Project Report On Performance Appraisal System of Shell Pakistan Limited

PROJECT REPORT ON PERFORMANCE
APPRAISAL SYSTEM OF SHELL PAKISTAN

LIMITED
Prepared by:
Abdul Mateen
(01-222071-002)
M.Hammad Waheed
(01-222071-050)
M.Farhaj
(01-222071-048)
Submitted to:
Ms.NUSRAT HUMA (HRM)

ABSTRACT
In the past few years, Pakistani market has received a vast
exposure in almost every field of life and many new companies are
entering into the market. Number of petroleum companies, which
includes national and multi-national companies has entered in the
market, and have made their names and images in the eyes of
Pakistani customers by providing them with their quality products
and services.
This project report is based on the task and mega environment of
different management strategies of Shell & performance Appraisal
System of SHELL Pakistan (Ltd) which they use in order to promote
and effectively increase the quality of their products and services &
HR Management.
The main concern in this report is to emphasize the management
strategies used by Shell, as we are about to enter in the
professional lives, we would be needed to have information about
the practical implementation of these sort of strategies. We would be
analyzing the factors combined to make the task and mega
environment, and the true blend of these factors by Shell effectively.
Furthermore, what advantages and competitive edge it is getting
over its competitors because of the effective implementation of their
strategies.
MBA PROJECT: Performance Appraisal System of SHELL Page 2

ACKNOWLEDGMENT
All praise is for Almighty Allah, the most merciful most compassionate
who help his poor creatures in the time of crisis and best owned upon
it, his unfathomable kindness and guidance.
We felt satisfaction to write this page as this project is on the way of

its destination. We are grate full to our Supervisor Mrs. NUSRAT
HUMA for his most cooperative attitude, valuable comments
constructive suggestions and step by step guidance without his help,
it would have been impossible to complete this task.
Last but not least we wish to express our feelings and passion of
gratitude to our parents who always prayed for our success, health
and brilliant future. Our words cannot express our deepest thanks to
our parents whose love and sacrifices are invested and written on
every page.

DEDICATED TO
Our parents whose love, strength of Character and spiritual

insight will always be with us to show the light in the dark
moments of life.

GUIDENCE BY
Due to the proper guidance of our competent Teacher Mrs. NUSRAT HUMA,
we have been able to Complete this task, so we all very grateful to her.

LETTER OF TRANSMITAL
Respected Madam,
Enclosed in this Project is what was required by you. We have tried our best
to apply everything which has been taught by you.
We strongly hope that this project is acceptable. Human beings make

errors. So, this project cannot be perfect from all angles for that we really feel
sorry. However preparing it has been a rewarding and enlightening experience.
Thanks
Yours obediently,
MUHAMMAD FARHAJ
HAMMAD WAHEED
ABDUL MATEEN

PREFACE
SHELL is Oil Company and its Network spread all over the country. It is very
organized and well established and biggest Oil Company in Pakistan.
The experience of SHELL Company is very valuable in Market and people well
known about SHELL Oil Company, so we select this company to gain
experience.

TABLE OF CONTENTS
CHAPTER NO: 1 INTRODUCTION

1.1 BACKGROUND.............................................................................................10
1.2 PROBLEM STATEMENT...............................................................................11
1.3 THEORITICAL FRAMEWORK......................................................................11
1.3.1 Hypothesis Testing........................................................................11
1.3.2 Cause & Effect Relationship ........................................................12
1.3.3 Research Question...........................………………........................12
1.4 OBJECTIVE OF STUDY...............................................................................13
1.5 METHODOLOGY .........................................................................................14
1.5.1 Observation....................................................................................14
1.5.2 Preliminary Data Gathering...........................................................14
1.5.3 Sampling.........................................................................................15
1.5.4 Scale................................................................................................16
1.6 SCOPE OF STUDY.......................................................................................17
1.7 LIMITATIONS OF THE STUDY.....................................................................18
1.7.1 Resources.......................................................................................18
1.7.2 Time period.....................................................................................18
1.7.3 Insufficient Information by the Company....................................18
1.7.4 Security...........................................................................................19
CHAPTER NO: 2 LITERATURE REVIEW..........................................................20

2.1 Performance Appraisal System..................................................................20
2.2 Performance Appraisal Methods................................................................21
2.3 Rating Scales Methods................................................................................22
2.4 Essay Method...............................................................................................23
2.5 Management by Objective Methods...........................................................24
2.6 Reviewed in History on Performance Appraisal Research......................24
CHAPTER NO: 3 INDUSTRIAL ANALYSIS.......................................................27

3.1 Economical & Social Analysis……...….…………..………………..27
3.1 Technological Analysis……..................................................……..27
3.1 International Analysis……...….……………………...............….…..28

CHAPTER NO: 4 ORGANIZATIONAL OVERVIEW...........................................29
4.1 Mission Statement...........................................................................29
4.2 Vision Statement..............................................................................29
4.3 SHELL Values...................................................................................30
4.4 Business Integrity............................................................................31
4.5 HR Management at Shell.................................................................32

4.6 Shell Recruitment & Selection........................................................33
CHAPTER NO.5 IDENTIFICATION OF ISSUES................................................35
5.1 Issues Related To Ethics.................................................................35
5.2 Unethical Issues...............................................................................36
5.3 Legal Issues in SHELL....................................................................37
CHAPTER NO.6 PERFORMANCE APPRAISAL SYSTEM OF SHELL ............39

6.1 Straight-Ranking Method................................................................39
6.2 Grading Method...............................................................................40
6.3 Forced Choice Description Method...............................................40
CHAPTER NO.7 PROPOSED PERFORMANCE APPRAISAL SYSTEM.........42
7.1 Graphic Rating Method...............................................................................42
7.2 Checklist Method.........................................................................................42
7.3 Free Essay Method......................................................................................43
7.4 Critical Incident Method..............................................................................43
CHAPTER NO.8 RECOMMENDATIONS & HYPOTHESIS RESULT.........................44
Hypothesis Acceptance / Rejection.................................................................44
BIBLOGRAPHY..................................................................................................45

