To study the Performance Appraisal of Employees REPORT

Submitted for the partial fulfillment of the degree of Masters of Business Administration

Supervised By
Madhulika Sinha

Submitted By
Surabhi Agarwal

Facilitator D.E.I

MBA 1st Sem

D.E.I Study Centre, Ellora Branch Dayalbagh Educational Institute (Deemed University) Dayalbagh Agra-282110

CONTENTS
Acknowledgement Human resource management Performance appraisal Need of the study Objectives of performance appraisal Standards and indicators of performance appraisal Approaches in performance appraisal Performance appraisal system Methods Process of performance appraisal Performance appraisal examples Cases a) Albon drinks b) Quest computers c) Call centers Problems in evaluating appraisal Guidelines for appraisal Conclusion Bibliography

IT IS NATURAL FOR A HUMAN BEING TO DEVELOP AND ACHIEVE HIS FULL POTENTIAL AS IT IS FOR A CORN TO GROW INTO A MAJESTIC OAK TREE

ACKNOWLEDGEMENT
I have had considerable help and support in making this project reality.

First and foremost, gratitude goes to Ms.Madhulika Sinha (Supervisor of HRM) who provided me all the guidance and support in realizing the dissertation.

I am especially indebted to Mrs. Avina Mathur (Mentor) who gave me an opportunity to prepare a project report on Performance appraisal.

Last but not the least I also convey my regards to my parents and friends, without their co-operation this project could not have been thought of.

SURABHI AGARWAL

Case study of ford

Imagine you're the VP of human resources for a fortune 100 company. You've spent your entire career attempting to enhance the workplace for employees to support their productive work in the organization. You understand that "bottom line" decisions often dominate many of the matters you have to address, but you've worked hard to ensure that employees were treated with respect and dignity in all interactions that affected them. You aligned the hiring process to serve the strategic needs of the organization, as well as implementing an effective performance management system. You truly believe in the progress you've made in helping the organization achieve its goals and simply couldn't imagine doing things differently. But outside pressure could change all of that. Such pressure led to the dismantling of Ford Motor Company's "Performance Management Process."1 Under the Ford Performance Management Process, senior managers were evaluated as an A, B, or C, with A being the highest rating, and C the lowest. Ford evaluators were required to give a C rating to the lowest 5 percent of senior manager performers each year. Managers who received a C rating for two consecutive years were either fired or demoted, and they were ineligible for bonuses and pay raises. Throughout the twoyear process, evaluators met frequently with the C employees, counseling them, and providing necessary development opportunities. Moreover, such a performance management process allowed Ford to avert management layoffs that General Motors and DaimlerChrysler faced. Some affected employees saw matters differently. They viewed the performance management process as punitive, one in which the organization was attempting to rid itself of higher paid, older workers. Accordingly, they filed suit. Compounding this problem was the realization that many Ford supervisors were reluctant to give the lowest ratingseven though they knew that such a rating triggered significant coaching. Nonetheless, the pressure bearing down on the company caused Ford officials to scrap the evaluation process. They replaced it with a rating scale of high achievers, achievers, and improvement needed. This may resemble an A, B, and C format, but there are notable differences. The quota (for instance, the lowest 5 percent) is gone, and those with the improvement-needed rating no longer lose their bonus or pay raise. What effect these changes will have is yet to be seen, although since the performance management system has been eliminated, nearly 5,000 Ford managers have been laid off! One must wonder if there is any connection between the two.

PREFACE
In the fast changing world the success of an organization very much depends upon the quality, capacity and utility of men power. The human beings are the most important assets in an organization which represents heavy investment, hence their utilization require very careful handling as well as most efficient and proper managing (i.e.) planning, organizing, leadership and evaluation. The role of human resources or personnels is to keep the wheel that is the organization moving. Human being also put needed objects otherwise useless into productive use. Here the innovation power, skill and capacity of human resources are utilized.

In present scenario the importance of HRM is growing very fast in every organization, since there is a change in social climate, value & norms, the employees who join now are more educated, competent & informed. While they are great assets yet can become problem if the organization fails to manage, motivate & meet their aspiration.

