SARASWATI COLLEGE OF ENGINEERING

DEPARTMENT OF MASTER OF MANAGEMENT STUDIES.

Kharghar, Navi Mumbai – 410 210

Research Paper
Title: Performance Appraisal.

Guide: Prof. Priyadarshani Poddar Author: Rekha Gaikwad.

Date: 17nd March 2010

ABSTRACT:
This research is conducted to identify how the top level management do or
identifies the potential of the employee. Performance appraisals of Employees are necessary
to understand each employee’s abilities.Conduct market survey on a sample selected from the
entire population and derived opinion on that research. According the market survey come
know about how much methods or technics used by the top level management.

PURPOSE:
To understand the exact nature of performance appraisal process which tend to
provide or motivate employees of an organization for their self development as well as
organizational growth and development.

Research Methodology:

Literature review, qualitative as quantitative method of research are been

carried out. By referring journals, for website.

PROBABLE OUTCOME :
It was found that subjectivity and appraiser bias were most common
apprehensions regarding performance appraisal system. Correspondingly, objectivity and
measurable performance were found to be most desirable for improving performance
appraisal system.

KEY WORDS:
Training of appraisers and importance of performance review discussion have
also been furnished.

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 :INTRODUCTION:
Performance appraisal is one of the most important processes in human resource
management. Organizations rate their employees’ abilities to perform through
this process and assess their worth for organizational rewards. Various
researchers have noted at different points of time that many employees are not
satisfied with their performance appraisal system. Rudrabasavaraj (1977) found
that only one of the 12 organizations that were investigated in that particular
study, seemed to be satisfied with the appraisal system. Bolar (1978)
states,”Most managers and supervisors have at some time or other questioned
the basis or relevance of employee evaluation practices or performance
appraisal [and] the difficulties, the doubts and the lack of credibility about the
various systems appear to have increased”.

Employee differ in their abilities and their aptitudes. There is always some
difference between the quality and quantity of the same work on the same job
being done by two different employee. Performance appraisals of Employees
are necessary to understand each employee’s abilities, competencies and
relative merit and worth for the organization. Performance appraisal rates the
employees in terms of their performance.

Employee assessment is one of the fundamental jobs of

HRM. An organisation’s goals can be achieved only when employee put in their
best efforts. How to ascertain whether an employee has shown his or her best
performance on a given job? The answer is PERFORMANCE APPRAISAL.

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In simple terms, performance appraisal may be understood as the assessment of
an individual's performance in a systematic way, the performance being
measured against such factors as job knowledge, quality and quantity of output,
initiative, leadership abilities, supervision, dependability, co-operation,
judgement, versatility, health, and the like. Assessment should not be confined
to past performance alone. Potentials of the employee for future performance
must also be assessed.

It is the systematic evaluation of the individual with respect to his or

her performance on the job and his or her potential for development.

:RESEARCH METODOLOGY:

This study was carried out as an exercise to understand the requirements of

performance appraisal as perceived by organizations. It was attempted to collect
data from different types of organizations so as to give a sufficient representative
indication of the requirements of performance appraisal system. Industry were
elicited about performance appraisal, bias and treatment, desired improvements to
the system. All the questions were open – ended, leaving executives free to
express their perceptions and views. Organizations were selected based on size,
type, nature of business. Care is taken to cover a different kind of industries.

Research always starts with a question or a problem. Its

purpose is to question through the application of the scientific method. It is a
systematic and intensive study directed towards a more complete knowledge of
the subject studied.

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 :Collection of data:
After the research methodology, the next step is together the requisite data. There
are two types of data collection method – primary data and secondary data.
In our live project, we decided primary data collection method because our study
nature does not permit to apply observational method. In survey approach we had
selected a questionnaire method for taking a customer view because it is feasible
from the point of view of our subject & survey purpose. I conducted 50 sample of
survey in our project and I have collected the data of employee of Navi Mumbai.
and for secondary data i collected from website ,referring articles and bye text
book.