Chapter 1: INTRODUCTION
1.1 Background:
The Researcher’s opinion is to make a systematic Performance Appraisal system which

will be very rewarding for the SHELL Company as the employees always need appraisal
for their performance and they are appraised through a proper system that continues for
a long period that definitely creates full employee satisfaction. In this report Shell
Pakistan Ltd emphasize the HR Management strategies. As we are about to enter in the
professional lives, there are significant need to have information about the practical
implementation of these sort of strategies. Project would be analyzing the factors
combined to make the task and mega environment, and the true blend of these factors
by Shell effectively. Furthermore, examine the current Performance Appraisals system of
SHELL Company within Company’s Environment for what advantages and competitive
edge over the main competitors because of the effective implementation of HR
strategies. Some times the performance appraisal system is affected by the internal
factors and sometimes is affected by the external factors but at the end performance
appraisal system is affected. Shell is multinational company that have the both internal
and external aspects and both are directly related to the performance appraisal system,
if either of one factor is have got problem the whole appraisal system will be affected, if
we see deeply the internal factors involve the problems in the management and
employees performance and the external factors involve the operations and dealings of
the company. In the project we have focused both the internal and external issued. As
per our research there are certain external factors like ethical, unethical, legal,
operational issues and internal problems like the method for evaluating the performance
is highlighted. And we have at the end given the recommendations to pull out the
problems and carry on the system more effectively so the employees get a complete
justified performance appraisal system so to work in a comfortable environment and
contribute more in the prosperity of organization. (www.shell.com.pk)

1.2 PROBLEM STATEMENT:
‘‘After Preliminary Investigation, it has been found that the Performance

Appraisal System of SHELL Pakistan (Ltd) effecting by the Ethical and Legal
Issues which is further affecting the Relationship at the workplace.’’
This study is investigating the Relationship between the Independent Variables &
Dependent Variables in Shell Pakistan (Ltd). (www.shell.com.pk)
1.3 THEORETICAL FRAMEWORK:
1.3.1 Hypothesis Testing:
Null & Alternative Hypothesis:
H 0: Legal and Ethical Issues are directly related to Performance Appraisal

System.
H 1: Legal and Ethical Issues are indirectly related to Performance Appraisal

System.

1.3.2 CAUSE & EFFECT RELATIONSHIP
Independent variables Dependent Variable
(I.V) (D.V)
Legal Issues
Performance
Appraisal System
of SHELL
Ethical Issues
1.3.3 RESEARCH QUESTION:
A Research Question is a statement that identifies the phenomenon to be

studied. So, our research question for SHELL is “What Resources are helpful
to new and Effective HR System of SHELL Pakistan Limited?”

1.4 Objective of the Study
This is the period when the whole world is facing the problem of energy and
resources. The countries having access to these resources are ruling the world
and still want to expand their energy resources as natural Resources always
been the main asset of every country. Countries spend and provide opportunities
for foreigners and locals for finding the Natural Resources to meet the future
challenges. In Pakistan, Petroleum Sector has been the key factor and has
witnessed huge response from the foreign companies and local companies to
invest because the soil of Pakistan is full of natural resources but the local
government has not sufficient resources to explore and make use of these
resources that is why foreign companies are always appreciated to invest in
energy sector in Pakistan and Shell is one the leading energy exploring and
selling brand in whole world as well as Pakistan so there must be a proper
human resource system in Shell. We have tried to pull out the problems in Shell
regarding various aspects and given certain recommendations in order to make it
more proper and effective. Number of petroleum companies, which includes
national and multi-national companies has entered into the market, and have
made their names and images in the eyes of Pakistani customers by providing
them with their quality products and services but some have failed to compete
due to certain major problems and human resource is a key factor in success of
any company and Shell is a successful company so we want to improve its
human resource so that it can get a stable position in the market to be on the top.
Experts do agree that no company can grow if its employees are not satisfied.
This project is based on the Performance Appraisal System strategies adopted
by the Shell for its employees to work under huge task and different environment
at different places. The performance appraisal system is the main factor in
employee performance which has the big effect on the internal and external
environment of the company and Shell has a strong performance appraisal

system but some how we have found certain loop wholes regarding various
aspects of the company that involves certain internal and external issues by our
research and have made the recommendation in order to improve the system so
that it work out more effectively.
1.5 METHODOLOGY
1.5.1 Observation:
During the era of our course we studied the HR system of various companies but
we wanted to select for our project a leading company in any sector. We choose
the energy sector because we all are aware of the energy crisis that is being
currently faced by the whole world and in coming age the need for energy will be
more critical. We wanted to select a company that operates in Pakistan and Shell
being a multinational was the perfect for our research project. So we started our
working on the HR system of Shell and specifically on performance appraisal
system of Shell. After the preliminary studies we observed that there is need of
some reforms in the performance appraisal system and the performance
appraisal system is being affected by some legal and ethical issues then we
started collecting our research data.
1.5.2 Preliminary Data Gathering:
We started gathering the data from different sources i.e. preliminary or secondary
data from internet and books then we prepared a questionnaire that was to be
used to interview different Shell HR professionals. We moved to different regional
offices of Shell and on some petrol pumps and interviewed different people in
order to analyze that are they satisfied with the policies regarding timings, salary,
bonuses, environment, management decisions etc. So we got the enough data

on which we could carry on our project then with the help of other sources like
media we started making our research project. Moreover we gathered the data
regarding:
 Background information of the organization

