A STUDY ON

PERFORMANCE APPRASIAL SYSTEM

With reference to

MADDI LAKSMAIAH COMPANY LTD, GANAPAVARAM

A project report submitted to

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY,

KAKINADA

in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION
By
G.PAVAN KUMAR
(Regd. No. 08391E0032)
Under the Guidance of
G.Appala Narasimham, M.Com, M.B.A ,MPhil., (Ph.d)

DEPARTMENT OF MANAGEMENT STUDIES

VIGNAN’S ENGINEERING COLLEGE
VADLAMUDI – 522213
AN ISO 9001–2000 CERTIFIED INSTITUTION, ACCREDITED BY NBA,
‘A’ GRADE ACCREDITED BY NAAC & AFFILIATED TO JNTU,
KAKINADA
 2008-2010

VIGNAN’S ENGINEERING COLLEGE

(Approved by AICTE & Affiliated to Jawaharlal Nehru
Technological University, Kakinada)
Accredited by NAAC with ‘A’ Grade, Accredited by NBA, ISO Certified

Date:

CERTIFICATE

This is to certify that the Project Report entitled “A STUDY ON performance

appraisal system with reference to ML & Co Limited” is a bona fide work done by
Mr.G.Pavan Kumar (08391E0032) for the partial fulfillment of award of MBA degree
during the period January 2010 – March 2010.

(G.APPLA NARASIMHAM) (Mr.D.VIJAY KRISHNA)

Project Guide Head of the Department

Vadlamudi, Guntur District, Andhra Pradesh, India. Pin – 522213. Tel : 0863-2534645,

DECLARATION

I hereby declare that this project report entitled “A STUDY ON

PERFORMANCE APPRAISAL SYSTEM WITH REFERENCE TO
ML & CO LTD” has been prepared by me during the year 2010 in the
months of January – March in partial fulfillment of the requirement for the
award of degree of “MASTER OF BUSINESS ADMINISTRATION” of
Jawaharlal Nehru Technological University.

I also declare that this project report is of my own effort and it has not
been submitted to any other university for the award of any degree or
diploma.

Date:
Place:
(G.PAVAN KUMAR)
 ACKNOWLEDGEMENTS

The completion of this study makes me recall with gratitude several

persons who have extended their co-operation in one way or the other in
preparation of project.

I would like to thank our Principal for granting me permission to do

this project and I wish to thank Mr.D.Vijaykrishna, Head of the
Department for his valuable support.

My Internal Guide, Mr.G.A.Narasimham, Faculty Member,

Department of Management Studies Vignan’s Engineering College,
Vadlamudi was valuable in his guidance and constant encouragement, which
has enabled me to complete this project.

I humbly acknowledge my profound gratitude to Mr. BABU RAO

(External Guide) for extending her kind co-operation and guidance in
preparing the Project Report.

I express deep, sense of gratitude and sincere thanks to the entire

Departments’ personnel who extended their wholehearted co-operation in
the collection of information and technical help in completing the project.

Last but not least, I am deeply indebted to my friends & family, for
their consistent support in times of need and constructive criticism.
 (G.PAVAN KUMAR)

CONTENTS

PAGE NO:
CHAPTER – 1

 INTRODUCTION
 NEED FOR THE STUDY
 OBJECTIVES OF THE STUDY
 METHODOLOGY OF THE STUDY
 LIMITATIONS

CHAPTER – 2

 INDUSTRY PROFILE
 COMPANY PROFILE

CHAPTER – 3

 THEORETICAL REVIEW OF THE STUDY

CHAPTER – 4

 DATA ANALYSIS AND

INTERPRETATION

CHAPTER – 5

 FINDINGS
 SUGGESTIONS

BIBLIOGRAPHY

QUESTIONNAIRE
INTRODUCTION
 PERFORMANCE APPRAISAL

Performance appraisal is the process of obtaining, analyzing and

recording information about the relative worth of an employee . The
focus of the performance appraisal is the measuring and improving the
actual performance of the employee and also the future potential of the
employee.Its aim is to measure what an employee does.

According to flippo, a prominent personality in the field of Human

resources, “performance appraisal and an impartial rating of an
employee`s excellence in the matters pertaining to his present job and his
potential for a better job” performance appraisal is a systematic way of
reviewing and assessing the performance of an employee during a given
period of time and planning for his future.It is a powerful tool to
calibrate, refine and reward the performance of the employee .It helps to
analyze his achievements and evaluate his contribution towards the
achievements of the overall organizational goals.

By focusing the attention on performance, performance appraisal goes to the

heart of performance management and reflects the management interest in
the progress of the employees.
NEED FOR THE STUDY OF PERFORMANCE APPRAISAL:

A performance appraisal system is used .

 To provide systematic judgments to backup salary increases, transfer,
emotion or termination.

 To help each employee to understand his own strengths &

weaknesses.

 They are means of telling a subordinate how he is doing and

suggesting needed changes in his behaviour, attitude, skills or job
knowledge.

 Develop inter personal relationship.

 They are used as a base for coaching and counseling the individual by
the superior.

Hence, there is a need to check from time to time the success of time
performance appraisal systems, the employee opinions and the
corresponding changes. Thus this study will be helpful to identify and
suggest certain feedback about the performance appraisal system and will
provide a learning experience to the researchers as well.
 A performance appraisal system facilitates optimization of employee
performance a nd helps identifying areas for development. It is also useful
for taking administrative decisions relating to payment of incentives,
promotions etc.

 Setting targets and goals as performance standards

 Evaluating employee performance
 Identifying training and development needs
 Rewarding performance
 Improving performance

LIMITATIONS:

 The study is limited to M.L & CO. LTD.

 Study is limited to selected group from the main stream of the

organization.

 Sample size is limited as there were time constraints.

 There were some problems with the confidential information, because

of which some crucial information could not be obtained.

 The response would have also been affected by the amount of work &
working condition.
OBJECTIVES OF THE STUDY:

 To study the performance appraisal system in the company.

 To identify the merits and demerits of performance appraisal in

implementation the company.

 To know the impact performance appraisal process in improving

employee performance.
METHODOLOGY

A present study is an exclusive study on “PERFORMANCE

APPRAISAL IN MADDI LAKSHMAIAH & CO.LTD.
GANAPAVARAM”, to meet the formulated objectives. The collection of
data or information is done through principle sources

COLLECTION OF DATA:
Primary Data is collected through the schedule, which consist of
21statements. The schedule is presented to the sampled employees by
Investigator. Here Investigator explains and gives the questionnaires to the
respondents. The respondents have taken one to two days time to complete
and return the filled questionnaires to the Investigator. The information of
the schedule of the questionnaire is kept confidential and it is used for
academic purpose only.

Source of data:

The data for the study has been collected from various primary & secondary
sources.

Primary Data:
Primary data is collection of facts on the subject of study by the researcher.
Primary data can be collected by-
 Questionnaire.
 Personal Interview.
 Observation.
Of these methods, Questionnaire & personnel interview are used.

Questionnaire:

It is a formalized set of questions, which are logically and

systematically arranged to collect the information useful for the proposed
study. The questionnaire in this study is structured containing a limited
number of questions which are easy and clear to understand. The layout of
this questionnaire is framed in such a way that confusing and rerecording
error are minimized. The questionnaire is mainly desired to measure the
effectiveness of performance appraisal system for executives at M.L & CO.
LTD.

Personal Interview:

It’s the face-to-face systematic conversation between the

interviewer & respondent to elicit information. This method is chosen
because through this more information can be gathered easily. Bias is less
and there is increased accuracy.

Secondary data:
 Secondary data refers to the use of information already collected and
published or unpublished. The sources are books, journals, reports etc.

INDUSTRY PROFILE
&
COMPANY PROFILE
 TOBACCO INDUSTRY IN INDIA

Tobacco industry is an agro based industry it is cultivated mainly in

the states on Andhra Pradesh and Karnataka. Most of the tobacco used for
the manufacture of cigarettes and for exports is produced from these two
states. Tobacco is also grown in Tamilnadu, West Bengal, Uttar Pradesh,
Gujarat, Madhya Pradesh, Maharashtra and Orissa. How ever, the tobacco
grown in these states is of very less quantity and is not used for manufacture
of cigarettes and export.

Several varieties of tobacco such as Virginia flue cared, Virginia air

cured, light soil burley, sun cured Virginia, Natu, chewing tobacco, HDBRG
wrapper tobacco, bide tobacco and Hookah. Tobacco etc; are grown in India.
Virginia flue cured is a major variety grown in India. More than 80% of
Indian tobacco crop belongs to this variety.

