM; it may be at a higher or lower level.
And most of the time the eligible candidates have left around and the inefficient are being selected
without doing much efforts.

ECONOMIC: This factor also affect the Performance Appraisal process because the amount to be
kept for performance appraisal separately in the annual & monthly budget will directly give a
positive impact on the mind of the performers in any company. In BGL almost 7% of the total
income is spent on HR department and further HR department spend this total amount on
recruitment, selection. training and development.

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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

SOCIAL: Through performance appraisal social development of the employees is also maintained,
as he is working with other employees including his Peers, Superiors, Subordinates & other
outsiders as well. So he must be of flexible nature, that he can manage & adjust himself according
to the environment. After performing well & up to the best level, an employee could be able to get
the maximum rewards and remarks, get added into his experience, which in return gives him
various opportunities to get more suitable & satisfactory job inside as well as outside the
organization.

TECHNOLOGICAL: Through performance appraisal technological development of the employee

is also done. As they keep on working with new machines & new technology, in return their own
technological development is also get updated with the span of time in any organization. In BGL
techniques like fire safety, ISO 14000, 14001. and TS- 16949 are used during the production
process and the ISG of BGL helped a lot in the technical advancement of the employees.

EDUCATIONAL: Under performance appraisal process the educational development of the

employees is also get updated after recognizing the needs and weakness of every employee, as a
number of trainings & personal development seminars are being organized by the organization.
Through Performance Appraisal the morale, efficiency, confidence and capabilities of the
employees can be raised , strengthened & further get motivated to perform well in all fields.

LEGAL: After getting performance appraisal by an employee, it could be a threat for the company
that he may leave the existing company and he would join some other company, and that may be
among the competitors one. A company has a loss of a trained employee.

8. INTERPRETATION

After getting the responses from the employees it can be interpreted that the performance appraisal
must include the following factors in order to implement a transparent PA system: Motivational
factors, personal abilities, adequate importance planning for each employee, transparency in
system, problem solving ability, training needs for every employee, all over cooperation and
coordination from each department, facilities provided by the company, development opportunities
given, appraisals of suggestions & innovations, reward giving, satisfaction & counselling,
Evaluation & improvement opportunities and finally the job security& their commitment for the
organization must be considered.

9. FINDINGS & CONCLUSION

In BGL Employee of the month has been selected and awarded every month differently among the
executives and the associates. And finally one employee of the year from among the executives as
well as one employee from the associates has been awarded separately every year, which
encourages them to perform very extraordinarily every next time. But still each one cant be
satisfied and become happy all the times and the company has to face many problems at that tough
time, when it is difficult to put smile on every face for regarding and rewarding their efficiency
and potential given for the success of whole organization. Hence it can be concluded that
Performance Appraisal plays a very crucial role in motivating the employees and to get work done
through them with the same energy and commitment.

Hypothesis Testing: hypothesis H0 is selected and H1 is rejected as all the employees do not feel
satisfied with the current appraisal system.

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International Journal of Commerce & Business Studies (O) 2347-2847
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Volume-1, Issue-2, October-December, 2013, www.iaster.com (P) 2347-8276

REFERENCES

[1] Ishaq, M., Iqbal, Z., and Zaheer, A., (2009), Effectiveness of Performance Appraisal: Its
outcomes and Detriments in Pakistani Organizations, European Journal of Social Sciences,
Vol.10 (3), pp. 479 -485.

[2] McGregor, Douglas (1957), An Uneasy Look At As Means Human Resource Development
Would Be Better Off if Performance In Harvard Business Review, May/June.

[3] Monis, H., Sreedhara, T.N., (2010), Correlates of Employee Satisfaction with Performance
Appraisal System in Foreign MNC BPOs Operating in India, Annals of the University of
Petrosani, Economics, Vol.10 (4), pp. 215 224.

[4] Nair, B., (2011), A Study of the Various Performance management Systems Adopted by
Selected Indian Private Sector Organisations, International Journal of Research in
Commerce and Management, Vol. 2 (6), pp. 43 -47.

[5] Obisi,s C., (2011), Employee Performance Appraisal and its Implication for Individual and
Organisational Growth, Australian Journal for Business and Management Research, Vol. 1
(9), pp. 92-97.

[6] Pradhan, K. Sunil, and Chaudhury, K. Suman, (2012), A Survey on Employee Performance
Management and Its Implication to their Retention in OCL India Ltd., Asian Journal of
Research in Social Science & Humanities, Vol. 2 (4), pp. 249 262.

[7] http://www.managementstudyguide.com/performance-management.htm

[8] http://en.wikipedia.org/wiki/Performance_appraisal.

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