PROJECT REPORT

Project Title

PERFORMANCE APPRAISAL
SYSTEM
&
ITS EFFECTIVENESS IN AN
ORGANIZATION
REPORT SUBMITTED FOR THE PARTIAL FULFILLMENT OF
THE POST GRADUATE DIPLOMA IN

MANAGEMENT
(APPROVED BY AICTE)

(2007-2009)

SUBMITTED TO

SUBMITTED BY
Mahendra Asati

INJ BUSINESS SCHOOL

GREATER NOIDA
CERTIFICATE
This is to certify that__________________ , _______________ Prasad is a
bonafied student of two year regular course of PGDM(post graduation
diploma in management) in our institute.
The project titled "Study of Performance appraisal in an organization and
it's effectiveness " is her original work.
The student bears a good moral character.

Faculty (HR Department)

ACKNOWLEDGEMENT
My sincere thanks to faculty supervisor __________________ and agency
supervisor _____________________ under whose able guidance and kind
cooperation I was able to complete the project work titled "Study of
Performance Appraisal System and its Effectiveness in an Organisation"
.
All those employees of Dabur India Ltd deserve special thanks for their
cooperation and help in the collection of necessary and relevant material for
this work.
Also, I do thank and remember my friends for their effort and helping hand.
Every effort has been made to enhance the quality of work. However, I owe
the sole responsibility of the shortcoming, if any, in the study.

_______________________

CONTENTS
Page
Nos.
Chapter 1: Introduction
Chapter 2: Objective and Methodology of the Study
Chapter 3: Oraganisation Profile
Chapter 4: Performance Appraisal- Theoretical Review
Chapter 5: Performance Appraisal System in
Dabur India Ltd.
Chapter 6: Analysis and Interpretation of Data
Chapter 7: Conclusion and Suggestions
ANNEXURES

CHAPTER 1
INTRODUCTION

CHAPTER 1
TITLE OF THE PROJECT:

Study of Performance Appraisal System and Its

Effectiveness in an Organization
INTRODUCTION
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!
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 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.
7

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 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,
8

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).
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
9

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
appraises 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.
On the other hand, there is a strong rival argument which claims that
performance appraisal must unequivocally be linked to reward outcomes. The

10

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 appraises 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; appraises 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
Recent research (Bannister & Balkin, 1990) has reported that appraises 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 appraising performance is, say critics, based on inconsistent and
muddled ideas of motivation.

11

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.
There are basically three purposes to which performance appraisal can be put.
First, it can be used as a basis for reward allocation. Decision as to who gets
salary increase, promotion, and other rewards are determined by their
performance evaluation. Second, these appraisals can be used for identifying
areas where development efforts are needed. The performance appraisal is a
major tool for identifying deficiencies in individuals. Finally it can be used as
a criterion against which selection devices and development programs are
validated. As a key input into management's reward and punishment decision,
performance appraisals can motivate or de-motivate employees.
Three different approaches exist for doing appraisals. Employees can be
appraised against
1.

Absolute

standards 2. Relative
standards
3.

12

Objectives

PERFORMANCE MANAGEMENT

Since organizations exits to achieve goals, the degree of success that

individual employees have in reaching their individual goals is important in
determining organization effectiveness.
Performance system is fundamentally, a feed back process, which require
sustained commitment. The cost of failure to provide such feedback may result
in a loss of key professional employees, the continued poor performance of
employees who are not meeting performance standards and a loss of
commitment by employees, in sum, the myth that the employee know what.
they are doing without adequate feedback from management can be an
expensive fantasy.
THE APPRAISAL PROCESS

1.

Establishing Performance Standard

2.

Communicate Performance expectations to employees

3.

Measure actual performance

4.

Compare actual performance with standards

5.

Discussion with the employees and identification development

programs to bridge the gap.

6.
13

Initiate action

THE PURPOSE OF APPRAISING PERFORMANCE

In general the appraisal systems serve a two fold purpose
1.

To improve the work performance of employees by helping them

realize and use their full potential in carrying out their firms mission.

2.

To provide information to employees and managers for use in making ,

work related decisions.

More specifically appraisals serve the following purposes.

a)

Appraisals provide feedback to employees and help the. "' management

identify the areas where development efforts are "' needed to bridge the
gaps thereby serving as vehicles for personal " and career development.

b)

It helps management spot individuals who have specific skills so that

their promotions/transfer are in line with organizational requirements.

c)

Appraisal serve as a key input for administering a formal organisation

reward and punishment system.

d)

The performance system can be used as a criterion against which

selection devices and development programs are validated.

14

REQUIREMENT

OF

THE

PERFORMANCE

MANAGEMENT

SYSTEM.

Reliability: The foremost requirement of a sound system is reliability. In this

contact it refers to consistency of judgment. For any given employee,
appraisals made by raters working independently of one another should agree
closely. But raters with different perspective (e.g. supervisors, peers,
subordinates) may see the same individuals job performance very differently.
To provide reliable data, each rater must have an adequate opportunity to
observe what the employee has done and the condition under which he or she
has done it. By making appraisal system relevant, sensitive and reliable we
assume the resulting judgment are valid as well.
Acceptability: In practice, acceptability is the most important requirement of
all, for it is true that human resources program must have the support of.
those who will use them. Unfortunately, many organizations do not put
much effort into garnering the front end support and participation of those
who will use the appraisal system. Ultimately it is management's
responsibility to define as clearly as possible the type and level of job
behaviour desired of employees.
It is important to enlist the active support and cooperation of subordinates by
making explicit what aspects of job performance they will be evaluated on.