Even though the cultivation of Tobacco is spread all over the country,
the commercial cultivation of Tobacco is concentrated in States like Andhra
Pradesh, Karnataka, Gujarat, Maharastra, Bihar, Thailand and West Bengal
etc. Cigarette Tobacco is mostly cultivated in Andhra and Karnataka,
whereas bidi Tobacco is grown in Gujarat, Karnataka and Maharastra. Cigar
and Cheroot Tobacco are also grown in Tamilnadu, Andhra Pradesh and
West Bengal.

Chewing Tobacco is grown in Tamilnadu, Gujarat, Bihar, West Bengal

and U.P. Hookah Tobacco is grown in UP, and West Bengal.

The total area and production of Tobacco in India for the year 1997-98
were 463.5 thousand ha. And 646 million kags respectively.

The tobacco cultivation exports and some other industrial activities are
regulated by central Government (Ministry of commerce) through tobacco
board, headed by I.A.S officer of senior category generally from the central
Government .The board consists of several central Govt. officers, state Govt.
officers, political leaders, representatives of farmers and reputed
industrialists. One of the directors of ML Group is always representing the
industrialist in the tobacco board.

Introduction to tobacco industry:

India is the second largest producer of tobacco in the world after china.
India produced 572 million kags of tobacco in 2002-2003. India only holds a
meager 0.7% share of the US$30 billion global import-export trade in
tobacco, with cigarettes /cigarette tobacco accounting for 85% of the
country’s total tobacco exports. The tobacco industry holds tremendous
potential for India. For the govt, it means excise duties and export revenues,
and for the country in general, it translates into huge employment
opportunities

Despite being the second largest producer, India is only the largest
exporter of tobacco products in the world out of the total tobacco products in
India, only one third is flue-cured tobacco suitable for the manufacture of
chewing tobacco, bides and other cheap tobacco products, which have no
demand outside the country. There is only an export demand for flue-cured
tobacco, which is used for cigarette manufacturing.

If India adopted a rational tax polity for the tobacco industry that
encouraged the growing of export tobacco, Tobacco farmers income would
increase and export revenue would grow. If India adopted china’s tax policy
on tobacco, tax revenue could rise from the current Rs.6, 031 cores to Rs.54,
000 cores. China’s economy oriented tax policies have given cigarettes
100% share of domestic tobacco consumption. This strong domestic base
has proved to be conducive to exports as well as revenue generation.

The scenario in the international market is also not favorable for

Indian exports, which are normally in the range of Rs.850 cores to Rs 1000
corers every year. It is estimated that the global surplus sticks is about
750mkg. Anti smoking campaigns by public health activists and litigation in
many western countries have depressed sales. The countries of the common
wealth of independent states (cis), which are going through a recession, have
been unable to found their imports. The repeated devaluation of the
currencies of tobacco producing countries, such as brazil, Zimbabwe,
Argentina, Malawi and china, has made there exports more competitive then
those of India.

No dealer or farmer or buyer is permitted to transport in Virginia

flue curd tobacco other than through tobacco board action platforms. Central
government as also established several tobacco research institutes for
betterment of quality of tobacco in India. Tobacco board does not regulate
the other varieties of tobacco.
 1. The approximate production of different variety of tobacco in our
country
Are as under:

 VFC Tobacco Traditional/Nls/Mysore 20 Million

 VAS Tobacco HDBRG 12 Million
 LSB Tobacco LSB 10 Million
(Veleswaram/Warangal)
 IAC Tobacco 25 Million

The tobacco industry comprises those persons and companies engaged

in the growth, preparation for sale, shipment, advertisement, and
distribution of tobacco and tobacco-related products. It is a global
industry; tobacco can grow in any warm, moist environment, which
means it is farmed on all continents except Antarctica.

Tobacco is a commodity product similar in economic terms to

foodstuffs in that the price is set by the fact that crop yields vary depending
on local weather conditions. The price varies by specific species grown, the
total quantity on the market ready for sale, the area where it was grown, the
health of the plants, and other characteristics individual to product quality.
Laws around the world now often have some restrictions on smoking but
still 5.5 trillion cigarettes are smoked each year. Taxes are often imposed
heavily.

Current state of affairs:

The tobacco industry generally refers to the companies involved

in the manufacture of cigarettes, cigars, snuff, chewing and pipe tobacco.
This industry is heavily dominated by giant firms. Due to historical growing
areas, many of these companies are concentrated in the southern United
States (particularly Raleigh-Durham, North Carolina; Winston-Salem, North
Carolina; and Richmond, Virginia). Other companies are based around the
world.

Tobacco advertising is becoming increasingly restricted around the world.

TOBACCO IN INDIA

Tobacco is a principal cash crop of National importance. It has been playing

a prominent role in the development of Nation's Economy. Although the
cultivation of Tobacco is restricted to 0.3% of the total cultivated area, it
provides employment to large number of people on the one hand. On the
other hand, it makes significant contribution to National Exchequer by way
of excise revenue and foreign exchange earnings. Tobacco being a lab our
intensive crop provides employment to more than 60 lakhs people who are
engaged in the farming curing, redrying, packaging, grading, manufacturing
distribution, export and retailing activities. The bidi industry which provides
employment to around 44.00 lakhs essentially unskilled rural folks mostly
women is also arresting the influx of rural labour to urban centers.

Although there is nation wide anti-Tobacco campaign, the commercial

importance of Tobacco can never be underestimated due to the revenue
earning potentiality and employment generation capacity of the crop.
Presently there is a call for substitution of Tobacco with other crops, but the
research findings show that there is no economically viable alternative crop
which is as remunerative as Tobacco to the farmer.

India is the second largest producer and eighth largest exporter of

tobacco and tobacco product in the world. While India's share in the
world's area under tobacco crop has risen from 9% to 11% in the last 3
decades, its share in production has inched up from 8% to 9% in tobacco
industry. Asia and America, together account for 75% of world's production
of tobacco. China, USA and India are the three leading tobacco-producing
nations in the world.

India ranks 4th in the total Tobacco consumption in the world. But India's
cigarette consumption ranks 11th in the world. Out of the total production,
only 19% of the total consumption of Tobacco is in the form of cigarette
whereas 81% is in other forms like, chewing, bidi, snuff, Gutkas paste,
Jarda, hookah paste etc. The per capita consumption of cigarette in India is
one of the lowest in the world in comparison to major Tobacco consuming
countries like Zimbabwe, UK, Brazil, U.S.A and Pakistan.

Tobacco is traditional item of India's foreign trade. India is one of the

leading Tobacco exporting countries in the world. India amounts for 5.8% of
the international trade and ranks 5th after Brazil, U.S.A. Turkey and
Zimbabwe. The principal market for India Tobacco are U.S.S.R, U.K, Japan
and Middle East countries

Tobacco Industry in India contributes in a unique manner to several

important facets of the Indian Economy, covering revenue, export,
employment, and GDP growth. The Tobacco industry in India mainly covers
manufacturing of cigarette, bidi, cigar and cheroot, hookah, snuff and other
chewing Tobacco likezarda, gutkha and other pan masala.

Cigarette industry in India is essentially capital intensive in nature. The

growth of cigarette industry both in domestic and international market
represents a big revenue opportunity for the economy.

India's share in world cigarette production has remained at around

1.7% whereas India's exports of around 2.8 billion sticks of cigarette per
year amounts for less than 1% of the world export of cigarette..

Bidi industry is one of the foremost cottage industries in India. Total amount
of bidi Tobacco production was 150million kg and that of bidi was around
700 billion pieces during1994-95. Around 37% of Tobacco production in
India goes to bidi making as per Indian Market Research Bureau (IMRB)
report 199

India: Tobacco covers the global perspective, general economic

environment, tobacco/cigarette industry and economic impact of tobacco
industry in India. It also covers the market trends and outlook of production,
distribution, exports, imports, environment analysis, export strategy 2002-
2007 and organizations dealing in tobacco: Directorate of Tobacco
Development, Indian Tobacco Development Council, Indian Council of
Agricultural Research, Tobacco Board, Directorate of Marketing and
Inspection, Central Board of Excise and Customs, and Departments of
Agriculture in various States. There are also comparative matrix and SWOT
for the industry local leading players: ITC Holdings Corporation (ITC),
Godfrey Phillips India Limited, Vazir Sultan Tobacco (VST) and G.T.C.

