INTRODUCTION

INTRODUCTION
Definition
Process by which a manager or consultant (1) examines and evaluates an employee's work behavior by comparing it with preset standards, (2) documents the results of the comparison, and (3) uses the results to provide feedback to the employee to show where improvements are needed and why. Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired.

Performance Appraisal
The history of performance appraisal is quite brief. Its roots in the early 20 th century can be traced back to Taylors pioneering @Time and Motion studies@. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal, management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War not more than 60 years ago. Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the worlds second oldest profession! There is, says Dulewicz (1989), . a basic human tendency to make judgments about those one is working with as well as about oneself. Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates naturally, informally and arbitrarily.

The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate. Performance appraisal systems began as simple methods of income justification. That is appraisal was used to decide whether or not the salary or wage of an individual employee was justified. The process was firmly linked to material outcomes. If an employees performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to reform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self- esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation

and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time.

PERFORMANCE APPRAISALS ARE A REGULAR REVIEW OF EMPLOYEE PERFORMANCE WITH IN ORGANIZATIONS.

Generally, the aims of a scheme are; Give feedback on performance to employees. Identify employee training needs. Document criteria used to allocate organizational rewards. Form a basis for personnel decisions: salary increases, promotions Disciplinary actions, etc. Provide the opportunity for organizational diagnosis and development. Facilitate communication between employee and administrator. Validate selection techniques and human resource policies to meet federal Equal Employment opportunity requirements. 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 360 appraisals. The most popular methods that are being used as performance appraisal process are: Management by objectives (MBO) 360 degree appraisal

Behavioral Observation Scale (Bos) Behaviorally anchored Rating Scale (BARS)

Trait based systems, which rely on factors such as integrity and conscientiousness. Are also commonly used by businesses. The scientific literature on the subject provides evidence that assessing employees on factors such as these should be avoided. The reasons for this are two-fold: 1) Because trait based systems are by definition based on personality traits. They make it difficult for a manager to provide feedback that can cause positive change in employee performance. This is caused by the fact that personality dimensions are for the most part static, and while an employee can change a specific behaviour they cannot change their personality. For example, a person who lacks integrity may stop lying to a manager because they have been caught, but they still have low integrity and are likely to again when the threat of being caught is gone 2) Trait based systems, because they are vague, are more easily influenced by office politics. Causing them to be less reliable as a source of information on an employees true performance. The vagueness of these instruments allows managers to fill them out based on who they want to/feel should get a raise, rather than basing scores on specific behaviors employees should/should not be engaging in. These systems are also more likely to leave a company open to discrimination claims because a manager can make biased decisions without having to back them up with specific behavioural information.

PERFORMANCE APPRAISAL AS A HRM FUNTION

HRM is considered as a process of increasing knowledge, skills and capacities of people It is important not only for an enterprise but also for a nation to develop its human resources. At the enterprise level, employees training and executive development are the main areas of human resource development. The quality of manpower required varies from job to job. Therefore, the quality of employees required for a job can be determined only after determining the job requirements. JOB ANALYSIS is the process of knowing the requirements of a particular job. It is the process of analyzing a job so as to collect all pertinent facts about the job in terms of duties and responsibilities involved in it and the qualifications needed for the successful performance of the job. With the help of information obtained through job analysis, two statements namely JOB DESCRIPTION and JOB SPECIFICATION can be prepared. JOB DESCRIPTION contains details about the contents of a job whereas job specification or man specification reveals the physical and other qualification and experience required in an individual to perform the job satisfactorily. 1) JOB DESCRIPTION Plays a major role while the recruitment is done by the organizations. It helps the employees to match the qualification which they have with those which are needed to perform a particular job. Once the shortcomings are identified the next step is to overcome them. The deficits are then met through especially designed training plans.

Realistic plans for the procurement or for the training of the employees or for their development should be made after considering the macro and micro environment which affect the manpower objectives of the organization. A plan for Training and Development generally includes following points: 1) Number of employees to be trained. 2) Existing employees to be retrained. 3) Skill areas for training. 4) Availability of trainers. 5) Training period. 6) New courses to be developed and changes to be made in existing courses.

BASIC PHILOSOPHY OF PP & A: LEADERSHIP THROUGH QUALITY

RECOGNISATION AND REWARD Individual Reorganisation

PERFORMANCE IMPROVEMENT Building on Successes Skill Development Regular Counselling & Feedback

PERFORMANCE PLAING Link to company Goals Policy Deployment Understanding & agreeing the role

PP & A
CAREER PLANING Mapping towards skills and experience MANAGEMENT RESOURCE PLANING Input to Succession plans Company Resource

PERSONAL DEVELOPMENT Individual development action plans

PERFORMANCE APPRAISAL METHO

Performance appaisal methods include 11 methods / types as follows:

1. Critical incident method

The critical incidents for performance appraisal is a method in which the manager writes down positive and negative performance behavior of employees throughout the performance period

2. Weighted checklist
This method describe a performance appraisal method where rater familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behavior on jobs

3. Paired comparison analysis

Paired comparison analysis is a good way of weighing up the relative importance of options. A range of plausible options is listed. Each option is compared against each of the other options. The results are tallied and the option with the highest score is the preferred option.

4. Graphic rating scales

The Rating Scale is a form on which the manager simply checks off the employees level of performance. This is the oldest and most widely method used for performance appraisal.

5. Essay Evaluation
This method asked managers / supervisors to describe strengths and weaknesses of an employees behavior. Essay evaluation is a non-quantitative technique

This method usually use with the graphic rating scale method.

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6. Behaviorally anchored rating scales

This method used to describe a performance rating that focused on specific behaviors or sets as indicators of effective or ineffective performance. It is a combination of the rating scale and critical incident techniques of employee performance evaluation.

7. Performance ranking method

Ranking is a performance appraisal method that is used to evaluate employee performance from best to worst. Manager will compare an employee to another employee, rather than comparing each one to a standard measurement.

8. Management By Objectives (MBO)

MBO is a process in which managers / employees set objectives for the employee, periodically evaluate the performance, and reward according to the result. MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods)

9. 360 degree performance appraisal

360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them.

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10.Forced ranking (forced distribution)

Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution. For example, the distribution requested with 10 or 20 percent in the top category, 70 or 80 percent in the middle, and 10 percent in the bottom.

11. Behavioral Observation Scales

Behavioral Observation Scales is frequency rating of critical incidents that worker has performed.

360- DEGREE PERFORMANCE APPRAISAL

360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive

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appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the "on-the-job" performance of the employee. 360 degree appraisal has four integral components: 1. Self appraisal 2. Superiors appraisal 3. Subordinates appraisal 4. Peer appraisal.

Self appraisal gives a chance to the employee to look at his/her strengths and
weaknesses, his achievements, and judge his own performance. Superiors appraisal forms the traditional part of the 360 degree performance appraisal where the employees responsibilities and actual performance is rated by the superior. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superiors ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees abilities to work in a team, co-operation and sensitivity towards others.

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Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. It provides a "360-degree review" of the employees performance and is considered to be one of the most credible performance appraisal methods. 360 degree performance appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles.

ADVANTAGE & DISADVANTAGE OF 360- DEGREEE PERFORMANCE APRAISALS

Advantages

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1. It provides a more comprehensive view of employee performance than other appraisal method. 2. It increases the credibility of the appraisal result. 3. The feedback from the peers can help to enhance the staffs self-development. 4. A chance to complain their manager without following the normal complaint procedures. Disadvantages 1. Time consuming and more complex on administration 2. May generate the environment of suspicion and cynicism 3. Risk of confidentiality.

PROCESS OF PERFORMANCE APPRAISAL

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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
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should be clearly explained to the. 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

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The result of the appraisal is communicated and discussed with the employees on one-toone 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.

DECISION MAKING
The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc.

CHALLENGES OF PERFORMANCE APPRAISAL

In order to make a performance appraisal system effective and successful, an organization comes across various challenges and problems. The main challenges involved in the performance appraisal process are: Determining the evaluation criteria

Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. For the purpose of evaluation, the criteria selected should be in quantifiable or measurable terms

Create a rating instrument

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The purpose of the performance appraisal process is to judge the performance of the employees rather than the employee. The focus of the system should be on the development of the employees of the organization. Lack of competence

Top management should choose the rates or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. They should have the experience and the necessary training to carry out the appraisal process objectively. Errors in rating and evaluation

Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait influencing the evaluators rating for all other traits) etc. may creep in the appraisal process. Therefore the ratter should exercise objectivity and fairness in evaluating and rating the performance of the employees Resistance The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her.

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PURPOSE OF PERFORMANCE APPRAISAL

Performance Appraisal is being practiced in 90% of the organizations worldwide. Selfappraisal and potential appraisal also form a part of the performance appraisal processes. Typically, Performance Appraisal is aimed at: To review the performance of the employees over a given period of time.

To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. To diagnose the training and development needs of the future.

Provide information to assist in the HR decisions like promotions, transfers etc. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.

To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

To reduce the grievances of the employees. Helps to strengthen the relationship and communication between superior subordinates and management employees.

PERFORMANCE APPRAISAL & DEVELOPMENT PLAN PURPOSE:

The purpose of conducting a Performance Appraisal is to review and evaluate the performance of an executive/journalist on contract.

OBJECTIVE:
To inform the appraisee of his/her relative performance in terms of targets and Key Result Areas(KRA) To encourage meaningful and transparent communication between the appraiser and appraisee.

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 To identify the training need for development.

GUIDELINES:
The date and time for the appraisal interview has to be fixed well in advance by mutual consent between the appraiser and the appraisee to allow for adequate preparation. A separate self-evaluation form has to be filled by every executive/journalist on contract prior to the appraisal interview and submitted to the appraiser. After the form is filled, the appraiser should then proceed with the appraisal interview. During the appraisal interview the appraisee first do a Target based review for the appraise and he should appraise the appraisee on the important parameters that have been identified. The appraiser should explain to the appraisee why he/she has been given a particular score against a particular parameter and point out the appraisers strengths and weaknesses. The targets for the next year should be retained by the Department Head for midterm review. The appraiser should keep a copy of his/her self-evaluation and performance appraisal form and note the areas for improvement

DEFINITION OF SCORES:
Scores/ Rating High Flier/Outstanding (5) Definition Employee who truly achieves outstanding success in the given targets and accomplishes much more than the expected tasks with efficiency and effectiveness. Research indicates that only 1% of the total employee population belongs to this

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Regularly Exceeds

(4)

category. Employee who exceeds the requirements of the job. It gives an indication that the person is prepared sufficiently for a higher classified job. Research indicates that only about 15% of the total employee population belongs to this

Meets Requirement

(3)

category. This rating is to be given to the employee who has the requisite qualities to perform the present job with efficiency. Research indicates that 73% of the total employee population belongs to this category.

Occasionally Meets

(2)

Employee whose performance is adversely affected due to the lack of qualities required to perform in his current job. This is an indication that the person needs to be trained and developed sufficiently to orient him towards good

Fails To Meet

(1)

performance. This rating means totally unacceptable performance over a period of time. In spite of all efforts in training and development the employee continues to demonstrate lack of qualities to perform the job..