As I have discussed above with the changing trends the idea of personnel management which was confined to recruitment, salary, administration & industrial relation has become the thing of past & is replaced with HRD which besides above involves placement, selection for promotions providing financial rewards or incentives & other actions as motivation & encouragement, but above all the human welfare in order to achieve, smooth harmonious comprehensive progress of organization.

CONCEPT OF PERFORMANCE APPRAISAL

Performance appraisal can be defined as the process of evaluating the performance of an employee and communicating the results of the evaluation to him for the purpose of rewarding or developing the Employee. According to Michael Armstrong, Performance appraisal is a formal assessment and rating of individuals by their managers at-usually-an annual review meeting.Performance can be defined as the degree of accomplishment of tasks by an employee in his job. In some organizations, it is a measure of the results achieved and targets accomplished whereas in others, it is a measure of employee efforts and behavior. However, most organizations use a combination of both efforts and Results. Performance Appraisal is also termed as Performance Review, Annual Review or Annual Appraisal. The latest mantra being followed by organizations across the world being "get paid according to what you contribute" the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. If the process of performance appraisals is formal and properly structured, it helps the employees to clearly understand their roles and responsibilities and give direction to the individuals performance. It helps to align the individual performances with the organizational goals and also review their performance.

NEED OF THE STUDY

Performance Appraisal is a vital area for the success of any organization with respect toa) Training and Development of employees b) Promotion c) Transfer etc. d) Important Decision regarding Human Resource

In view of the recent changes due to Globalization and entrance of Multinationals in Indian Market, the business scenario has been changed drastically.

In order to understand the process of Performance Appraisal in real practice and to have practical experience.

The investigator has been interest in the area of Performance Appraisal.

Thats why this field has been selected for study by the student.

What should a performance system be?

Correlated with the organization's philosophies and mission Cover assessment of performance as well as potential for development Look after the needs of both the individual and the organization Help create a clean environment Rewards linked to achievements Generate information for personnel development and career planning suggesting appropriate person-task matching

Performance appraisal should evaluate, audit, motivate, identify training needs, develop the individual and plan for future performance

Objectives of performance appraisal

Generally, the aims of a performance appraisal are to:

Give employees feedback on performance. Identify employee training needs. Document criteria organizational rewards. used to allocate

Form a basis for personnel decisions:

salary increases, promotions, disciplinary actions, Bonuses, etc.

Provide the opportunity for organizational diagnosis and development. Facilitate communication between employee and employer. Validate selection techniques and human resource policies to meet federal Equal Employment Opportunity requirements.

To improve performance through counseling, coaching and development.

Standards and indicators of performance appraisal

Mutual goal Reliable and consistent

Accurate and equitable

Practical and simple format Regular and routine Participatory and open Rewards Timely feedback

Impersonal feedback
Noticeable feedback Relevance and responsiveness Commitment

APPROACHES IN PERFORMANCE APPRAISAL

 Intuitive approach-In this approach, a supervisor or manager judges the employee based on their perception of the employee's behavior. Self-appraisal approach- Employees evaluate their own

performance using a common format. Group approach- The employee is evaluated by a group of persons. Trait approach -This is the conventional approach. The manager or supervisor evaluates the employee on the basis of observable dimensions of personality, such as integrity, honesty,

dependability, punctuality, etc. Appraisal based on achieved results- In this type of approach, appraisal is based on concrete, measurable, work achievements judged against fixed targets or goals set mutually by the subject and the assessor.

DURING PERFORMANCE APPRAISAL, DISTINGUISH BETWEEN...

Accomplishments and Activity Working efficiently and Working effectively Work and Important work Working hard and Working smart

Source: Nickel, L. J. 1989. Research Management for Development: An Open Letter to a New Agricultural Research Director. San Jose, Costa Rica: ICCA.

Frequency in performance appraisal system

Performance appraisal system is a very important function for the management and it requires a continuous evaluation. Traditionally this was done on the annual basis but due to change in the organizational culture and the employees requirement it is done on the regular basis. So it may be quarterly or monthly.