Tobacco occupies a prime place in the Indian economy on account of

its considerable contribution to the agricultural, industrial and exports
sectors. Between 2001 and 2006, the Indian tobacco market increased at an
average annual rate of 6.1%. India is currently the world’s second largest
producer of tobacco next to China and the fourth largest exporter of
unmanufactured tobacco in the world. In India, the tobacco industry
provides employment to 35 million people.
 The major players in tobacco industry in India are as under

Name of company
Occupation % of Business
in India

1. ITC Ltd Cigarettes manufacturing

Un manufacturing Tobacco 50%
Exports
2. VST industries ltd Cigarettes manufacturing
Un manufacturing Tobacco
Exports 12%

3. GTC industries ltd Cigarettes manufacturing

Un manufacturing Tobacco
Exports
6%
4. God Frey Phillips Cigarettes manufacturing
India Ltd Un manufacturing Tobacco
Exports

8%
Exporter:

S.No Name of the Occupation % of business

Company
A M.L. Group
B Ploiesti Group.
C Bommidala Group.
D Mittapalli Group.
E Other exports.
in India
Cigarette Manufacturing 5%
& tobacco exports.
Cigarette Manufacturing 5%
& tobacco exports.
Cigarette Manufacturing 3%
& tobacco exports.
Cigarette Manufacturing 3%
& tobacco exports.
Cigarette Manufacturing 8%
& tobacco exports.

Tobacco Industry is fetching more than Rs. 9,000crores of revenue to

the central Govt. It is providing employment to lakhs of people directly and
millions of people indirectly and is also contributing Rs.1000 Crores of
forex reserves to the country. Though the control Govt. is accounting several
restrictions on advertisement and consumptions of cigarettes in the country.
It is encouraging the farmers by providing several subsidies and is
supporting through tobacco board. Because the consumption is linked with
the hobbies of the people, the tobacco usage cannot be eradicated. Even in
countries like USA where anti tobacco Company started in 1962, the
production of cigarette and consumption of cigarettes is still progressing.

AN OVERVIEW OF MADDI LAKSHMAIAH & CO.LTD.,

In India, the first rushing plant which is working uninterruptedly for the
last 25/30 years is an imported one by Maddi lakshmaiah &co.Ltd, this is
created at Ganapavaram, this plant is still running at high efficiency levels in
the country with 98% average efficiency levels for the last 3years.There are
2 plants owned by ITC which can be compared with this plants in the
country .ITC uses their threshing plants for their own consumption.
ML Company has developed strong relationship with our real
manufacturers in Europe, Russia and middle cast. Though there is very good
demand from Russian market, our company is not exporting much because
of the poor economic conditions of the country. ML Company is now
exporting cigarettes to Middle East and USA by manufacturing the
cigarettes on job work basis. Company foresees very bright future for this
company in Tobacco industry in the coming years.
ML group is the first tobacco company who exported tobacco to
China and is the first company who imported tobacco also from China, there
are no imports of tobacco in India tobacco history before this and after this
till now. The group maintain & good relationship with the Chinese tobacco
monopoly. One of the trade delegates that accompanied our honourable
prime minister during his recent visit to china is form ML Company. Three
ambassadors of china have visited the ML company in the past as guests and
expressed their satisfaction on the company’s infrastructure facilities.
ABOUT ML GROUP:
(Maddi Lakshmaiah&co.ltd)

ML group was a multifaceted corporate leader of which the group

consists of concerns namely

1. Maddi Lakshmaiah&co.ltd
(Tobacco thresher packers & exporters’ real estate &leasing)

2 . ML Agro products Ltd.

(Tobacco thresher packers &exporters)

3. K.S Subbiah pillai and co. Ltd.

(Tobacco exporter)

4. ML Exports
(Export house.)

5. Coromandel Agro products &oils Ltd.

(Bulk producer of oils)
ML& CO.LTD:

(A multifaceted corporate leader)

The highly completive tobacco market represented tremendous
growth potential to Mr.Maddi Lakshmaiah foreseeing the demand for quality
Indian tobacco; a long term strategy was formulated. Right from its
inception, the company adhered to international standards and made rapid
inroads into global tobacco markets. A sophisticated threshing plant of
international standards was commissioned in 1976.The first in Andhra
Pradesh; it created a revolution in tobacco processing and led to a huge
upsurge in demand. This led to the commission of two modern plants with
threshers redress and other sophisticated equipment for the processing of
equality tobaccos.
A real estate development wing was set up to develop and lease
commercial properties with working environments that reveal the best
internationally.

(Spearheading Indian excellence):

M.L and company limited therefore-runner of all the companies of

M.L group, enjoys a pre-environment standing in the world of tobacco,
exporting to China, Russia, the CIS, Western and Eastern Europe, African
and Bangladesh among others. Supported by a team of experts, techniques,
engineers and a skilled work force, the company has forged a head, setting
standards that become bench marks in the industry. Today Chilakaluripet is
well known in name of the global tobacco business in no little measure due
to the pioneering efforts of by Sri Maddi Lakshmaiah.

M.L Agro products Limited:

(Imperatives of demand)

ML Agro products ltd. was born of a increases in demand for

quality tobacco in both the domestic and foreign markets. Building on the
rich experience of running a profitable operation, a new plant was set up in
1976 at Martur, Prakasam district.
It spreads over 13 hectares. It is fully self sufficient with modern
threshers, lamina redress, Automatic double ram press, sophisticated quality
control Laboratory and mammoth ware houses. It ranks among the largest
threshing units in the country. Apart from its export commitment the
company also processes tobacco for domestic cigarette manufacturing .The
Company today has a global reach and a global resin from what was a small
beginning. This modern giant symbolizes the string for excellence that
characterizes ML Group.

ML Exports:
(Exporting to the world)

ML Exports is a totally export oriented unit, with clients in a variety

of markets around the world .The company enjoys a reputation for excellent
delivery schedules and transparent business practices in global markets.

K.S. Subbaiah Pillai &Co (India) Ltd:

 K.S.S.P & Co ltd. was acquired in 1982 with its entire assets K.S.
Subbaiah Pillai & Co Ltd. Is the group’s leading tobacco exporting
competitive. The excellent performance of the company is an indirect
measure of the trust that it enjoys across the globe.

Coromandel Agro products & oils ltd (CAPOL):

(Progress and diversification)

CAPOL was started in 1976. CAPOL extracts and refines cotton

seed oil. Today it is a multi product company with equipment to process all
kinds of oil seeds. The plant has a storage capacity of 2100 tones for
different types of oil.

BRIEF ACCOUNT OF THE ORGANISAION:

ML Group of companies (ML GROUP) was founded by Mr.Maddi

Lakshmaiah in 1970. He joined in his family business in 1952, after
completion of his engineering degree. The joint family business started way
back in 1943, dealing with tobacco exports, well before Indian
independence.

ML Group of companies (ML Group) a pioneer in Indian unfiltered

tobacco industry. Has been exporting tobacco to all over the world for the
past 3 decades. It has solidified its relationships with overseas tobacco
merchants& manufacturers.

Maddi lakshmaiah & co Ltd. was set up at Chilakaluripet, a village

in Andhra Pradesh that produces some of the best tobacco in the country.
Today it has evolved into a diversified, multi product conglomerate known
as ML Group, recognized world over for its excellence.

Establishment of the group:

Sri Maddi Lakshmaiah a mechanical engineer founded the group

after 15 years of versatile experience in tobacco industry in 1970 at
Chilakaluripet, Guntur Dist, A.P

The group has 5 major concerns namely:

1. Maddi Lakshmaih&co.Ltd (MLCO)

2. ML Agro product (MLAP)

3. K.S.Subbaiah pillai & co. (India) Ltd (Kssp).

4. ML Exports (MLE).

5. Coromandel Agro products& oil Ltd (CAPOL)

Except CAPOL, which is engaged in edible oils, all are engaged in

tobacco industry. MLCO&MLAP have concentrated on processing activities
where as KSSP & MLE are leading exporters and are recognized by govt. of
India as export houses.

Share holding pattern & management of group:

 Sri Maddi Lakshmaiah and his family members are holding 100% of
shares of the entire Group, companies except CAPOL where the Group is
holding 66% shares. All the partners of M.L export are the family members
of Sri. Maddi Lakshmaiah.

The Group is totally managed and controlled by Sri Maddi

Lakshmaiah and his family members only.

ML Group’s infrastructure:

The group has been successfully improving its business in all of its
activities such as domestic sales, Export sales, tobacco processing &other
tobacco development activities, warehousing facilities etc.

Incorporation:

ML company is a deemed limited company (M/S Maddi

Lakshmaiah and company limited deemed Ltd.co) Which was originally
incorporated on 8thday of October, 1970 under the name, Maddi Lahshmaiah
and Company private Ltd, having duly passed the necessary special
resolution on the 23rd day of march 2002, in terms of sec 31(1)/44 of the
companies Act 1956,the name of the company was changed to MADDI
LAKSHMAIAH AND COMPANY LIMITED.

Nature of activity:

The factors produces good quality tobacco

1. The production capacity per each day is 1 lack 20 tones.

2. The production capacity per year is around 15/16 million tones.

Financial structure:

1. The initial investment of M.L company is 16, 00,000.

Turn over of the company:

The turnover of M.L Company for the following years of 1999-2007 is

as follows.