15

Practicality: This implies that appraisal instruments are easy for managers and
employees to understand and to use.

For years, personnel specialists have searched for the 'Perfect; appraisal
method as if it were some kind of miraculous cure for many pitfalls that
plague organizations. Such a method does not exist. In tomorrows world of
work far more emphasis needs to be placed on process issues. Factors such
as timing and frequency are no less important. In sum performance appraisal
is a dialogue involving people and data. Both technical and human issues are
involved. Neither can be overemphasized at the expense of the other.
WHO SHOULD EVALUATE PERFORMANCE?
The most fundamental requirement for any rater is that he or she has an .
adequate opportunity to observe the rates job performance over a reasonable
period of time. This suggest several possible raters.
The immediate supervisor: Generally appraisal is done by this person. He is
probably the most familiar with the individual's performance and in most
jobs has had the best opportunity to observe actual job performance. Further
more, the immediate supervisor is probably best able to relate the
individual's performing to department and organizational objectives.
In some jobs such as outside sales, law enforcement and teaching, the
immediate supervisor may observe a subordinate's actual job performance
16

rarely (and indirectly thru written reports). Here judgment of peers play
important role. However, there is a danger of potential bias.
Subordinates: Appraisal by subordinates can be useful input to the immediate
development. Subordinates know first hand the extent to which the supervisor
actually delegates, how well he communicates, the type of leadership he has
and the extent to which he or she plans and orgasms.
Self appraisal: On one hand it improves the rate's motivation and moral, on
the other it tends to be more lenient, less variable and biased. The evidence on
the accuracy of self assessment is fairly complex.
In industry it is seen that feed back/ input is taken from various sources
-Peers, subordinates, superiors etc. Some companies have gone step ahead in
taking feedback from the customers and integrating it into the performance
management process.

17

APPROACHES TO PERFORMANCE MANAGEMENT

The traditional approach: The one dimensional model

The Job

Define what results

have to e achieved

Performance contact

Define a set of key

objectives against the
accountabilities
Accountabilities i.e,
output
Review performance
against the key
objectives

In this model job expectations are defined in terms of what results have to be
achieved. This model doesn't have a long term focus and can't be used for
employee development and career path planning,

18

A satisfactory performance implies doing a job effectively and efficiently,

with a minimum degree of employee -created disruptions. Employees are
performing well when they are productive. Yet productivity itself implies both
concern for effectiveness and efficiency. Effectiveness refers to goal
accomplishment. Efficiency evaluates the ratio of inputs consumed to outputs
achieved. The greater the output for a given input, the more efficient the
employees. Similarly, if output is a given, consumed to get that output results
in greater efficiency.
There are basically three purposes to which performance appraisal can be put.
First, it can be used as a basis for reward allocations. Decisions as to who gets
salary increases, promotions, and other rewards are determined by their
performance evaluation. Second, these appraisals can be used for identifying
areas where development efforts are needed. Management needs to spot those
individuals who have specific skill or knowledge deficiencies. The
performance appraisal is a major tool for identifying these deficiencies.
Finally, the performance appraisal can be used as a criterion against which
selection devices and development programs are validated.

19

Chapter 2
OBJECTIVE
&
METHODOLOGY

20

Chapter 2
OBJECTIVE & METHODOLOGY

1. Objective of the study

This project aims at studying the system of performance appraisal and its
effectiveness in an organization. Performance appraisal is the most significant
and indispensable tool for the management as it provide useful information for
decision making in area of promotion and compensation reviews.
Thus broad objectives of the study includes:
To know the present system of performance appraisal
To know the extent of effectiveness of the appraisal system
To identify and know the area for improvement system

2.

Sample of the study

The population covered for the present study consisted of employee belonging
to supervisory and the level above. For the purpose of this study, survey
covered the employee of DABUR INDIA LTD. falling under supervisor and
the level above.
The study covered a sample of 100 employee belonging to supervisory level
and above.

21

3.

Methodology of the project

The project work has been carried out in three stages, a structured
questionnaire with objective and question was communicated tested and
finalize. During the second stage, the questionnaire was administered to the
employees at Dabur India Ltd. by contacting them. The work relating to data
entry compilation, data analysis and report writing constituted the third stage.
Interview index was also used at some places to get information on the project
subject.
The details of the methodology adopted are presented below:
The Questionnaire
Keeping in view the objective of the study, questionnaire was designed and
tested on few employees. After getting the proper response and sanction from
the concerned department the questionnaire was finalized.
Response to Questionnaire
In all 96 questionnaire were given to employees falling in the category of
supervisors and above. Out of which 48 could be collected back duly
completed. The researcher individually contacted the employees to get
response on the questionnaire.
Data entry and analysis
It has been an uphill task to enter the enormous data received through the
questionnaire which consisted nearly 20 questions. Response to the descriptive
22

questions though very few but was valuable for the purpose of study. Hence
these were further structured in time with the system adopted for compilation
and data analysis.
Limitations
Many employees gave guarded answers to some crucial questions.
Some of them did not fill the questionnaire due to lack of time
Response could not be collected from the total sample selected.
Some of the questionnaire could not be completed due to reasons other than
time factor.
The confidentiality of the system created some problem in getting information.