1) Performance Assessment Discussion

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This candid discussion between the Appraiser and the Appraisee on the latters performance during the year should focus on the following aspects: Demonstration of the extent of performance by the employee in the objective terms. Identifying the key drivers and facilitators for performance. Reviewing and discussing performance bottlenecks and making plans to overcome them. Planning of KRAs, Measures and Performance Standards for the next year.

2) Assessment by Appraiser
Post discussion with the employees, the Appraiser will fill in the following information:

3) Performance Review
The Appraiser will forward the Worksheet duly assessed and completed by him/her to the Reviewer (the immediate supervisor of the Appraiser) for his/her review and validation. Based on discussion with the Reviewer, the Assessed Level of Overall Performance for the employee will be documented in the Worksheet (based on the guidelines in the above table). The reviewer and the appraiser shall document their overall comments relating to the assessment of employee and sign off at respective places in the worksheet.

4) Performance Calibration Process

After the completion of performance review, the Overall Performance as assessed will be taken through the Performance Calibration Process by the Functional

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Directors. This process would aim at reviewing performance levels across the functional area and apply necessary changes in line with structured guidelines, if any.

5) Feedback to Appraisee
Post calibration process, the Assessed Level of Overall Performance will be communicated to the Appraisee by the Appraiser. The Appraisee writes down his impressions and views (including those regarding the objectivity of the process), signs off the worksheet and hands it over back to the Appraiser. The Appraiser then forwards the Worksheet to the Functional Head.

EMPLOYEE DEVELOPMENT GUIDELINES (A) Identifying Key Behavior Areas and their Desired Level

The Appraisee should fill in the following information in consultation with the Appraiser and HR Managers. Sl.No. 1 Term Key Behavior Area Description These are the behaviors that are required by an individual To perform his/her job effectively. 2 Desired Level of Behavior This is the proficiency with which the Key Behavior is Required to be demonstrated by the job-holder for performing his/her job effectively.

(B)

Demonstration of Key Behaviors by Appraise

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Appraisee provides Examples of Demonstration of Key Behavior (with reference to the Desired Level of Behavior) for each of the Key Behavior Areas. These Examples (may be Critical Incident) would always have to be work-related and would be determinants of their Proficiency Level (explained below) on the applicable Key Behavior Areas.

(C)

Development Review

Post filling in the Examples of Demonstrated Behavior, the Appraise and the Appraiser candidly discusses the following: 1. The Frequency of demonstration of a Behavior by the Appraise, as well as the Proficiency with which it is demonstrated over a defined period of time. 2. Development Support required by the Appraise to take on higher/ wider roles within the next year. 3. Training Needs of the Appraise that need to be addressed within the next year. Post discussion with the Appraise, the Appraiser will fill in the following information in the Worksheet: The Appraiser signs off and forwards the documents to the Appraise for his/her comments and sign-off. Post this; the Appraise forwards the Worksheet to the concerned HR Manager. The Proficiency Level is communicated the Functional Director. This data will form an important parameter for Progression / Re-designation decisions.

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COMPANY PROFILE

COMPANY PROFILE
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DHAMPUT SUGAR MILLS LTD, KASHIPUR HISTORY The Kashipur Group began its operations at Kashipur, Uttar Pradesh in 1933 with a crushing capacity of 300 TCD. The current capacity of Kashipur Group is 39,500 TCD. Its products include Power, Ethanol, Chemicals, Refined Sugar and Plantation White Sugar. Leadership begins with a vision Lala Ram Narain ji [1880 1943], founder of the Kashipur Group, took on the task of supporting his entire family at a very young age and shouldered his responsibilities with fortitude and confidence. During this period he worked with a forest contractor but the craving to press forward and accomplish, burnt deep within his heart. He soon spotted an opportunity in supply of wooden sleepers, for laying new railway tracks and boldly struck out on his own. His determination defied logistics and laid the foundations of the Kashipur Group. From such modest beginnings, he hand-crafted the destiny of the corporate house that today, directly and indirectly, provides employment and livelihood to a large number of individuals and families of the rural India. In the early 1930s, while the strategists debated over choice of role models on which to shape the Indian economy, Lala Ram Narain ji anticipated the need for industrialization. The outcome of his foresight was investment in two sugar mills one at Kashipur and the other as a 50% partner, at Bareilly, in Uttar Pradesh. The Kashipur Sugar Mill was commissioned in 1933. Shri Murli Manohar ji [1916 1964], eldest son of Lala Ram Narain ji took up the baton at an early age to carry forward the vision and legacy of his father. Even in face of a youth spent in comparatively difficult circumstances, the indomitable will he inherited from his father manifested itself in 1947 when the Indian Sugar Industry was passing through a challenging 27

phase. He resisted efforts to divest the Kashipur unit and took over the Managing Agency of the factory agreeing to pay a fixed dividend to his partners. He accomplished this task with great lan and successfully turned around the fortunes of the Kashipur factory. He passed away at the young age of 48 but the path for the future generations had already been etched. Kashipur Today The Kashipur Group is spearheaded by its dynamic Chairman, Mr.V.K.Goel. His visionary innovativeness and emphasis on continuous R&D have made the company a technological leader in sugarcane processing and green energy solutions. Starting from 300 TCD in 1933 the Kashipur Group has recorded an impressive performance taking its crushing capacity of sugarcane to 39500 metric tonnes per day, with power cogeneration capacity of 145 MW and alcochem capacity of 270,000 liters per day. Through its successful pioneering efforts, the Kashipur Group directed the industrys development by introducing new technologies like Fibrizors, Pressure Feeders, Fiber based single tandem, Pressure Evaporation System with Falling Film Type Evaporator Bodies, Vertical Continuous Pans etc. These innovations became the mainstay of sugar technology in India. Kashipur is one of the most integrated sugarcane processing companies in India. Kashipur's sugarcane co-generation capacity is one of the largest in the country and it has perhaps the highest ethanol manufacturing capacity relative to its cane crushing capacity, in the country. It is also the first and the largest producer of refined sulphurless sugar in the country. BOARD OF DIRECTORS

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Mr. V.K. Goel Promoter Director and Chairman, aged 69 years is a Chemical Engineer. He is a well known Sugar Technologist and Entrepreneur with vast experience of around 47 years. He is the source of inspiration for every innovation and R&D and has placed the company among the global leaders in sugarcane technology. He has been the President of Indian Sugar Mills Association (ISMA), an apex body of sugar manufacturers of India. An avid sportsperson, he is also the Founder President of Delhi Squash Association. Mr. A.K. Goel Promoter Director and Vice Chairman, aged 63 years, is a commerce graduate. He too has vast experience of over 41 years in the Sugar and Paper Industry. He has been the President of U.P. Sugar Manufacturers Association (UPSMA) and President of Indian Sugar Manufacturers Association (ISMA). He is also the Founder President of Indian Agro Paper Mills Association (IAPMA). He is a dedicated bridge player and Founder President of Contract Bridge Association. He has represented India at the Bridge Olympiad and the Bermuda Bowl. Mr. Gaurav Goel Promoter Director and Managing Director. Mr. Gaurav Goel, aged 36 years is the son of Mr. Ashok Kumar Goel. He is a Business Management Graduate from United Kingdom and has been associated with the company since 1994. He is responsible for the overall management of financial aspects. He has been the President of Entrepreneurs Organization (EO), Delhi Chapter, for the year 2006-07. He takes avid interest in Tennis, Bridge and Reading.

Mr. Gautam Goel

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Promoter Director and Managing Director. Mr. Gautam Goel aged 36 years is the son of Mr. Vijay Kumar Goel. He has been associated with the company since 1994. He is responsible for the technical and working aspect of operations. He is presently the Chairman of the Cogeneration Sub-Committee as well as of the Media and Communications Sub-Committee of the Indian Sugar Mills Association (ISMA). He is a dedicated sportsperson with special interest in Squash and has represented Delhi in national tournaments. Mr. Ashwani K. Gupta Independent Director. Mr. Ashwani Kumar Gupta, aged 54 years, is a Chartered Accountant, headquartered at Lucknow. He has experience of over 31 years and is acknowledged as one of the leading Finance, Treasury, Real Estate, Securitisation, Re-construction of Assets Experts in the Industry today and is on the Board of various prestigious companies. Mr.Gupta is Regional Council Member of Central India Regional Council of Institute of Chartered Accountants of India. He has been Government Nominee on the Board of Joint Sector Companies and RBI nominee on the Boards of Bank. Mr. M.P.Mehrotra Independent Director. He is a Chartered Accountant with experience of over 41 years and with vast exposure of finance and taxes. He has wide experience as an Auditor and Tax Consultant and is an expert on Companies Act and Income Tax Act. He is the founder Partner of Mehrotra & Mehrotra and member of several prominent organizations such as Central Board of Trustees, Employees Provident Fund Organization (EPFO), Ministry of Labour, Govt. of India, Task Force for MOUs, Ministry of Heavy Industries & Public Enterprises, Govt. of India, Advisory Committee, Handlooms, Ministry of Textiles,Govt. of India, PHDCCI and ASSOCHAM and several others. He has been Director, Canara Bank and Trustee, Cochin Port Trust.

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Mr. Harish Saluja Independent Director. He is a Chartered Accountant with experience of about 36 years and with vast exposure of the financial market in India. Mr. Rahul Bedi Independent Director, aged 57 years. Experienced Journalist. He is the India Correspondent for the Daily Telegraph, UK and the Irish Times, Dublin. He specializes in military and security-related issues. An MA in English Literature from Delhi University he was also at Oriel College, Oxford as the Reuters Fellow in the mid 1980's.He has co-authored several books. In the 1970's he was Assistant Master at The Mayo College, Ajmer and The Doon School where he taught English, History and Mathematics. Mr. J.P. Sharma Employee Director. A senior employee of the company, acting as Occupier for the Factories of Company. Mr. Priya Brat Independent Director. He is a science graduate and started his career as an academician but has been a banker since 1959. During his remarkable career he has been associated with several major financial institutions. He has been on the boards of State Bank of Patiala, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Travencore, State Bank of Saurashtra, M.P.State Development Corporation, M.P.State Electronic Development Corporation and OPTEL.