S.NO Name of the yrs Amount in lakhs. Rs

1 1999 2370
2 2000 1693
3 2001 488
4 2002 2372
5 2003 3358
6 2004 1778
7 2005 1000
8 2006 1318
9 2007 946
10 2008 1000
11 2009 1200
12 2010 1550
 MAN POWER OF PARTICULARS:

In M.L & CO. LTD., total number of employees is 876. It may be

shown in the form of table as follows.

S.NO. Type of workers permanent Seasonal Temper\Daily total

wage
1 Officers 16 - - 16

2 Staff(including 154 70 - 224

boys)
3 Scavengers 7 - - 7
4 Female workers 223 - 74 307

5 Male workers 7 - - 7

6 Security - - 21 21
7 Engineering Daily - - 50 50
Wages
8 Apprentice - 10 - 10
9 Carpenters 3 - - 3
10 Gunnies 2 - - 2

11 Meithei 105 - - 105

Total 527 109 295 876

Profit after tax:

S.NO Name of the yrs Amount in lakhs. Rs

1 1999 105
2 2000 109
3 2001 270
4 2002 203
5 2003 312
6 2004 262
7 2005 132
8 2006 103
9 2007 123

The above table represents the profit for the following years after
paying all the taxes.

Shift system:
 In this organization there is one general shift and three working shifts,
which are as follows.

Shift name Timings Interval for hour

from To
Day shift 6.00am 2.00pm Half an hour

Half night shift 2.00pm 10.00pm Half an hour

Full night shift 10.00pm 6.00am Half an hour

General shift 8.00am 12.00pm Half an hour

12.30pm 4.30pm
 CHAPTER-III
THEORETICAL REVIEW OF THE
STUDY
PERFORMANCE APPRAISAL

Introduction:

Once the employee has been selected, trained and motivated he is then
appraised to his performance. Performance appraisal is the step where the
management find out effective it has been at hiring and placing employees.

Definition:

A Performance appraisal is a process of evaluating an employee’s

performance of a job in terms of its requirements

Walter Dill Scott Heyel observes “it is process of evaluating the

performance and qualifications of the employees in terms of be requirements
of the job for which he is employed for purposes of administration including
placement selection for promotions, providing financial rewards and other
actions which require differential treatment among the members of a group
as distinguished from actions affecting all members equally. Others regard it
is a process of estimating or judging the value, excellence, qualities are
status of some object person or thing. Individually and collectively it is a
part of all the other staffing process viz., recruitment, selection, placement
and induction.
 Employee appraisal technique is said to have been used for the first
during the First World War when at the distance of Walter Dill Scott, the
U.S army adopted the man – to- man rating system for evaluating military
personnel. During the 1920 – 30 periods relational wage structure for hourly
paid workers was adopted in industrial unit. Under this system this policy at
giving grade wage increments on the basis of merit was accepted. These
early employee plans were called merit rating programs which continued to
be so called up to the 1950. By then most of these plans were of the rating
scale type, where emphasis was given to factors, degrees and points. In the
yearly fifties, however, attention began to devote to the performance
appraisal of technical, professional, and managerial personnel. Performance
appraisal various organizations called various types. These are merit rating,
behaviour assessment, employee evaluation, personnel review, progress
report, staff assessment, and service rating and fitness report

Customers :-

The performance of an employee has a direct and immediate impact on his

customers either internal or external. In service organizations like
banks and hotels, customer feedback has become the most important
THE APPRAISAL PROCESS

1. The first step in the appraisal process is the determination of standards of

performance based on the organizational objectives and the job description.
The performance standards and objectives have to be determined by the
employee and the supervisor together. These have to be communicated in a
simple and lucid manner to the employee.
2. The next step in the process of performance appraisal is the measurement
of employee performance against the pre-determined by goals and
standards. This determines what components of the performance are to be
measured. At this stage, the process of measurement, namely, how the
performance components are to be measured, has to be determined.

3. The next step is the actual process of measurement. Performance appraisal

has to be a continuous process and the feedback should be given to the
employee at regular intervals. Making a note of the critical incidents, either
positive or negative, helps the manager keep a track of the employee
performance. Feedback has to be given once in 2-3 months, depending on
the need to do so, which would help the employee in meeting his objectives.

4. The next step is a very critical step and involves communicating the
results of appraisal to the employee concerned. It is the responsibility of
manager to make the employee feel comfortable with the whole process.
Continuous feedback and orientation would ensure a simple final appraisal
discussion, with very few differences of opinion.
5. Once the appraisal is finalized after discussing it with the employee, it
has to be put to effective use. Though most organizations link it to the
rewards system, some prefer to restrict it to the development of employees.
Whatever might be the organizational policy, the document of appraisal has
to be effectively and immediately put to use ensure a better performance
during the next appraisal period.
The ideal way to ensure maximum utility of performance
appraisal is to link the performance standards to rewards system and the
competency standards to training and development. The gaps in competency
levels can be identified and necessary training is imparted to the employee.
OVERVIEW OF PERFORMANCE MANAGEMENT

Performance management is the systematic process by which an agency involves

employees, as individuals and members of a group, in improving organizational
effectiveness in the accomplishment of agency mission and goals. Employee’s
performance management includes
  Planning work and setting expectations.
 Continually monitoring performance.
 Developing the capacity to perform effectively.
 Periodically rating performance.
 Rewarding good performance.

Planning
In an effective organization, work is planned out in advance. Planning
means setting performance expectations and goals for groups and
individuals to channel their efforts towards achieving organizational
objectives. Getting employees involved in the planning process will make
them understand the goals of the organization. Performance elements should
be measurable, understandable, verifiable, equitable and achievable.

Monitoring
In an effective organization, assignments and projects are monitored
continually. Monitoring well means consistently measuring performance,
providing ongoing feedback to employees and work groups on the progress
towards reaching their goals. Regulatory requirements for the monitoring
performance include continuous progress reviews with the employees.
Ongoing monitoring provides opportunity to check how well employees are
meeting predetermined standards and to make changes to unrealistic or
problematic standards by monitoring continually, unacceptable performance
can be identified any time during the appraisal period.

Developing
In an effective organization, employee development needs are addressed.
Developing in this instance means increasing the performance through
training, giving assignments that introduce new higher levels of
responsibility, improving work processes.
Providing employees with training and developmental opportunities
encourages good performance, strengthens job-related skills and
competencies, and helps employees keep up with changes in the
environment such as the introduction of nee technology.
Carrying out the processes of the performance management provide
excellent opportunity to identify developmental needs.

Rating
From time to time, organizations find it useful to summarize employee
performance. This can be helpful for looking at and comparing performance
among various employees.
Rating of performance appraisal means evaluating employee or group performance
against the standards in an employee’s performance plan and assigning a suitable
rating of record. The rating of record is assigned according to process included in
the organization’s appraisal program. It is based on what has been performed
during an entire appraisal period. The rating of record will be bearing on various
other personnel actions, such as granting with pay increases and determining
additional retention service

Rewarding
In an effective organization, rewards are used well. Rewarding means recognizing
employees, individually and as members of groups, from performance and
acknowledging their contributions to the agency. A basic principal of effective
management is that all behavior is considered by its consequences. Those
consequences can and should be both formal and informal and both positive and
negative.
Good performance is recognized without waiting for nominations and awards are
solicited. Recognition is an ongoing, natural part of experience. None of awards
regulation provide a broad range of forms that more formal rewards can take, such
as cash, time off and many non-monitory forms.

THE APPRAISERS:
Traditionally, appraisal has been the job of the supervisor with the
employee himself having no role to play in the process. However, the whole
concept has changed today and the appraisee has an important role in the
process. He in coordination with his superior determines the performance
objectives and standards.
In more recent concepts like 360 degrees feedback, the peers of the
employee, his suppliers, his customers and even his subordinates play a role
in assessing his performance.
 Self-appraisal
 Superiors
 Peers
 Customers
 Subordinates
 360 degree appraisal
Self-appraisal :-

Self-appraisal is a common practice today, with the employees being given a

role in evaluating their own performance. The employee himself his best
equipped to evaluate his performance because he understands his strengths
and weaknesses the best. He can easily identify the problem areas that need
training and development.
Supervisor :-

It is the responsibility of the supervisor to ensure that his subordinates

perform their jobs well. Hence, the authority to evaluate the employee
performance has traditionally been with the supervisor. Even today the
supervisor has a very important role to play in the appraisal of his
subordinates.
peers :-

Peers evaluation is a very sensitive area as it may lead to false and unhealthy
appraisals, because of the competition among peers. Tortant to in evaluating
employee performance. In manufacturing organizations the internal
customer evaluate the performance of the employee.
Sub-ordinates:-

The concept of the subordinates evaluating the performance of his

supervisor is yet to gain acceptance in most Indian companies. The Indian
company does not encourage the idea of sub-ordinate appraisal.