 Importance of Performance Appraisal:

Performance appraisals are necessary. It may be informal or formal,

documented or undocumented, scheduled or unscheduled .Due to
performance appraisal employee will earn consistent promotions, obtain
attendant salary increases and lead a successful organization goes up
every time you conduct a thorough performance-boosting employee
evaluation.

Specifically, performance appraisal helps an organization gain

competitive edge in the following ways:

Fig: How Performance Appraisal can contribute to Firm's Competitive Advantage

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1 Improving Performance:

An effective appraisal system can contribute to competitive

advantage by improving employee job performance in two ways-by
directing employee behaviour towards organizational goals, and by
monitoring that behaviour to ensure that the goals are met.

2 Making Correct Decisions:

Appraisal is a critical input in making decisions on such issues as pay

raise, promotion, transfer, training, discharges and completion of
probationary periods. Right decision on each of these can contribute to
competitive strength of an organization. If promotion, for example, is
made on performance, the promote feels motivated to enhance his or her
performance.

3 Ensuring Legal Compliance:

Promotions made on factors other than performance might land up a

firm in a legal battle, thus diverting its focus on non-productive areas .
Organizations can minimize costly performance-related litigation by
using appraisal systems that give fair and accurate ratings.

4 Minimizing Job Dissatisfaction and Turnover:

Employees tend to become emotional and frustrated if they perceive that

the ratings they get are unfair and inaccurate. Such employees find that
the efforts they had put in became futile and obviously get de-motivated.
Dissatisfaction in the job sets in and one of the outcomes of job
dissatisfaction is increased turnover. Fair and accurate appraisal results in
high motivation and increased Job satisfaction. An organization having
satisfied and motivated employees will have an edge over its competitors.

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5 Strategy and Behaviour:

An organization needs a strategy consistent with the behaviour of its

employees if it were to realize its goals. Organizational life is that
employee engage themselves in behaviours that they perceive will be
rewarded. As employees want to be rewarded, they tend to occupy
themselves more with those activities on which the organization
emphasizes. For example, if the focus is on cost control, employees will
seek to control cost and thus be recongnised and rewarded. If the focus is
on rewarding productivity, employees will strive for productivity. The
performance appraisal becomes not only a means of knowing if the
employees' behaviour, but also a way of bringing to the fore any negative
consequence of the strategy- behaviour fit .For example, a single point
productivity focus may include potential negative consequences such as
decreased quality and co-operations. Thus, the performance appraisal
system is an important organizational mechanism to elicit feedback on the
consistency of the strategy-behaviour link.

6 Organizational Strategy and Performance Appraisal

The performance appraisal system serves many organizational

objectives and goals. Besides encouraging high level of performance, the
evaluation system is useful in identifying employees with potential,
rewarding performance equitably. And determining employees' needs for
development. These are all the activities that should support the
organization’s strategic orientation. Although these activities are clearly
instrumental in achieving corporate plans and long-term growth, typical
appraisal systems in most organizations have been focused on short-term
goals.

Whatever the category, a performance appraisal system has strategic

importance to a firm in three ways:
1. Feedback mechanism,
2. Consistency between organizational strategy and job behaviour,
3. Consistency between organizational values and job behaviour.

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  Effective purpose / Objective of performance
appraisal includes following elements:

1. Career Development

• This provides an opportunity for discussion of career objectives, and creation

of a strategy designed to maximize career potential.
• To provide an opportunity for career counseling
• To help in succession planning.
• To assess training needs
• To plan for career development
• To assess and develop individual abilities
• To provide an objective basis on which to base decisions about training and
promotion

2. Feedback

• As well, feedback is encouraged in both directions: as such, employees are

encouraged to prepare ratings of their supervisors.
• To provide constructive feedback to the individual regarding how their
performance is seen.
• This provides a structured format for the discussion of performance issues
• on a regular basis.
• Feedback either reinforces performance strengths, or provides the opportunity
to discuss resolution of performance deficiencies.