Mr.B.B.Tandon

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Independent Director. Mr. B.B. Tandon was a member of Indian Administrative Services (IAS) 1965-2001, Election Commissioner of India w.e.f. 13.06.2001 to 15.05.2005, member of the Delimitation Commission w.e.f. 12.07.2002 to 15.05.2005 and Chief Election Commissioner of India w.e.f 16.05.2005 to 29.06.2006. He was also invited as International Election Observer to observe the Second Cambodian General Election held in Jul,2003. He also served as a member of the "Commission on Constitutional and Electoral Reforms" set up by the Govt. of Mauritius in November, 2001. He also headed the working group on comprehensive revision of the Companies Act,1956, which recommended several changes/amendments in the said Act. Having joined the service in 1965, Shri Tandon held various top-level posts in the Government of India including as Addl. Secy.- Ministry of Company Affairs and at State level as principal secy. (power) - Govt. of Himachal Pradesh. He has also served on the Board of several Public Sector Undertakings. Ms. Romi Chakravorty Nominee Director appointed by IDBI Ltd. Mr. S.P.Arora Nominee Director appointed by IFCI Ltd. Mr. Amit Dhawan Mr. Amit Dhawan is Nominee Director appointed by ICICI Bank Limited. He is Deputy General Manager with the Corporate Banking Group of ICICI Bank Limited. He joined ICICI Group in 1996 and has worked in various departments. Mr. Dhawan is a B.E. (Mechanical) and Masters in Business Administration from University of Delhi, India. Mr. Dhawan was deputed to help set up the Banks operations in the USA. He launched the loan Origination practice and was instrumental in forging some of the Banks strategic

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alliances in the USA. MISSION & VISION Kashipur stands tall with the collective confidence that our farmers, our workers, our vendors and our stakeholders have pledged with us. Their sense of belonging, their hopes and expectations motivate us to perform better each time. Preserving their trust is our corporate mantra. At Kashipur we have striven to realize a corporate environment of collaborative effort and have worked towards continuous improvement in every sphere of our activity. In our quest for excellence we have given special consideration to our social obligations, whether it is caring for the rural hinterland or the environment we live in. A significant and endearing feat for the Group is that some of its employees have been a part of the Kashipur family for two to three generations. Projections of the sugarcane based Industry in India are exceptionally promising and Kashipur is totally geared up to think beyond the cube:

To provide energy alternatives to an energy-starved country through cogeneration and ethanol.

To value add on our product portfolio To maximize the potential of the agro industry in India. To continuously bring down the cost of conversion. To encourage creativity and resourcefulness, and focus on continuous R&D. To optimize the value of stakeholder investments with a continuous improvement in financial performance.

To diversify and protect the bottom-line during industry downturn.

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To attain the highest level of accountability, corporate governance and shareholder value.

In a country where agriculture is the predominant activity, sugarcane processing units wield a tremendous impact on the area of their location. We continue to play our role with absolute commitment and watch with fascination and pride as even the most backward areas where our units are located, slowly transform into a beehive of activity, touching the lives of thousands of people, now a part of the ever increasing Kashipur family.

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PERFORMANCE APPRAISAL IN KASHIPUR SUGAR MILL, KASHIPUR

The employee Performance Appraisal enables the manager or the supervisor to identify, evaluate and develop an individuals performance. It is a tool to encourage strong performers to maintain their high level of performance and to motivate poor performers to do better. It offers a chance for a supervisor and subordinate to have time out for a one-on-one discussion of important work issues that might not otherwise be addressed. Performance Appraisal is a medium that provides recognition for an employees good work. The existence of an Appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. This has a positive influence on the individuals sense of worth, commitment and belonging. Performance Appraisal offers an excellent opportunity, for a supervisor and subordinate to recognize and agree upon individual training and development. From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for training. This data may be analyzed by variables such as sex, department etc. in this respect, performance appraisal can provide a regular and efficient training needs audit for the entire organization. Appraisal data can be used to monitor the success of the organizations recruitment and induction practices. For example how well are the employees performing who were hired in the past two years? Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies. By following the yearly data related to new hires (and given sufficient numbers on which to base the analysis) it is possible to assess whether the general quality of the work force is improving staying steady or declining. Performance Appraisal not only results in a healthy interaction between the supervisor

35

and the employee but also brings forth the problems of a job (if any), needs of a job, strengths and weaknesses of an employee, the training needs etc. The benefits of Performance Appraisal can be discussed under three headings. Benefits for the employee Gaining a better understanding of their role. Understanding more clearly how and where they fit in within the wider picture. Understanding of how performance is assessed and monitored. Getting an insight into how their performance is perceived. Improving and understanding their strengths, weaknesses and developmental needs. Identifying ways to improve employee performance. Providing an opportunity to discuss and clarify developmental and training needs. Understanding and agreeing to their objectives for the next year. Discussing career direction and prospects.

The above if done in true spirit encourages employee satisfaction. Benefits to the line manager/supervisor/team leader

Opportunities to hear and exchange views and opinions away from the normal pressure of work.

Identifying potential difficulties or weaknesses. Understanding the resources available. Planning for and setting objectives for the next period. Thinking about and clarifying each ones role in the team. Planning for achieving improved performance. Planning for further delegation and coaching.

36

Motivating members of the team.

Benefits to the organization Identifying and assessing potential. Gathering information regarding the expectations and aspirations of employees. Analyzing information to improve decisions about promotions and motivation. Reviewing succession plan. Assessing training needs which forms the base for developing training plans. Updating of employee records (achievements, new competencies). Career counseling.

In reality, many managers handle performance appraisals quite poorly. The result is not only an unpleasant meeting, but one where the manager and his/her staff members never quite appreciate the others point of view, and never appreciate the others point of view, and never quite settle an appropriate goals for the coming year. Its almost inevitable that the staff members will end up less happy, motivated and less motivated than what she/he was before. To make performance appraisal an enriching experience for both the employee and his supervisors, the supervisor should remember not to make the following 5 mistakes: Waiting for the performance appraisal to give feedback This is a very commonly committed blunder. Its where a manager falls to give someone adequate feedback on their performance during the year, and then dumps it on them in the performance appraisal meeting. Unfortunately, the feedback is almost always negative, so the employee ends up sitting there in shock- at best, wondering why his/her manager didnt say something sooner, at worst, feeling unjustly victimized.

37

Overemphasizing recent performances Its very natural to remember and give greater weight to recent events rather than earlier events. This can lead to an inaccurate and unfair assessment when it comes to reviewing an employees performance. The manager must take notes of an employees work throughout the year. Being too positive or too negative Some managers feel uncomfortable giving negative feedback and consequently, can omit to give employees the constructive criticism they need to improve. And then there are other managers who are instinctively too negative, leaving the employee wondering if they can do anything right. As a manager, appraising an employees performance, he should give an honest opinion, so that the employee understands and appreciates the managers view. Being critical without being constructive Some managers can be too critical and neglect to provide any constructive advice on how an employee can improve. This doesnt help the employee or the manager. In order to refrain the employee from feeling victimized, the manager should validate his criticism by giving reasons and improvement tips. Talking and not listening The final big mistake that the managers make in a performance appraisal is, doing too much talking and not enough listening. Performance Appraisal meeting are meant to be interactive- where the manager doesnt simply rely on his/her own appraisal of

38

the employees performance but also listens to the employees viewpoint and his feedback of the job. In truth, managers who seek to influence the performance of their employees need not always have the support of an elaborate corporate system. The most effective performance management approaches build on a strong communication system that is transparent; exemplifies high standards and trust. In a nutshell Performance Appraisal is a legitimate employee evaluation and feedback system which makes the system and working of a company more transparent and goal-oriented. It is not just a process to review an employees performance but also an opportunity that can give the employee, the required motivation to do better and the superior a feedback on the problems 360 Degree Appraisal

The 360 degree appraisal has obvious merits but it often becomes difficult to implement because of a variety of factors such as lack of clarity regarding performance measures, lack of competence on the part of the appraisers, time considerations etc. Self Appraisal

39

This involves assessment of ones performance by the employee himself. The employee identifies his own strengths and weaknesses, offers his opinion on the adequacy of the training he has received and suggests ways in which the organization might better use his talents, skills and experiences. Self appraisal is based on the assumption that nobody knows a person better than the person himself. Further, it helps in making the process of appraisal more transparent. However, employees often have an inaccurate perception of their performance where they exaggerate their accomplishments and in such cases, self appraisal may lose its meaning. Therefore, most often, self-appraisal on the part of the employees is taken as a supplement, that is as an additional input to formal appraisal by the superiors in an organization. Self appraisal is used only for developmental purposes and not for administrative purposes.

40

PRODUCT PROFILE SUGAR:

BRAND : KASHIPUR

With the belief that the Indian consumer today is as quality and health conscious as any other consumer today the world over, Kashipur Sugar Mills made an initiative to produce a sugar comparable to the high standards of the western countries, in India. Kashipur embarked on the project in 1996, under the aegis of the Sugar Technology Mission to make sugar that would be sparkling white, pure and healthier. Kashipur perfected the technique and the result was India's first double refined sulphurless sugar sold under its brand KASHIPUR. KASHIPUR is a better sugar simply because its processing continues long after that of ordinary sugar has stopped. The secret behind KASHIPUR's purity is the unique Defeco Remelt Process, in which the

sugar after it has crystallized is melted all over again and all the impurities are removed without the use of sulphur. Since no sulphur is used in the manufacturing of KASHIPUR sugar, it meets even the

strict standards of the European Union on sulphur content. The double refined KASHIPUR sugar has no impurities, so its crystals have natural

translucent white colour and don't require bleaching with sulphur-dioxide. KASHIPUR is packed under a controlled environment, untouched by hand, assuring

impeccable hygiene. 41

POWER COGENERATION CAPACITY : 145 MW (80 MW GRID INTERACTIVE)

BAGASSE, the residual fiber of sugarcane after crushing and extraction, is a valuable byproduct generated during the sugar manufacturing process. It has high calorific value and is therefore used to generate steam and thereby electricity, which is a conventional thermal alternative and eliminates emission of green house gases. In 1994, Kashipur was the first sugar company in India to start eco-friendly cogeneration at one of its units, with a low project outlay as compared to conventional power plants. Conventionally, this was restricted to providing captive power in order to meet the energy requirements of the sugar factory. However, Kashipur was one of the first to realize the tremendous potential it had towards reducing the power deficit, by supplying to the grid, thereby contributing to the bio-energy effort undertaken by the country. An additional benefit of using bagasse is that it is a renewable source of fuel and does not contribute to Greenhouse gasses as the sugarcane plantation consumes more carbon dioxide than that generated in burning bagasse. Today, the Groups combined co-generation capacity stands at 145 MW with 80 MW of grid interactive power. Kashipur is the first in the world to install 105 kg.cm 2 boiler and turbine in its sugar division, which has increased efficiencies in bagasse usage and made it perhaps the most efficient cogeneration unit in the world. Kashipur additionally installed energy saving devices which

42

would further increase bagasse savings. This saving would enable the company to run its power plants without external bagasse purchases. Power generation in non-sugar season as well, will result in consistent cash inflows. Kashipur was the first sugar company in Uttar Pradesh, which was allowed export of power under Open Access (during off-season), from 1st October, 2009, resulting in higher realizations. ETHANOL CAPACITY : 270 KL Per Day Ethanol is a generic name for Ethyl Alcohol which is a product of sugarcane molasses and juice, prepared by fermentation and distillation processes. It is a volatile, flammable and colourless liquid, widely used as a solvent of substances intended for human contact or consumption, including fragrances, flavoring, colouring and medicines. When blended, as an additive with fuel for motor vehicles, it is known as Motor Fuel Grade Alcohol or Power Alcohol. It can be blended with petrol in varying quantities up to any extent depending upon the technology of the engine. Up to 15% blend no modifications are required in the engines. Usage of ethanol-blended gasoline began in the late 1970s. Environmentally, the use of ethanol blends has assisted in reducing carbon monoxide emissions. In the United States, one out of every eight gallons of gasoline sold contains ethanol. Most of this ethanol is purchased as blends of 10% ethanol and 90% gasoline, known as E10, and is used as an octane enhancer to improve air quality. In India we are presently using E5 that is, 5% ethanol blend with gasoline but a government order for 10% blend is expected in the near future. A SUGAR INDUSTRY PERSPECTIVE & ETHANOL PRODUCTION Most sugar companies in India are evolving into integrated players as diversification into distillery, ethanol and power has become possible. This has improved the demand for molasses and ensures better economics.