360 degrees feedback:

360 degrees feedback has grown in popularity. Multisource feedback

recognizes that the manager is no longer the sole source of performance
appraisal information.
When using 360 degrees feedback for administration purpose managers
must anticipate potential problems. Differences among raters can present a
challenger especially in the use of 360 degree rating for discipline or pay
decisions.
WHAT SHOULD BE RATED:

One of the steps in designing an appraisal programme is to determine

the evaluation criteria. It is obvious that the criteria should be related to the
job. The seven criteria for assessing performance are.

Quality :-

The degree to which the process or result of carrying out an activity

approaches perfection in terms of either conforming to some ideal way of
performing the activity, of fulfilling the activity’s intended purpose.

Quantity :-

The amount produced, expressed in monetary terms, number of units, or

numbers of completed activity cycles.

Timeliness :-

The degree to which an activity is completed or a result produced, at the

earliest time desirable from the stand points of coordinating with the outputs
of others and of maximizing the time available for other activities.
Cost effectiveness:-

The degree to which the use of the organization’s resources is maximized in

the sense of getting the highest gain of reduction in loss from each unit or
instance of use of resources.

Need of supervision:-

The degree to which a job performer can carry out a job function with either
having to request supervisory assistance or requiring supervisory
intervention to prevent an adverse overcome.

Interpersonal impact:

The degree to which a performer promotes feeling of self-esteem, goodwill

and co-operation among co-workers and subordinates.
Community service:

Firms are increasingly emphasizing on employees’ community

involvement. This is particularly true in educational institution.
Factors that distort appraisals
COMPONENTS OF PERFORMANCE APPRAISAL SYSTEM

As we have seen performance evaluation reasons, the personnel

evaluation system should address the questions who, what, when, where,
how of performance appraisal.
WHO OF APPRAISAL

Usually the immediate supervisor must be interested with the task of

rating the absence, because he is most familiar with his work: Supervisors
ratings are regarded as the best possible assessment and they are often
considered as the “heart of the most appraisals systems”. Appraisal is also
done by the staff specialties the personnel officers. They may advise the
supervisor while evaluating their subordinates stressing the need for
evidence. Some times self evaluation is also employed for evaluating
performance but this approach have his disadvantage that the individual may
rate himself excessively.

WHAT OF APPRAISAL

What of performance appraisal consist in appraising non-supervisors

employees for their current performance and managers for future potentials?

WHY OF APPRAISAL

Promoting to the understanding between the supervisors and his

subordinates. Aiding in decision making for promotions, transfers, lay-offs
and discharges. So the appraisal is necessary.

WHEN OF APPRAISAL

In most of the organizations employees are formally evaluated once of

a year in other twice in a year. New employees are rated more frequently
than the older once. The ideal thing is that employee should be rated 3
months and 6 moths and every 6 months thereafter.

WHERE OF APPRAISAL

The where indicates the location where an employee may be

evaluated. It is usually done at the place of work or office of the supervisor.

HOW OF APPRAISAL

Every organization must decide what different methods are available

which of these may be used for performance appraisal on the basis
ocomparative advantages and disadvantages it is decided which method
would suit the best method.

METHODS FOR APPRAISING PERFORMANCE :

TRADITIONAL METHODS MODERN METHODS

1.Straight ranking method
2.Paired comparison method 1.Management by objectives
3.Grading method 2.Assessment center
4.Graphic rating scales 3.Human asset accounting method
5.Checklists method 4.Behaviourly anchored rating scale
6.Forced choice description method 5.360 degree performance appraisal
7.Selection of critical incidents
8.Free from essay method
9.Group appraisal
10.Field review method

TRADITIONAL METHODS:

1. STRAIGHT RANKING METHOD

It is the oldest and simplest method of performance appraisal by which the

man and his performance are considered as an entity by the rater. No
attempt is made to functionalize the rate or his performance. The
‘workman’ is compared with the ‘whole man’ that is the ranking of man in a
work group is done against that one of another. But this greatest limitation
of this method used for paired comparison technique. As per the technique
every employee to compare a single individual having various behavioral
traits. The task ranking individuals is difficult when a large number of
persons are rated.

2. PAIRED COMPARISON TECHNIQUE

Man-to-Man Comparison Method

The USA Army used this technique during the First World War. By this
method certain factors are selected for the purpose of analysis such as
leadership dependability, initiative and a scale is designed rates for each
factor. In other words comparing a “Whole man” to “Whole man”
personnel are compared to the key man in respect of one factor at a time.
This method is used in a job evaluation and is known as the factor
comparison method.

3. GRADING METHOD
Under this system the rater considers certain features and marks them
accordingly to a scale.
A - Outstanding
B - Very Good
C - Good or Average
D - Fair
E - poor and
0 5 10 15 20 25

The selected may be analytical ability, co-operativeness, dependability,

self-expression, job knowledge, judgment leadership and organizing ability.
The actual performance of an employee is then compared with these grade
definitions and he is allotted the grade, which describes his performance.

4. GRAPHIC RATING SCALE

This is the most commonly used method of performance appraisal. Under it,
a printed form one person to be rated, in this method initiative, attitude
leadership, quality and quantity of work, regularity of attendance towards
superiors and associated veracity.

--------------------------------------------------------------------------
0 5 10 15 20 25

0 - No interest in work
5 - Carelessness
10 - Interested in work
15 - Enthusiastic about job and fellow workers
20 - Enthusiastic opinions and advises

5. CHECK LISTS METHOD

This method does not evaluate employee performance, he supplies reports

about it and the final rating is done by the personnel dept. A series of
questions are presented concerning employee to his behaviour. The rater
then checks to indicate if the answer to a question about an employee is yes
or no.

6. FORCED CHOICE DESCRIPTION METHOD

Under this method the rating elements are several sets of paid phrases
adjectives relating to job proficiency or personnel qualification. The method
has certain advantages such as while choosing statements from each series.
The rater is unable to introduce personnel bias on hallo effect as only one of
the favorable phrases in each series is related to success of failure on the job.

7. SELECTION OF CRITICAL INCIDENTS

The method was developed and conducted by the armed forces in the United
States during World War II. The essence of this system is that if attempt to
measure workers performance in terms of certain events or episodes that
occur in the performance of the rates job. These events are known as critical
incidents.

The supervisor keeps a written record of the events (either good or bad) that
can easily be recalled and used in the courses of a periodical or formal
appraisal. Feedback is provided about the incident during performance
review session.

The critical incident is discovered after a thorough study of the personnel

working on a job. The collected incidents are then tanked in an order of
frequency and importance. “ This approach reduces the ‘regency’ effect of
most performance ratings.”

8. FREE ESSAY METHOD

Under this method the supervisor makes a free form open-ended appraisal of
an employee in his own words and puts down his impression about the
employee.
There are several advantages of this method, an essay can provide a
good deal of information, especially, if the supervisors asked, for instance,
to give two or three examples of each judgment he makes. The explanation
will give specific information about the employee and can reveal even more
about the supervisor.

9. GROUP APPARISAL METHOD

Under this method, employees are rated by an appraisal group, consulting of

their supervisor and three or four other supervisors who have some
knowledge of their performance. The supervisor explains to the group the
nature of subordinates duties. The group then discusses standards of
performance for that job. The actual performance of jobholder and the
causes of their particular level of performance and others suggestions for
future improvement.

10. FIELD REVIEW METHOD

Under this method a trained employee from the personnel department

interviews line supervisors to evaluate their respective subordinates.
The appraiser is fully equipped with definite test questions. Usually
memorized in advance, which he puts to the supervisor. The supervisor is
received to give his opinion about the progress of his subordinates. The
level of the performance of each subordinate, his weaknesses, good point’s
outstanding ability, promotability and the possible plans of action in cases
require further consideration. The questions are asked and answered
verbally. The appraiser takes detailed notes of the answers placed in the
employee’s personal folder.

MODERN METHODS

1) Management by objectives(MBO):-

The main aspects of MBO are clear and well-defined goals, a definite time-
span to achieve the goals, an action plan and finally, timely and constructive
feedback. Also called the goal-setting approach, MBO is more commonly
used for managers and professionals. The goals are set with the active
participation of the employee and his supervisor. These goals have to be in
alignment with the organizational goals and have to contribute to their
achievement. For successful implementation of MBO, the following are
required.
 Quantifiable and measurable goals that are neither too easy not too
difficult to achieve
 A well-laid out action plan providing for contingencies.