23

Chapter 3
ORGANISATION PROFILE

24

Chapter 3
ORGANISATION PROFILE
.
History
The story of Dabur goes back to 1884, to a young doctor armed with a
degree in medicine and a burning desire to serve mankind. This young man,
Dr. S. K. Burman, laid the foundations of what is today known as Dabur
India Limited. From those humble beginnings, the company has grown into
India's leading manufacturer of consumer healthcare, personal care and food
products. This phenomenal progress has seen many milestones, some of
which are mentioned below:
1884 -Dr. S K Burman lays the foundation of what is today known
as Dabur India Limited. Starting from a small shop in Calcutta, he
began a direct mailing system to send his medicines to even the
smallest of villages in Bengal. The brand name Dabur is derived
from the words 'Da' for Daktar or doctor and 'bur' from Burman.
1896 -As the demand for Dabur products grows Dr. Burman feels
the need for mass production of some of his medicines. He sets up a
small manufacturing plant at Garhia near Calcutta.
Early 1900s -The next generation of Burmans take a conscious
decision to enter the Ayurvedic medicines market, as they believe
that it is only through Ayurveda that the healthcare needs of poor
25

Indians can be met.

1919 -The search for processes to suit mass production of
Ayurvedic medicines without compromising on basic Ayurvedic
principles leads to the setting up of the first Research &
Development laboratory at Dabur. This initiates a painstaking study
of Ayurvedic medicines as mentioned in age-old scriptures, their
manufacturing processes and how to utilize modern equipment to
manufacture these medicines without reducing the efficacy of these
drugs.
19208 -A manufacturing facility for Ayurvedic Medicines is set up
at Narendrapur and Daburgram. Dabur expands its distribution
network to Bihar and the northeast.
1936 -Dabur India (Dr. S K Burman) Pvt. Ltd. is incorporated.
1940 -Dabur diversifies into personal care products with the launch
of its Dabur Amla Hair Oil. This perfumed heavy hair oil catches
the imagination of the common man and film stars alike and
becomes the largest hair oil brand in India.
1949 -Dabur Chyawanprash is launched in a tin pack and becomes
the first branded Chyawanprash of India.
1956 -Dabur buys its first computer. Accounts and stock keeping are
one of first operations to be computerized.
26

 1970 -Dabur expands its personal care portfolio by adding oral care
products. Dabur Lal Dant Manjan is launched and captures the
Indian rural market.
1972 -Dabur shifts base to Delhi from Calcutta. Starts production
from a hired manufacturing facility at Faridabad.
1978 -Dabur launches the Hajmola tablet. This is the first time that a
classical Ayurvedic medicine is branded -from Shudhabardhak bati
to Hajmola tablet.
1979 -The Dabur Research Foundation (DRF), an independent
company, is set up to spearhead Dabur's multi-faceted research.
1979 Commercial production starts at Sahibabad. This is one of the
largest and most modern production facilities for Ayurvedic
medicines in India at this time.
1984 -The Dabur brand turns 100 but is young ~enough to
experiment with new offerings in the market.
1986 -Dabur becomes a public limited company through reverse
merger with Vidogum Limited, and is re-christened Dabur India
Limited.
1989 -Hajmola Candy is launched and captures the imagination of
children and establishes a large market share.

27

 1992 -Dabur enters into a joint venture with Agrolimen of Spain for
manufacturing and marketing confectionery items such as bubble
gums in India.
1993 -Dabur sets up the oncology formulation plant at Baddi,
Himachal Pradesh.
1994 -Dabur India Limited comes out with its first public issue. The
Rs.10 share is issued at a premium of Rs.85 per share. The issue is
oversubscribed 21 times.
1994 -Dabur reorganizes its business with sales and marketing
operations being divided into 3 separate divisions.
1994 -Dabur enters the oncology (anti-cancer) market with the
launch of Intaxel (Paclitaxel). Dabur becomes only the second
company in the world to launch this product. The Dabur Research
Foundation develops the unique eco-friendly process of extracting
the drug from the leaves of the Asian Yew tree.
1995 -Dabur enters into a joint venture with Osem of Israel for food
and Bongrain of France for cheese and other dairy products.
1996 -Dabur launches Real Fruit Juice which heralds the company's
entry into the processed foods market.
1997 -The Foods division is created, comprising of Real Fruit Juice

28

and Hommade cooking pastes to form the core of this division's

product portfolio.
1997 -Project STARS (Strive To Achieve Record Successes) is
initiated by the company to achieve accelerated growth in the
coming years. The scope of this project is strategic, structural and
operational changes to enable efficiencies and improve growth rates.
1998 -The Burman family hands over the reins of the company to
professionals. Mr. Ninu Khanna joins Dabur as the Chief Executive
Officer. ..
1999-2000 -Dabur achieves the Rs.IOOO crore turnover mark
What is that life worth which cannot bring comfort to others", these
words of Dr. S K Burman have inspired generations of Dabur. Keeping
r" these golden words in mind, Sandesh or the Sustainable Development
Society was set up to carry out welfare activities aimed at improving the
A quality of life of the rural people in its area of operation. This society is
given complete financial and managerial support by Dabur India
Limited.

29

PRODUCTS AND SERVICES

A vast array of products touching the lives of almost every individual, from
an infant to a grand old man, from poor to rich; that's how the Dabur's range
of health personal care and food products could be best explained. Today
Dabur trust has traveled beyond the boundaries of India and is available in
more than 50 countries worldwide. These value for money products have
made Dabur a household name Healthcare is one of the biggest and oldest
divisions of Dabur with a wide range of OTC healthcare products. It
comprises of:
Ayurvedic Health Tonics
Chyawanprash
The leader in the chyawanprash market in India, Dabur Chyawanprash is
one of the most well known Ayurvedic products in India and abroad. An
effective herbal immune modulator, Dabur Chyawanprash has the essential
goodness 'of amla and over 50 other herbs. Dabur has conducted several
clinical trials on this product, which confirm its efficacy as a unique
product that strengthens the body from within.
Digestives
Hajmola Tablets
Hajmola Tablets are the first classical Ayurvedic products to be branded
and positioned as fun-filled product with medicinal properties. It finds

30

mention in Ayurvedic scriptures as Kshudhavardhak Bati, and was branded

as Hajmola, a name derived from Hajma which means digestion in Urdu. It
is available in regular and tamarind flavour.