43

The Government of India has made blending of 5% Ethanol in motor vehicle fuels, compulsory all over India. This directive has provided sugar mills the opportunity to implement forward integration. A 5% ethanol blend on an all-India basis would require around 500 million liters. The current installed capacity would be adequate to meet this requirement as also for E10 blend, even after fully meeting the requirement of the chemical industry and potable sectors, as India is the second largest producer of sugar in the world. Ethanol blended fuels are advantageous due to the following characteristics: Renewable source of energy Renewable source of energy Use Molasses which is readily available and is a by-product of the sugar manufacturing process Diversifies the Sugar Industry Utilizes industrial installed capacity, improving the economy of the industry. Energy security, trade balance and risk reduction. Reduce use of gasoline and ensures less dependence on imports of oil Market opportunity for agricultural crops Rural economic development and boost to the agricultural sector Environmental benefits (reduced carbon dioxide and carbon monoxide emission. It does not contribute to the harmful greenhouse gasses) Displaces dangerous and environmentally damaging components in gasoline, such as benzene. India presently has an installed capacity of over 3,000 million liters per annum but is producing less than 50% of installed capacity.

44

OBJECTIVES OF THE STUDY

45

OBJECTIVES OF THE STUDY

To study the procedure of performance appraisal implemented in Kashipur Sugar Mill Kashipur To analyse the methods of performance appraisal used in Kashipur Sugar Mill Kashipur To explore how the individual use their strength and weakness so that their performance may be appraised To study how performance appraisal linked with T&D needs To study how performance appraisal is a tool to strong them relationship and communication between superiors and subordinates

46

LITERATURE REVIEW

47

LITERATURE REVIEW
The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago. Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world's second oldest profession! The basic concept in 360 Performance Appraisal makes obvious sense -- soliciting performance feedback not only from our supervisor but also from our customers, employees, peers and all whom we interrelate with in the course of doing our job. We all should do this as a matter of course to ensure that we're living up to the expectations others have of us (the psychological contract) and to see that we are playing the right role in the minds of our associates. There is much to be learned from the opinions of those we serve and work with. This "full circle" of feedback results in the 360 (degree) name. 360-feedback concept in the context of a performance appraisal. Many people have jumped on this bandwagon without sufficient consideration. In no particular order my concerns are: Performance "appraisal" is better called performance "review" since it is the closing stage of a performance management process which begins with the clarification of

48

performance direction and expectations. A Performance Review is a review or comparison of actual performance during the review period, with the past direction, and an opportunity to set future direction (reviews are also used for formal documentation and for use in employee development, promotion and compensation decisions). A Performance Review is never the occasion for the employee to discover how well he's performed or to find out what was expected of him during the review period. The employee should be aware of that (his individual performance related to the performance expectations) continually throughout the review period. A Performance Review is principally between the employee and whomever the employee is responsible and accountable to. Realistically, in most organizations this is the "boss." At the review it would be insightful, and for some jobs essential, to review how the employee met client and/or peer expectations. But, the degree to which an employee meets client, supplier, peer or subordinate expectations is not what an employee comes to a Performance Review to discover. It's too late to learn that information at the end of the review period. The employee throughout the review period should solicit that feedback continually, and then the results of this feedback activity reviewed at Performance Review time. A common approach to 360 Appraisal is to administer confidential surveys, especially so people can rate their peers and supervisor. Anonymity is ensured and employees can comment in confidence about the performance of another employee or the boss. Aggregate data is then given to the employee in question and used as input to the appraisal and eventual rating of that employee. Notwithstanding the substantial research evidence warning of the dangers associated with peer evaluations and their low validity, my basic concern about this process can be summed up with these questions.

49

Many employees who resent being asked to judge their peers anonymously, wondering all the while, who is writing things about them, and is it any of their business. Supervisors are also frustrated not knowing the actual source of employee concerns so that they can attend to the problem effectively. When we set up a system which assumes it must protect against deceit and retribution, it can become self fulfilling. AnThe history
of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management.

As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago.

Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world's second oldest profession!

There is, says Dulewicz (1989), "... a basic human tendency to make judgements about those one is working with, as well as about oneself." Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily.

The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgements made will be lawful, fair, defensible and accurate.

Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified.

50

The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time. Modern Appraisal Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or

51

semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions. By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.) Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter.

Controversy, Controversy Few issues in management stir up more controversy than performance appraisal. There are many reputable sources - researchers, management commentators, psychometricians - who have expressed doubts about the validity and reliability of the performance appraisal process. Some have even suggested that the process is so inherently flawed that it may be impossible to perfect it (see Derven, 1990, for example). At the other extreme, there are many strong advocates of performance appraisal. Some view it as potentially "... the most crucial aspect of organizational life" (Lawrie, 1990).

52

Between these two extremes lie various schools of belief. While all endorse the use of performance appraisal, there are many different opinions on how and when to apply it. There are those, for instance, who believe that performance appraisal has many important employee development uses, but scorn any attempt to link the process to reward outcomes - such as pay rises and promotions. This group believes that the linkage to reward outcomes reduces or eliminates the developmental value of appraisals. Rather than an opportunity for constructive review and encouragement, the reward-linked process is perceived as judgmental, punitive and harrowing. For example, how many people would gladly admit their work problems if, at the same time, they knew that their next pay rise or a much-wanted promotion was riding on an appraisal result? Very likely, in that situation, many people would deny or downplay their weaknesses. Nor is the desire to distort or deny the truth confined to the person being appraised. Many appraisers feel uncomfortable with the combined role of judge and executioner. Such reluctance is not difficult to understand. Appraisers often know their appraisees well, and are typically in a direct subordinate-supervisor relationship. They work together on a daily basis and may, at times, mix socially. Suggesting that a subordinate needs to brush up on certain work skills is one thing; giving an appraisal result that has the direct effect of negating a promotion is another. The result can be resentment and serious morale damage, leading to workplace disruption, soured relationships and productivity declines.

53

On the other hand, there is a strong rival argument which claims that performance appraisal must unequivocally be linked to reward outcomes. The advocates of this approach say that organizations must have a process by which rewards - which are not an unlimited resource - may be openly and fairly distributed to those most deserving on the basis of merit, effort and results. There is a critical need for remunerative justice in organizations. Performance appraisal whatever its practical flaws - is the only process available to help achieve fair, decent and consistent reward outcomes. It has also been claimed that appraisees themselves are inclined to believe that appraisal results should be linked directly to reward outcomes - and are suspicious and disappointed when told this is not the case. Rather than feeling relieved, appraisees may suspect that they are not being told the whole truth, or that the appraisal process is a sham and waste of time. The Link to Rewards Research (Bannister & Balkin, 1990) has reported that appraisees seem to have greater acceptance of the appraisal process, and feel more satisfied with it, when the process is directly linked to rewards. Such findings are a serious challenge to those who feel that appraisal results and reward outcomes must be strictly isolated from each other. There is also a group who argues that the evaluation of employees for reward purposes, and frank communication with them about their performance, are part of the basic responsibilities of management. The practice of not discussing reward issues while

54

appraising performance is, say critics, based on inconsistent and muddled ideas of motivation. In many organizations, this inconsistency is aggravated by the practice of having separate wage and salary reviews, in which merit rises and bonuses are decided arbitrarily, and often secretly, by supervisors and managers. d as with suggestion boxes, the anonymous survey unfortunately symbolizes that not only do employees take a risk if they raise problems or concerns directly with the supervisor; but also that it's not the supervisor's job to solicit such information. Essentially, The most common rationale used to justify the use of the 360 Appraisal process is that everyone else is doing it! There isn't much research showing the usefulness and validity of the concept as part of performance appraisal. Sales literature from many 360 Appraisal vendors essentially promotes the idea as the thing to do. I would hope potential users of the concept do a little deeper analysis, especially since for many, the process becomes an administrative nightmare and an unnecessary expense. If you really want your employees to get performance feedback from the circle of people they work with, including their customers, peers and subordinates, try the following simple process: (a) make "soliciting performance feedback from significant others" a part of all employee jobs and therefore a performance requirement; (b) determine what sort of feedback is required, and if possible develop tools to capture this information;

55

(c) teach employees how to use the tools (or questions) to get feedback from their subordinates, customers, peers, etc.; (d) teach employees how to give performance feedback to their supervisors, peers or suppliers, etc. (e) teach employees how to make use of the feedback they receive, and, for example how to follow-up on their subordinates and customer concerns; (f) require employees to regularly review (perhaps monthly) the results of getting feedback from others, with their own supervisor, so that the process becomes a priority and so that employees are held accountable for doing so. Many organizations that go out shopping for performance appraisals, 360 or other versions, have already taken a step in the wrong direction. They typically have forgotten to diagnose their real needs. If your business has a desire for the 360 Appraisal process make sure you ask yourself "Why?" What is your organization's or management's real need? Don't do it because everyone else seems to be doing it. Make sure the process and philosophy are appropriate to your organization and its values. There is, says Dulewicz (1989), "... a basic human tendency to make judgements about those one is working with, as well as about oneself." Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily. The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgements made will be lawful, fair, defensible and accurate.

56

Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified. The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation

57

and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time. Modern Appraisal Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions. By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.) Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter.

Controversy, Controversy Few issues in management stir up more controversy than performance appraisal. There are many reputable sources - researchers, management commentators,

58

psychometricians - who have expressed doubts about the validity and reliability of the performance appraisal process. Some have even suggested that the process is so inherently flawed that it may be impossible to perfect it (see Derven, 1990, for example). At the other extreme, there are many strong advocates of performance appraisal. Some view it as potentially "... the most crucial aspect of organizational life" (Lawrie, 1990). Between these two extremes lie various schools of belief. While all endorse the use of performance appraisal, there are many different opinions on how and when to apply it. There are those, for instance, who believe that performance appraisal has many important employee development uses, but scorn any attempt to link the process to reward outcomes - such as pay rises and promotions. This group believes that the linkage to reward outcomes reduces or eliminates the developmental value of appraisals. Rather than an opportunity for constructive review and encouragement, the reward-linked process is perceived as judgmental, punitive and harrowing.