PERFORMANCE APPRAISAL SYSTEMS

PROBLEMS
Measurement Deciding what to evaluate Judgment Appraising performance Policy Using the results of the appraisal Organization Recognizing how managers work and the organization culture

SYMPTOMS
Ambiguity in roles and responsibilities of each job Job performance is difficult to quantify No clear statement of overall objectives of units or the organization Appraisal contains only numerical indices Disagreement on ratings Official review changes ratings Top management fails to reward managers who are excellent in staff assessment and development Appraisal forms not completed Managers com plain about time needed System seen as belonging to the designers, not the users Personnel/HR specialists take enforcer not adviser role system revised frequently

Marginal performers receive Appeals, grievances, promotions or salary increases accusations of bias, discrimination

POTENTIAL CURES
Job analysis and credible job description Outcomes of each job identified Overall goals set for units and the organization Train managers to make documented judgments Observable, behaviorally based criteria Performance documented over time rater training and practice Effective communication of performance expectations Top management actually uses performance appraisal itself Polices for performance appraisal consistently applied performance-contingent reward system operates Implement performance appraisal using the Performance Management (PM) model

Source: Craig, E. S., Beatty, R. E., and Baird, L. S. 1986. How to contract a successful performance appraisal system. Training and Development Journal, April: 38-42

METHODS
A common approach to assessing performance is to use a numerical or scalar rating system whereby managers are asked to score an individual against a number of objectives/attributes. In some companies, employees receive assessments from their manager, peers, subordinates, and customers, while also performing a self assessment .This is known as a 360-degree appraisal and forms good communication patterns.

The most popular methods used in the performance appraisal process include the following:

Management by objectives 360-degree appraisal Behavioral observation scale Behaviorally anchored rating scales

METHODS OF PERFORMANCE APPRAISAL

TRADITIONAL METHODS
Essay Appraisal Method

Straight Ranking Method

Paired comparison

Critical incidents methods

Field Review

Checklist methods

Graphic Rating Scale

Forced Distribution

1. Essay Appraisal Method

This traditional form of appraisal, also known as "Free Form method" involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator.

2. Straight ranking method

This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.

3. Paired comparison
A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.

4. Critical incidents methods

In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behavior as and when they occur.

5. Field review
In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors personal bias.

6. Checklist method
The rate is given a checklist of the descriptions of the behavior of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees. Yes
1. Are supervisor's orders usually followed? 2. Does the individual approach customers promptly? 3. Does the individual suggest additional merchandise to customers? 4. Does the individual keep busy when not serving a customer? 5. Does the individual lose his or her temper in public? 6. Does the individual volunteer to help other employees?

No

7. Graphic rating scale

In this method, an employees quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on the job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

8. Forced distribution
To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion.

MODERN METHODS

Assessment centers

Management by objectives

360-degree appraisal

Human Resource accounting method

Behaviorally anchored rating scales

1. Assessment centers
An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics. The major competencies that are judged in assessment centers are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. assessment centers are also an effective way to determine the training and development needs of the targeted employees.

Assessment centre- many takers

Ranbaxy retained the services of a team of psychologists from the UK-based Kelly & King to take the executives (of Ranbaxy) through an assessment center, 20 star managers went through the exercise. Santrupt Misra, Director- Birla Management Corporation had plans for similar exercise to be held at Gaynodaya, the Aditya Birla learning centre. Use the concept 4 years ago on 150 middle and senior level managers.

2. Management by objectives
Management by Objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. Some of the important features and advantages of MBO are: 1. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment. 2. Better communication and Coordination Frequent reviews and an interaction between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems. 3. Clarity of goals 4. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. 5. Managers can ensure that objectives of the subordinates are linked to the organization's objectives.

3. 360-degree appraisal
In the formatted from of 360-degree performance appraisals, the performance of an employee will be assessed based on ideas of many other different people, for example customers, suppliers, peers and direct reports. If the assessed is a manager, his/her staff will be often asked for feedback on how that manager is doing his task. In case of using 360-degree performance appraisal, it is vital that the process be implemented by the manager of Human Resources Department so that the subordinate reviewers (or staff) are made sure that all their assessments on performance are kept anonymous.

Whats 360 degree measures?

360 degree measures manners and capacities. 360 degree improves such skills as listening, planning and goal-setting. 360 degree concentrates on subjective areas, for example efficiencies of teamwork, character, and leadership. 360 degree supplies on the way others think about a specific staff.

