Project Report on "Performance Appraisal System
PROJECT REPORT on
Performance Appraisal System Submitted in the partial fulfillment for the award of the degree of Master of Business Administration
CERTIFICATE This is to certify certify that this Project Report entitled ‘Evaluation of Performance Appraisal System’ is the result of research work carried out by Mr. __________ under the guidance and superision of Professor _______________________. !ignature
PROJECT REPORT ON PERFORMANCE APPRAISAL SYSTEM AT BSNL INTRODUCTION TOW TOWA ARDS PERFORMANCE P ERFORMANCE APPRAISAL SYSTEM Human Resource (or personnel) management, in the sense of getting things done through people, is an essential part of every manager’s responsibility, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently. efficiently. “eople are our most valuable asset! is a clich", #hich no member of any senior management team #ould disagree #ith. $et, the reality for many organizations are that their people remain under valued, under trained and under utilized.
erformance %ppraisal is the process of assessing the performance and progress of an employee or a group of employees on a given &ob and his ' their potential for future development. t consists of all formal procedures used in the #oring organizations to evaluate personalities, contributions and potentials of employees.
PREFACE *anaging human resources in today’s dynamic environment is becoming more and more complex as #ell as important. Recognition of people as a valuable resource in the organization has led to increases trends in employee maintenance, &ob security, etc *y research pro&ect deals #ith “erformance %ppraisal as carried out at +hart anchar -igam td. (+-/)!. n this report, have studied 0evaluated the performance appraisal process as it is carried out in the company. 1he first section of my report deals #ith a detailed company profile. t includes the company’s history2 its activities and operations, organizational structure, etc. this section attempts to give detailed information about the company and the nature of it’s functioning. 1he second section deals #ith performance appraisal. n this section, have given a brief conceptual explanation to performance appraisal. t contains the definition, process and significance of performance appraisal. n the third section of my report, have conducted a research study to evaluate the process of performance appraisal at +harat anchar -igam td.3 this section also contains my findings, conclusions, suggestions and feedbac. 1he forth and final section of this report consists of extra information that related to the main contents of the report. 1hese annexure include some graphs and diagrams relating to the company, graphs relating to the research study and important documents upon #hich the pro&ect is based.
RATIONALE OF THE STUDY erformance %ppraisal is the important aspect in the organization to evaluate the employees performance. t helps in understanding the employees #or culture, involvement, and satisfaction. t helps the organization in deciding employees promotion, transfer, incentives, pay increase.
INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Human Resource (or personnel) management, in the sense of getting things done through people, is an essential part of every manager’s responsibility, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently. “eople are our most valuable asset! is a clich", #hich no member of any senior management team #ould disagree #ith. $et, the reality for many organizations are that their people remain under valued, under trained and under utilized. 1he maret place for talented, silled people is competitive and expensive. 1aing on ne# staff can be disruptive to existing employees. %lso, it taes time to develop 4cultural a#areness’, product ' process ' organization no#ledge and experience for ne# staff members. FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
5ollo#ing are the various functions of Human Resource *anagement that are essential for the effective functioning of the organization2 6. Recruitment 7. election 8. nduction 9. erformance %ppraisal :. 1raining 0 ;evelopment Recruitment
1he process of recruitment begins after manpo#er re
1he selection is the process of ascertaining #hether or not candidates possess the re
a) nduction is the techni
erformance %ppraisal is defined as the process of assessing the performance and progress of an employee or a group of employees on a given &ob and his ' their potential for future development. t consists of all formal procedures used in #oring organizations and potential of employees. %ccording to 5lippo, “erformance %ppraisal is the systematic, periodic and an important rating of an employee’s excellence in matters pertaining to his present &ob and his potential for a better &ob.! CHARACTERISTICS
6. erformance %ppraisal is a process. 7. t is the systematic examination of the strengths and #eaness of an employee in terms of his &ob. 8. t is scientific and ob&ective study. 5ormal procedures are used in the study. 9. t is an ongoing and continuous process #herein the evaluations are arranged periodically according to a definite plan. :. 1he main purpose of erformance %ppraisal is to secure information necessary for maing ob&ective and correct decision an employee. PROCESS
1he process of performance appraisal2 6. =stablishing performance standards 7. >ommunicating the tandards 8. *easuring erformance 9. >omparing the actual #ith the standards :. ;iscussing the appraisal ?.1aing >orrective %ction LIMITATIONS
6. =rrors in Rating 7. ac of reliability 8. -egative approach 9. *ultiple ob&ectives
:. ac of no#ledge
METHODS OF PERFORMANCE APPRAISAL 1he foregoing list of ma&or program pitfalls represents a formidable challenge, even considering the available battery of appraisal techni
n its simplest form, this techni
GRAPHIC RATING SCALE 1his techni
FIELD REVIEW 1he field revie# is one of several techni
FORCED-CHOICE RATING
ie the field revie#, this techni
MANAGEMENT BY OBJECTIVES 1o avoid, or to deal #ith, the feeling that they are being &udged by unfairly high standards, employees in some organizations are being ased to set @ or help set @ their o#n performance goals. Cithin the past five or six years, *+D has become something of a fad and is so familiar to most managers that #ill not d#ell on it here.