 Managerial philosophy, company policies and other structural aspects
 Perceptions, attitudes and behavioral responses of organizational
members
 Communication channel and independent relationships with other
institutions and the external environment
 Reward provided by the organization such as pay raises, benefits and
organizational attitude towards employees family responsibilities.
 Organizational involvement with community, government, social groups
and environmental aspects.
1.5.3 SAMPLING
During the research period our tem visited the Shell offices in Karachi (head
quarter) and Rawalpindi to gather information regarding our project.
Sample Size:
We had made the following sample size which is as Follows:

Job Level Number of Elements Proportionate sample
(25%)
HR Managers 08 02
Employees 40 10
Petrol pump boys 20 4
TOTAL 68 16
1.5.4 SCALE:
The selection of a right scale was a critical decision in our project but with the
guidance of our supervisor and mutual consent we have used the Consensus
Scale for our research project. By using this scale there is a panel of judges
which measure the selected items and made the opinion about the particular. We
have selected this scale for our project because consensus scale is developed
after the selected items are examined and tested for their reliability and validity.
After getting the data for our project from various sources we summarized the
data and under the supervision of our supervisor all the group members gathered
and interpreted the outcomes of our research.

1.6 SCOPE OF STUDY
After thoroughly study of Strategies adopted by Shell, we can say that there is a huge
role of Performance Appraisal System on employee which plays in the success of the
business. Analysis has shown that well motivated employee is a one step before every
success.
Performance Appraisal System continues to be a subject of interest and importance to

human resource specialists. Managers discuss with the employee and place the targets
for them with rewards/recognition which motivates the employee behavior to work hard.
This goal setting strategies have shown great response in employee behaviors and
witnesses great success in every aspect of field. The planning of this process also
involves the company’s environment and other associated factors.
This is sometime a very complex situation to change employee behavior or identification.

For covering this complexity you can direct one behavior towards the target and also
show him reward which will be given to him after accomplishment but to do this you have
to reduce the variability in his role which can affect his performance. Thus, Performance
Appraisal System is the tool through which you can identify one’s behavior towards
target and his performance before or after assigning the target. This will also tell you if
any training/development needed by your employee which can be a handful tool.
How ever performance appraisal system in Shell is quite satisfactory so management

should take extra steps to make it more and more better because the world is changing
day by day very fast and one cannot bear to have the old systems in the organization as
research n development is a very important in the prosperity of the company that leads
to the innovation. So after achieving the stage of satisfaction the company should move
forward to gain more excellence so that to make itself more compatible in the market for
a long period of time because being on the top is first step of the success but to sustain
the position is the real success for the company. (www.fao.org)
1.7 Limitations of the Study

1.7.1 Resources:
During the period of our research we had the first limitation of resources
that were monetary, transport, references. We had to move to different places to
get the information and had to consult different books and research material. As
we were not funded by the parents or university so we had the lack of resources
that was a real limitation for the project.
1.7.2 Time period:
Time I will say was the most critical factor that limited our
findings for the research. As we three students are doing job in private as well as
government sector so it was a real hurdle for us to go from the office in office
timings as managers had strict eye on us so we had to go after the office timing
but we cannot meet the officials that time. So due to the shortage of time we
faced a lot of delay for our project.
1.7.2 Insufficient Information by the Company:
Most of the officials used to say that we cannot disclose the

company secrets or cannot tell you the internal matters of our company so we
faced a lot of delay and problems then we find the persons who had the
reference in the company in our related department then after we got the
information and carried forward our project.
1.7.3 Security:
A lot of time was wasted due to the security reasons
because we had to pas through many securities checks to enter in different
offices as Shell is a Dutch company and many officials were not allowed to meet
the outsiders by security reasons that resulted in delays and insufficient
information.

CHAPTER 2 : Contemporary Research (Literature
Review)
“Everyone knows what satisfaction is, until asked to give a definition.

Then, it seems, nobody knows.”
(Richard L. Oliver…2007)
“Performance is the consumer’s fulfillment response. It is a judgment that

a product or service feature, or the product or service itself, provides a
pleasurable level of Production-related fulfillment.”
SHELL literature review illustrates, summarize, appraise and clarify its Performance
Appraisal System for which it launches hypothetical foundation for their Products &
Services.
2.1 Performance Appraisal System:
Performance Appraisal System significantly plays an integral part role in performance

Management for establishing employee Performance Plans, Critical Results as outputs
& for Performance Indicators. These systems are designed to serve the company's &
employee’s interest in the factor of Company’s Production and also used to inventory the
abilities and resources of employees for to let the employee for thinking about his/her
future plans by taking Improvement in its performance.
There is, says Dulewicz (1989), "... A basic human tendency to make judgements about
those one is working with, as well as about oneself."
According to Dulewicz Without a structured appraisal system human inclination always

be takes place which can easily create motivational, legal & Ethical problems in Work
place. (www.interior.gov)

Feedback:
Feedback is a motivational factor in Performance Appraisal as looped back to

control the Performance system & that loop is called a feedback loop.
2.2 Performance Appraisal Methods

In (1977) Locher & Teel (HR Management) founded that generally three most
common appraisal methods use are Free-essay methods, Rating scales &
results- oriented or MBO methods
Following techniques have been thoroughly investigating in performance

appraisal,& founded that some have better oriented results than the others.
Encourage Debate:
Current Research shows that employees are likely to feel satisfied with their
Appraisal result if they have right to feel freely in case of any Query/request on
discussion its performance to meet future performance goals achievement.
(Nemeroff & Wexley, 1979)
Opportunity to challenge and appeal against employee’s evaluation can results

the better & Fair HR Management System. (en.wikipedia.org)
(Greenberg, 1986)
Constructive Target:
As significant factor employees should recognize that negative appraisal

feedback is provided with a constructive intention, i.e., to help them overcome
present difficulties and to improve their future performance.
(Fedor et al., 1989)
In contrast, other studies By Baron, in 1988 have reported that "destructive

criticism" - which is indistinct, ill-informed, inequitable or ruthlessly discipline - will
lead to troubles or problems such as irritation, anger, tension and workplace
conflict, as well as increased resistance to poorer performance.
(www.performance-appraisal.com)

Performance Goals-Setting:
Goal-setting studies play an important element role in employee motivation.