Advantages of 360 degree appraisal

Offer a more comprehensive view towards the performance of employees. Improve credibility of performance appraisal. Such colleagues feedback will help strengthen self-development. Increases responsibilities of employees to their customers. The mix of ideas can give a more accurate assessment. Opinions gathered from lots of staff are sure to be more persuasive. Not only manager should make assessments on its staff performance but other colleagues should do, too. People who undervalue themselves are often motivated by feedback from others. If more staff takes part in the process of performance appraisal, the organizational culture of the company will become more honest.

Disadvantages of 360 degree appraisal

Taking a lot of time, and being complex in administration Extension of exchange feedback can cause troubles and tensions to several staff. There is requirement for training and important effort in order to achieve efficient working. It will be very hard to figure out the results. Feedback can be useless if it is not carefully and smoothly dealt. Can impose an environment of suspicion if the information is not openly and honestly managed.

Who should conduct 360 degree performance appraisal?

Subordinates. Peers. Managers (i.e. superior). Team members. Customers. Suppliers/ vendors. Anyone who comes into contact with the employee and can provide valuable insights and information.

360 degree appraisal has four components:

Self appraisal Subordinates appraisal Peer appraisal. Superiors appraisal

4. Human resource accounting method

Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judged in terms of cost and contribution of the employees.

The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in monetary terms). The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them

5. Behaviorally anchored rating scales

It is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioral statements describing important job performance qualities as good or bad (for e.g. the qualities like inter personal relationships, adaptability and reliability, job knowledge etc). These statements are developed from critical incidents.

In this method, an employees actual job behavior is judged against the desired behavior by recording and comparing the behavior with BARS. Developing and practicing BARS requires expert knowledge.

PROCESS OF PERFORMANCE APPRAISAL

In short performance appraisal contains the following steps

Establishing Performance Standards

The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards. Communicating The Standards Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to them. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.

Measuring the Actual Performance

the most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work.

Comparing the Actual with the Desired Performance The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees performance.

Discussing Results
the result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.
.

PERFORMANCE APPRAISAL EXAMPLES

Samples / examples of performance appraisal are popular in staff / employee appraisal with organizations, human resource department, managers. Organizations, departments of human resources, managers often use examples/samples of performance appraisal to make assessments on their staff/employees. The below information will help you form an efficient performance appraisal. This information will help you develop your effective Performance appraisal.

I. List of appraisal forms

Following are such free samples or examples of job specifications that you can use: 1. Performance appraisal form This form is very typical to assess working performances. 2. Manager performance appraisal form This formatted form is often used to assess the performances of managers. 3. Employee performance appraisal form This formatted form is often used to assess the performances of staff/employees. 4. Essay evaluation form In this form, performance is appraised based on the use of essay evaluation method. 5. Forced Choice form This formatted performance appraisal is done by using the method called forced choice. 6. Weighted checklist form This method describes a performance appraisal method where the jobs being evaluated based on descriptive statements about effective and ineffective behavior on jobs. 7. Rating scale form This style of performance appraisal is made base on building a set of categories designed to elicit information about a quantitative or a qualitative attribute. 8. Self appraisal form This is the style of performance appraisal in which employees make assessments on their own working performances. 9. 360 degree performance appraisal By using this method, your staff performance can be appraised as follows: Subordinates. Peers. Managers (i.e. superior). Team members. Customers.

A RESEARCH REPORT
Recent research undertaken by the CIPD provides a snapshot of a number of features of performance management. Clearly one of the most important aspects of enhancing performance is performance appraisal, which is a critical element of performance management and a key feature of organizational life. As Bach (2005: 289) notes, performance appraisals have become far more than just an annual ritual and are viewed as a key lever to enhance organizational performance. Performance appraisal is defined by Heery and Noon (2001: 7) as, the process of evaluating the performance and assessing

Features of performance management

Feature Individual annual appraisal Objective setting and review Personal development plans Career management and/or succession planning Coaching and/or mentoring Competence assessment Performance related pay Self-appraisal Twice yearly/biannual appraisal Continuous assessment 360-degree appraisal Subordinate feedback Rolling appraisal Peer appraisal Competence related pay Team appraisal Contribution related pay Team pay Percentage 65 62 62 37 36 31 31 30 27 14 14 11 10 8 7 6 4 3

Source: This material is taken from Managing Performance: Performance Management in Action by Armstrong, M. and Baron, A., 2nd edition (2005), with the permission of the publisher, the Chartered Institute of Personnel and Development, London.