Hajmola Candy
To cash in on the brand equity enjoyed by Hajmola, Dabur launched Hajmola
Candy in 1989. Since then, the company has added Mango and tamarind
flavors besides the regular one.

Pudin Hara

One of the oldest products in Dabur portfolio, Pudin Hara is available in liquid
as well as capsule form. It has a special combination of mint oils and cures
gastric problems without any side effects.
The company has added effervescent powder with goodness of Mint for gas
and acidity and named it Pudin Hara G.
Hingoli
Asafoetida or Hing is mentioned in Ayurveda as an effective aid in digestion,
and is used a lot in Indian cooking. Dabur's Hingoli has all the goodness of
asafoetida and other herbs.

31

Childcare Products
Dabur Lal Tail
The largest baby massage oil in India, it has the goodness of herbs which helps
in strengthening the bones of infants.
Dabur Janma Ghutti
This Ayurvedic preparation helps in strengthening the digestive system of new
borns.

Women Care Products

Efarelle Comfort
A herbal medicine in self gel capsule form to help overcome abdominal pain
during PMS. A combination of natural oils, this formulation gives immediate
relief from pain without any side effects.
The largest division in terms of sales, the Family Products Division of Dabur
has in its portfolio hair care and skin care products, oral care and select foods
like honey.
Hair & Skin Care
Dabur is the leader in hair care products in India, and has covered almost all
the categories of hair oils.

32

Dabur Amla Hair Oil -As a brand has made its mark beyond India and is a
leading hair oil brand in Middle East and Africa. A perfumed heavy hair oil, it
is Dabur's largest brand.
Dabur Special Hair Oil -It is light hair oil that combines the natural hair care
properties of lemon and hibiscus.
Vatika -The fastest growing hair oil brand of India, Vatika has single handedly
created an altogether new category of herbal enriched natural oils. The Vatika
range also includes an herbal shampoo, which has made its mark in the very
first year of its launch in the competitive shampoo market of India.
The company has recently launched Vatika Anti -Dandruff Shampoo having
herbal ingredients to fight the problem of Dandruff
Gulabari -Rose water derived from best of Indian roses makes the skin supple
and glowing.
Oral Care
Dabur Lal Dant Manjan -It is the second largest tooth powder brand of
India and the largest in coloured tooth power category. This herbal tooth
powder is very popular in rural parts of India.
Binaca Toothbrushes -After having acquired this dormant brand a few
years back, Dabur launched toothbrushes under this umbrella. There are
plans to launch other oral care products under the Binaca brand.

33

Dabur Honey
When repositioned in 1993, it totally changed the perception of Indian
consumer. Honey, which was mainly used for its medicinal properties in
India, is today competing for space on breakfast table.
Ayurvedic Specialties is a range of over 350 Ayurvedic Medicines -both.
classical Ayurvedic drugs and proprietary Ayurvedic medicines - developed
by Dabur's own research and development. Dabur has products for all the 16~
categories as defined in the Ayurveda. Some of the leading products in this
category are:
Asav Arishtas -These are medicated decoctions with a self-generated alcohol
content. Dabur has a range of over 30 Asav Arishtas. Some of the well-known
ones include Dashmularishta, Drakshasava, Lohasava, Parthadyarishta and
Ashokarishta.
Chumas -These are finely ground medicinal powders used to treat a variety of
ailments ranging from digestive problems to cough and fever.
Ras Rasayans -Preparations containing mineral drugs as main ingredients are
called Ras Rasayans. Dabur has a range of more than 50 Ras Rasayans which
are used by Ayurvedic practitioners in the cure of host of ailments.
Medicated Oils -The oils boiled alongwith certain prescribed drugs are known
as medicated oils. These oils retain the curative properties of herbs and is used
for inunction and massage. Launched over two years back, the Dabur Foods

34

range include juices under the brand name Real and cooking pastes under the
brand name Hommade. To give a better focus this division has been carved out
as a subsidiary company of Dabur India Limited. Subsidiarie.
Dabur Foods Limited -Dabur Foods Limited, a 100% subsidiary of Dabur
India Limited, is spearheading Dabur's foray into food processing industry.
The company, set up in April 1999, is marketing a range of fruit juices under
the brand name Real, Hommade Cooking Paste and Sauces and Lemoneez
lemon juice.
Dabur was the first company in India to introduce fruit juices in packaged
form without any artificial additive. Real is today the market leader in this
category with more than 50% market share. Hommade cooking paste is the
oply national brand in this category. Lemoneez is the only product in its
category

available

in

unique

drop

and

trickle

pack

and

uniquelPharmaceuticals
Branded Pharmaceuticals -It includes a range of natural ethical products like
New Livfit, Honitus, Ulgel etc. and a range of contrast media and
gynecological.
Oncology -This wide and formidable range includes brands such as Intaxel,
Docetaxel and Topotecan, all of which were manufactured for the first time in
India by Dabur. Little wonder then, that Dabur is the undisputed market leader
in this category in India and has plans to establish itself as a generic oncology
player in select global markets.

