INSTITUTE OF PROFESSIONAL EXCELLENCE & MANAGEMENT

A RESEARCH PROJECT REPORT

ON
PERFORMANCE APPRAISAL PRACTICES IN INDIAN PUBLIC
SECTOR ORGANIZATIONS
PERFORMED AT
BSNL
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE DEGREE
MASTER OF BUSINESS ADMINISTRATION
(2013-2015)
SUBMITTED TO:
MR.Shashank Chaudhary

SUBMITTED BY:
Asim khan
Roll No 1311470003

INDEX

Sr. No.

Particulars

1.

INTRODUCTION

2.

OBJECTIVES OF THE STUDY

3.

SCOPE AND IMPORTANCE OF THE

STUDY

4.

RESEARCH METHODOLOGY

5.

ANALYSIS OF DATA

6.

FINDINGS

7.

RECOMMENDATION

9.

CONCLUSION

10.

LIMITATION

11.
12.

ANNEXURE
BIBLIOGRAPHY

INTRODUCTION TOWARDS PERFORMANCE APPRAISAL SYSTEM

Human Resource (or personnel) management, in the sense of getting things done
through people, is an essential part of every managers responsibility, but many
organizations find it advantageous to establish a specialist division to provide an
expert service dedicated to ensuring that the human resource function is
performed efficiently.
People are our most valuable asset. Yet, the reality for many organizations is
that their people remain undervalued, under trained and underutilized.
Performance Appraisal is the process of assessing the performance and progress
of an employee or a group of employees on a given job and his / their potential for
future development.
It consists of all formal procedures used in the working organizations to evaluate
personalities, contributions and potentials of employees.

ACKNOWLEDGEMENT

I would like to take this opportunity to thank the following people who have
directly or indirectly contributed towards the completion of this dissertation
and without their help this in the present form would have not been possible.

I am thankful to Mr SHASHANK CHAUDHARY for giving me opportunity

to work on such a nice project as my project. And last but not the least my
special thanks to my parents without their support my MBA course would not
have been possible.

ASIM KHAN
MBA (4th Sem)
Roll No. 1311470003

BHARAT SANCHAR NIGAM LIMITED

Type
Industry
Founded
Headquarters
Key people
Products
Revenue
Net income
Total assets
Owner(s)

State-owned enterprise
Telecommunications
19th century, incorporated 2000
New Delhi, India
R.K.
Upadhyay
(Chairman & MD)
Fixed line and mobile telephony, Internet services, digital
television, IPTV
4,567,327,933 crore (US$831,253.68 billion) (2011-12)[1]
123,228,851 crore (US$22,427.65 billion) (201112)
117,632 crore (US$21.41 billion) (201112)[2]
Government of India

BSNL, Headquarter, New Delhi

Bharat Sanchar Nigam Limited (abbreviated BSNL)

is an Indian state-owned telecommunications company headquartered in New
Delhi, India. It is the largest provider of fixed telephony and fourth largest mobile
telephony provider in India, and is also a provider of broadband services.
However, in recent years the company's revenue and market share plunged into
heavy losses due to intense competition in Indian telecommunications sector.

BSNL is India's oldest and largest communication service provider (CSP). It had a
customer base of 95 million as of June 2011. It has footprints throughout India
except for the metropolitan cities of Mumbai and New Delhi, which are managed
by Mahanagar Telephone Nigam (MTNL).
BSNL provides almost every telecom service in India. Following are the main
telecom services provided by BSNL:

Universal Telecom Services:

Fixed wire line services and landline in local loop (WLL) using CDMA
Technology called bfone and Tarang respectively. As of June 30, 2010,
BSNL had 75% market share of fixed lines.

Cellular Mobile Telephone Services:

BSNL is major provider of Cellular Mobile Telephone services using GSM
platform under the brand name Cellone & Excel (BSNL Mobile). As of June
30, 2010 BSNL has 13.50% share of mobile telephony in the country

WLL-CDMA Telephone Services:

BSNL's WLL (Wireless in Local Loop) service is a service giving both fixed
line telephony & Mobile telephony.

Internet:

BSNL provides Internet access services through dial-up connection as

Prepaid, Net One as Postpaid and ADSL broadband as BSNL Broadband
BSNL held 55.76% of the market share with reported subscriber base of
9.19 million Internet subscribers with 7.79% of growth at the end of March
2010.Top 12 Dial-up Service providers, based on the subscriber base, It Also
Provides Online Games via its Games on Demand (GOD)

Intelligent Network (IN):

BSNL offers value-added services, such as Free Phone Service (FPH), India
Telephone Card (Prepaid card), Account Card Calling (ACC), Virtual Private
Network (VPN), Tele-voting, Premium Rae Service (PRM), Universal
Access Number (UAN).