 Employees who are suitably equipped ad motivated to achieve these

goals
 Continuous and constructive feedback and guidance
 Objective evaluation of the performance
 Identification of areas for improvement and corrective action

2) Assessment center method:-

 Under this method, many evaluators join together to judge employees
performance in several situations with the use of variety of criteria. It is used
mostly to help select employees for the first level supervisory positions.
Assessment are made to determine employee potential for purpose of
promotion. The assessment is generally with the help of a couple of
employees and involve a paper- and – pencil test, interviews and situational
exercises, like in basket exercise, business game, role playing incident and
leader less group discussions.

Purpose of assessment center:

 To measure potential for first level supervision, sales and upper

management positions; and also for higher levels of management for
development purposes.
 To determining individual training and development needs of
employees.
 To select recent college students for entry level positions.
 To provide more accurate human resource planning information.
 To make an early determination of potential.
 To assist in implementing affirmative action goals.

3) Human asset accounting method:

The human asset accounting method refers to activity devoted to

attaching money estimate to have the value of firms internal human
organization and its external customer goodwill.
The current value of firms human organization can be appraised by
developed procedures by undertaking periodic measurements of “ key
casual” and “intervening enterprise” variables. The key casual variables
include the structure of organization management policies, decisions
business leader ship strategies, skill and behaviour.

4) Behaviourly anchored rating scales:

This is a new appraisal technique, which has recently been developed.

Its supporters claim that it provides better more equitable appraisals as
compared to other techniques the procedure for BARS is usually five
stepped.
1) Generate critical incidents: Persons with the knowledge of the job to

be appraised are asked to describe specific illustration of a effective

performance behaviour.

2) Develop performance dimensions: These people then cluster the

incidents into a small set of performance dimensions each cluster is

then defined.

3) Reallocate incidents: Any group of people who also know the job

then reallocate the original critical incidents. They are given the
clusters definition, and critical incidents, and asked to redesign each
incident to the dimension in best describes. Typically a critical
incident is retained with some percentage of these group assigns it to
the same cluster as the previous group did.
 4) Scale of incidents: The second group is generally asked to rate the

behaviour described in the incident as to how effectively in effectively

it represents performance on the appropriate dimension.

5) Develop final instrument: A subset of incidents are used as “

behaviour anchors” for the performance dimension.

6) 360 degree appraisal:

A 360-degree appraisal system aims at comprehensive and objective

appraisal of employee performance. In a 360-degree appraisal system, the
employees performance is evaluated by his supervisor, his peers, his internal
and external customers, his internal and external suppliers and his
subordinates. This system reduce the subjectivity of traditional supervisor
appraisal. It is also most comprehensive because the feedback is given by
the peers, customers, suppliers and subordinates of the employee, who are
more directly affected by his behaviour and performance, apart from the
boss. More and more organizations are trying to implement the system of
appraisal in India.
APPRAISE THE PERFORMANCE :

The moral taught us we need to measure the performance not mere

activities.
What then his performance? Performance is essentially what an
employee does or does not do employee performance common to most jobs
include the following elements.

 Quantity of output
 Quality of output
 Timeliness of output
 Presence at work
 Cooperativeness

In addition to these, other elements that deserve assessment are job

knowledge, leadership abilities, judgments, supervision, versatility and
health. Assessment should also include one’s potential to perform and not
just actual performance.

PERFORMANCE INTERVIEW:

The appraisal interview plays a prominent role in the success of

performance appraisal system. A well-designed appraisal system also needs
to be implemented well. The appraisal procedure in most modern
organizations start with the employee himself. He evaluated his own
performance on the various factors mentioned in the appraisal form and
assess his strengths and weaknesses. These will help him identify the areas
that need training or development inputs. Then he discusses his appraisal
form with his supervisor, who give his own inputs and the two together
finally reach an agreement on the future course of action. However some
organizations still follow the traditional method of appraisal where the
supervisor evaluates the performance of his subordinates during the
appraisal period.

ARCHIVING PERFORMANCE DATA:

Organizations need to archive or store the appraisal data so that at any

point in the future, the information can be retrieved and used. For e.g., if an
employee has been told that he/she was not promoted because of below
average performance and he/she would be considered favorably for a jump
in status and remuneration provided the performance improved. The H.R
manager should have those details to convince the employee concerned
when he/she joins issue with the management on matter relating to
promotion.

USE OF APPRAISAL DATA:

The data and information generated through performance evaluation

must be used by H.R department.
It may be recollected that the most significant rewards employers
offer to employees are:
1) The opportunity to use innate and learned skills and talents in
productive manner that the individual and his or her manager and co-
workers recognized as valuable.
 2) Opportunities to interact with the other people in a favorable working
environment.
3) Opportunities to learn, grow and make full use of their potential.
4) A sense of performance and stability through the continuing existence
of the organization and the job.

Specially, the data and information will be useful in the following areas of
H.R.M.

 Remuneration administration
 Validation of selection programmes
 Employee training and development programes
 Promotion transfer and lay-off decisions
 Grievance and discipline programmes.
 H.R planning

CHALLENGES OF APPRAISAL:

 Create a culture of excellence that inspires every employee to improve

and lend himself or herself to be assessed.
 Align organizational objectives to individual aspirations
 Clear growth paths for talented individuals
 Provide new challenges to rejuvenate careers that have reached the
plateau stage
 Forge a partnership with people for managing their careers
 Empower employees to make decisions without the fear of failing
 Embed teamwork in all operational processes
  Debureaucratise the organization structure for ease of flow of
information.

PITFALLS IN PERFORMANCE APPRAISAL:

The performance appraisal system in any organization has to face

some major challenges. This lead to potential errors individuals appraisals. It
is the responsibility of the manager in general and the human resources
function in particular to take corrective actions and avoid these pitfalls.
Some of the factors that affect the appraisal process at an individual level:

Halo effect:
The appraisal allows a single characteristic of the appraisee to
dominate his judgment of the employee performance. This can result in
either a positive report or negative report on the performance of the
employee.

Leniency effect:

These refer to the situation where the appraise tends to give high
ratings and only positive feedback to the appraisee, irrespective of his actual
performance.
Stringency effect:

This is the just opposite of the leniency effect. An appraisal who feels
that the rules and standards of the organization are not strict enough, tries to
be very strict in rating his appraisees. This might lead to dissatisfaction
among his appraisees, as they would feel that the evaluation is biased and
unfair.
Primacy effect:

The performance of the appraisee at the beginning of the appraisal

period dominates the evaluation. The appraiser tends to be influenced by the
behaviour or outcomes exhibited in the early stage of the appraisal period
and this lead to a distorted evaluation.
Central tendency effect:

Central tendency is the tendency of the appraiser to rate most of the

appraisees in the middle of the performance scale. The appraiser gives
neither high nor low ratings and tends to give ratings in the middle of the
scale to all the appraisees. This is one of the most common errors in
employee performance rating.

Ethics of performance appraisal:

Every performance management system needs the support of top

management and the acceptance of the work force for its success. Without
these, any system will be a failure. The employees of the organization have
to be convinced about the effectiveness and importance of the appraisal
system. They should have trust in the process of implementation of the
system.
Performance appraisal system turnout to be ineffective due to
implementation errors. However as for the international errors concerned,
more organization level steps have to be taken some of them are:
 Making the ratings more measurable and quantifiable
 Reducing subjectivity by using multi-rater feedback
  Using instruments/methods which have hidden weights or keys
attached to them
 Having the feedback evaluated by a third party like the HR
department
 Training appraisers on how to provide negative feedback
 Assuring and maintaining the confidentiality of the appraisal is a
major responsibility of the HR function.

The organizational culture has to be open and transparent, and support

the employees in delivering a better performance. Attaching pay and
rewards to performance management has to be handle with care, as it is a
very sensitive issues. If the performance is measured through quantifiable
targets and goals, unhealthy competition and some of the related problems
can be eliminated.
NATURE OF THE STUDY:

Performance appraisal has been around for hundred of years, as

it is only human nature to evaluate fellow colleagues. Effective appraisal
systems should address clarity; openness and fairness recognize productivity
through rewards and be cognizant to appraiser leadership qualities.

“Performance appraisal is the process of evaluating the

performance and qualifications of the employees in terms of the
requirements of the job for which he is employed, for the purpose of
administration including placement, selection for promotions, providing
financial rewards and other actions which require differential treatment
among the member of a group as distinguished from actions affecting all
members equally”. By heyel
“Performance appraisal determines who shall receive merit increases,
counsel’s employees on their improvement; determines training needs,
determines promotion ability, identifies those who should be transferred
moreover, it improves employee job performance, encourage employees to
express their views or to seek clarification on duties; broadens their, capacity
and potential, promotes a more effective utilization of manpower and
improves placement; facilitates selection, reward & promotion of the best
qualified employees, prevents grievances & increases the analytical ability
of supervisors”.
CHAPTER-IV
DATA ANALYSIS &
INTERPRETATION
 1. EXPERIENCE PROFILE OF RESPONDENTS.