3. Administrative Uses of Performance appraisal

• Salary
• Promotion
• Retention/termination
• Recognition of performance
• Layoffs
• Identification of poor performers.

4. Performance History

• This provides a performance history which is not dependent upon human

memory, and which may be useful in the full range of personnel decisions,
including compensation decision-making.

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• To review past and present performance, identifying strengths and
weaknesses.

5. Organizational Goals

• To clarify, for the individual, organizational expectations

• To set objectives for the next period
• This provides an opportunity to view one’s performance in the context of
broader organizational goals.
• To assess future promotion prospects and potential.

6. Job Standards

This provides an opportunity for clearer articulation and definition of

performance expectations.

7. Documentation use of Performance appraisal

• Documentation for HR decisions

• Helping to meet legal requirements

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  Contents Of Performance Appraisal

Generally the content to be appraised is determined on the basis of job

analysis. The content to be appraised may vary with the purpose of
appraisal and level of employees.

For officer’s the content should be:

 Regularity of attendance
 Ability to work with others
 Leadership styles
 Initiative
 Technical skill
 Ability to grasp new things
 Creative skills
 Honesty and Sincerity
 Capability of assuming responsibility
 Judgment skill
 Quality of suggestions offered for improvement.

 Process Of Performance Appraisal:

1. ESTABLISHING PERFORMANCE STANDARDS

The first step in the process of performance appraisal is the setting
up of the standards which will be used to as the base to compare the actual
performance of the employees. This step requires setting the criteria to judge
the performance of the employees as successful or unsuccessful and the
degrees of their contribution to the organizational goals and objectives. The
standards set should be clear, easily understandable and in measurable terms.
In case the performance of the employee cannot be measured, great care
should be taken to describe the standards.

2. COMMUNICATING THE STANDARDS

Once set, it is the responsibility of the management to communicate
the standards to all the employees of the organization.
The employees should be informed and the standards should be clearly
explained to the. This will help them to understand their roles and to know
what exactly is expected from them. The standards should also be
communicated to the appraisers or the evaluators and if required, the

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standards can also be modified at this stage itself according to the relevant
feedback from the employees or the evaluators.

3. MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is
measuring the actual performance of the employees that is the work done
by the employees during the specified period of time. It is a continuous
process which involves monitoring the performance throughout the year.
This stage requires the careful selection of the appropriate techniques of
measurement, taking care that personal bias does not affect the outcome of
the process and providing assistance rather than interfering in an
employees work.

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4. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE
The actual performance is compared with the desired or the
standard performance. The comparison tells the deviations in the
performance of the employees from the standards set. The result can show
the actual performance being more than the desired performance or, the
actual performance being less than the desired performance depicting a
negative deviation in the organizational performance. It includes recalling,
evaluating and analysis of data related to the employees’ performance.

5. DISCUSSING RESULTS
The result of the appraisal is communicated and discussed with
the employees on one-to-one basis. The focus of this discussion is on
communication and listening. The results, the problems and the possible
solutions are discussed with the aim of problem solving and reaching
consensus. The feedback should be given with a positive attitude as this
can have an effect on the employees’ future performance. The purpose of
the meeting should be to solve the problems faced and motivate the
employees to perform better.

6. DECISION MAKING
The last step of the process is to take decisions which can be
taken either to improve the performance of the employees, take the
required corrective actions, or the related HR decisions like rewards,
promotions, demotions, transfers etc.

 Problem Occurs In Performance Appraisal

The problems inherent in performance appraisal may be

listed thus:

1 Rating biases: Is that rating which is not verifiable by others. The rater
biases include :
a)Halo: The Halo error occurs when one aspect of the subordinate’s
performance affects the rate’s evaluation of other performance
dimensions. Eg: an employee might be rated high on performance simply
because he has a good dress sense and comes to office punctually!