Goals can stimulate effort, focus attention, increase persistence, & encourage
employees to find new and better ways to work.
(Lockeet al 1981)
According to supported theories in Management it‘s quite clear that goals which
are "...specific, difficult and accepted by employees will lead to higher levels of
performance than easy, indistinct goals (such as do your best) or no goals at all."
(Harris & DiSimone, 1994)
Appraiser Rewards:
It’s so important that employee's supervisor should well-informed and credible

like Appraisers should well aware from techniques of appraisal & conversant
about the employees Performances & jobs.
Introducing of above Conditions in performace Appraisal System, can easily view

the Appraisal system as fair & accurate for the pupose of productive Feedback.
(Bannister, 1986)
2.3 Rating Scales Methods:

For appraisals, rating scales Method finds a way for high scale of structure as each
employee behavior or trait is differ from the others. In this method, each employee rated
on a basis of bipolar which has several scale points ranking from “Poor to Excellent”.
The traits scales assessed on characteristics like communications ability, cooperation

within workplace, technical working skills, competent & challenging skills, and punctuality
& Regular tasks assessment.
One major condition in selecting traits is that they should be in somehow relevant to the
appraisee's job.

Advantages:
The biggest advantage of these methods is that they are structured and
standardized which allow the appraiser’s to comparison & contrasted rating in
entire workforce.
Subjected to Each employee is the same basic rating criterion, with the same
range of reactions /responses. This supports equality in treatment for all
appraisees and imposes standard measures of performance across all parts of
the organization. (www.performance-appraisal.com)
2.4 Essay Method:
In this Method, employee being appraised on the fulfillment of written statement.
Description of Written Statement:
-Strengths and Weaknesses in job performance.
- Courses of action to remedy to identify Problem areas.
Basically, Essay methods are non-quantitative technique because usually their

use are simultaneously occur with the graphic rating scale method.
(www.humanresources.hrvinet.com)

2.5 Management by Objective Methods:
In 1950, Peter Drucker has introduced that methods of performance appraisal

are results-oriented. He determined these tactics by the measure of
predetermined work objectives Once an objective is approved, employee is
usually expected to self-audit; that is, to identify the skills needed to achieve the
objective.
2.6 Reviewed in History on Performance Appraisal

Research
In 1950, BOHN SHIMMIELD has done research on shell performance appraisal

system on the basis of Essay methods scales for assessing the evaluation of
employees by using the simple form statement as below:
Instructions: Employee should complete and return to supervisor prior to

the performance appraisal and development meeting.
Name
Position
Employee Number
Date:
PERFORMANCE
What were your major achievements/contributions this past year related to

your current performance plan?

What suggestions do you have for improving your performance plan for the
next year?
DEVELOPMENT
III. What are your work-related goals for the upcoming year?
IV. What are your long-range development goals (i.e., 1-3 years)?
What actions are you taking to achieve these goals?
What actions can the District or your Supervisor take to help you?
List subjects you would like to discuss during your Performance Appraisal
and Development meeting?
EMPLOYEE’S SIGNATURE SUPERVISOR’S SIGNATURE
DATE DATE
___
DIVISION HEAD’S SIGNATURE DIRECTOR’S SIGNATURE
DATE DATE

Now Question of Current Research arises is that “Is Current
Research wide enough to ensure the availability of relevant
Material’’?
The answer is that Performance Appraisal directly relates
to the Objectives of the Company which evaluates the
Performance as rewards examines through behavioral,
feedback, scales & level of Performance of the
Employee by Different Appraisal Methods like Appraisal
forms, rating scale Methods, comparison analysis,
Behavioral Observation Scales etc completely Covers all
aspects of Performance Appraisal Management.
Critically, Examine of different behavioral relationship

between employees of company affects the Structured
Performances System which enhances by following Reasons:
 Populated amount of permanent executives which concludes lack of

Coordination between Employees
 An unstructured questionnaire on Appraisal forms and the research design
adopted is descriptive.
 Lack of Determination of training needs on Initial Stages of career.
Our thought about the research is that to create relative worth of an employee
by multiple and complex training tasks for the Purpose of Effective
Performance.

CHAPTER NO.3 INDUSTRIAL ANALYSIS
3.1 Economical & Social Analysis:
 Shell donated Rs.30 million for affectees of Earthquake in Pakistan

 Shell provides medical and workforce assistance to the affectees of
Earthquake in Pakistan.
 Every stakeholder i.e. partners, customers, employees, contractors,
vendors have contributed in donating the funds to the Earthquake
affectees.
 Shell also donated 300 Liquefied Petroleum Gas Cylinders to CDA for
helping the affected people of Earthquake.
 Shell provided fuel requirements to Pakistan Army and Air Force to meet
the challenges in reaching the affected areas of Earthquake.
 Shell always been on the first row to help and contribute in social and
economic sector of Pakistan.
3.2 Technological Analysis:
 Shell signed an agreement with Aker Kvaerner and Starkraft to launch the
project to work on technology potential on commercially. Shell with its
partners aim to complete this project by the end of this year 2010.
 After completing this project Shell would become the first in the world to
develop and commercialize on large-scale, multi-megawatt fuel cells. An
investment of $125 million has been spent on this project.
 Previously Shell has the successful partnership with Siemens
Westinghouse. They both have produced the technology of Capture
Carbon Dioxide.