3G:
BSNL offers the '3G' or the'3rd Generation' services which includes facilities
like video calling, mobile broadband, live TV, 3G Video portal, streaming
services like online full length movies and video on demand etc.

IPTV:

BSNL also offers the 'Internet Protocol Television' facility which enables
watch television through internet.

FTTH:
Fibre to The Home facility that offers a higher bandwidth for data transfer.
This idea was proposed on post-December 2009
Landline, mobile, or IP phone anywhere in the world, provided that the
requisite video phone equipment is available at both ends.

WiMax:
BSNL has introduced India's first 4th Generation High-Speed Wireless
Broadband Access Technology with the minimum speed of 256kbit/s. The
focus of this service is mainly rural customer where the wired broadband
facility is not available.

HISTORY
BSNL then known as the Department of Telecommunications had been a near
monopoly during the socialist period of the Indian economy. During this period,
BSNL was the only telecom service provider in the country. MTNL was present
only in Mumbai and New Delhi. During this period BSNL operated as a typical
state-run organization, inefficient, slow, bureaucratic, and heavily unionized. As a
result subscribers had to wait for as long as five years to get a telephone

connection. The corporation tasted competition for the first time after the
liberalization of Indian economy in 1991. Faced with stiff competition from the
private telecom service providers, BSNL has subsequently tried to increase
efficiencies itself. Dot veterans, however, put the onus for the sorry state of affairs
on the Government policies, where in all state-owned service providers were
required to function as mediums for achieving egalitarian growth across all
segments of the society. The corporation (then Dot), however, failed to achieve
this and India languished among the most poorly connected countries in the
world. BSNL was born in 2000 after the corporatization of Dot. The
corporatization of BSNL was undertaken by an external international consulting
team consisting of a consortium of A.F.Ferguson & Co, JB Dadachanji and NM
Rothschild - and was probably the most complex corporatization exercise of its
kind ever attempted anywhere because of the quantum of assets (said to be worth
USD 50 Billion in terms of breakup value) and over half a million directly and
indirectly employed staff. Satish Mehta, who led the team later, confessed that one
big mistake made by the consortium was to recommend the continuation of the
state and circle based geographical units which may have killed the synergies
across regions and may have actually made the organization less efficient than had
it been a seamless national organization. Vinod Vanish, then Chairman of the
Telecom Commission made a very bold decision to promote younger talent from
within the organization to take up a leadership role and promoted the older leaders
to a role in licensing rather than in managing the operations of BSNL. The
efficiency of the company has since improved; however, the performance level is
nowhere near the private players.
The corporation remains heavily unionized and is comparatively slow in decision
making and its implementation, which largely acts at the instances of unions

without bothering about outcome. Management has been reactive to the schemes
of private telecom players, though it offers services at lowest tariffs; the private
players continue to notch up better numbers in all areas, years after year. BSNL
has been providing connections in both urban and rural areas. Pre-activated
Mobile connections are available at many places across India. BSNL has also
unveiled cost-effective broadband internet access plans (Data One) targeted at
homes and small businesses. At present BSNL enjoys around 60% of market share
of ISP services

CHALLENGES
During the financial year 200809 (from April 1, 2008 to March 31, 2009) BSNL
has added 8.1 million new customers in various telephone services taking its
customer base to 75.9 million. BSNL's nearest competitor Bharti Airtel is standing
at a customer base of 62.3 million. However, despite impressive growth shown by
BSNL in recent times, the fixed line customer base of BSNL is declining. In order
to woo back its fixed-line customers BSNL has brought down long distance
calling rate under One India plan, however, the success of the scheme is not
known. However, BSNL faces bleak fiscal 2009-2010 as users flee.
Presently there is an intense competition in Indian Telecom sector and various
Telcos are rolling out attractive schemes and are providing good customer
services. But situation as on 2012 BSNL will be third largest operator (Service)
and No 1 access operator among country. As Trai Report 2011-12 BSNL became
most trustworthy brand due to its loyalty towards customers and its rule.
Access Deficit Charges (ADC, a levy being paid by the private operators to BSNL
for provide service in non-lucrative areas especially rural areas) has been slashed