Table No.1

EXPERIENCE NO. OF PERCENTAGE

RESPONDENTS
(IN YEARS)
0-3 23 30.66
3-6 46 61.33
6-9 6 8
9-12 0 0
TOTAL 75 100

Fig No.1
50
45
NO.OF RESPONDENTS

40
35
30
25 NO.OF RESPONDENTS
20
15
10
5
0
0-3Y 3-6Y 6-9Y 9-12Y
EXPERIENCE

INTERPRETATION:

From the above data it is evident that 30.66 % of the

employees are having 0 to 3 years experience, 61.33% of the employees
are having 3 to 5 years experience, and 8% of the employees are having
6 to 9 years experience. It indicates that most of the employees have
less than 10 years experience.
2. AWARENESS ABOUT PERFORMANCE APPRAISAL USED
IN THE ORGANIZATION.

Table No.2

OPINION NO. OF PERCENTAGE

RESPONDENTS
Yes 75 100
No 0 0
Total 75 100

Fig No.2

100%

INTERPRETATION:

From the above data it can be interpreted that all (100%) of

the employees know that the organization is following the ranking
method for appraising employee. It tells us that all the employees have
awareness about their performance appraisal.
3. EMPLOYEE OPINION ABOUT NEED FOR PERFORMANCE
APPRAISAL.

Table No.3

NO. OF
OPINION PERCENTAGE
RESPONDENTS
Yes 66 88
No 9 12
Total 75 100

Fig No.3

70

60
NO.OF RESPONDENTS

50

40
NO.OF RESPONDENTS
30

20

10

0
YES no
OPINION

INTERPRETATION:

From the above data it can be interpreted that most of the

employees (88%) opine that performance appraisal system is very
essential, 12% of the employees opine that it is not essential. It tells that
the employees are feeling that system is essential to the development of
the employee.
4. SATISFACTION ABOUT THE PRESENT APPRAISAL SYSTEM.

Table No.4

OPINION NO. OF PERCENTAGE

RESPONDENTS
Yes 68 90.66
No 7 9.33
Total 75 100

Fig N o.4

80
70
NO.OF RESPONDENTS

60
50
40 NO.OF RESPONDENTS
30
20
10
0
YES NO
OPINION

INTERPRETATION:
From the above data it can be interpreted that 90.66% of the
employees are satisfied with the current appraisal system, and 9.33% of
the employees are not satisfied with the current appraisal system. It tells
that employees are satisfied with the current appraisal system.
 5. THE FLEXIBILITY OF THE PRESENT APPRAISAL
SYSTEM.

Table No.5

OPINION NO. OF PERCENTAGE

RESPONDENTS
Yes 48 64
No 27 36
Total 75 100

Fig No.5
60

50
NO.OF RESPONDENTS

40

30 NO.OF RESPONDENTS

20

10

0
YES NO
OPINION

INTERPRETATION:

From the above data it can be interpreted that 64% of the

employees opine that the performance appraisal system is flexible
enough to meet the changing organization needs, 36% of the employees
opine that it is not flexible to the changing needs of the organization. It
indicates that the performance appraisal system is flexible enough to
changing organization needs.
 6. PERIODICITY OF PERFORMANCE APPRAISAL IN THE
ORGANIZATION.
Table No.6

OPINION NO. OF PERCENTAGE

RESPONDENTS
A)Quarterly basis 5 6.66
B)Half yearly basis 10 13.33
C)Annual basis 60 80
Total 75 100

Fig No.6

70
NO.OF RESPONDENTS

60
50
40
30 NO.OF RESPONDENTS
20
10
0
A B c
OPINION

INTERPRETATION:

From the above data it is observed that 6.66% of employees opine

that appraisal should be on quarterly basis, 13.33 employees opine that
it should be on half yearly basis, 80% of the employees’ opine that the
organization should follow the annual basis of performance appraisal
process. It indicates that the most of employees feel that organization
should follow the annual basis to assess the employee performance.
7. WHETHER PERFORMANCE APPRAISAL PERIOD IS
INFORMED BY THE MANAGEMENT.
 Table No.7

Fig No.7
OPINION NO. OF PERCENTAGE
RESPONDENTS
Yes 18 24
No 57 76
Total 75 100

60
NO.OF RESPONDENTS

50

40

30 NO.OF RESPONDENTS

20

10

0
YES NO
OPINION

INTERPRETATION:

From the above data it is evident that 24% of the

employees opine that the management informed the appraisal period,
76% of the employees opine that management does not inform
appraisal period. It indicates that management is unable to reach all
employees in informing the beginning of the appraisal period.

8. WHETHER APPRAISAL SYSTEM ASSESSING THE

EMPLOYEE PERFORMANCE.

Table No.8
 Opinion No. Of Respondents Percentage
Yes 60 80
No 15 20
Total 75 100

Fig No.8
90
80
NO.OF RESPONDENTS

70
60
50
PERCENTAGE
40
30
20
10
0
YES NO
OPINION

INTERPRETATION:

From above data it is evident that 80% of the employees feel that the
performance appraisal system is helpful in assessing employee
performance, 20% of the employees are not agreeing with this. It tells
that most of the employees are feeling that the appraisal system helps in
assessing the performance.

8. USEFULNESS OF PERFORMANCE APPRAISAL SYSTEM

TO IDENTIFY THE STRENGTHS AND WEAKNESS OF THE
EMPLOYEE.

Table No.9
 OPINION NO. OF PERCENTAGE
RESPONDENTS
Yes 53 70.66
No 22 29.33
Total 75 100

Fig No.9

60
NO.OF RESPONDENTS

50

40

30 NO.OF RESPONDENTS

20

10

0
YES NO
OPINION

INTERPRETATION:

From the above data it is observed that 70.66 % of the

employees agree that the present appraisal system is useful to identify
the strengths and weaknesses, 29.33% employees agree that the present
appraisal system is not useful. It indicates that most of the employees
identify their strengths and weaknesses through the performance
appraisal system.
9. EMPLOYEE OPINION LEVELS ON HOW ESSENTIAL
PERFORMANCE FEEDBACK IS.

Table No. 10
 OPINION NO. OF RESPONDENTS PERCENTAGE
A) Strongly agree 14 18.66
B) Agree 58 77.33
C) Disagree 3 4
D)Strongly disagree 0 0
TOTAL 75 100
Fig No.10

90
80
NO.OF RESPONDENTS

70
60
50
PERCENTAGE
40
30
20
10
0
A B C
OPINION

INTERPRETATION:

From the above data it is observed that 18.66% of the

employees strongly agree and 77.33% of the employees agree that
Performance feedback is essential to employees to improve efficiency.
4% of the employees disagree with this. It tells that performance
feedback helps the employees to improve the performance.

11. WHETHER PERFORMANCE APPRAISAL SYSTEM IS

HELPFUL IN IDENTIFYING THE CARRIER NEEDS.

Table No.11
 Fig No.11

OPINION NO. OF RESPONDENTS PERCENTAGE

Yes 56 74.66
No 19 25.33
Total 75 100

60
NO.OF RESPONDENTS

50

40

30 NO.OF RESPONDENTS

20

10

0
YES NO
OPINION

INTERPRETATION:

From the above data it is observed that 74.66% of the employees

agree that performance appraisal system helps to identify career needs,
25.33% of employees opine performance appraisal system is not useful.
It indicates that performance appraisal is essential for the development
of employee in future.
12. WHETHER PERFORMANCE APPRAISAL SYSTEM
PROVIDE AN OPPORTUNITY FOR EMPLOYEE SELF
REVIEW AND REFLECTION
 Table No.12
OPINIO NO. OF PERCENTAGE
N RESPONDENTS
Yes 55 73.33
No 20 `26.66
Total 75 100

Fig No.12

60
NO.OF RESPONDENTS

50

40

30 NO.OF RESPONDENTS

20

10

0
YES NO
OPINION

INTERPRETATION:

From the above data it is observed that 73.33% of the

employees agree that performance appraisal system provides an
opportunity for self-review and reflection. 26.33% of the employees
agree that performance appraisal system does not provide an
opportunity. It indicates that most of the employees opinion is that they
could assess their performance by the self-review and reflection in the
performance appraisal system.

