PERFORMANCE APPRAISAL SYSTEM

INTRODUCTION:
Al m ost e ve r y or ga ni za t i on in one wa y or a not he r goes t hr ough a pe ri odi c ri t ua l ,
f orm a ll y or inf orm a ll y, known a s per f orm a nc e a ppr a i sa l . Per f orm a nc e a ppr a i sa l ha s
be e n c al l e d ma ny t hi ngs . The form a l pe rf or m a nc e a ppr ai s al ha s be e n ca l le d a t ool of
m a na ge m e nt , a c ont r ol pr oc e s s, a n a ct i vit y a nd a cr it i c al e l em e nt in hum a n re s ourc e s
a ll oc a ti on. Us e s for pe r f or m a nce a ppr a i s al ha ve inc l ude d e qual em pl oym e nt
oppor t uni t y c onsi de r at i ons, pr om oti ons , t ra ns fe r and s al a r y i ncr e a s es . Pri m ar il y
pe rf or m a nc e a ppr a is a l ha s be e n c ons i der e d a n ove ra l l s yst e m f or c ont r ol l i ng a n
or ga ni z a ti on. Per f orm a nc e a ppr a i sa l ha s al s o be e n ca ll e d a n a udit f unct i on of an
or ga ni z a ti on re ga r di ng the per f orm a nc e of i ndi vi dual s , gr oups a nd ent ir e di vi si ons .

Pe r f or m a nce a ppr a i sa l ma y be def i ne d a s a st r uct ur e d f orm a l i nt e r a ct i on be t we e n a

s ubor di na t e a nd s upe r vi s or, tha t us ua ll y ta ke s t he for m of a per i odi c int er vi e w
( a nnual or s em i- a nnua l) , in whi c h t he wor k per f orm a nc e of t he s ubor di nat e i s
e xa mi ne d a nd di s c us s e d, wi t h a vi e w t o i de nt i f yi ng we a kne s s es a nd s tr e ngt hs as we l l
a s oppor t uni ti e s for i mpr ove me nt a nd s ki ll s de ve l opme nt.

Performance Appraisal is defined as the process of assessing the performance and progress of an
employee or a group of employees on a given job and his / their potential for future development.
It consists of all formal procedures used in working organizations and potential of employees.
According to Flippo, “Performance Appraisal is the systematic, periodic and an important rating
of an employee’s excellence in matters pertaining to his present job and his potential for a better
job.”
Need of the study:

Why is performance is measured?

 Provides feedbacks to employees

 Identifies employees developmental needs

 Decides Promotions and rewards

 Decides demotions and termination

 Develops information for selection and placement decisions

Performance Appraisal is the important aspect in the organization to evaluate the employees
performance. It helps in understanding the employees work culture, involvement, and
satisfaction. It helps the organization in deciding employees promotion, transfer, incentives, pay
increase.

It is scientific and objective study. Formal procedures are used in the study. The main purpose of
Performance Appraisal is to secure information necessary for making objective and correct
decision an employee.
Objectives of the Project:
This project has been undertaken to share my experiences on Performance appraisal system as
well as to enhance my understanding of this fascinating subject by doing some study & research.

The project explains the meaning of Performance Appraisal, different methods used to evaluate
the performance of employees, its effective implementation and the benefits of the system.

 1. To assess objectively the performance of the individual and his contribution to organisational
goals.

2.   To provide feedback to the employee about the performance and his strengths and
weaknesses without which improvement is not possible.

3.   To help him improve his strengths and in overcoming his weaknesses

4.   To help in assessment of development needs as well as motivating him to develop himself.

Performance appraisal should also aim at the mutual goals of the employees and the
organization. This is essential because employees can develop only when the organization’s
interests are fulfilled. The organization’s main resources are its employees, and their interest
cannot be neglected. Mutual goals simultaneously provide for growth and development of the
organization as well as of the human resources. They increase harmony and enhance
effectiveness of human resources in the organization.
Scope of the Project:
The project chosen Performance appraisal was aimed for the betterment of the organization in
terms of quality as well as quantity. The scope of the study under mentioned points depicts the
same.

 to be instrumental in helping employees to better understand their strengths and

weaknesses with respect to their role and functions in the organization;

 to help in identifying the developmental needs of employees, given their role and
function;

 to increase mutuality between employees and their supervisors so that every employee
feels happy to work with their supervisor and thereby contributes their maximum to the
organization;

 To act as a mechanism for increasing communication between employees and their

supervisors. In this way, each employee gets to know the expectations of their superior,
and each superior also gets to know the difficulties of their subordinates and can try to
solve them. Together, they can thus better accomplish their tasks;

 to help employees internalize the culture, norms and values of the organization, thus
developing an identity and commitment throughout the organization;

This project report covers the definition and meaning of Performance Appraisal.   It elucidates

the benefits and drawbacks of the traditional methods as well as recent advances in the field of

performance appraisal.
PERFORMANCE APPRAISAL SYSTEM

Performance appraisal is a process of evaluating employee performance for the purpose of

placements, selections for promotions, career planning, motivation etc and performance appraisal
seeks to achieve following objective.