35

Bulk Drugs and Chemicals -This range consists primarily of bulks in the
oncology category.

Joint Ventures
Dabon International Limited -Dabur has also collaborated with Bongrain
of France for the manufacture and marketing pf specialty cheese and other
dairy products. This joint venture company has already made its presence
felt in the Indian cheese market through the launch of processed cheese
under the brand name LeBon, and a specialty cheese under the brand name
Delicieux.
Subsidiaries
Dabur has six subsidiary units, which come under the umbrella of the Dabur
India organization. These are:
Dabur Foods Limited -Dabur Foods Limited, a 100% subsidiary of Dabur
India Limited, is spearheading Dabur's foray into food processing industry.
The company, set up in April 1999, is marketing a range of fruit juices under
the brand name Real, Hommade Cooking Paste and Sauces and Lemoneez
lemon juice. Dabur was the first company in India to introduce fruit juices in
packaged form without any artificial additive. Real is today the market
leader in this category with more than 50% market share. Hommade cooking
paste is the only national brand in this category. Lemoneez is the only

36

product in its category available in unique drop and trickle pack and
uniquely shaped tabletop pack.
Dabur Nepal Private Limited -Dabur Nepal was the first manufacturing
base overseas for Dabur group. The company is today the leading exporter
of Nepal and the third largest and most modern manufacturing base for
Dabur. Dabur Nepal is today involved in promoting cultivation of herbs and
apiculture activities in Nepal. The company has set up state of the art
greenhouse at Banepa for developing saplings for 20 medicinal plants.
Dabur Nepal has also set up an Apiculture centre for promoting bee-keeping
activity in Nepal and developing queen bees and bee colonies for exports.
Dabur Egypt Limited -Dabur Egypt is groups gateway to Africa. This
manufacturing base set up a couple of years back to c~ater to the demands of
Middle East and African market is producing Hair Care, Skin Care Products
and Foods.
Dabur Oncology PIc. -Set up recently in UK, this subsidiary of Dabur India
Limited will be manufacturing anti-cancer formulations for European
market. The company is in the process of setting up manufacturing base near
London and is expected to start operation from year 2001.
Dabur Finance Limited
Dabur has an illustrious Board of Directors who are committed to take the
company onto newer levels of human endeavour in the service of mankind.

37

Chapter 4
PERFORMANCE
APPRAISAL

38

Chapter 4
PERFORMANCE APPRAISAL
Since organisation exist to achieve goals, the degree of success that
individual employees have in reaching their individuals goals is important in
determining organizational effectiveness. The assessment of how successful
employees have been at meeting their individual goals, therefore, becomes a
critical part of HRM. This leads us to the topic of performance appraisal.
PURPOSE
There are basically three purposes to which performance appraisal can be
put.
First, it can be used as a basis for reward allocations. Decisions as to
who gets salary jncreases, promotions, and other rewards are
determined by their performance evaluation.
Second, these appraisals can be used for identifying areas where
development efforts are needed. Management needs to spot those
individuals who have specific skill or knowledge deficiencies. The
performance appraisals is a major tool for identifying these
deficiencies.
Finally the performance appraisal can be used as a criterion against

39

which selection devices and development programs are validated. It is

one thing to say, for example, that our selection process is successful
in

differentiating

satisfactory

performers

from

unsatisfactory

performers.
THE APPRAISAL PROCESS

Established performance standard

Communicate performance expectations to employee

Measure actual performance

Compare actual performance with standards

Discuss the appraisal with the employees.

If necessary, initiate the corrective action

The appraisal process begins with the establishment of performance

standards. These should have evolved out of job analysis and the job
description discussed under human resource planning. These performance
40

standards should also be clear and objective enough to be understood and

measured. Too often, these standards are articulated in some such phrase as
"a full day's work" or "a good job". Communication only takes place when
the transference has taken place and has been received and understood by the
subordinate. Therefore feedback is necessary from the subordinate to the
manager. Satisfactory feedback censures that the information communicated
by the manager has been received and understood in the way it was intended.

The third step in the appraisal in the measurement of performance. To

determine what actual performance. To determine what actual performance
is, it is necessary to acquire information about it. We should be concerned
with how we measure and what we measure.

What we measure is probably more critical to the evaluation process than

how we measure, since the selection of the wrong criteria can result in
serious dysfunctional consequences. And what we measure determines, to a
great extent, what people in the organization will attempt to excel at.

One of the most challenging tasks facing managers is to present an . accurate

appraisal to the subordinate and then have the subordinate accept the
appraisal in a constructive manner. Appraising performance touches on one
of the most emotionally charged activities the assessment of another
individual's contribution and ability. The impression that subordinates

41

receive about their assessment has a strong impact on their self-esteem and,
very important, on their subsequent performance.

The final step in the appraisal is the initiation of corrective action when
necessary. Corrective action can, be of two types. One is immediate and deals
predominantly with symptoms. The other is basic and delves into causes.
Immediate corrective action often described as "putting out fires," whereas
basic corrective action gets to the source of deviation and seeks to adjust the
difference permanently.

Immediate action corrects something right now and gets things back on track.