13. WHETHER COUNSELING IS ESSENTIAL FOR

EMPLOYEES.
 Table No.13
OPINION NO. OF PERCENTAGE
RESPONDENTS
Yes 58 77.33
No 17 22.68
Total 75 100

Fig No.13

70
NO.OF RESPONDENTS

60

50
40
NO.OF RESPONDENTS
30
20

10

0
YES NO
OPINION

INTERPRETATION:

From the above data it is evident that most of the employees (77.33%)
feel that counseling is essential for employees. 22.68% of the
employees feel that counseling is not essential for the employees. It
indicates that counseling is essential for the employees to developing
their performance.

14. OPINION ON HOW COUNSELING SHOULD BE DONE.

Table No.14
 OPINION NO. OF PERCENTAGE
RESPONDENTS
Formal 45 60
In formal 30 40
Total 75 100

Fig No.14

YES
NO

INTERPRETATION:

From the above data it is evident that most of the employees

(60%) feel that formal counseling should occur in the organization,
40% of the employees feel that informal counseling should occur in the
organization. It tells that most of the employees prefer formal
counseling in the organization.

15. WHETHER THERE IS ANY CULTURAL EFFECT IN

PERFORMANCE APPRAISAL PROCESS.

Table No.15
 OPINION NO. OF PERCENTAGE
RESPONDENTS
Yes 11 14.66
No 64 85.33
Total 75 100

Fig No.15

90
80
NO.OF RESPONDENTS

70
60
50
PERCENTAGE
40
30
20
10
0
YES NO
OPINION

INTERPRETATION:

From the above data it can be interpreted that 14.33%of the

employees opined that management follows cultural effect in the
performance appraisal process, 85.33% of the employees opined that
management does not follow any cultural effect in performance
appraisal process. It indicates that there are no pitfalls in the
performance appraisal process in the organization.

16. WHETHER EMPLOYEES ARE SATISFIED WITH THE

SELF-APPRAISAL PROCESS.

Table No.16
 OPINION NO. OF PERCENTAGE
RESPONDENTS
Yes 71 94.66
No 5 5.33
Total 75 100

Fig No.16

80
70
NO.OF RESPONDENTS

60
50
40 NO.OF RESPONDENTS
30
20
10
0
YES NO
OPINION

INTERPRETATION:

That organization provides an opportunity for the employee to

give self-appraisal in order to meet their satisfactory levels. From the
above data 94.66% are having their self- appraisal and where as 5.33%
are not having the self-appraisal to them. It indicates that the self-
assessment process is satisfaction for of employees to identify their
performance.

17. WHETHER T & D PROGRAMS PROVIDING BASED ON

APPRAISAL RESULT.

Table No.17
 OPINION NO. OF PERCENTAGE
RESPONDENTS
Yes 67 89.33
No 8 10.66
Total 75 100

FigNo.17
80
70
NO.OF RESPONDENTS

60
50
40 NO.OF RESPONDENTS
30
20
10
0
YES NO
OPINION

INTERPRETATION:

From the above data it is observed that 89.33 % of the

employees opinion is that organization is providing the T & D programs
based on appraisal result, 10.66% of the employees opinion is that T &
D programs are not provided based on the result. It tells that training &
development programs are useful to the employees to improve their
performance.

18. WHETHER EMPLOYEES ARE INFORMED ABOUT THEIR

PERFORMANCE.

Table No.18

OPINION NO. OF PERCENTAGE

RESPONDENTS
 Yes 15 20
No 60 80
Total 75 100

Fig No.18

70
NO.OF RESPONDENTS

60
50
40
NO.OF RESPONDENTS
30
20
10
0
YES NO
OPINION

INTERPRETATION:

From the above data it can be interpreted that 20% of

the employees opine that management inform the performance of the
employees, 80% of the employees opine that the management does not
informing the performance results to employees. It indicates that
organization is maintaining confidential in the performance appraisal
process.

19. MODE OF COMMUNICATION ABOUT PERFORMANCE.

Table No.19

OPINION NO. OF RESPONDENTS PERCENTAGE

A) Written form 45 60
B ) Oral form 18 24
C) Open communication 6 8
D ) No need 6 8
TOTAL 75 100
Fig No.19
PERCENTAGE

A
B
C
D

INTERPRETATION:

From the above data it is evident that 60% of the employees

opine that performance appraisal should be communicated written form,
24% of the employees opine that it should be communicated in oral
form,8% of the employees opine that it should be communicated
through open communication, 8% of the employees feel that their
performance need not communicated to them. It indicates that written
communication is most employees preferable as it easy to express their
feelings of the employees.
20. EXTENT OF DEVELOPMENT IN PERFORMANCE AS A
RESULT OF PERFORMANCE APPRAISAL SYSTEM

Table No.20
 OPINION NO. OF RESPONDENTS PERCENTAGE
25 33.33
A) To a large extent
B) To some extent 46 61.33
C ) Not at all 4 5.33
75 100
TOTAL
Fig No.20

PERCENTAGE

A
B
C

INTERPRETATION:

From the above data it can be interpreted that 33.33% of the

employees opinion is that their performance increased to large extent,
61.33% of employees opinion is that their performance increased to some
extent, 5.33% of the employees opinion is that their performance has not at
all increased as a result of performance appraisal system. It tells that to a
great extent performance increased due to the performance appraisal system.
 CHAPTER-V
FINDINGS & SUGGESTIONS

Findings:

The following are the findings of the study

 The company is following ranking method to give promotion,
increments, etc.

 The study found that the existing performance appraisal system is

giving satisfactory level of results.

 From the study, it is observed that performance appraisal system

useful to meet the changing needs in the organization.

 From the study, it is observed that employees in the organization are

able to know their strengths and weaknesses.

 Most of the employees have accepted that performance feedback is

essential for the employee to improve the efficiency.

 Most of the employees are satisfied by having their self-appraisal in

the organization.

 Form the study it was found that most of the employees prefer
written mode of communication as it is easy to express their feelings.

Suggestions:
The following are the suggestions proposed to the organization based
on the study

 It can be suggested to the organization to recruit the

experience employees

 It is suggested to implement better and modern performance

appraisal systems like 360-degree appraisal, MBO to get better results.

 It can also be suggested to have a regular feedback both from the

employee as well as the employer to know the pros and cons of the
system.

 It is suggested to modify the present appraisal system in such

away that it could related to the organization objectives as well as
employees.

 It is also suggested to provide training and development

programs to improve the performance of the employees and provide
career development.

 It can also be suggested that counseling could be given to the

employees to get better results.
BIBLIOGRAPHY
BIBLIOGRAPHY

1. C. B. MAMORIA - Dynamics of Personnel

Management

2. K.AWASTHAPPA - Hunan Resource management

3. R.L.MATHIS - Human Resource

management
& J.H.JOCKSON

4. V.S.P. RAO - Human Resource management

.
www.citehr.com
www.wikipidea.org
www.hrguide.com
www.hr.com

QUESTIONNAIRE
 PERSONAL DATA
Name:
Designation:
Department:

QUESTIONNAIRE ANALYSIS

1. From how many years are you working in this organization?

a) 0-3 b) 3-6 c) 6-9 d) 9-12
2. Do you know what performance appraisal method is used for
appraisal in your organization?

a) Yes, it is-------------

b) No
3. Do you think performance appraisal is essential?
a) Yes b) No
4. Are you aware about the organization performance appraisal system?
a) Yes b) No
5. Is the performance appraisal system flexible enough to meet the
Changing organization needs?

a) Yes b) No
6. Periodicity of performance appraisal should be on?
a) Quarterly Basis b) Half-Yearly Basis c) Annual Basis

7. Does the management inform, you about the performance appraisal at

the beginning of the appraisal period?
a) Yes b) No
 8. Is the present appraisal system helpful in assessing the employee
performance?
a) Yes b) No
9. Does the present appraisal system help you in knowing your
strengths and weakness?
a) Yes b) No
10. Performance feed back allows employees to improve efficiency?
What is your opinion?
a) Strongly agree b) Agree c) Disagree d) Strongly
disagree
11. Does the performance appraisal system help you in identifying
career needs?
a) Yes b) No
12. Does the performance appraisal provide an opportunity for self
review and reflection?
a) Yes b) no
13. Do you think counseling is essential for employees in connection
with performance appraisal?

a) Yes b) No
14. What kind of counseling should occur in an organization?
a) Formal b) Informal
15. Is there any cultural effect in performance appraisal process?

a) Yes b) No

16. Are you satisfied by giving your self-appraisal?

 a) Yes b) No

17. Does the organization provide training and development programs

basing on appraisal result?

a) Yes b) No
18. Are you informed about your performance?

a) Yes b) No
19. How do you want your performance to be communicated to you?
a) Written Form b) Oral Form c) Open Communication d) No
Need
20. Has your performance increased as a result of performance
appraisal system?
a) To a large extent b) To some extent c) Not at all