● To assess the performance, personal attributes and potential of the employee.

● Performance based rewards in terms of promotion, increments etc.

● to identify training needs.

● to assess strengths, areas of improvements and give feedback to the employee

Company considers its human resources as the most valuable resources for its growth &
development. Performance appraisal seeks to achieve the following.

1. To set realistic & challenging targets/ key performance area on annual basis for the
individual.

2. To assess employee’s performance based on person attributes.Job performed targets

achieved/ specific achievements.

3. To assess the strengths, weakness& potential of the employee.

4. Performance based reward in terms of increment& promotion etc.

Performance appraisal system in any organization depends substantially on five factors –

concept, criteria, context, culture and contingency.

Concept :- The performance dimensions are several. They include duties,

responsibilities, behavior and traits. Performance appraisal involves at least two

persons/parties: the appraiser (who does the appraisal) and the appraise (Whose
performance is being appraised).

Criteria: - Several performance measures such as output, quality, punctuality, cost

control contribution, job knowledge, discretion, initiative, team work, resourcefulness

honestly, and leadership qualities are usually reckoned as some of the criteria against

which performance is assessed.

Context: - The top management philosophy values and belief system in the

organization influence the notions about people in the organizations and the type of

control, motivation and communication systems.

Culture: - The cultures of people in general seem to affect appraisal system. Studies

and commentaries on Indian organizations seem to point to a pattern where the loyalties

of employees are more to the people than to the tasks or to organizations.

Contingency: - There is a systematic effort to link performance appraisal to other sub-

systems of human resource management such that all personnel decisions use the

performance appraisal data as a critical input, it becomes difficult to impart seriousness in

to the system. The result would be apathy on the point of both the appraiser and the
appraisee to the entire process.

SAMPLE SIZE

The sample size is of 50 employees, from Gnaritus Technology Solutions Pvt Ltd.

Duration:2 months

Research Methodology
Research Design refers to "framework or plan for a study that guides the collection and analysis
of data". A typical research design of a company basically tries to resolve the following issues:

a) Determining Data Collection Design

                b) Determining Data Methods

c) Determining Data Sources

d) Determining Primary Data Collection Methods

e) Developing Questionnaires

f) Determining Sampling Plan

(1) Explorative Research Design:

Explorative studies are undertaken with a view to know more about the problem. These studies
help in a proper definition of the problem, and development of specific hypothesis is to be tested
later by more conclusive research designs. Its basic purpose is to identify factors underlying a
problem and to determine which one of them need to be further researched by using rigorous
conclusive research designs.
(2) Conclusive Research Design:

Conclusive Research Studies are more formal in nature and are conducted with a view to
eliciting more precise information for purpose of making marketing decisions.

These studies can be either:

a) Descriptive or

b) Experimental   

Thus, it was mix of both the tools of Research Design that is, Explorative as well as Conclusive.

The study was done with the help of primary as well as secondary data. Primary data were
collected through the questionnaire while secondary data were collected through:

 Internet

 Company report etc

 MULTIPLE PURPOSES OF PERFORMANCE APPRAISAL

General applications Specific Purpose

Developmental uses Identification of individual needs.

Performance feedback.

Developmental uses

Determining transfers and job

assignment.

Identification of individual strengths

and

developmental needs.

Administration uses Salary

Promotion

Retention and termination

Reorganization of individual
performance.

Lay off

Identification of poor performance

Organizational HR planning determining training

need
maintenance/objective
Evaluation of goal achievement

Information of goal identification

evaluation of HR system

Documentation criteria for evaluation research

Documentation for HR decision

helping to meet legal requirement

ISSUES in Performance Appraisal:
 Formal Vs
Informal

What Who se
methods Performance

When to
Appraisal Who are
evaluate Design the
partners?

What to What
evaluate? problems
How to
solve

Methods of appraisal-
The last to be addressed in the process of designing an appraisal programme is to
determine method(s) of evaluation.