Case1:-Performance Appraisal Implementation Problems at Albion Drinks

Background Albion Drinks is a manufacturer of its own-brand soft drinks which are sold in grocery stores and supermarkets across the UK, and the company also provides private-label products to the major supermarket chains. It is part of a larger parent organization which manufactures a wide range of products across the whole fast-moving consumer goods (FMCG) spectrum. Its main manufacturing base (which is also its head office) is located in the North West of England. At its main location, the company employs around 1,200 staff of whom 1,000 are factory-based production operatives, with a further 200 based in the head office, undertaking support activities including finance, marketing, sales, product development, human resources and logistics. Trade Union membership within the factory is high (almost 100%) although only 25% of the head office employees are in a Trade Union. Two different Trade Unions represent the two separate groups of employees. The Employee Relations climate is generally good, although factory-based employees have traditionally been resistant to change, and are often slow to adopt new working practices. The New HR Director The company recently appointed a new HR Director following the retirement of his predecessor who had been in post for approximately 20 years. The newly-appointed HR Director did not come from a traditional HR background, but rather from production management in one of Albions sister companies. Staff generally believed that he had been appointed with a brief to generally "shake things up a bit." Just something that we can use immediately Upon appointment, one of the first activities of the new HRD was to task the Head Office HR Manager with the responsibility of introducing an appraisal system for all employees in the Head Office. His brief - or rather his instruction - to the HR Manager was to establish contact with the HR Director in one of Albions sister companies and simply lift their existing appraisal process and introduce it within Albions Head Office. "We don't want anything fancy or best practice; just something that we can use immediately with the minimum of cost and fuss" was his stated recommendation. The HR Manager followed his boss's instructions and obtained copies of the relevant paperwork which was rather more complicated that he had expected, particularly as the appraisal system in the sister company not only contained annual assessment against the year's objectives, but also an evaluation of each employee's performance in key competency areas which seemed appropriate within the sister company, but somewhat alien to Albion Drinks. Albion's sister division had not only trained its managers, but had also produced a comprehensive "How to Undertake an Employee Appraisal" guide. The HR Director therefore

decided to save valuable time and money, and circulated copies of the training material in November to all appraising managers, along with copies of the relevant paperwork, with the instruction that all employees were to have received an appraisal by the end of December, by which date all documentation was to have been returned to the HR department. These guys are experienced managers, said the HR Director, so they shouldnt need any training in how to conduct an appraisal, should they? The problems begin The first murmurings of dissent started almost immediately when some of the Head Office managers raised questions over who they were supposed to be appraising. Certain departments had a shared resource pool of secretaries and administrative staff, and it had never been made clear who reported to whom, so there was confusion over who exactly was the appraising manager for some employees. In a few departments it was evident that managers and supervisors were using the lack of clarity as a way to evade responsibility for undertaking appraisals. It wasnt too long after this that managers raised their concern over the terminology in the key competencies section of the appraisal documentation, particularly one area that required them to assess the Innovation and Creativity of their subordinates. One manager commented, I pay my staff to come to work and make sure that the books balance at the end of the month. Whether or not they are innovative or creative has got nothing to do with the job. Issues took a further negative turn when representatives from both Trade Union groups (i.e. both the Head Office Trade Union and the one representing factory-based staff) requested to see the HR Manager. The TU official representing the factory staff made his view perfectly clear by stating, You might think that you can force something like this on the guys in the Head Office, but theres no way that my members in the factory will agree to have such a shoddy process imposed on them. Ill be instructing them to refuse to co-operate if you introduce something like this without consulting with the shop stewards. The HR Manager raised his concerns with his boss the HR Director, who suggested that they let events take their course, as he was certain that at least in the Head Office the majority of managers would comply with the requirement to have all appraisals completed by the end of the year. The New Year The HR Manager left it until after the Christmas and New Year break before he counted the returned appraisal paperwork. Less than 45% had been returned. Early in the New Year the HR Director and HR Manager sat down to review events. Where did we go wrong and how could we have managed this better? was his question. How do you believe the HR Manager should have responded?
SOURCE: - Graham Salisbury www.hrcasestudies.blogspot.com September 2009