42

Chapter 5
PERFORMANCE
APPRAISAL SYSTEM IN
DABUR INDIA LIMITED

43

Chapter 5
PERFORMANCE APPRAISAL SYSTEM IN DABUR
INDIA LIMITED
In Dabur India Limited they have the system of performance appraisal of
their employees. The main objective of this performance appraisal system is
to evaluate the performance, promote their employees and to arrange for
their various training programmes if they require for enhancing their skills
in their respective areas and in contribution enhancement..
Employees are evaluated by how well they accomplish a specific set of
objectives that have been determined to be critical in the successful
completion of their job. This approach is frequently referred to as .
management by objectives. Management by objectives is a process that
converts organization~l objectives into individual objectives. It can be
thought of as consisting of four steps: goal setting, action planning, selfcontrol, and periodic reviews. In goal setting, the organization's overall
objectives are used as guidelines from which departmental and individual
objectives are set. In action planing, the means are determined for achieving
the ends established in goal setting. That is, realistic plans are developed to
attain the objectives. Self-control refers to the systematic monitoring and
measuring of performance. Finally, with periodic progress reviews,
corrective action is initiated when behaviour deviates from the standards
established in the goal-setting phase. Dabur uses very constructive
44

performance appraisal process while evaluating its employees. Its

evaluation is based on quantitativewise and objectivewise.
Company set goals to its employee by properly reporting with its employees
and then evaluating them upto what extent it has been achieved and if there is
failure in reaching the target what are the causes or reasons behind it.
Every evaluator has his or her own value system which acts as a standard
against which appraisals are made. Relative to the true or actual performance
an individual exhibits, some evaluator~ mark high and others low. The
former is referred to as positive leniency error and the latter as negative
leniency error. When evaluators are positively lenient in their appraisal, an
individual's performance becomes over- stated; that is, rated higher than it
actually should. Similarly, a negative leniency error understates performance,
giving the individual a lower appraisal. As such there is no scope of error as
far as the Dabur company is concerned, but sometimes over estimation of
target brings
about a description in the evaluating criteria. Thus, though chances are less,
positive leniency errors have been stated to be committed.
Outcome of Performance Appraisal
As far as Dabur company is concerned, there are four outcomes possible:
a.

Outstanding -If the performance evaluated by the management turns

out to be outstanding. If the employee performs in such a way as to
collect 3 consecutive outstanding performance into his/her credit) he /

45

she gets promoted.

b.

Excellent -If the performance evaluated by the management turns out

to be excellent. If the employee performs in such a way as to collect 3
consecutive excellent performance into his/her credit, he/she gets
promoted.

c.

Good -If the performance evaluated by the management turns out to be

good. The management sends the employee to the training programme
to improve his/.her skill to perform form.

d.

Below average -If the performance evaluated by the management turns

out to be below average. And, if the employee collects 3 below average
to his/her credit, then he/she dismissed

Duration of Appraisal System

The time constraints enables the employee to show or project his/her
capabilities in term of performance as per the duration allowed. In Dabur
India Limited, the performance appraisal system is carried out annually.
Feedback
The company provides the annual feedback to its employees and thus, in term
bring out the highlights of the self assessment programme. This enables the
better communicaiton between the management and employees ad thus, helps
in promoting the business future.

46

Response
There are mixed responses from the feedback by the employees. It has helped
some of the employees in motivating themselves while those who felt bad
were thoroughly communicated and all the confusion and failure part were
discussed with employees.

47

Chapter 6
ANALYSIS AND
INTERPRETATION OF
DATA

48

Chapter 6
ANALYSIS AND INTERPRETATION OF DATA

After collecting the data on "Performance Appraisal System" data was

Analyzed and interpreted. The various topics covered for analysis and
interpretation of data are: )
1.

Promotions

A promotion may be defined as an upward advancement of an employee in an

organisation to another job, which commands better pay/wages, better status /
prestige and higher opportunities / challenges and responsibility, a better
working environment, hours of work and facilities etc.
Promoters have a salutary effect on the satisfaction of the promoted person's
need for esteem, belonging and security. They also afford an opportunity for
greater self-actualizing action through more varied and challenging
assignments. The promotion policies differ from an organisation to another.
The guidelines for departmental promotion in are same for male and female
employees. The period of experience required for filling a higher post
departmentally varies from 3-5 years. 5 years experience for promotion to
managerial staff and 3 years experience for promotion to Junior Management
staff is needed. The other area of promotion apart from seniority are merit and
fitness. Though these guidelines are not in a written format the supervisor and
manager get it at the time of appraisal from the personnel department.

49

As per the guidelines from the personnel department employees are to be

promoted accordingly. However there is confusion among the employee as
these guidelines are not being explained time to time, many are not aware of
the existing promotion policy in the organisation.
Respondents were asked whether the promotion is well defined in the
organisation. The responses are given below:
N=96
Response

Number

Percentage

Yes

16

16.66

No

52

54.16

Can't say

28

29.16

From the above table, it can be seen that 30% agree that promotion is well
defined in the organisation. However 54% were not able to say it as there is
lack of information about the promotion policy. Every employee need to be
communicated about the existing promotion policy.

60

52

50
40

28

30
20

16

10
0

50

Yes

No

Can't Say

Series1

Respondent were also asked to suggest any change in the policy. The
responses were as given below:
Response

Number

Percentage

Merit not recognized

20

20.83

Does not define career plan

26

16.66

Not integrated with business

Heterogeneity within policy for

different position

56

58.83

Majority suggested for no change in the policy. It seems they are satisfied with
the current policy.

51

Aligning goal
Respondent were asked about the present system, does it help in aligning
individual goal with those of the organisation. The responses were as given
below:
Response

Number

Percentage

Yes

44

45.83

No

12

12.5

Can't say

36

37.5

No response

4.16

Here the response from the supervisor were 45.83% for the factor that it help
in aligning their goal with those of organisation.