ESSAY APPRAISAL

In its simplest form, this technique asks the rater to write a paragraph or more covering an
individual's strengths, weaknesses, potential, and so on. In most selection situations, particularly
those involving professional, sales, or managerial positions, essay appraisals from former
employers, teachers, or associates carry significant weight.

GRAPHIC RATING SCALE

This technique may not yield the depth of an essay appraisal, but it is more consistent and
reliable. Typically, a graphic scale assesses a person on the quality and quantity of his work (is
he outstanding, above average, average, or unsatisfactory?) and on a variety of other factors that
vary with the job but usually include personal traits like reliability and cooperation. It may also
include specific performance items like oral and written communication.

FIELD REVIEW

The field review is one of several techniques for doing this. A member of the personnel or
central administrative staff meets with small groups of raters from each supervisory unit and
goes over each employee's rating with them to (a) identify areas of inter-rater disagreement, (b)
help the group arrive at a consensus, and (c) determine that each rater conceives the standards
similarly. .

FORCED-CHOICE RATING
Like the field review, this technique was developed to reduce bias and establish objective
standards of comparison between individuals, but it does not involve the intervention of a third
party.

RANKING METHODS

For comparative purposes, particularly when it is necessary to compare people who work for
different supervisors, individual statements, ratings, or appraisal forms are not particularly
useful. Instead, it is necessary to recognize that comparisons involve an overall subjective
judgment to which a host of additional facts and impressions must somehow be added. There is
no single form or way to do this.

The best approach appears to be a ranking technique involving pooled judgment.

The two most effective methods are alternation ranking and paired comparison ranking.

1.    “Alternation ranking”:

Ranking of employees from best to worst on a trait or traits is another method for evaluating
employees. Since it is usually easier to distinguish between the worst and the best employees
than to rank them, an alternation ranking method is most popular. Here subordinates to be rated
are listed and the names of those not well enough to rank are crossed. Then on a form as shown
below, the employee who is highest on the characteristic being measured and the one who is the
lowest are indicated. Then chose the next highest and the next lowest, alternating between
highest and lowest until all the employees to be rated have been ranked.

2.    “Paired-comparison ranking”:

 This technique is probably just as accurate as alternation ranking and might be more so. But
with large numbers of employees it becomes extremely time consuming and cumbersome.

Both ranking techniques, particularly when combined with multiple rankings (i.e., when two or
more people are asked to make independent rankings of the same work group and their lists are
averaged), are among the best available for generating valid order-of-merit rankings for salary
administration purposes.

MANAGEMENT BY OBJECTIVES

To avoid, or to deal with, the feeling that they are being judged by unfairly high standards,
employees in some organizations are being asked to set - or help set - their own performance
goals. Within the past five or six years, MBO has become something of a fad and is so familiar
to most managers that I will not dwell on it here.

MBO works can be described in four steps :-

1. To establish the goals for each subordinate that he has to attain.

2. Involves setting the performance standard for the subordinates in a previously

arranged time period.

3. The actual level of goal attainment is compared with goals agreed upon.

4. Establishing new goals and, possibly, new strategies for goals not previously

attained.

Psychological Appraisals :- Large organization employ full-time industrial

psychologists. When psychologists are used for evaluations, they assess an individual’s

future potential and not past performance. The appraisal normly consists of in-depth

interviews, psychological tests, discussions with supervisions and a review of other

evaluations. The psychologist then writes an evaluation of the employee’s intellectual,

emotional, motivational and other work-related characteristics that suggest individual

potential and may predict future performance. From these evaluations, placement and

development decisions may be made to shape the person’s career.

Assessment Centres :- An assessment Centre is a central location where managers may

come together to have their participation in job related exercises evaluated by trained

observers. The principal idea is to evaluate managers over a period of time, say one to

three days, by observing (and later evaluating) their behaviour across a series of selected

exercises or work samples.

DESIGN OF AN EFFECTIVE APPRAISAL SYSTEM

It is useful to focus on aspects such as the following so that the appraisal system can be

effective:

1. Appraisal objectives and uses should be specific, clear, relevant, timely, adequate,

open and fair. It should be adequately and appropriately linked with the other

subsystems of human resource management and capable of being put to use in a

manner beneficial to the individual employee and the organization.

2. It should be an ongoing process of managing performances with employee

actively participating and supervisor playing the role of coach and developer.

3. The information generated should be tailored to the needs of the organization,

performance requirements and norms of behaviour.