For example, how many people would gladly admit their work problems if, at the same time, they knew that their next pay rise or a much-wanted promotion was riding on an appraisal result? Very likely, in that situation, many people would deny or downplay their weaknesses. Nor is the desire to distort or deny the truth confined to the person being appraised. Many appraisers feel uncomfortable with the combined role of judge and executioner. Such reluctance is not difficult to understand. Appraisers often know their appraisees well, and are typically in a direct subordinate-supervisor relationship. They work

59

together on a daily basis and may, at times, mix socially. Suggesting that a subordinate needs to brush up on certain work skills is one thing; giving an appraisal result that has the direct effect of negating a promotion is another. The result can be resentment and serious morale damage, leading to workplace disruption, soured relationships and productivity declines. On the other hand, there is a strong rival argument which claims that performance appraisal must unequivocally be linked to reward outcomes. The advocates of this approach say that organizations must have a process by which rewards - which are not an unlimited resource - may be openly and fairly distributed to those most deserving on the basis of merit, effort and results. There is a critical need for remunerative justice in organizations. Performance appraisal whatever its practical flaws - is the only process available to help achieve fair, decent and consistent reward outcomes. It has also been claimed that appraisees themselves are inclined to believe that appraisal results should be linked directly to reward outcomes - and are suspicious and disappointed when told this is not the case. Rather than feeling relieved, appraisees may suspect that they are not being told the whole truth, or that the appraisal process is a sham and waste of time. The Link to Rewards Research (Bannister & Balkin, 1990) has reported that appraisees seem to have greater acceptance of the appraisal process, and feel more satisfied with it, when the process is

60

directly linked to rewards. Such findings are a serious challenge to those who feel that appraisal results and reward outcomes must be strictly isolated from each other. There is also a group who argues that the evaluation of employees for reward purposes, and frank communication with them about their performance, are part of the basic responsibilities of management. The practice of not discussing reward issues while appraising performance is, say critics, based on inconsistent and muddled ideas of motivation. In many organizations, this inconsistency is aggravated by the practice of having separate wage and salary reviews, in which merit rises and bonuses are decided arbitrarily, and often secretly, by supervisors and managers. Yearly performance reviews are critical. Organization's are hard pressed to find good reasons why they can't dedicate an hour-long meeting once a year to ensure the mutual needs of the employee and organization are being met. Performance reviews help supervisors feel more honest in their relationships with their subordinates and feel better about themselves in their supervisor roles. Subordinates are assured clear understanding of what's expected from them, their own personal strengths and areas for development and a solid sense of their relationship with their supervisor. Avoiding performance issues ultimately decreases morale, decreases credibility of management, decreases the organization's overall effectiveness and wastes more of management's time to do what isn't being done properlyivities.

61

So the following activities must be conducted time to time: Design a legally valid performance review process

11

Patricia King, in her book, Performance Planning and Appraisal, states that the law requires that performance appraisals be: job-related and valid; based on a thorough analysis of the job; standardized for all employees; not biased against any race, color, sex, religion, or nationality; and performed by people who have adequate knowledge of the person or job. Be sure to build in the process, a route for recourse if an employee feels he or she has been dealt with unfairly in an appraisal process, e.g., that the employee can go to his or her supervisor's supervisor. The process should be clearly described in a personnel policy. Design a standard form for performance appraisals

11

Include the name of the employee, date the performance form was completed, dates specifying the time interval over which the employee is being evaluated, performance dimensions (include responsibilities from the job description, any assigned goals from the strategic plan, along with needed skills, such as communications, administration, etc.), a rating system (e.g., poor, average, good, excellent), space for commentary for each dimension, a final section for overall commentary, a final section for action plans to address improvements, and lines for signatures of the supervisor and employee. Signatures may either specify that the employee accepts the appraisal or has seen it, depending on wording on the form. 3. Schedule the first performance review for six months after the employee starts employment

62

Schedule another six months later, and then every year on the employee's anniversary date. 4. Initiate the performance review process and upcoming meeting Tell the employee that you're initiating a scheduled performance review. Remind them of what's involved in the process. Schedule a meeting about two weeks out. 5. Have the employee suggest any updates to the job description and provide written input to the appraisal Have them record their input concurrent to the your recording theirs. Have them record their input on their own sheets (their feedback will be combined on the official form later on in the process). You and the employee can exchange each of your written feedback in the upcoming review meeting. (Note that by now, employees should have received the job descriptions and goals well in advance of the review, i.e., a year before. The employee should also be familiar with the performance appraisal procedure and form.)

6. Document your input -- reference the job description and performance goals Be sure you are familiar with the job requirements and have sufficient contact with the employee to be making valid judgments. Don't comment on the employee's race, sex, religion, nationality, or a handicap or veteran status. Record major accomplishments, exhibited strengths and weaknesses according to the dimensions on the appraisal form, and suggest actions and training or development to improve performance. Use examples of behaviors wherever you can in the appraisal to help avoid counting on hearsay. Always address behaviors, not characteristics of personalities. The best way to follow

63

this guideline is to consider what you saw with your eyes. Be sure to address only the behaviors of that employee, rather than behaviors of other employees.

7. Hold the performance appraisal meeting State the meeting's goals of exchanging feedback and coming to action plans, where necessary. In the meeting, let the employee speak first and give their input. Respond with your own input. Then discuss areas where you disagree. Attempt to avoid defensiveness; admitting how you feel at the present time, helps a great deal. Discuss behaviors, not personalities. Avoid final terms such as "always," "never," etc. Encourage participation and be supportive. Come to terms on actions, where possible. Try to end the meeting on a positive note.

8. Update and finalize the performance appraisal form Add agreed-to commentary on to the form. Note that if the employee wants to add attach written input to the final form, he or she should be able to do so. The supervisor signs the form and asks the employee to sign it. The form and its action plans are reviewed every few months, usually during one-on-one meetings with the employee.

9. Nothing should be surprising to the employee during the appraisal meeting Any performance issues should have been addressed as soon as those issues occurred. So nothing should be a surprise to the employee later on in the actual performance appraisal meeting. Surprises will appear to the employee as if the supervisor has not been doing his/her job and/or that the supervisor is not being fair. It is OK to mention the issues in the meeting, but the employee should have heard about them before.

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n recent years, the service industry in Taiwan has achieved rapid growth, not only in terms of productivity but also in the percentage of the labor employed as compared with themanufacturing industry and has become Taiwan's largest industry. Based on empirical data derived from 328 questionnaires, 125 from the service industry and 203 from the manufacturing industry, this study is aimed at exploring the differences in performance appraisal systems between these two industries. The results show that the service industry pays more attention to administration, while manufacturing industry emphasizes development more. The service industry is also more concerned about quantitative criteria, while the manufacturing industry emphasizes qualitative ones. These implications of these findings for mangers in these two kinds of industries are discussed. Introduction Following rapid economic development, the service industry in Taiwan is now the largest industry in the country. Labour employed in the service industry has increased from 1.181 million in 1980 to 2.654 million in July 2002. During this same period, labour in the manufacturing industry saw only a slight increase, from 2.036 million to 2.382 million. As part of these changes, many companies in the service industry have 'emerged' from being traditional small-scale businesses operations into large-scale, chain and enterprising organizations. In the face of an ever-increasing number of personnel, a more comprehensive human resource management policy is needed to address issues arising from these changes in business operations and management systems, both of which are becoming increasingly complicated. An accurate and realistic appraisal system is necessary for companies to control employee behavior and to provide high quality services and products. In this respect, with the growth of the service industry, developing

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an effective performance appraisal system, similar to those in the manufacturing industry, is very important. Performance appraisal systems have always played a very important role in human resource management. The performance appraisal is a critical mechanism for organizational control, through which the employees can view see their past performances and take concrete action for improvement. On the other hand, the performance appraisal also provides substantial information for human resource management to make fair and correct decisions regarding promotions, transfers, compensations, incentives and training programs as well as career management. Specific enterprises typically demand different performance appraisal system tailored to the needs of its functions and processes. Cleveland, Murphy, and Williams (1989) argued that that there is a relationship between organizational characteristics and the uses of a performance appraisal system. Stonich (1984) also argued that performance measurement in an organization should be in tune with its structure and culture. Since the nature of the enterprises in which each industry is engaged varies, its organizational type, business policy, internal and external environment are also usually different. The purpose of this study is to conduct a direct comparative analysis of performance appraisal systems in the service and manufacturing industries. The remainder of this paper is organized as follows. Section 2 briefly reviews the related literature. Section 3 provides background to the service and manufacturing industries in Taiwan, which is the basis for our study. The research methodology and empirical analysis are presented in Section 4 and 5, respectively. The last section presents our conclusions

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The Essence and Functions of Performance Appraisal Systems Performance appraisal systems aim to evaluate the job performance of employees, so that appropriate corrective action and management decisions can be taken. As performance appraisal is part of organizational control, the components of the control system are indispensable in the appraisal system. In general, a basic control system consists of control standards, measurement, and corrective actions (Newman, Warren & McGiIl, 1987). Among these three phases, control standards are based primarily on organizational missions or departmental goals, which reflects the role a performance appraisal plays in the organization. Measurement is concerned with the actual appraisal process, including the appraiser, appraisal criteria, appraisal methods, and appraisal timing. Corrective actions comprise the feedback processes after the performance appraisal is completed. If there is an evident gap between actual performance and performance standards, appropriate corrective actions should be taken to change the behaviours of the employees concerned. Apart from organizational control, Ilgen, Barnes-Farrell, and McKellin (1993) concluded, from their extensive review of the literature since the 1 980s about performance appraisal, that there are four important aspects that need to be considered. They are as follows: (1) Appraisal setting, the purpose of the performance appraisal; (2) Characteristics of the ratees (3) Characteristics of the raters; and (4) Natures of the scales used for the appraisal. In practice, performance appraisal systems cover a wide range of these aspects, and seldom have exactly the same nature and functions. In order to integrate findings in the area, Chu (2002) proposed a comprehensive framework including six categories, namely,

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appraisal purposes, appraisal personnel, appraisal criteria, appraisal methods, appraisal timing, and appraisal feedback. This study will adopt this framework to compare performance appraisal systems in the service and manufacturing industries. Factors Affecting Performance Appraisal Systems A company should take into consideration many factors when designing a performance appraisal system. The performance appraisal system, as an important part of the organizational management system, will be affected by the particular context within which the organization operates. As stated earlier, Cleveland, Murphy and Williams ( 1 989) found that there was a correlation between organizational characteristics and the uses of the performance appraisal . Stonich ( 1 984) argued that performance measurement must be consistent with the organization's structure and culture. For instance, when an organization emphasizes decentralization, performance standards should be focused on results (like "return on equity"). On the other hand, if the organization is inclined toward centralization, the performance appraisal should emphasize the processes of each management function. Adopting a cultural perspective, Ouchi (1981) compared American and Japanese enterprises and found that that American enterprises are more concerned about personal performance, while Japanese enterprises are more concerned about group performance. As far as the size of an organization concerned, Jobber, Hooley & Shipley (1993) confirmed that a large organization tends to adopt quantitative criteria, more formalized appraisal methods and pre-determined performance standards, while a small organization is apt to use qualitative and informal appraisal methods. Although these studies did not make direct comparisons between service and manufacturing industries, their results can

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explain accounts the fact that there is a link or relation between organizational characteristics and the functions of a performance appraisal system. Service and Manufacturing Industries in Taiwan Service and manufacturing industries in Taiwan and elsewhere consist of widely different kinds of businesses. Generally speaking, the manufacturing industry provides tangible products and their production and consumption can be carried out separately in different places. On the contrary, the service industry offers intangible merchandise. The things it produces are perishable and production and consumption are inseparable. The things that are provided also exhibit greater variability (Kotier, 1996). Because of these basic differences, enterprises in the two industries have to deal with different operating conditions. As the 'products' of the service industry are perishable and production and consumption processes inseparable, feedback or results from service processes can be immediate. Moreover, production and consumption in the service industry are almost simultaneous. The service industry gives or provides quicker and more immediate rewards (or retributions) than does the manufacturing industry. As reflected in their typical performance appraisal system, service businesses are more likely to have appraisals based on performance over shorter periods of time (i.e. monthly, quarterly), to employ monetary incentives (i.e. commission, bonus, rewards), and to use quantitative criteria. Manufacturing businesses are more likely, on the other hand, to utilize performance appraisals as a means toward long-term retention of personnel (i.e. educational training) and to employ qualitative criteria in appraisals.