3.3 International Analysis:
 Shell in partnership with UNDP establish the route to assess the issues,
impacts and concerns, including surveys and interviews involving project-
affected people, community organizations and other relevant
stakeholders.
 Shell has conducted an overall Environmental and Social Impact
Assessment (ESIA). Shell being the leaders of the consortium lead the
discussions with Petro China Company limited (Petro China) over possible
participation in the West East Pipeline Project. The ESIA is being carried
out with the approval of Petro China, and builds upon the Environmental
Impact Assessment commissioned by Petro China last year.
 Shell is in partnership with the State Key Laboratory of Coal Conversion in
China. Both are working together on several projects mainly include
carbon dioxide mineralization & enhanced coal bed methane recovery.
Both are sponsoring doctoral and post-doctoral research so helping
researchers to work in our laboratories in Amsterdam.
 Shell is a Dutch company operating in more than 11 countries and has
over 20,000 employees from all over the world and Shell head quarters
has directed the country offices in 2009 to make contracts with the local
governments and contribute more and more toward the social and
environmental issues of the particular country so Shell is heading toward
playing role in the betterment of society and environment. (www.shell.com)

CHAPTER NO.4 ORGANIZATIONAL OVERVIEW
4.1 Mission Statement :
Shell provides a high quality of petroleum products and services to

its customers and derives its competitive advantage. Shell aims to
be the market leader in terms of cost, quality and brand name that is
why it has spread its branches all over the world, the general
mission of Shell is to explore and produce the energy and
petrochemical products with the ultra modern technology in order to
produce more with less effort and cost so as to meet the emerging
energy requirements of the world that is why Shell is always on the
top of companies that play a key role in meeting the growing
demands of energy in economically, socially and environmentally
responsible ways. (w ww . a uthors trea m.c om)
4.2 Vision Statement:
Shell has a great vision to be the world top company in the energy and petroleum
sector. Shell being the marketer of petroleum products and provider of highest
quality of products in Pakistan to its customers and its professional employees
help them to achieve the task and contribute them in developing the petroleum
infrastructure in Pakistan. (w ww . a uthors trea m.c om)

4.3 Shell Values: (www.shell.com.pk)
Following are Shell Values discussed:
4.3.1 Objectives:
Shell objective is to manage its top position through competitive advantage by giving
high quality of products and retain highly professional employee in its organization.
4.3.2 Responsibilities:
Shell Pakistan Limited recognizes five areas of responsibility.
i. To Shareholders:
To protect shareholder's investment, and provide an acceptable return with

confidence.
ii. To Customers
To draw a work plan to win and maintain customers by developing and providing
products and services which offer value in terms of price, quality, safety and
environmental impact, which are supported by the requisite technological,
environmental and commercial expertise.
iii. To employees
Employees are the main asset of an organization. They provide their employees
with good and safe conditions of work, and good and competitive terms and
conditions of service, to promote the development and best use of human talent
and equal opportunity employment, and to encourage the involvement of
employees in the planning and the direction of its work.

iv. To STAKEHOLDERS:
To work for stakeholder’s Interest and make sure that every decision will
depict the picture of mutual agreement between all the stakeholders. Also
promote their interest in every step towards achieving highest tasks.
v. To society
SHELL Pakistan always conduct business as a responsible corporate

member of society , to observe the laws of Pakistan, to express support
for fundamental human rights in line with the legitimate role of business
and to give proper regard to health , safety and the environment
consistent with its commitment to contribute to sustainable development.
The above noted five areas of responsibility are seen an inseparable. Therefore,
it is the duty of top management continuously to assess the priorities and
discharge its responsibilities as best it can on the basis of final assessment.
4.4 Business Integrity:
Honesty, integrity and fairness is the trademark of Shell. Shell believe that all
aspects of its business and all those with whom it does business shall also
comply these rules and follow the instructions of business strictly. Shell
employees must not enter into conflicts of their private financial activities and
must follow the code of conduct of business established by the organization.

Shell being the market leader always believes in honesty, truthfulness and
fairness in dealing with customers to achieve its credibility and trust of customers
over its products. Shell is always on the top of companies that play a key role in
meeting the growing demands of energy in economically, socially and
environmentally responsible ways.
As we have a look at the success stories of different companies then we will

clearly notice that the companies having the core values of honesty and
customer care have grown remarkably in very less time era on the other hand the
companies not fulfilling its commitments have faced serious social and legal
problem. As we see the core values of Shell then we come to know that it has
Shell gives a lot of emphasis on customer care and working with honesty that is
the reason it has gained success in a country like Pakistan whose people are of
a specific mind that do not trust on the company that gives poor quality service
and sell something else and give something else. So Shell has put many
ingredients altogether like honesty, large network of branches, customer care,
research and development, innovation, better HR policies, 24 hours service and
have manipulated these ingredients in quite effective manner that is the reason
of being a great world leader in the energy and petrochemical field.
(www.shell.com.pk)
4.5 HR Management at SHELL:

Shell has designed the strategy and coherent approach that how to practice
the management and articulates the policies which an organization needs
in order to carry out the people. This will help to create boundaries, rules
and code of conduct of businesses and avoid conflicts between the
employees.
The following are HRM Practices followed by HRM Professionals at SHELL

Pakistan. We have gone thoroughly & found standard HRM System at SHELL:-
(www.shell.com.pk)
 Planning: Planning is the most important factor in HRM, to forecast and

estimate the future business and employee needs and plan for them.
 Recruitment: Enhance in company for Job descriptions, Screening,
 Selection: Tools like (adaptive" traits), background checks, offers.
 Employee relations: In SHELL employee relations Involve labor agreements,

performance management, disciplinary procedures, and employee recognition.
 Optional group benefits: In SHELL optional group benefits are in form of
insurance, time off benefits, flexible benefits, retirement plans, employee
assistance programs, perks.
 Mandated benefits: social security, unemployment insurance, worker's
compensation, COBRA/HIPPA
 Payroll: Payroll activities are internal vs. external options, & compliance.
 Recordkeeping: SHELL keeps personnel files, confidential records and
maintains employee recordkeeping.
 Employee communications: Employee communicates through handbook,
newsletter, recognition programs, announcements, electronic communication.
 Internal communications: Top Management of Shell communicate internally
through policies and procedures, management development, management
reporting