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b) Horn effect: The rate’s bias is in the other direction, where one negative
quality of the employee is being rated harshly. For example, the rate
rarely smiles, so he cannot get along with employee!

c) Leniency: Depending on rater’s own mental make-up at the time of

appraisal, raters may be rated very strictly or very leniently. Appraisers
generally find evaluating others difficult, especially where negative
ratings have to be given.The leniency error can render an appraisal
system ineffective.

d) Central tendency: An alternative to the leniency effect is the central

tendency, which occurs when appraisers rate all employees as average.

e) Personal Prejudice : If the rater dislikes any employee or any one group,
he may rate them at the lower end , which may distort the rating purpose
and affect the career of these employees.

2) Supervisors were often confused due to too many objectives of

performance appraisal.

3) Management emphasises punishment rather than development of an

employee in performance appraisal.

4) Most part of the appraisal based on subjectivity.

5) Less reliability and validity of the performance appraisal techniques.

6) Absence of inter-rater reliability.

7) Some superiors completed appraisal reports within a few minutes.

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 How To Minimise The Problem Of Performance
Appraisal

 By convening an open meeting with the appraises to discuss

the performance of all employees before, during and after
performance review discussion.

 By encouraging everyone one to comment on each other’s

achievements and areas requiring improvement.

 The appraisal should tell the truth and reality behind the
curtains to this subordinate.

 By conducting counselling meetings with the appraisees to

appraise them of the reasons for their performance and its
consequences.

Objectives Of Hypothesis:
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  Hypotheses are tentative, intelligent guesses as to the solution of the problem.
 Hypothesis is a specific statement of prediction. It describes in concrete terms
what you expect to happen in the study.
 Hypothesis is an assumption about the population of the study.
 It delimits the area of research and keeps the researcher on the right track.

So, Hypothesis of research is as follows:

Null Hypothesis:

Ho: There can be increase in the number of employee/organization who is satisfied or

benefited with appraisal.

Alternative Hypothesis:

Ha: There cannot be increase in the number of employee/organization who is dissatisfied or

not benefited with appraisal.

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Questionnaire:

I am Rekha Gaikwad student of MMS working on a Project, performance appraisal is play

important role for organization and employee in Navi Mumbai Region. I would be Thankful
to you if you could kindly share some valuable time of yours to give your opinion on mention
subject.

1) Name:

2) Gender: male female

3) Your Age: Below 25 Bet 25 to 40 Above 40

4) Work Experience:

0 to 5 years Bet 5 to 20 more than 25

5) Job Profile : Executive manager M.D. Other

6) company name:

7) whether appraisal motivates you to work?

Yes No

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8) In what terms they want appraisal & why?

increment in salary designation both

___________________________________________________________________________
___

9) Due to appraisal whether organization are benefited?

Yes No

10) Do u work hard for performance appraisal?

Yes No

11) due to appraisal are you committed with organization?

Yes No

12) Does appraisal satisfies you with job?

Yes No

13) do you like responsibilities which you get from appraisal?

Yes No

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14) Dose age play vital role for performance appraisal?

Yes No

15) Due to appraisal you get growth or opportunity in your job?

Yes No

16) Does your organization really appraise you on your performance?

Yes No

17) Their is any partiality or politics during appraisal?

Yes No

Thank you.

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 Analysis of Questionnaires

Motivatied Employee
Motivatied Partially Motivatied
Not at All Motivatied
10%

30%

60%

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 Benifited for Organisation
Benifited Pratialy
Not At All Benifited

10%

25%

65%

Derived From Research

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From the research it is clear that most of the employee like the appraisal in
terms of money as well as designation .It is also understand that employee work
more hard for the appraisal which directly help the employees growth and
development which is indirectly benefited organizations.

Conclusion

This research result shows that performance appraisals its help to motivated
employee and their growth..Also an organisation’s goals can be achieved only
when employee put in their best efforts. so that performance of employee
improve in aspect of organisational l growth.

BIBLIOGRAPHY

Article on performance appraisal system by Arvind Sudarsan.

Text book of Personal and Human Resource Managment by P. Subba

Rao

WEBLIOGRAPHY
 http://www.HR.com

 http://www.Mnagmentparadise.com

 http://www.google.com

 http://www.scridd.com

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