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The rapid growth of the service industry and the slower growth of the manufacturing industry in Taiwan are reflected in different kinds of development in these two industries. According to the official Directorate-General of Budget, Accounting, and Statistics (2002), in the service industry the number of employees rose from 1.181 million in 1980 to 2.654 million in July 2002. But during the same period, the number of labor employed in the manufacturing industry rose merely from 2.036 million to 2.382 million. As for compensation, the average wage in the service industry was NT$39,166 per month in 1997, higher than the average wage of NT$38,654 for all industries. In the same period the average wage was only NT$35,275 in the manufacturing industry, a difference of NT$3,891(equivalent to US$120) compared to the service industry. As for working hours, the average working hours in the service industry in 1997 was 187.7 hours per month while the manufacturing employees worked an average of 210.5 hours per month. From this comparison, it is apparent that in Taiwan at least the service industry not only offers higher wages but also shorter working hours than the manufacturing industry. These differences can perhaps account for the fact that more people have been attracted to the service industry. In a span of 18 years, an increase of 124.7% in the workforce was recorded in the service industry. The manufacturing industry showed only a 17% growth for this same period. From the above statistics, Taiwan appears to be in a transitional stage during which the manufacturing industry is shrinking while the service industry is growing. Research Method This study is based on a questionnaire survey. The sampling frame employed in this study was taken from "The Largest Corporations in Taiwan 2002", edited and compiled

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by the China Credit Information Service, Ltd. 1, 000 of the 'top companies' from the service industry and the manufacturing industry served as the population of this study, so that the research results can be regarded as representative of what is happening in large enterprises throughout Taiwan. 60 companies from service and manufacturing industries were then selected at random from these 1, 000 companies for a survey questionnaire. Each company selected received ten questionnaires for their staff to complete. The questionnaires were followed by a succession of telephone contacts. 17 companies from the service sector and 24 twenty-four from the manufacturing sector responded by returning their questionnaires. A total of 328 valid questionnaires were received from the 41 companies that responded, 54.67% of the total number of questionnaires. Analysis of Results The comparison of the performance appraisal systems employed in the service and the manufacturing industries was made in terms of six categories: appraisal purpose, appraisal personnel, appraisal criteria, appraisal methods, appraisal timing, and appraisal feedback. The statistical analysis tools used to the differences found were the t-test and cross tabulation. The results are stated below. Appraisal Purpose Typically, performance appraisals are either directed primarily at administrative or developmental goals. The former means that the managers will use the information as a guideline in making decisions related to promotions, transfers, salaries and fringe benefits. A correct decision depends on the information derived from the performance appraisal. The performance appraisal also 'informs' employees how their performance is regarded by their managers, as a result of which they can modify or change their

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performance. Results showed that the service industry is more concerned about "administrative purposes" averaging 4.2236, higher than the manufacturing industry's 3.8954, a difference that is significant at the 0.001 level. Also the manufacturing industry places greater emphasis on "developmental purposes" averaging 2.5880, higher than service industry's 2.2703 with a difference that is significant at the .010 level (see Table 1 ). This study also revealed that the service industry scored 6.4553 and 2.2520 with regard to "salary administration" and "decision on layoff respectively. These scores were higher than the manufacturing industry, which scored 5.8214 and 1.7347 respectively. This result can help explain why the service industry tends to more use the performance appraisal more directly for salary and employment decisions than the manufacturing industry. The manufacturing industry scored 2.9439 in "assistance in goal identification", higher than service industry which scored 2.3984, suggesting that manufacturing industry is more concerned about setting up working goals for its staff. From these results it seems that firms in the service industry find performance appraisals more useful for "administrative purposes" while forms in the manufacturing industry find them more helpful for "developmental purpose". Appraisal Personnel The personnel who did the performance appraisals in this study included supervisors, employees themselves, peers, subordinates and customers. Our analysis indicated that there is no noticeable difference between service and manufacturing industries in terms of the different types of personnel involved in the appraisal process. Supervisor appraisals were employed more often than appraisals by other kinds of personnel, 96% of the time in the service industry and 98.5% in the manufacturing industry. The

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proportion of self-appraisals used in the service industry was 28%, while in the manufacturing industry it was 37.4%, ranked second among all the appraisals methods. The proportion of peer-appraisals used in the service and manufacturing industry were 7.2% and 4.9%, respectively. Peer-appraisal occupied the third position among all the appraisal systems. Appraisal Timing This research found revealed no significant difference in respect of the timings of appraisals between service and manufacturing industries. Both industries are inclined to a annual appraisal, the proportion of appraisals made on this basis being 45.2% and 41.8% in service industry and manufacturing industry respectively. As for half-yearly appraisals, the rates were 33.1% in the service industry and 36.7% in the manufacturing industry. The proportion of appraisals based on performance over the particular period (rates) were all relatively low or small for monthly, quarterly and anytime periods, less than 10% in both the service and manufacturing industries. In service industry, only 7.3% of the appraisals were based on performances over a month, 5.6% over a quarter and 8.9% for anytime. In the manufacturing industry, the respective rates were 8.2%, 8.7% and 4.6% for (Table 5). Performance Feedback For performance appraisal feedback, the interviewed companies were asked two questions. First, is an appraisal interview conducted after the performance appraisal? Second, is there a complaint channel for employees who are dissatisfied with the appraisal process or result? The results indicate that there was no significant is no difference in the proportions of companies conducting appraisal interviews (after

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performance appraisals) and having a complaint channel for dissatisfied employees between service and manufacturing industries. The rates for 'appraisal interviews' were low, 30.6% in the service industry and 35.5% in manufacturing industry. Only 28% of the companies in the service industry set up a complaint channel for employees dissatisfied with results and 30% of companies in manufacturing industry. These findings suggest that in neither the service nor manufacturing industries attach much importance to performance appraisal feedback (Table 6). Conclusions According to the results of this study, significant noticeable differences do exist in purposes of appraisals and the criteria used in appraisals between firms in the service industries and those in manufacturing industries. However, there is little difference in appraisal personnel, appraisal tools, appraisal timing, and appraisal feedback between firms in these two industries. The following tentative conclusions can be drawn from the results of this study: The service industry pays more attention to the administrative purposes of appraisals, while manufacturing industry emphasizes developmental purposes. In addition, there are a number of differences between service and manufacturing industries in other aspects of performance appraisals. For instance, the service industry tends to make use of the information derived from the performance appraisal more often for administrative purpose, especially for "salary administration" and "decision on layoff. The manufacturing industry tends to use performance appraisal information more often for developmental purposes, particularly for "assistance in goal identification". In addition, the service industry is more concerned about quantitative outcome criteria, while the manufacturing industry emphasizes qualitative process criteria more often. Quantitative outcome criteria are adopted more frequently in the

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service industry than in the manufacturing industry, particularly in the assessment of "goal-accomplishment rates". At the same time, qualitative process criteria, particularly with respect to the "judgment ability" of employees, are used more often in the manufacturing industry. Finally, it was found that the service industry attaches greater importance to the "attendance records" of employees than the manufacturing industry. References 1. China Credit Information Service, Ltd., The Largest Corporations in Taiwan 2002, Taiwan: China Credit Information Service, Ltd. 2. Chu, Chen-Ming, "The Essence and Effects of Performance Appraisal Systems: Adpoting the Expectation/Reality Discrepancy Model", Taiwan: NTU Management Review (in Chinese), vol. 9 (2002), pp. 113-152. 3. Cleveland, J. N., K. R. Murphy, and R. E. Williams, "Multiple Uses of Performance Appraisal: Prevalence and Correlates," Journal of Applied Psychology, vol. 74 (1989), pp. 130-135. 4. Directorate-General of Budget, Accounting, and Statistics, Executive Yuan, Monthly Bulletin of Earnings and Productivity Statistics Tai wan Area (in Chinese), vol. 299 (2002), Taiwan: Directorate-General of Budget, Accounting, and Statistics, Executive Yuan. 5. Ilgen, D. R., J. L. Barnes-Farrell, and D. B. McKellin, "Performance Appraisal Process Research in the 1980s: What has it contributed to Appraisals in Use?", Organizational Behavior & Human Decision Processes, vol.54 (1993), pp.321-368.

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Outcomes of Effective Performance Appraisal Common outcomes of an effective performance appraisal process are employees learning about themselves, employees knowledge about how they are doing,

employees learning about what management values (Beer, 1981). According to Stephan and Dorfman (1989) outcomes of effective performance appraisal are improvement in the accuracy of employee performance and establishing relationship between performance on tasks and a clear potential for reward. Dobbins, Cardy and PlatzVieno (1990) told five outcomes i.e. use of evaluations as feedback to improve performance, reduced employee turnover, increased motivation, existence of feelings of equity among employees, linkage between performance and rewards. Nurse (2005) viewed provision of information for the development of managerial strategies for

training and development as an outcome. Teratanavat, Raitano and Kleiner (2006) found outcomes like reduced employee stress, review of overall progress, linkage between current performance and employees goals, and development of specific action plans for future. Detriments to Effectiveness of Performance Appraisal Literature uncovered following aspects that can make harm to the effectiveness of performance appraisal: exemptions to the highly visible employees, conduct of performance appraisal to punish the low performers, rewards on nonperformance, doubts in the mind of performers about appraisals after effects, organizations politics that leads to disturb performance of targeted employee (Deluca, 1993); use of fundamentally flawed appraisals, focus on encouraging individual, which automatically discourages teamwork/collaboration, inconsistencies in setting and applying appraisal criteria, focus on extremes (exceptionally good or poor performance), appraisals focus on achievement

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of short-term goals, support to autocrat supervisors, subjectivity of appraisal results and creation of emotional anguish in employees (Segal, 2000); use of vague qualities and irrelevant measurement criteria, use of useless checklists for evaluation, monologues instead of dialogues in feedback sessions, reluctance of appraisers to offer feedback, supervisors misguidance to appraiser (Nurse, 2005); inaccuracies at

supervisor/organizations end (Horvath & Andrews, 2007). Procedure and Measures The researchers designed a survey questionnaire for managers and operatives working with public and private sector organizations of Pakistan. As suggested by Fink (1995b), only purposeful statements based upon research objective and hypotheses were included. All questions were closed to elicit standardized response. Medium of communication was English with focus on use of conventional language. Wording of survey questions/statements was kept simple and unbiased (McClelland, 1993) and questions of trivial nature were avoided (McClelland, 1994). Instructions/legends were also given at the start of every set of questions having same format (Cooper & Emory, 1995). For expeditious response, survey questionnaires were administered through referrals. The researchers maximized accuracy in the test scores by applying measurement scaling carefully. The research design of the study used five-point Likert scale for all survey questions (Fink, 1995a). Nominal scales were also used for few personal information questions. The researchers focused mainly on inferential statistics with the purpose to test the hypotheses, but for description of facts found in data, tools of descriptive statistics were

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also used. Data were prepared for application of statistical treatments for further descriptive and confirmatory analyses. Three hypotheses were developed and tested to find as to whether they had answered the research questions. Two independent samples t-tests were performed to analyze difference between mean values of two groups in the respective data set. Hypotheses were: H1: There is a significant difference of opinion between managers/employees working with public and private sector organizations regarding (a) outcomes of effective performance appraisal and (b) detriments to effectiveness of performance appraisal H2: There is a significant difference of opinion between managers and employees working with public/private sector organizations regarding (a) outcomes of effective performance appraisal and (b) detriments to effectiveness of performance appraisal. H3: There is a significant difference of opinion between male and female managers/employees working with public/private sector organizations regarding (a) outcomes of effective performance appraisal and (b) detriments to effectiveness of performance appraisal.

