MANAGERIAL ETHICS IN PERFORMANCE APPRAISAL

Performance appraisal system should be effective as a number of crucial decisions are

made on the basis of score or rating given by the appraiser, which in turn, is heavily
based on the appraisal system. Appraisal system, to be effective, should possess the
following essential characteristics:

Reliability and validity:

Appraisal system should provide consistent, reliable and valid information and data,
which can be used to defend the organization-even in legal challenges. If two appraisers
are equally qualified and competent to appraise an employee with the help of same
appraisal technique, their ratings should agree with each other. Then the technique
satisfies the condition of inter-rater reliability. Appraisals must also satisfy the condition
of validity be measuring what they are supposed to measure. For example, if appraisal is
made for potential of an employee for promotion, it should supply the information and
data relating to potentialities of the employee to take up higher responsibilities and carry
on activities at higher level.

Job Relatedness:

The appraisal technique should measure the performance and provide information in Job
related activities/areas.

Standardization:

Appraisal forms, procedures, administration of techniques, rating etc. should be

standardized as appraisal decisions affect all employees of the group.

Practical Viability:

The techniques should be practically viable to administer, possible to implement and

economical regarding cost aspect.

Legal Sanction:

It should have compliance with the legal provisions concerned of the country.

Training and Appraisers:

Because appraisal is important and sometimes difficult, it would be useful to provide

training to appraisers namely insights and ideas on rating, documenting appraisals, and
conducting appraisal interviews. Familiarity with rating errors can improve rater
performance and this may inject the needed confidence in appraisers to look into
performance ratings more objectively.
Open Communication:

Most employees want to know how well they are performing on the job. A good appraisal
system provides the needed feedback on a continuing basis. The appraisal interviews
should permit both parties to learn about the gaps and prepare themselves for future. To
this end, managers should clearly explain their performance expectations to their
subordinates in advance of the appraisals period. Once this is known it becomes easy for
employees to learn about the yardsticks and, if possible, try to improve their performance
in future.

Employee Access to Results:

Employees should know the rules of the game. They should receive adequate feedback on
their performance. If performance appraisals are meant for improving employee’s
performance, then withholding appraisals results would not serve any purpose.
Employees simply could not perform better without having access to this information.
Permitting employees to review the results of their appraisal allows them to detect any
errors that may have been made. If they disagree with the evaluation, they can even
challenge the same through formal channels.

It follows then that formal procedures should be developed to enable employees who
disagree with appraisal results which are considered to be inaccurate or unfair. They must
have the means for pursuing their grievances and having them addressed objectively.

institutional investors
Definition

Large organizations (such as banks, finance companies, insurance companies, labor union
funds, mutual funds or unit trusts, pension funds) which have considerable cash reserves
that need to be invested. Institutional investors are by far the biggest participants in
securities trading and their share of stockmarket volumes have consistently grown over
the years. For example, on a typical day, about 70 percent of the trading on the NYSE is
on the behalf of institutional investors. Because they are considered knowledgeable and
strong enough to safeguard their own interests, institutional investors are relatively less
restricted by the security regulations designed to protect smaller investors.
Institutional investors are organizations which pool large sums of money and invest
those sums in securities, real property and other investment assets. They can also include
operating companies which decide to invest its profits to some degree in these types of
assets. Types of typical investors include banks, insurance companies, retirement or
pension funds, hedge funds, investment advisors and mutual funds. Their role in the
economy is to act as highly specialized investors on behalf of others. For instance, an
ordinary person will have a pension from his employer. The employer gives that person's
pension contributions to a fund. The fund will buy shares in a company, or some other
financial product. Funds are useful because they will hold a broad portfolio of
investments in many companies. This spreads risk, so if one company fails, it will be only
a small part of the whole fund's investment. Institutional investors will have a lot of
influence in the management of corporations because they will be entitled to exercise the
voting rights in a company. They can actively engage in corporate governance.
Furthermore, because institutional investors have the freedom to buy and sell shares, they
can play a large part in which companies stay solvent, and which go under. Influencing
the conduct of listed companies, and providing them with capital are all part of the job of
investment management.

[edit] Overview
Because of their sophistication, institutional investors may often participate in private
placements of securities, in which certain aspects of the securities laws may be
inapplicable. For example, in the United States, a private placement under Rule 506 of
Regulation D may be made to an "accredited investor" without registering the offering of
securities with the Securities and Exchange Commission. In essence institutional
investor, an accredited investor is defined in the rule as:

• a bank, insurance company, registered investment company (generally speaking, a

mutual fund), business development company, or small business investment
company;
• an employee benefit plan, within the meaning of the Employee Retirement
Income Security Act, if a bank, insurance company, or registered investment
adviser makes the investment decisions, or if the plan has total assets in excess of
$5 million;
• a charitable organization, corporation, or partnership with assets exceeding $5
million;
• a director, executive officer, or general partner of the company selling the
securities;
• a business in which all the equity owners are accredited investors;
 • a natural person who has individual net worth, or joint net worth with the person’s
spouse, that exceeds $1 million at the time of the purchase;
• a natural person with income exceeding $200,000 in each of the two most recent
years or joint income with a spouse exceeding $300,000 for those years and a
reasonable expectation of the same income level in the current year; or
• a trust with assets in excess of $5 million, not formed to acquire the securities
offered, whose purchases a sophisticated person makes.

[edit] Institutional investor types

• Pension fund
• Mutual fund
• Investment trust
• Unit trust and Unit Investment Trust
• Investment banking
• Hedge fund

[edit] Role in the globalization of financial markets

Institutional investors have played a major role in the emergence of truly global money
flows, notably through their large-scale cross-border investments, channelling the excess
liquidities of pension funds of G8 and OPEC countries towards both Western bourses and
emerging markets, contributing to the development of a truly integrated and thus more
efficient global financial sphere.[1]

When considered from a strictly local standpoint, institutional investors are sometimes
called foreign institutional investors (FIIs). This expression is mostly used in emerging
markets such as Malaysia and India.[citation needed]

In countries like India, statutory agencies like SEBI have prescribed norms to register
FIIs and also to regulate such investments flowing in through FIIs. In 2008, FIIs
represented the largest institution investment category, with an estimated US$ 751.14
billion.[2]