4.6 Shell Recruitment & Selection:
In Shell Pakistan Recruitment and Selection team has been processing and promoting
successful hiring decisions over the years which can be sees through their success of a
department or faculty.
The selection committee of Shell scrutinizes the candidate with the right combination of
education, work experience, and creativity. These qualities of a candidate bring
efficiency and effectiveness in the productivity of the subject. (www.shell.org)
4.6.1 Recruitment Initiating Process:
The recruitment initiating process of Shell following matters should be

considered:
 Job Analysis, scope and skill sets required to successfully perform the
duties of the position.
 Evaluation of the Job Description and Review of the Job Fact Sheet or
Position to ensure that the skills and abilities required correspond with the
current expectations of the position.
 Market Based compensation and Salary available to the position
 Final Analysis of the hiring impact on the budget. (www.shell.org)
4.6.2 Derecruitment:
In every company/organization De-recruitment or Downsizing is a technique for

reducing the labor. According to SHELL’s policies if the employee has done
something wrong or Hanky Panky, economic downturn to performance-related
problems then the company uses the option of firing as a mean of de-
recruitment. This seldom happens unless someone has broken the rules of the

company. Sometimes employees are also transferred. SHELL uses following two
methods of de-recruitment so often to avoid litigation:- (www.shell.org)
i. Handshake Policy
ii. Voluntary Separation Schemes
CHAPTER NO.5 IDENTIFICATION OF ISSUES
5.1 Issues Related To Ethics: (www.shell.com.pk)
5.1.1 Customer Care:
Shell being the market leader always believes in Honesty, truthfulness and
fairness in dealing with customers to achieve its credibility and trust of customers over its
products but there are certain elements internally and externally that create disturbance
in some areas of clarity. As matter of fact is that customer care is a great tool to achieve
the customer satisfaction but as we have found in our research that Shell some times
negatively influence the society and do not show the true picture to customers that often
create problem for the customers as customers satisfaction is key for any company
whether it is national or multinational so the HR department of Shell must create
necessary steps in order to improve the quality of customer care at different places that
mainly includes site offices and petrol pumps otherwise company may have to face
various steps to overcome the situation if the customer trust is once gone because in
such a challenging and competitive environment customer care is a whole department
itself. (www.shell.com.pk)
5.1.2 No Significant Donations:

Shell is a multinational company that holds 26% shares in the white oil
pipeline so has a huge network in Pakistan. Shell is a major share holder in Pakistani
market and has reserves overlapping billions. Shell is proud to the pioneer in petroleum
sector to donate good causes every year in the world but in Pakistan, Shell has not
made significant contributions in donating for the good causes. As Pakistan is a
developing nation and face bundle of problems each time that are economically, socially,
environmentally as well as security that’s why is in need of funds and aids. Shell being
one on the major earning company in Pakistan oil sector do have a responsibility to
assist the government and people in order to dig out the problems but there is no
remarkable contribution by Shell to any of the problem facing areas in Pakistan.
(www.shell.com.pk)
The only contribution made by Shell was during the earthquake period and that
was of minute value besides that Shell has failed to play a key role in helping the
society, so Shell must have a look over its policy and step forward in helping the
nation in monetary terms. (www.shell.com.pk)
5.2 Unethical Issues:
5.2.1 Lack of clarity in prices:
Being a market leader Shell must have a transparent price control

system but there is sometimes lack of clarity in petroleum products. Price
difference has been noted in urban and rural areas as well as Shell provides
petroleum products to US forces in Pakistan at very low price that in real terms is
a system that shows bias and this is very badly creating a negative impact on the
credibility of Shell Pakistan. (www.shell.com.pk)
5.2.2 Sells at lower price to gain market share:

There must be justice and truthfulness in price control system and
one should not use the unfair means in order to have some profits but in stock
exchange sometimes Shell sell its shares at very low prices to gain market share
that creates an unbalance position in the market , Shell should take care of other
companies and compete in the market in fair terms, this shows that the company
is self interest oriented and do not care others. (www.shell.com.pk)
5.2.3 Make cartels for price fixing:
There are regulatory bodies that monitor and control the price fixing of
petroleum products in the country like OGRA, OGDCL the companies are bound to
follow the decision but as being the market leader and a vast network among the country
Shell sometime establish cartels for price fixing so do not respects the regulatory bodies
and earn high profits. This is also a very bad practice in order to make the price
oproducts of your own choice that spoils the system and create bad impact in the mind
of customers. (www.shell.com.pk)
5.2.4 No information about side effects:
As talking about ethics one should show the both sides of picture
i.e.positive and negative, as energy and petroleum products do have certain side effects
for direct users, society and environment and Shell being a responsible body should take
in notice this fact but it deliberately keeps on omitting to provide information on side
effects that is against the meaning of honest and truthfulness and also step forward to
make people aware of the use of products that have dangerous side effects on
environment. (www.shell.com.pk)
5.3 Legal Issues in SHELL

5.3.1 Contractual:
Shell Pakistan Ltd has been involving so many business contracts in

different parts of the country. Shell has a lawyer team for legal business. The said team
work and make ensure that every aspect of project/work and essential wordings come
under the contract so that an effective contract can be placed before the parties and
acceptable by the parties. But sometimes Shell do not abide by the terms of the contract
and care for the other party whereas often Shell cares for its own interest and spoils the
interest of other company by taking advantage of its market leader and huge network.
(www.shell.com.pk)
5.3.2 Operations:
Shell Pakistan Ltd has been governed by Federal Laws of Pakistan.