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY Research Design

The research design is the conceptual structure with in which research is conducted it consist the blue print of the collection measurement and analysis of data. In this project the research design was adopted for the Descriptive cum Analytical The main purpose of such studies is that of formulating a problem for more precise investigation or of developing the working hypothesis from an operational point of view Research design is simply the framework or plan for a study, used as a guide in collecting and analyzing data. There are three types of Research Design:1. Exploratory Research Design:- The major emphasis in exploratory Research design is on discovery of ideas and insights. 2. Descriptive Research Design:- The Descriptive Research Design Study is typically concerned with determining the frequency with which something occurs or the relationship between two variables. 3. Causal Research Design:- A Causal Research Design is concerned with determining cause and effect relationship. Descriptive cum Analytical Research Design is used in my project report. DATA COLLECTION SOURCES Research work was done from two sources:(1) Primary data (2) Secondary data

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Primary data was collected by questionnaire and interview in the organizations. The questionnaire comprised of closed and attitude questions. The opinion on existing Performance Appraisal practices and their affectivity were

collected through questionnaire which was circulated to all the employees at all levels and the results have been analysed on the basis of agree and disagree. The methodology for collection of data also included interviews and discussion with the top management of the organization. Secondary data: It was collected by reviewing different literatures, from published books, management journals, articles published by the other researchers on 360 Degree Appraisal. Sampling: The total sample size for this project was 50 employees at Kashipur Sugar Mills
Ltd.. The information collected through above methods has been tabulated,

analysed and interpreted. Finally an overall assessment of the contribution of top management, supervisory staff has been effectiveness of the organization. SAMPLING PLAN: Sample Size = 50 Employees Sample Area = Kashipur Sugar Mills Ltd. Duration = 45 Days DATA PRESENTATION AND ANALYSIS: Pie Diagrams made towards improving the

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FINDINGS & ANALYSIS

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FINDINGS AND ANALYSIS

1. In your company, a r e the key competencies required for each job a l r e a d y identified? Response Category Very true True Partly true Not true No. of responses 0 4 9 37 Percentage 0 8 1 74

8 18 Very True True Partly True Not True

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Inference:

Most of the respondents (74%) found the above statement to

be Not true. This was followed by 18% of the respondents feeling that this statement was Partly True for organization. Only 8% of the people found it to
be True. Remarks: Although the appraise does not have a clear understanding of what is expected of him at the beginning of the year (Inference I), both he and the appraiser know what his job is all about. This also shows that although an employee knows what his current to do to be rated higher by the reporting officer. The responsiveness in category of Partly True and Not True may be due to the face that job content in
Kashipur Sugar Mills Ltd. .is flexible and not well defined and some people find it

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difficult to define their jobs. However, most of the people have a general idea of the scope of their jobs.

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2. Are there mechanisms that help employees develop their potential for the next round of job? Response Category Very true True Partly true Not true No. of responses 0 5 25 20 Percentage 0 10 50 40

0 40

10 Very True True Partly True 50 Not True

Inference: Quite a large number of respondents (40%) shared the view that the appraisal system did not give a clear understanding of all appraisals, job to both appraiser and appraise by saying that it was Not True. Only 50% and 10% of the respondents felt that the statement was True and Partly True respectively. Remarks: Although the appraise does not have a clear understanding of what is expected of him at the beginning of the year (Inference I), both praise and the appraiser know what his job is all about. This also shows that although an employee knows what his current to do to be rated higher by the reporting officer. The responsiveness in category of Partly True and Not True may be due to the face that job content in Kashipur
Sugar Mills Ltd. is flexible and not well defined and most people find it difficult to define

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their jobs. However, most of the people have a vague idea of the scope of their jobs.

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4. Do the employees regularly receive feedback about their potential for higher level jobs? Response Category Very true True Partly true Not true No. of responses 0 8 7 35 Percentage 0 16 14 70

16 14 Very True True Partly True Not True

70

Inference: 70% of the respondents agreed that the appraisal system did not helped them to know their potential to perform at higher levels. Plan their performance well by saying that it was Not True. Only 16% and 14% people felt that this statement was True and Partly True. Remarks: The above inference shows that the PA system in Kashipur Sugar Mills Ltd.does not give feedback about planning for performance to its employees. It helps anticipating work needs in order to arrange work in logical order. It also helps in devising efficient methods to attain pre-determined plans. Again due to flexibility in job content, some people may have found problems in planning their performance systematically.

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4. Is job rotation practiced widely to help people develop their potential in new areas?

Response Category Very true True Partly true Not true

No. of responses 7 18 25 0

Percentage 14 36 50 0

14 Very True True

50 36

Partly True Not True

Inference: About 50% of the respondents felt that the above statement was Partly True. It was followed by 36% people feeling that it was True with 14% believing that it was Very True. Remarks: Job rotation is the most economical way of providing training to the employees. It facilitates both organization and individual development. Job rotation gives an individual hand on experience for carrying out various different functional activities. performance appraisal system should include this process in The

the training need

identification performance.

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5. Does the appraisal system provide an opportunity for self-review and reflection?

Response Category Very true True Partly true Not true

No. of Responses 0 0 13 37
0 0 26

Percentage 0 0 26 74

Very True True Partly True Not True 74

Inference: There is a general agreement on then fact that the PA system in Kashipur Sugar Mills Ltd. does provide ample opportunity for self-review and reflection. 74% of the people felt that it was Partly True with 26% agreeing. Remark: The presence of self-appraisal procedure in the PA appraisal system is an important reason for the above inference. The self appraisal includes questions on major achievements, constraints in performance, type of training required, tasks/activities undertaken successfully during the year, problems faced etc. It also includes suggestions on making the job interesting and challenging and plans to improve effectiveness. Due to this fact, employees may have felt that they were participating actively in their own appraisal by self -review and reflection on various issues.
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6. Are promotions based strictly on need rather than to reward individuals?

Response Very true True Partly true Not true

No. of Responses 0 4 25 21

Percentage 0 8 50 42

0 42

8 Very True True Partly True 50 Not True

Inference :50% of the respondents believe that the above statement is Partly True This was closely followed by 42% of the respondents rating it as Not True and 8% of the respondents feeling that it was True. Remarks :The performance appraisal is completely need based the organization recognizes and promotes high achievers only if there are vacancies available in the organization. This has a negative impact on people who are not rewarded and promoted duly for their good performance. There should be a system of rewarding employees either in monetary terms or in terms of recognition.

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7. Does the appraisal system give each appraise an idea of what is expected of him next year? Response Very true True Partly true Not true No. of Responses 0 10 26 14 Percentage 0 20 52 28

28

20 Very True True Partly True Not True 52

Inference: 52% of the respondents felt that the above statement was Partly True. This was followed by 28% and 20% of the respondents feeling that it was Not True and True respectively. Remarks: Each employee needs to have an idea as to what accountabilities will he have if his appraisal is given a good remark for working at higher levels. The appraise should know his potential, which will go a long way in his higher level jobs.

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8. Is it designed to aid the appraise and appraiser jointly understand the Formers job? Response Very true True Partly true Not true No. of Responses 0 14 22 14 Percentage 0 28 44 28

28

28 Very True True Partly True Not True

44

Inference :There was a mixed response to the given statement. 44% of the responses consisted of Partly True ratings. 28% respondents believed that this was Not True whereas 28% believed that this was True. Remarks :The above inference implies that Kashipur Sugar Mills Ltd. PA system does score well employees in the aspect of transparency in communicating an not

performance through performance review and discussion. The discussions

between appraisal processes. The interaction on self appraisals is not a common feature and is only done on certain occasions (exceptionally good or bad performance etc.) The presence of 44% responses as True may be due to good relationship and open communication shared by some of the appraiser appraise pairs.
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9. Does the performance appraisal provide an opportunity for self review and reflection?

Response Category Very True True Partly True Not True

No. of Responses 0 2 25 23

Percentage 0 4 50 46

0 4 46 50 Very True True Partly True Not True

Inference: Most of the respondents agreed that the appraisal system catered to their development needs (50% believed that it was Partly True) and it was very closely followed by 46% saying it was Not True. There were 4% cases, which believed that it was True. Remarks: Although the inference indicates that the PA system allowed mutuality, trust and open communication between superior and subordinates, there may be chances of biases in employees while rating this statement. The answers may have varied depending on proximity etc. of the employee with his superior. However present of 50% completely true answers help us in obtaining a general view on the ability of PA system to allow communication

between superiors and subordinates in Kashipur Sugar Mills Ltd.. Therefore, it can be assessed that the Performance Appraisal does provide ample opportunity for

open communication between appraiser and appraise.

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10. Does the appraisal procedure allow the appraise to express his developmental needs?

Response veryCategory true True Partly true not true

No. of Responses 0 8 16 26

Percentage 0 16 32 52

16 Very True True

52 32

Partly True Not True

Inference :The most common response on above statement was an astounding Not True with 52% people agreeing that the PA system was free of any biases. It was followed by 32% saying that it was True and 16% saying that it was Partly True. Remarks :The above inference implies that people are satisfied with the PA system in
Kashipur Sugar Mills Ltd. and believe that it provides scope for developing their potential.

This may be due to the fact that the self appraised of the appraise invites suggestions on job enrichment, training needs and steps effectiveness. to be taken to improve individuals

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11. Does the system have scope to correct the biases of the assessor through a super review?

Response Category very true True Partly true not true

No. of Responses 0 2 14 34

Percentage 0 4 28 68

0 4 28 Very True True Partly True 68 Not True

Inference: 68% of the people rated the above statement as Not True 28% believed it was Partly True with 4% disagreeing by saying that it was True. Remarks: A performance appraisal system, which is perceived as bias-free by its executives, is an achievement for the organization. In the PA system the reporting officer appraises a section of people whereas the reviewing officer appraises the performance of an entire department. also the reviewing officer is the immediate superior of

reporting officer. Any disagreement between the assessments of an employee has to be duly discussed and recorded. Also, any noticeable difference of opinion between self appraisal and appraisal by reporting officer has to be accounted for. All the above factors help in correcting the biases,. If any, of reporting officer.