Case 2:- The Fall of Quest

Note: This case study is mainly based on the recent troubles (1999) of a real computer manufacturer. 1997 was a banner year for Quest Computer Corporation, a leading manufacturer of personal computers. The company surpassed $15 billion in sales, nearly seven times its revenues in 1992, and the year John Clarke took over as CEO. Clarke is a hard-driving, no-nonsense leader. His vision was to create a $30 billion enterprise by the year 2000, but things were slowly started to crumble around him. What once had been an open and productive atmosphere that cultured teamwork, was now deteriorating under the strains of political infighting, cronyism, and allegations of sexual harassment. In the eye of the storm was Samuel Anderson, vice president of human resources. Anderson and Clarke worked together in the eighties at another corporation before Clarke came to Quest in 1992. Three years later Anderson followed. Anderson immediately started using his relationship with Clarke to influence business decisions. Anderson also leveraged his ties to discreetly resolve two allegations of sexual harassment against him. Although the majority of senior executives and managers believed Clarke was an extremely tenacious and good executive, they also believed he was getting bad advice and accepting it. Clarke, when asked about the sexual harassment complaints against Anderson, replied, People make things up. There is no way of knowing. People spread rumors. This and other incidents further strained relations between Clarke and the rest of the senior executive team. Busy with the task of running one of the world's leading PC manufacturing organizations, Clarke began relying heavily on three senior executives Anderson, Senior Vice President Tim Hunt, and Chief Financial Officer Barry Lynn. The rest of the team felt increasingly alienated. Over a three-year period, starting in 1996, 10 top executives left the company and following them were several essential managers and supervisors. At the center of this exodus was the bizarre dynamics between Clarke and Anderson. Many believed that Clarke empowered Anderson to do things way beyond his role in human resources. For example, Anderson had significant influence on changing the organizational structure of the company, determining what divisions ought to sell into what markets, and which products should be sold through various departments. He also took steps to drive a wedge between senior executives, strengthening his position with Clarke while inducing a communications breakdown throughout the organization. Anderson had a list of people whom he would constantly campaign against by advocating organizational changes to lower their profile. Once he lowered their profile, he would start a process of easing them out of the door. As one executive put it, Anderson was instrumental in deciding which people to bring in and which were no longer acceptable in the company. Clarke's reliance on Anderson baffled, and angered, other executives. Anderson was very close to Clarke, and he had a huge impact on the business. Human resource professionals usually do

not play that kind of a role, as they are supposed to try to bring the team together, but all anyone saw Anderson doing was creating divisiveness. Instead of working together to fine-tune a coherent growth strategy, Quest's senior executive team became disjointed and increasingly detached from the rest of the company. Their inability to lead soon had an effect on the morale of almost every employee within the company. Two of Anderson's initiatives drove home the point of an executive team that was out of touch with its workers. The first initiative was the building of a multimillion-dollar on-campus cafeteria that included reserved underground parking for senior executives. Prior to that, executives shared parking space with the rest of the company's employees. The second initiative was the increased security on the eighth floor of the corporate building. Here the executives and several key managers had their offices; even though every other executive objected to the idea by arguing that it created a hierarchical environment not conducive to a free exchange of ideas with subordinates. Anderson was at the center of almost every bit of chaos that existed within the company. Clarke denied that Anderson had undue influence. Every executive has the same access to me, Clarke said. He continued, I have always had an across-the-board relationship with everybody. I always maintained a high degree of equality. There was no favoritism. Clarke also maintains that Anderson had very good relations with just about everybody. Anyone who says otherwise, Clarke added, must have an ax to grind. Many former executives said they were reluctant to complain to Clarke about Anderson because Clarke took personal offense, as if he were being criticized, and because they feared winding up on Anderson's list. The erosion of the executive team came at a very bad time. Its main competitor was starting to grab big chunks of PC market share by proving the viability of the direct-sales model. When Clarke replaced the former CEO in 1992, his aggressive price-cutting initiatives reversed Quest's direction and led the company to the top of the PC market. But now, Clarke was much less decisive. As one former executive noted, He was paralyzed by the speed with which the market was changing, and he couldn't make the difficult decisions. Clarke failed to see the opportunity of the web. Its main rival was now selling over $2 million worth of products per day over the Web. In 1998, its rival surpassed Quest in desktop PC sales to U.S. businesses for the first time. The high turnover in the sales divisions led to instability that caused several high-profile corporate accounts to take their business elsewhere. As people left, the performance of the company started to degrade. Quest attempted to construct its own build-to-order strategy by purchasing a rival company. This failed as it had no vision to guide its direction. Finally, things came to a head. Quest could not significantly reduce distribution and manufacturing costs or boost PC revenues. Huge oversupplies of inventory adversely affected Quest. While its main competitors grew at about 55 percent from the first quarter of last year to the first quarter of this year, Quest's business fell by 11 percent over the same period. By the end of this year's first quarter, Quest's stock lost almost half its value, and the company's first-quarter earnings fell far short of analysts' estimates.