45
40
35
30
25
20
15
10
5
0

52

44
36

Series1

12
4
Yes

No

Can't Say

No
response

Career Progress
Career progress is something which is continuous, with the input from
organisation in term of training, feedback and counselling. In today's
changing scenario this has to be followed in every organisation so that an
individual make progress in the career adding value to himself and the
organisation. Respondent were asked about the current system helping in
their career progress.
Career advancement is the most motivating factor when employee aspire for
the advancement of his career and for better opportunities to use his/her
talents. From the organisation's point of view, it is necessary to develop in
manager. Some expectations of opportunities for the future in order to keep
their motivation high. Career planning means helping the employee plan his
career in terms of his capabilities with the context or organisational needs.
Individual, after becoming aware of some of his/her capabilities and career
and development opportunities chooses to develop himself/herself in a
direction that improves his/her chances of being able to handle new
responsibilities. It is also the responsibility of the employer to help him/her to
identify the career opportunity, make choices and develop his/her career and
provide opportunities for career planning and succession planning

53

Question asked was as follows:

Are the issues like career planning and succession planning a part of
companys policy
The responses to the above were as given below:

Response

Number

Percentage

Yes

16

16.66

No

44

45.83

Cant say

36

37.5

Here only 46% of the respondent gave response that it does not while 38%
gave response that there is no career development plan at all.

50

44
36

40
30
20

Series1

16

10
0

54

Yes

No

Can't Say

Feedback

Providing feedback play a constructive role. It helps the employee know

his/her weakness and strength. Feedback provides for the area of
improvement.

Respondent were asked about the frequency of feedback based on their

performance. The responses were as given below:

Response

Number

Percentage

Rarely

24

25

On a few occasion

40

41.66

Sometimes

24

25

Often

8.34

Almost always

Nil

Nil

41 percent responded that feedback is provided though on a few occasion. The

frequency has to increase both from the individual and organisation point of
view to keep the individual motivated for work in line with the organisational
expectation.

55

40
35
30
25
20
15
10
5
0
Rarely

On a few
occasion

Sometimes

Often

Almost
alw ay s

Remedial measure
Based on the performance the remedial measures are taken to do away with
weakness if any and build on the strength and add to the existing capability

56

Response on the remedial measure were as given below:

Response

Number

Percentage

Job rotation

44

45.83

Sent to training programmed

40

41.66

Counseled

12

12.5

Any other

Nil

Nil

None

Nil

Nil

Here the response were both for job rotation and training programme. During
the course it was felt that more training input is to be provided to the
employee to overcome the weakness and improve upon the existing capability
of the employee.

45
40
35
30
25
20
15
10
5
0
Job rotation Sent to Counselled Any other
training
program

57

None

PROMOTION POLICY AND PERFORMANCE APPRAISAL

APPRAISAL SYSEM
Respondent were asked whether the promotion policy is linked with the
performance appraisal system

The responses were as given below:

Response

Number

Percentage

Yes

54

56.25

No

28

29.15

Cant say

14

14.58

Majority response were that promotion policy is linked with the performance
appraisal system.

60

54

50
40

28

30
20

Series1
14

10
0

58

Yes

No

Can't Say

SWOT ANALYSIS

1. Strength -Dabur India Limited is the first Indian major company which
came up with the idea of Ayurvedic concept in various family and health
care products. mostly whatever ingredients it uses in its product are
extracted from nature as it has very less synthetic chemical constituents
used in its product and so it does not has any threat of side effect. As it has
its product in major areas viz. family, health care and in food division it
can easily has larger share of market. By this performance appraisal system
act as motivating factor for its employees to a great extent by increasing
their efficiency and skills. For example, if we see Dabur Lal Dunt Manjan,
it is India's number one tooth powder doing very well in rural as well as in
urban market.

2. Weakness -The main weakness of the company is that the company is

taking the performance appraisal in objective wise, while evaluating a
particular employee performance, on objective wise, the employee does not
get enough opportunity to express completely and freely the valid reasons
of his/her failure to the organization. Weakness is also highlighted when
Dabur India Limited do this performance appraisal procedure annually.

3. Opportunity -With the help of this performance appraisal system the

employee always get feedback from the company. He / she can realize

59

easily his/her level of efficiency. By this performance appraisal system the

employee gets enormous opportunity to enhance their skills by special
training and various other managements programme.
4. Threats -While evaluating an employees performance the performance
appraisal system there is always a chance of fear that those employees who
are unable to achieve their target can take it as a huge set back for them and
in the log term it tends to decrease their efficiency level how good the
employee is and thus it effect the over all performance of the organization.

60

Chapter 7
CONCLUSIONS &
SUGGESTIONS

61

Chapter 7
CONCLUSIONS & SUGGESTIONS
Conclusion
The analysis and interpretation of data on study of performance appraisal and
its effectiveness in an organization led to the following conclusions:
The promotion rule though defined need to be communicated to every
employee before appraisal process is done and also justify the promotion
as a result of the appraisal. That the promotion policy followed differs at
different position and category. A uniformity has to be there in the
implementation of promotion policy at all levels
The process of performance appraisal followed in Dabur India Ltd. at the
supervisory and above level IS to say not good but of satisfactory level.
The employees do not rate it very good
The appraisal outcome has to be used frequently for the purpose of reward
on performing well together with the feedback on the performance. Also
when performance goes down employee has to be given feedback and
motivated to do better.
The organization at present doesn't lay career planning and career
suggestion plans.
In Dabur India Ltd. feedback is being provided to the employee though on
a few occasion.