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12. Does the appraisal system provide for a frank discussion between appraiser and appraise?

Response Category Very True True Partly True Not True

No. of Responses 0 6 0 44

Percentage 0 12 0 88

12

0 Very True True Partly True Not True

88

Inference: An astounding 88% rated the above statement as not true with 12% that it was true. Remarks: Although, most of the people felt that there was mutuality and trust between appraiser a n d apprais e , it may again depend on the proximity and relationship shared by an employee and his/her boss. The ratings may be based, as the employees may have felt that a negative answer may adversely affect them. The reason behind this conclusion is that a low score on extent of communication and discussion between appraisers and appraise and high score on mutuality and trust give a contradictory view.

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13. Does the procedure allow for the communication of CEOs goal to the workforce?

Response Category Very True True Partly True Not True

No. of Responses 0 2 10 38

Percentage 0 4 20 76

0 4

20 Very True True Partly True Not True

76

Inference: The typical response in this case was Not True, by 76% of the respondents. 20% rated the above statement as Partly True and 4% as True. Remarks: Even if half of the respondents gave a mid-way answer, presence of 44% Slightly True answers give a negative picture of the above statement. This implies that the business goals are not well integrated w ith individual goals . There is no direct

linkage between the management plans and evaluation criteria. This may be due to the fact that either the business goals are not quantified enough or the management is not quick enough to communicate its plans to the staff below.

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14. Does the appraisal system bring out the training needs of the employees.

Response Category Very True True Partly True Not True

No. of Responses 0 3 22 25

Percentage 0 6 44 50

6 Very True True

50

44

Partly True Not True

Inference: 50% of the respondents believed the above statement to be Not True closely followed by 44% people believing it to be Partly True. Only 6% believed it to be True. Remarks :A few people get the training related to their competencies skills that needs to be enhanced for successful completion of their work. Most of the people do not get adequate training according to changes in their job description i.e. responsibilities and KRAS.

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15. Does the performance appraisal system clarify the career prospects, aspirations and intentions?

Response Category Very True True Partly True Not True

No. of Responses

Percentage

0 5 40 40

0 10 80 80

0 80

10 Very True True Partly True 80 Not True

Inference: The typical response (80%) for the above statement was Not True 10% employees believed it to be Partly True with an equal 10% employees believing if to be Not True. Remarks: The general picture drawn from the above inference is that all the employees are not clear as to what the PA system is all about and what is the reason behind its existence. This shows that PA system has acquired an important status in Kashipur
Sugar Mills Ltd. with all employees acknowledging its presence and essence.

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16. The appraisal system provides a rational basis for salary recommendations?

Response Category Very True True Partly True Not True

No. of Responses 0 8 14 28

Percentage 0 16 28 56

16 Very True True Partly True 28 Not True

56

Inference: 56% of the respondents felt that the above statement was Not True. 28% responses included Partly True ratings whereas 16% responses included True ratings. Remarks: The employees do not want a fixed increment for their great performance. The company should make recommendations related to salary on the basis of regular performance feedback about every employee since the frequency of performance

measurement varies from department to department, it is difficult to carry out this work smoothly.

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17. Do the company relate reward to your performance?

Response Category Very True True Partly True Not True

No. of Responses 0 10 4 36

Percentage 0 20 8 72

20 8 Very True True Partly True Not True

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Inference: Most of the respondents (72%) felt that the above statement was Not True. 20% believed it to be True whereas a mere 8% felt that it was partly True. Remarks: The Company uses the reward system as a motivating force for enhancing the performance of its employees. Rewards should be promptly given to high achievers in terms of increment, promotions, and increased job responsibilities etc. for their accomplishment.

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FINDINGS

In this section, basic data for a group of 50 employees from lower, middle, senior and top managers is presented on various attributes of performance appraisal. Frequency and frequency percent scores were computed for each of the groups of the entire selected variable. Finding through the Questionnaire Same reason c o u l d be attributed to the fact that code 1 managers were absolutely clear of what was expected out of them every year, whereas 50% senior management ware clear or partly clear about the same and the about 20% of middle management were not clear about it and still further, the 71% of lower management was not aware of what was expected out of them every year. 85% of code 4 employees said that they could express their reason of failure. The responses of 50% of Middle Managers were bit favorable whereas 100% senior management also thought that they did not get the opportunity to express their cause of failure. The 60% of top management were portly able to express their cause of failure. This may be because the appraisal system is more of less performance based and human factor is by and large overlook. Whereas, at the lower levels of the organization, performance can be quantified, and the managers are made accountable at the higher echelons the tasks are too complex and therefore cannot be assessed on the basis of quantified performance and therefore the top and senior management
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believed that the promotions are also for motivation whereas the attitude wanes as the level of hierarchy goes up. This is probably because of the appraisal of performance based on the quantity or results. If the employees output is good of better they get promotions and also get motivation to achieve better

performance. At the higher levels the results are more of subjective nature therefore promotions does not accrue on the basis of quantified results only. Most of the managers feel that the mechanism for potential appraisal is not adequate. This may be, because the training programmers are also not developed. As far as feedback is from superiors is concerned, most of the top and senior management were of the view that they constantly receive feedback. This is because, they take decisions crucial to the existence of the organization and therefore are closely watched and monitored as compared to the employees in the lower & middle levels. Again the top management felt that they with their superior decide about their job but 100% of senior management did not feel the same at all. This is because again due to power centeredness and power difference in the organization, being a tall organization the superior are not accessible to their subordinate. 60% of lower management thought that their creativity was definitely not adequately recognized whereas the top management
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believed that the organization encouraged creativity. highlights

This

the g a p o f communication in the organization

and differences in the perception of culture in the organization by different grades of employee. 70% of lower management thought that the system was not free from biases and same is felt by most of the middle, senior and top management. This shows that human instincts and behaviors influence the performance appraisal system. 60% of l o w e r management was not clear about the goals and objectives of the organization. Most of top management thought that they were clear or very clear, about the organization goals. This is because, the power distance is extent and

communication system of the organization is not very effective. This also shows that transparency is lacking in the system. 70% of lower managers thought that the performance

appraisal system did not identify their training needs. 80% of senior managers also thought the same. But the view of top management differed in the sense that they felt that the system helped them surface their training needs. The reason being that the training programmes are not fully developed and are not constantly evaluated in the organization. The top management felt that there was a scope of super review. The senior management also felt a bit the same but lower and middle management keep attending meetings and had already developed rapport with their superiors and so could easily talk out their appraisal results

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whereas this is not so for lower and middle management. They are not able to approach their senior easily and are therefore could not appeal for super- reviews. 60% of lower managers said that they do not get opportunity for self review and reflection. This is because performance appraisal is lacking human touch to it. The appraisals are entirely based on performances, overlooking the cause of successes and failures. The appraisal system thus does not meet individuals developmental needs and also does not contribute to employees job satisfaction and moral development.

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LIMITATIONS

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LIMITATIONS
I faced some of the limitations while preparing this report. Some of them are: Lack of expertise trainer handed in the prosecution of Performance Appraisal program. Lack of feeling in people of against the awareness for the Performance Appraisal t program. Search for the exact Appraisal was also difficult to define. Assessment of the Appraisal period was also a tuff work to decide for how long it should continue

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SUGGESTIONS

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SUGGESTIONS
To be very legally defensible and effective a system would have these suggestions: Employee participation in establishing performance standards Standards based on critical elements of job; clearly recorded in writing Employee advised of critical requirements before the appraisal System should not be based on interpersonal comparisons (eg. curve) Performance Appraisal done in writing at least annually

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CONCLUSION

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CONCLUSION
Organizational development, which rests on the strength and support of the human elements, is catching the imagination of several policy-makers leading to the promulgation of several techniques and tools in this direction. The emergence of the 360-degree performance appraisal, a comprehensive mechanism to know the pulse of the organization, has got a lot of implications.

Formal systems for appraising performance are neither worthless nor evil, as some critics have implied: Nor are they panaceas, as many managers might wish. A formal appraisal system is, at the very least, a commendable attempt to make visible, and hence improvable, a set of essential organization activities. Personal judgments about employee performance are inescapable, and subjective values and fallible human perception are always involved. Formal appraisal systems, to the degree that they bring these perceptions and values into the open, make it possible for at least some of the inherent bias and error to be recognized and remedied. Many organizations that go out shopping for performance appraisals, 360 or other versions, have already taken a step in the wrong direction. They typically have forgotten to diagnose their real needs. If your business has a desire for the 360 Appraisal process make sure you ask yourself "Why?" What is your organization's or management's real need? Don't do it because everyone else seems to be doing it. Make sure the process and philosophy are appropriate to your organization and its values. By improving the probability that good performance will be recognized and rewarded and poor performance corrected, a sound appraisal system can contribute both to organizational morale and organizational performance. Moreover, the alternative to a bad
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appraisal program need not be no appraisal program at all, as some critics have suggested. It can and ought to be a better appraisal program. And the first step in that direction is a thoughtful matching of practice to purpose.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

Book: Kothari C.R. Research Mehtodology Vishwa Publication Second Edition Page No. 1-20 Patro S.K The Growth and Challenges of Rural Academic Foundation New Delhi edition 1991 Page No. 65

Websites www.Kashipur.com

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QUESTIONNAIRE

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QUESTIONANIRE
Name: Designation: Date: Age:

1. In your company, are the key competencies required for each job already identified? a) Very true c) Partly true b) true d) not true

2. Are there mechanisms that help employees develop their potential for the next rung of job? a) Very true c) Partly true b)true d) not true

3. Do the employees regularly receive feedback about their potential for higher level jobs? a) Very true c) Partly true b) true d) not true

4. Is job rotation is practiced widely to help people develop their potential in new areas? a) Very true c) Partly true b) true d) not true

5. Are your companys promotion policies clearly defined and shared with all employees? a) Very true c) Partly true b) true d) not true

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6. Are promotions are based strictly on need rather than to reward individuals? a) Very true c) Partly true b) true d) not true

7. Does the appraisal system give each appraise an idea of what is expected of him next year? a) Very true c) Partly true b) true d) not true

8. Is it designed to aid the appraise and appraisers jointly understand the formers job? a) Very true c) Partly true b) true d) not true

9. Does the performance appraisal provide an opportunity for self review and reflection? a) Very true c) Partly true b) true d) not true

10. Does the appraisal procedure allow the appraise to express his developmental needs? a) Very true c) Partly true b) true d) not true

11. Does the system have scope to correct the biases of the assessor through a super review? a) Very true c) Partly true b) true d) not true

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12. Does the appraisal system provide for a frank discussion between appraisers and appraise? a) Very true c) Partly true b) true d) not true

13. Does the procedure allow for the communication of CEOs goal to the workforce? a) Very true c) Partly true b) true d) not true

14. Does the appraisal system bring out the training needs of the employees? a) Very true c) Partly true b) true d) not true

15. Does the performance appraisal system clarify the career prospects, aspirations and intentions? a) Very true c) Partly true 16. Does the appraisal system provide b) true d) not true a rational basis for salary

recommendations? a) Very true c) Partly true b) true d) not true

17. Does the company relate reward to your performance? a) Very true c) Partly true b) true d) not true

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