Then came the kicker, the forced resignations of both Clarke and Anderson. The new CEO, Paula White, now has the massive job of turning a lot of infighting rank and file into a cohesive organization. The leadership structure was severely damaged due to the large number of people leaving Quest. Although a large number of replacements were found, it is extremely hard to replace the collective experience of that many people leaving in such a short time. To help rebuild the leadership structure, Paula White has charged the interim human resource vice president, Samuel Wines, with rebuilding the leadership structure. Samuel created a special leadership task force team by hiring several new human resource specialists. You were brought on as a training analyst to be a part of that team.

Discussion - Competencies
The team's first decision is a long-term strategy of implementing a competency based performance appraisal system. 1. What are competencies and how are they related to performance? 2. How do Skills, Knowledge, and Attitudes (SKA) fit into competencies?

Example of a call centre

Performance appraisal involves the following principles (illustrated by a call centre example):
o o

Measurement You establish performance measures (e.g.: sales turnover) You establish measurable behavioral goals that will improve performance (e.g.: making 30 prospective phone calls a day) You measure current behaviors (e.g.: logging actual phone calls) Appraisal You compare the current behaviors with the behavioral goals and identify the main differences (e.g.: on average, 20 phone calls are actually being made, giving a shortfall of 10 phone calls). Action For each difference, you plan how to bring actual behaviors in line with the goals, in order to improve the performance (e.g.: introduce a revised telephone script that qualifies the prospect more quickly, shortening each phone call and enabling more calls to be made in the time available) You implement the plan (e.g.: issue the revised script to all telesales people, perhaps with some training to support its use) Monitoring Check that the new plans are being followed (eg: review a sample of phone call recordings to determine whether the new script is being used and check that it is 'workable'). At an appropriate time, you return to the appraisal stage to assess the impact of the changes on the behavioral and performance measures (e.g.: review the average number of calls made per day and sales achieved).

Problems in evaluating performance

Identification of appraisal criteria
It is usually quite difficult to decide the criteria for evaluating performance, particularly the performance of those engaged in research activities. Initiative, appearance, tact or organizational skills of researchers are very difficult to assess. While deciding the performance criteria, it is important to simultaneously decide how well people should perform. The aim of the appraisal system is to make informed, accurate and fact-based judgments, although some of these judgments may not be quantifiable.

How would you rate the coaching effectiveness of Chicago Cubs baseball manager Dusty Baker? If you evaluate him based on his team's 2003 win-loss record, or getting the Cubs into the post-season playoff for the first time in years, you might come to one conclusion. However, if you evaluate him based on the fact that the team did not advance to the 2003 World Series after leading the Florida Marlins baseball team 3-1 in the best of seven games series, your conclusion may differ. This is an example of how one particular factor may distort an appraisal.