Their operations like Tax payments, Labor Policy, Insurance policies, social and
Environmental policies have come under the Federal Law of Pakistan. All the oil
and gas companies have to work under the rules made be government
authorities and have to carry on the operations in limited areas of field but Shell
have great influence over governing authorities so some times expand their
operations without proper permission and violate the laws. (www.shell.com.pk)
5.3.3 Sole Proprietorship vs. LLC:
If any business operating under the LLC, then it will remove

personal finances from the equation should any legal action be brought against
the business by a customer or vendor.
If operates under sole proprietorship, everything you own, including your home
and personal savings, can be seized should you lose a lawsuit. If you operate as
an LLC, only business assets are subject. As Shell is as Dutch company so do
come under the heads of sole proprietorship or LLC but it’s a foreign investment

and has its separate laws so take extra favors and relief from the local
government. (www.shell.com.pk)
CHAPTER NO.6 PERFORMANCE APPRAISAL SYSTEM OF

SHELL
In Successful organizations Performance Appraisal System is a tool for

management to find out how effectively hired or placed the candidate on right
position with motivation. If any problem in placing or hiring then management
communicate with the candidate for its better future and guide them into right
direction. It is the evaluation process which gives weaknesses and strengths of a
particular employee. (appraisals.naukrihub.com)
The part concerned with our Project is the comparative methods which are used
in SHELL Pakistan for the assessment of Performance Scales for Evaluation.
There are so many methods which are including in comparative method but the
most important and most popular are discussed below:
6.1 Straight-Ranking Method:
It is simplest method followed by so many organizations as to Shell also. In this

method a whole performance of particular employee has been compared with the
other employee in same group. This will gives the actual position of every

employee in terms of numerical rankings. HR at shell uses this method because
it is the simplest and agreeable by all the employees. (appraisals.naukrihub.com)
Limitation:
Limitation of this method is that it is very difficult to compare a particular

employee with other employee having different behavioral traits and job
requirements. This method only tells us how a man stands in relation to the
others in the group but does not indicate how much better or worse he/she is
than another. (appraisals.naukrihub.com)
6.2 Grading Method:
As name tells, grading method considers certain feature and marks them
accordingly to the appropriate scale. So many variables have been selected i.e.
analytical ability, cooperativeness, dependability, self-expression, job knowledge,
leadership, etc. Following is the example of Grading Method:-
A-Out standing
B-Very good
C-Good
D-Average
E-Poor
Limitation:
This method can be a demotivator factor among the group of employees of got
50 – 60% as compared to 80 – 90% points. (appraisals.naukrihub.com)
6.3 Forced Choice Description Method:
In Shell this technique has been used for refers to attempts to correct a rater
tendency to give consistently high or low rating to all the employees. Following

are the rating statements which will provide the personal qualification and related
job proficiency:- (www.ehow.com)
 Work efficiency is good.
 Less Customer oriented
 Can work under stress
 Punctual and Hard worker.
Limitations:
Each occupations group sets may required and prepared by

the trained technicians.
Irritation and conflicts increased between the raters because
they have not been trusted by the authorities.
Most of the time rater doesn’t go into the detail and the result
of evaluation doesn’t prove useful for training.

CHAPTER NO.7 PROPOSED PERFORMANCE APPRAISAL
SYSTEM
7.1 Graphic Rating Method:
This is the most commonly used method of performance appraisal in Company.

Under this technique, a printed form one for each person to be rated. The factors
which are including in this method are employee characteristics and employee
contribution. In employee characteristics, leadership, attitude, enthusiasm,
locality creative ability, analytical ability, co-ordination factors are included. In the
employee contribution, are include the quantity and quality of work, the
responsibility assumed, specific goal achieved, regularity of attendance. These
traits then evaluated on continuous scale where in the rather place a mark
somewhere along a continuum. (www.blackwellreference.com)
7.2 Checklist Method:
Under this method, the rater does not evaluate employee performance; he/she
supplies report about it and the final rating is done by personnel department. A
series of question are presented concerning an employee to his/her behavior.

The rater then checks to indicate if the answer to a question about an employee
is positive or negative. The value of each question may be weighed equally or
certain question may be weighed more heavily than others.
Example:
Is the employee really interested in job? Yes/No

Is Employee regular on his/her job? Yes/No
Is his/her Equipment maintained in order? Yes/No
Does he/she ever make mistake? Yes/No
Does he/she follow instruction properly? Yes/No
7.3 Free Essay Method:
Under this method the supervisor makes a free form, open ended appraisal of an
employee in their own words and put down its impression about the employee.
He/she takes note of these factors: (appraisals.naukrihub.com)
 Relation with fellow Supervisor.

 General organization and planning ability.
 Job knowledge and potential.
 Employee characteristics and attitude.
 Production, quality, and cost control.
 Physical condition & Development Needs.
7.4 Critical Incident Method:
The essence of this system is that, it attempts to measure workers performance

in terms of certain events and episode that occur in the performance rates job.
These events are known as critical incident method. The supervisor keeps a

written record of the event that can easily recall and used at the time of
Performance Appraisal. (appraisals.naukrihub.com)
CHAPTER NO.8 RECOMMENDATIONS & HYPOTHESIS RESULT
 The Free essay method used in appraisal should never be the main
method for appraisal as it lacks over the big picture.
 The employee must not be held responsible for things which were
out of his control.
 There must be room for occasional human errors and these should
not be considered for annual appraisal.
 The appraisal system should be quarterly based, however this
exercise can be termed as informal appraisal.
 The questions developed for checklist method must be
comprehensive and adaptable with certain exceptions that may
occur.
 The method used in wage administration which is part of Forced
Distribution Method, should be scrapped as it sinks the employee’s
morale and motivation.