4. Recognize individual differences in system design. Identify the needs of rates in

terms of feed back, mobility, Self esteem etc.

5. The overall purpose should be developmental than judgmental. It is important to

Separate evaluation of performance and potential.

Analysis of the Project:

Question no 1: Number of service years in this organization.

Question Less than 5 5-10 years 10-15 years More than 15

years years
Sample Size 24 24 2
50 employees

25

20

15

10 Sample Size 50 employees

5

0
Less than 5-10 years 10-15 More than
5 years years 15 years
Question no 2: Are you aware about your performance
appraisal or any evaluation done by your superior?
Question Yes No
Sample size 50 37 13
employees

40
35
30
25
20 Sample size 50
15 employees
10
5
0
Yes No

Question no 3: Performance appraisal techniques make you better eligible for promotion,
demotion, & transfer,

Question Agree Disagree

Sample size 50 31 19
 Agree
Disagree

Question no 4: Do you think performance appraisal is useful or just a waste of time?

Question Useful Waste of time

Sample size 43 7

Useful
Waste of time

43

Question no 5: How Performance Appraisal affects the productivity of the employees?

Question + Feedback -Feedback Neutral

Sample size 36 5 9

5
+ Feedback
-Feedback
Neutral

36

7. If continuous appraisal – what should be the gap between two appraisal period?

Question Quaterly Half-yearly Yearly

Sample Size 50 11 22 17

25

20

15
Sample Size 50
10

0
Quaterly Half-yearly Yearly
8. Appropriate method of conducting the performance appraisal

Question Ranking Paired MBO Assesment

Method Comparison Centre
Sample Size 12 10 24 4
50

4
12

Ranking Method
Paired Comparison
MBO
24 Assesment Centre
10
FINDINGS:
1. The response collected is based on the period of their service in the organization. As

company was set up in 2003 so the years of service in the organization of most of

the employees is less than 5 years.

2. 80 % the employees had responded in favor of that they were aware about

performance appraisal.

3. More than 90% of the employees say that performance appraisal is useful for

thereself-assessment and promotions. Thus, they cannot ignore it. And rest of the

employees thinks it as a waste of time.

4. More than 90% of the employees say that performance appraisal is useful for

thereself-assessment and promotions. Thus, they cannot ignore it. And rest of the

employees thinks it as a waste of time.

5. 85% employess feels that performance appraisal affects the productivity of the

employee.
LIMITATIONS OF THE STUDY

 A few limitations and constraints came in way of conducting the present study, under which the
researcher had to work are as follows:

Ø      Although all attempts were made to make this an objective study, biases on
the part of respondents might have resulted in some subjectivity.

Ø      Though, no effort was spared to make the study most accurate and useful, the
“sample Size” selected for the same may not be the true representative of the
Company, resulting in biased results.

Ø      This being the maiden experience of the researcher of conducting study such
as this, the possibility of better results, using deeper statistical techniques in
analyzing and interpreting data may not be ruled out.

CONCLUSION
1. It is truth that no work is completed in itself. Infact, completion of one job is actually the
beginning of another job. Likewise, performance Appraisal is never ending process. It is
essential for personal & professional development.

2. This project has been considering all possible aspects mentioned in the project booklet. The
project is made very clear and precise with the help of the relevant data gathered from the
company, company website & through various annexure.

3.They believe in investing continuously in human resource for their growth. The company is
led by young professionals. They have an open work environment which is achievement
oriented.
RECOMMENDATIONS/ SUGGESTIONS

1. This situation realizes that there were 20% of the employee who are unaware of the

Performance appraisal report which will be reduced by providing them counseling.

2. They should have to be aware about the performance appraisal techniques because

they have to pass through it for taking better promotions & greater responsibility.

3. This shows there negligence towards there career & awareness. Thus, it can avoid by

providing enough information to employee with the help of training & development

exercise.

4. The 20% of respondent’s responses shows that they are not aware about importance of

Performance appraisal report. They should be aware about that how they can take

promotion and greater responsibility through better performance.

5. They have to introduced career development graphs and necessary skills to reach that

position after experiencing some years.

6. Respondents should have to better understand the job responsibility and training need

identification through schedule chart or through the job analysis.

BIBLIOGRAPHY
Websites:

www.scribd.com

www.pdfcast.org

www.seminarprojects.com

Books:

1) Personnel – Human Resource Mgmt

By David A Decenzo

2) Human Resource Management

By K. Aswathapa

3) Human Resource Management

By L. M. Prasad

4) Human Resource Management

by S. K. Gupta