62

 Performance appraisal in Dabur India Ltd is done on an annual basis.

More emphasis on training and job rotation as remedial measures.
The mechanism of counseling pre-performance and post performance is
not in practice at the organization in strict term. During. the course of
study suggestion came from the employee side for the need of counseling.
Suggestions
The study undertaken bring some interesting result.
Training the Appraiser: It is proposed that appraiser be trained for clear
understanding of the system and its objective and also counseled to be
honest, fair, just, unbiased in appraising the appraisal.
Factors/traits of evaluation: It is proposed that appraisal evaluated on
above factors/traits be given suitable remark or justification for being
given different quantitative grade.
Greater clarity has to be has to there in terms of job responsibility. This is
possible when the appraisal is done on the basis of the description.
In the organization, performance appraisal is done on an annual basis
which should be done Quarterly to make it more effective.
Consistency is demanded in the promotional policy. It should not change
every year.
Monetary difference between two grades should not be large, it should be
motivating in nature.

63

 Performance appraisal system should be made more transparent and

rationale.
Performance feedback: The performance feedback sessions should be
improved which would results in increasing employee motivation to
improve performance. The following could be incorporated.
Pin point the problem behaviors and make sure the employee is aware
of it
Make sure the employee understands the consequences of the problem
behaviors. Get employee's commitment to change and make sure he
cares about the change
Assistance should be provided to improve poor performance. Make a
realistic plan appropriate to the behaviour and set a time frame for
improvement.
To make sure to review performance time to time
The other change which has to be incorporated at the supervisor and the
level above are:
These should be listing down of task undertaken during the last one
year and the result achieved.
In some areas of performance there should be self appraisal and more
and more counseling so that employee improve upon weak area and
understand what is expected of him/her at the organization level.
Based on the above an open appraisal system is suggested.

64

In an open appraisal the employee would come together to set the targets, to
understand the mutual expectations and support to be provided by the
appraiser to the employee for achieving mutually accepted goals/targets.
Through this process of setting targets the interpersonal relationship between
the appraiser and the employee would improve.
The open appraisal system reduces the whims and fancies of the appraiser. It
promotes result-orientation as it is based on performance rather than on
personality based appraisal.

65

Annexure

66

a)

Questionnaire

b)

Bibliography

QUESTIONNAIRE
TO STUDY PERFORMANCE APPRAISAL SYSTEM
Q.1.

Is the promotional policy well defined in your organization?

a. Yes

Q.2.

b. No

c. can't say

Do you know the objectives of the Performance appraisal system. If yes

kindly specify.

Q.3. How often the performance appraisal form is filled or Performance Appraisal
is done.

Q.4.

a.

fortnightly.

e.

not fixed.

b. monthly

c. six-monthly.

d. annually

On what basis is the performance appraisal done.

a.

merit cum seniority

b. seniority cum merit.

d.

seniority only.

e. any other. Pl. specify

c. merit only

Q.5 Who appraises you?

Q.6.

Q.7.

a.

appraisal committee. b.

your immediate supervisor

c.

self-appraisal

360 degree appraisal.

e.

any other please specify

What methods are being used for performance appraisal

a.

forced choice distribution method.

b.

essay method

c.

ranking method.

d.

critical incident method

e.

any other, kindly specify

In your opinion does it identify the training needs?

a.

all

67

d.

to a large extent

b. to some extent

c. cant say

d. not at

Q.8.

Is the promotional policy linked with the performance appraisal system

a.

yes

b. no

c. can't say

Q.9. Are the issues like career planning and succession planning a part of company's
policy
a. yes

b. no

c. can't say.

Q.I0 Does the system help you in aligning your goals with those of the organization.
a.

yes

b.

no

c.

can't say

Q.11. What role does top management play in the performance appraisal. kindly
comment.

Q.12. Are you a part of the appraisal committee

a.

yes

b.

no

Q 13 . Do the employees get the feedback of performance appraisal

Q.14

a.

yes, every time.

c.

only when required

d.

rarely

b.

often, but not always.

e.

never

Does the organization provide counseling after the appraisal.

a. always

b. often

c. rarely

d. never.

e. can't say.

Q.15. Who does the counseling

a. trained professionals

b. untrained counselors. c. can't say

Q.16. What kind of remedial measures are taken.

a. job rotation

b. sent to training programmes

c. counseled

d. any other, kindly specify

Q.17. How do you rate the overall assessment of performance appraisal
a. Outstanding b. Very good c. Good

68

d. Satisfactory

e. Poor

69

Q.18. What do you feel are the positives in the perfomance appraisal system in your
organization, Kindly mention

Q.19

What do you feel are the shortcomings of the performance appraisal system
being followed in your organization, Kindly mention

Q.20. For how long have you been working in this organisation

Q.21. Suggestion towards improving the performance appraisal system in your

organisation

70

BIBLOGRAPHY

1)

Flippo EdwinB., Personnel management, Edition sixth, Tata Mc Graw Hills,

1984, p.g. 225-230

2)

Gupta, C.B., Human Resource Management, Edition Fifth(Reprint),Sultan

Chand and Sons, New Delhi 2001, P.G. 5.3-5.10

3)

Rao, P. Subba,Essentials of Human Resource Management and Industrial

Relations;Edition Second, Himalaya Publishing House, New Delhi 2001,
p.g.206-210

WEB SITES SURFED

www.google.com
www.indiatimes.com
www.msn.com

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