8.1 Hypothesis Acceptance / Rejection:
After having all above discussion we accept Ho that the legal and ethical issues
are directly related to performance appraisal system and reject Hi that legal and
ethical issues are not directly related to performance appraisal system.
In the project we have discussed various legal and ethical issues and seen their
impact on the performance appraisal system of the company. Basically
performance appraisal system is based on the performance of employees and
the legal and ethical issues create a bad impact on performance of the
employees resulting effect on performance appraisal system so we can say that
legal and ethical issues are directly related to performance appraisal system of
company.
So we accept Ho and reject Hi.
BIBLOGRAPHY
It is welcome to Search and Contact SHELL at:
Searching for History and working of Shell on 12-07-2009 and was available at:
http://www.shell.com.pk
Searching for Human resource system on 12-07-2009 and was available at:
http://en.wikipedia.org/wiki/Human_resources
Searching for general information about Shell on 18-07-2009 and was available at:
http://www.shell.com.pk/home/content/pak/aboutshell/who_we_are

Searching for the network of Shell on 25-07-2009 and was available at:
-http://www.shell.com.pk/home/content/pak/aboutshell
Searching for the goals and objectives of Shell on 30-7-2009 and was available at:
http://www.fao.org/docrep
Searching for the criteria set by the government for Shell on 7-8-2009 and was available at:
http://www.interior.gov/hrm/pmanager
Searching for the customer satisfaction in Shell on 8-8-2009 and was available at:
http://en.wikipedia.org/wiki/Feedback
Searching for performance appraisal of Shell on 20-8-2009 and was available at:
http://www.performance-appraisal.com/methods
Searching for human resource management at Shell on 30-8-2009 and was available at:
http://www.humanresources.hrvinet.com/performance-appraisal-methods
Searching for articles about Shell on 15-9-2009 and was available at:
www.authorstream.com/presentation-shell-pakistan-education
Searching for Shell Values and principles on 26-10-2009 and was available at:
http://www.shell.com.pk/home/content/pak/aboutshell/our_values_and_principles
Searching for recruitment at Shell on 3-11-2009 and was available at:

www.shell.org/.../Recruitment-and-selection
Searching for methods of performance appraisal at Shell on 25-11-2009 and was available
at: -http://www.ehow.com/methods-performance-appraisal
 COURTLAND L. BOVEE MANAGEMENT (International Edition)

 Readers Digest, “Promoting Issues and Ideas”, by M. Booth and
Associates, Inc.

 Mc GJRW- HILL
Human resource management, International 10th Edition, December

2007.
PERSONS INTERVIEWED
1. Mr.Izhar Ahmed Abbasi
Manager SHELL
Distributor, Islamabad.
2. Faisal Ikram
Sales Promotion Officer
Regional Office Rawalpindi.

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PROJECT REPORT ON PERFORMANCE

APPRAISAL SYSTEM OF SHELL PAKISTAN

Ms.NUSRAT HUMA (HRM)

MBA PROJECT: Performance Appraisal System of SHELL Page 2

We felt satisfaction to write this page as this project is on the way of

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Our parents whose love, strength of Character and spiritual

MBA PROJECT: Performance Appraisal System of SHELL Page 4

MBA PROJECT: Performance Appraisal System of SHELL Page 5

We strongly hope that this project is acceptable. Human beings make

MBA PROJECT: Performance Appraisal System of SHELL Page 6

MBA PROJECT: Performance Appraisal System of SHELL Page 7

CHAPTER NO: 1 INTRODUCTION

CHAPTER NO: 2 LITERATURE REVIEW..........................................................20

CHAPTER NO: 3 INDUSTRIAL ANALYSIS.......................................................27

MBA PROJECT: Performance Appraisal System of SHELL Page 8

4.5 HR Management at Shell.................................................................32

CHAPTER NO.5 IDENTIFICATION OF ISSUES................................................35

5.1 Issues Related To Ethics.................................................................35

5.2 Unethical Issues...............................................................................36

5.3 Legal Issues in SHELL....................................................................37

CHAPTER NO.6 PERFORMANCE APPRAISAL SYSTEM OF SHELL ............39

CHAPTER NO.7 PROPOSED PERFORMANCE APPRAISAL SYSTEM.........42

7.1 Graphic Rating Method...............................................................................42

7.2 Checklist Method.........................................................................................42

7.3 Free Essay Method......................................................................................43

7.4 Critical Incident Method..............................................................................43

CHAPTER NO.8 RECOMMENDATIONS & HYPOTHESIS RESULT.........................44

Hypothesis Acceptance / Rejection.................................................................44

MBA PROJECT: Performance Appraisal System of SHELL Page 9

The Researcher’s opinion is to make a systematic Performance Appraisal system which

MBA PROJECT: Performance Appraisal System of SHELL Page 10

‘‘After Preliminary Investigation, it has been found that the Performance

1.3 THEORETICAL FRAMEWORK:

1.3.1 Hypothesis Testing:

Null & Alternative Hypothesis:

H 0: Legal and Ethical Issues are directly related to Performance Appraisal

H 1: Legal and Ethical Issues are indirectly related to Performance Appraisal

MBA PROJECT: Performance Appraisal System of SHELL Page 11

Independent variables Dependent Variable

1.3.3 RESEARCH QUESTION:

A Research Question is a statement that identifies the phenomenon to be

MBA PROJECT: Performance Appraisal System of SHELL Page 12

MBA PROJECT: Performance Appraisal System of SHELL Page 13

1.5.2 Preliminary Data Gathering:

MBA PROJECT: Performance Appraisal System of SHELL Page 14

 Background information of the organization

We had made the following sample size which is as Follows:

MBA PROJECT: Performance Appraisal System of SHELL Page 15

Petrol pump boys 20 4

MBA PROJECT: Performance Appraisal System of SHELL Page 16

Performance Appraisal System continues to be a subject of interest and importance to

This is sometime a very complex situation to change employee behavior or identification.

How ever performance appraisal system in Shell is quite satisfactory so management

1.7 Limitations of the Study

1.7.2 Time period:

1.7.2 Insufficient Information by the Company:

Most of the officials used to say that we cannot disclose the

MBA PROJECT: Performance Appraisal System of SHELL Page 19