RANKING METHODS 5or comparative purposes, particularly #hen it is necessary to compare people #ho #or for different supervisors, individual statements, ratings, or appraisal forms are not particularly useful. nstead, it is necessary to recognize that comparisons involve an overall sub&ective &udgment to #hich a host of additional facts and impressions must someho# be added. 1here is no single form or #ay to do this. 1he best approach appears to be a raning techni
%$Raning of employees from best to #orst on a trait or traits is another method for evaluating employees. ince it is usually easier to distinguish bet#een the #orst and the best employees than to ran them, an alternation raning method is most popular. Here subordinates to be rated are listed and the names of those not #ell enough to ran are crossed. 1hen on a form as sho#n belo#, the employee #ho is highest on the characteristic being measured and the one #ho is the lo#est are indicated. 1hen chose the next highest and the next lo#est, alternating bet#een highest and lo#est until all the employees to be rated have been raned. &' “Pare(-)!*+ar,!n ran"n#
%$ 1his techni
ASSESSMENT CENTERS o far, #e have been taling about assessing past performance. Chat about the assessment of future performance or potentialB n any placement decision and even more so in promotion decisions, some prediction of future performance is necessary. Ho# can this ind of prediction be made most validly and most fairlyB
'() DEGREE FEEDBAC* *any firms have expanded the idea of up#ard feedbac into #hat the call 8?E@degree feedbac. 1he feedbac is generally used for training and development, rather than for pay increases. *ost 8?E ;egree 5eedbac system contains several common features. %ppropriate parties F peers, supervisors, subordinates and customers, for instance F complete survey,
%nother techni
A!+,nt,-e. nstead of assuming traits, the *+D method concentrates on actual outcomes. f the employee meets or exceeds the set ob&ectives, then he or she has demonstrated an acceptable level of &ob performance. =mployees are &udged according to real outcomes, and not on their potential for success, or on someoneAs sub&ective opinion of their abilities.
1he guiding principle of the *+D approach is that direct results can be observed easily. 1he *+D method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements that go to mae up employee performance. *+D advocates claim that the performance of employees cannot be broen up into so many constituent parts, but to put all the parts together and the performance may be directly observed and measured.
Di.,!+,nt,-e.
1his approach can lead to unrealistic expectations about #hat can and cannot be reasonably accomplished. upervisors and subordinates must have very good Greality checingG sills to use *+D appraisal methods. 1hey #ill need these sills during the initial stage of ob&ective setting, and for the purposes of self@auditing and self@monitoring. Iariable ob&ectives may cause employee confusion. t is also possible that fluid ob&ectives may be distorted to disguise or &ustify failures in performance.
Bene/it. / Per/rm,nce A00r,i.,l. •
*easures an employee’s performance.
•
Helps in clarifying, defining, redefining priorities and ob&ectives.
•
*otivates the employee through achievement and feedbac.
•
5acilitates assessment and agreement of training needs.
•
Helps in identification of personal strengths and #eanesses.
•
lays an important role in ersonal career and succession planning.
•
>larifies team roles and facilitates team building.
•
lays ma&or role in organizational training needs assessment and analysis.
•
mproves understanding and relationship bet#een the employee and the reporting manager and also helps in resolving confusions and misunderstandings.
•
lays an important tool for communicating the organization’s philosophies, values, aims, strategies, priorities, etc among its employees.
•
Helps in counseling and feedbac.
R,tin- Errr. in Per/rm,nce A00r,i.,l. erformance appraisals are sub&ect to a #ide variety of inaccuracies and biases referred to as Arating errorsA. 1hese errors can seriously affect assessment results. ome of the most common rating errors are2 @
Lenienc1 r .e+erit12 3 eniency or severity on the part of the rater maes the assessment
sub&ective. ub&ective assessment defeats the very purpose of performance appraisal. Ratings are lenient for the follo#ing reasons2 a) 1he rater may feel that anyone under his or her &urisdiction #ho is rated unfavorably #ill reflect poorly on his or her o#n #orthiness. b) He'he may feel that a derogatory rating #ill be revealed to the rate to detriment the relations bet#een the rater and the ratee. c) He'he may rate leniently in order to #in promotions for the subordinates and therefore, indirectly increase his'her hold over him. Centr,l ten!enc12 3 1his occurs #hen employees are incorrectly rated near the average or middle of
the scale. 1he attitude of the rater is to play safe. 1his safe playing attitude stems from certain doubts and anxieties, #hich the raters have been assessing the rates. H,l errr2 3 % halo error taes place #hen one aspect of an individualAs performance influences the
evaluation of the entire performance of the individual. 1he halo error occurs #hen an employee #ho #ors late constantly might be rated high on productivity and
given only to certain individuals or groups based on the raterAs attitude to#ards them and not on actual outcomes or behaviors3 sex, age, race and friendship biases are examples of this type o f error. Prim,c1 ,n! Re-enc1 e//ect.2 3 1he raterAs rating is heavily influenced either by behavior exhibited
by the ratee during his early stage of the revie# period (primacy) or by the outcomes, or behavior exhibited by the ratee near the end of the revie# period (regency). 5or example, if a salesperson captures an important contract'sale &ust before the completion of the appraisal, the timing of the incident may inflate his or her standing, even though the overall performance of the sales person may not have been encouraging. Dne #ay of guarding against such an error is to as the rater to consider the composite performance of the rate and not to be influenced by one incident or an achievement. Per/rm,nce !imen.in r!er2 3 1#o or more dimensions on a performance instrument follo# each
other and both describe or rotate to a similar
S0ill+er e//ect2 3 1his refers lo allo#ing past performance appraisal rating lo un&ustifiably influence
current ratings. ast ratings, good or bad, result in similar rating for current period although the demonstrated behavior docs not deserve the rating, good or bad.