Conventionally, the number of contributions accepted for publication in refereed professional journals has been a useful measure for evaluating the performance of scientists. This is perhaps an appropriate measure for those who are engaged in basic research. However, publication numbers do not adequately measure performance of those engaged in adaptive and applied research, which are aimed at meeting practical and critical needs of users.

Assessment problems
It is difficult to observe behavior and interpret it in terms of its causes, effects and desirability. Rating behavior on an appraisal form is quite difficult. The human element plays a significant role in the appraisal process and introduces subjectivity and bias. This can be minimized by: documenting performance from time to time; basing criteria for evaluation on observable behavior; training the supervisors; and effectively communicating the expectations which management has of staff.

Policy problems
The results of the appraisal system should be followed up through a set of well designed and enforced policies, and translated into rewards and punishments. Performance of researchers is sometimes difficult to assess. A research manager has to balance between researchers' creativity and organizational goals. Researchers do not like others passing judgment on qualitative or quantitative aspects of their work, yet the need for an effective performance planning and appraisal system in a research organization is well accepted.

GUIDELINES FOR APPRAISAL

The rating should be given on the form for each factor or trait by the immediate Assistant
Manager & the same should be forwarded to the head of department (HOD) for his comments remember that the purpose of appraisal is to motivate the appraise & send signals to those who decide on pay & promotion.

The HOD should evaluate the training given by the immediate Assistant Manager & in case
if he does not agree on any rating, he must discuss with the persons who has given the rating & also put his comments for disagreement after discussing with the employees along with the officer, who has done internal appraisal.

The rating should be done only for his present position & for the period for which appraisal
is being done.

The period of appraisal in this case will be one year. The evaluation should be based on objective assessment of factor 7 over emphasis on any
resent incident or misbehavior should be avoided.

Avoid personal prejudice/biasness. Base your training on entire period & not on isolated incidences. Every individual has some weak & strong points, highlight both objectively. Avoid halo effect i.e. do not allow the tendency to influence assessment of one trait another,
treat each trait separately & independently uninfluenced by the rating you give to other factors.

 Avoid saving up praise or criticism for the next appraisal, try to deal with issues as they arise. Before working your rating, read & understand each trait/factor & read the comments given
in front of the first five factors & consider the employee performance on the basis of your own observation & data maintained by you.

The ideal way would be of maintaining a data book for each individual in which records of
all past & present incidents, good work etc is recorded for the period of appraisal. The rating should be based on facts & figure thus compiled.

After the rating of the immediate assistant manager & the comments of HOD have been
completed, the concerned employee must be discusses at length (appraisal interview/feedback) about the rating & should be informed about his strength & short coming.

Avoid feeling of anxiety & defensiveness, do not use complete rating as a mutual but do it
properly in a real way keeping in view the objectives stated above

An informal process of continuous review should be used to give your staff feedback on their
performance & prospects at the same time this encourages then to practice self appraisal, this appraisal will help you to judge your staff impartially without damaging team relationship.

CONCLUSION
People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Performance appraisals of Employees are necessary to understand each employees abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance. The most difficult part of the performance appraisal process is to accurately and objectively measure the employee performance. Measuring the performance covers the evaluation of the main tasks completed and the accomplishments of the employee in a given time period in comparison with the goals set at the beginning of the period. Measuring also encompasses the quality of the accomplishments, the compliance with the desired standards, the costs involved and the time taken is the in achieving basis of the results.

Measuring

employee

performance

the Performance

appraisal processes and performance management. Accurate and efficient performance measurement not only forms the basis of an accurate performance review but also gives way to judging and measuring employee potential. Measuring the performance of the employees based only on one or some factors can provide with inaccurate results and leave a bad impression on the employees as well as the organization. For example: By measuring only the activities in employees performance, an organization might rate most of its employees as outstanding, even when the organization as a whole might have failed to meet its goals and objectives. So it is the important function of an HR Manager.

BIBLIOGRAPHY
Ashwathappa K, Human Resource Management, Tata Mc Graw Hill, New Delhi, Fifth edition, 2009. Dr. Sanjeev Bhatnagar, Personnel management, 2009 www.humanresources.about.com www.hremguide.com- HRM related articles, features and link www.hr-topics.com- Human resources news and releases www.questia.com/library- Job evaluation- Appraising employee performance