ROLES IN THE PERFORMANCE APPRAISAL PROCESS
,4 Re0rtin- M,n,-er
J rovide feedbac to the revie#er ' HD; on the employees’ behavioral traits indicated in the * olicy *anual J =nsures that employee is a#are of the normalization ' performance appraisal process J %ddress employee concerns '
J ;iscuss #ith the reporting managers on the behavioral traits of all the employees for #hom he ' she is the revie#er J Chere re
J ecretary to the normalization committee J %ssists HD;’s ' Reporting *anagers in communicating the performance rating of all the employees
e4 Nrm,li:,tin Cmmittee
J ;ecides on the final bell curve for each function in the respective +usiness Knit ' >ircle J Revie#s the performance ratings proposed by the HD;’s, specifically on the up#ard ' do#n#ard shift in ratings, to ensure an unbiased relative raning of employees on overall performance, and thus finalize the performance rating of each employee
*EY CONCEPTS IN PMS n order to understand the erformance *anagement ystem at +H%R1, .me cnce0t. need to be explained #hich play a very important role in using the * successfully. 1hey are2 J *RA8S 7*EY RESULT AREAS42 1he performance of an employee is largely dependent on the /R% score achieved by the employee during that particular year. 1hus, it is necessary to ans#er a fe# basic
Chat are the guidelines for setting the /R%’s for an employeeB
o
Ho# does an employee #rite do#n his /R%’s for a particular financial yearB
o
/R%’s2 1he 5our erspectives.
o
Ho# is the /R% score calculated for an employee on the basis of the targets sets and targets achievedB
J BEHA;IORAL TRAITS2 ome
of the
aspects
of
an
employees’
performance combined #ith the general behavioral traits displayed by the employee during a year constitutes his behavior traits. %n employee is assigned the rating on the basis of the intensity of the behavior displayed by him. 1hey play a very important role in the deciding the final performance rating for an employee as is even capable of shifting the rating one level up#ards'do#n#ards. J BHARTI <)%) LEADERSHIP COMPETENCY FRAMEWOR*2 1his competency frame#or is a simple and structured #ay to describe the elements of behaviors re
J THE PERFORMANCE RATING PROCESS2 1he rating process tries to explain the four different types of rating that an employee can achieve i.e. EC9 SC9 C ,n! PC& t also explains the criteria, #hich is considered for a#arding any of these ratings to the employee. J PROMOTION AND RATING DISRTRIBUTION GUIDELINES2 1he promotion and normal distribution guidelines provide the frame#or #ithin #hich the performance appraisal process has to #or. t is very important that the HR department pays due attention to these guidelines #hile preparing the bell curves for various functions and the consolidated bell curve for all the functions. 1hese guidelines also help in deciding upon the promotion cases in a year.
PERFORMANCE RATING PROCESS E"CEPT#O$%& CO$TR#'(TOR )EC*
+
!#8$#5#C%$T CO$TR#'(TOR )!C*
Perfor,s consistently and substantially
+
aboe e-pectations in all areas +
areas
%chiees a final score greater than or
+
eual to //01
%chiees final score between /994 //:1
+
Consistently deliers on stretch targets
+
#s proactie
+
!pots
and
Perfor,s aboe e-pectations in all
anticipates
proble,s2
•
;ersatile in his< her area of operation
•
3eelops creatie solutions and
i,ple,ents solutions reuire little < ,ini,al superision +
!ees and e-ploits opportunities
+
3eliers ahead of ti,e
+
!ees the wider picture4i,pacts across business
+
•
!ets e-a,ples for others
•
Take ownership of own deelop,ent
•
Coaches others
•
3e,onstrates business initiatie
5ocuses on what6s good for the business
+
!een as role ,odel by others
+
Recogni7ed as e-ceptional functions as well
by other
+
Motiates others to sole proble,s
+
3eelops others
+
Proides open and honest feedback
+
%ble
to
establish
functional tea,s
and
lead
•
#s self ,otiated
•
!upportie tea, player
•
&eads own tea, ery effectiely
•
3e,onstrate functional initiatie
cross4
+