by 20% by TRAI, i.e. April 1, 2009 The reduction in ADC may hit the bottom
lines of BSNL.
BSNL has started 3G services in 290 cities and acquired more than 6 Lakh
customers. It has planned to roll out 3G services in 760 cities across the country in
2010-11. According to users and big sources BSNL's 3G data speed is much
higher than other operator and also it is competitively cheap.
Broadband services: The shift in demand from voice to data has revolutionized the
very nature of the network. BSNL is poised to cash on this opportunity and has
planned for extensive expansion of the Broadband services. The Broadband
customer base of 3.56 Million customers in March'2009 is planned to be increased
to 16.00 million by March 2014. On 13 June 2012, BSNL employees participated
called off an earlier planned nationwide strike against discriminatory policies of
BSNL management upon promise

BSNL - MTNL MERGER PLANS

On February 23, 2011, The Department of Telecommunications said it wanted to
revive a proposal for the merger of state-owned operators BSNL and MTNL. In its
draft plan, the department while showing concern over the deteriorating
performance of BSNL and MTNL said that BSNL and MTNL should be merged
as they have complimentary operations and can combine their strengths for
synergies. Dot said the government should set up a multi-stakeholder committee
to develop a restructuring plan for both firms. The committee should have
members from public enterprises, the DoT, department of IT and ministry of
finance. However the BSNL's staff unions are opposing this merger tooth and nail

realising that MTNL is in dire state and need help of its big brother, BSNL, to
alleviate itself from getting into red balance sheet. MTNL in spite of having its
operations in two big metro cities viz. New Delhi & Mumbai is realising
cascading fall in revenue and profits for the past 10 successive years. The
telecommunication operators should focus on enterprise business, services to
government and the public sector, value-added services and technologies like 3G,
the department recommends.
3G

While it did not participate in the 3G auction, BSNL paid the Indian government
Rs. 10,187 crores for 3G spectrum in all 20 circles it operates in. State-owned
MTNL provides 3G services in the other 2 circles - Delhi and Mumbai. Both these
state-owned operators were given a head start by the government in the 3G space
by allotting the required 3G spectrum, on the condition that each will have to pay
an amount which will be equivalent to the highest bid in the respective service
areas as and when the 3G auctions take place. BSNL recently launched a 3G
wireless pocket router named Winknet Mf50 for 5800/- Indian rupees. It was
released in collaboration with another telecom service provider Shyam networks.
Winknet Mf50 enables you to connect multiple devices to the internet using a
single sim card.
3G Coverage

BSNL has the largest 3G network in India. Additionally, BSNL 3G services

usually cover not only the main town/city but also the adjoining suburbs and rural
areas as well. As of now BSNL has 3G services in 826 cities across India. The
following is a list of BSNL 3G enabled towns/cities. This list covers only BSNL
3G services provided through HSDPA/HSUPA and HSPA+ for GSM subscribers

and

not

EVDO

for

CDMA

subscribers.

Note: This list may not be complete as new towns/cities are added regularly.
BSNL Tablet

BSNL initially launched three tablets manufactured by Pantel now fourth tablet
(T-Pad IS701C) is also available. The tablet's brand name is Penta. The tablet is
available for pre-order online.

Specifications
Screen size

T-Pad
T-Pad
T-Pad
T-Pad
IS701R
IS701C
WS704C
WS802C
7
Inch,
7
Inch,7
Inch,8
Inch,
800x480
800x480 pixel800x600 pixel800x600 pixel
pixel
Capacitive
Capacitive
Capacitive
Resistive

Central
processor unit1 GHz
speed
Random-access 256MB
memory
DDR2
Flash Memory 2 GB

1 GHz

1 GHz

1.2 GHz

512MB DDR3512MB DDR3512MB DDR3

4 GB

4 GB

4 GB

Recognitions

The Brand Trust Report published by Trust Research Advisory ranked BSNL in
the 65th position of the list of Most Trusted brands.
Competitors

BSNL competes with 14 other mobile operators throughout India. They are
Aircel, Airtel, Idea, Loop Mobile, MTNL, MTS, Reliance Communications, Tata
Do Como, Uninor, Videocon, Virgin Mobile and Vodafone.
Quality of Service

BSNL goes by the motto "Connecting India, faster"] nd displays the same at their
homepage. The service quality of BSNL Customer service has been severely
criticized as very poor.The mobile services provided by BSNL in almost every
part of the country were and still are criticized for network outages and frequent

call drops. Despite the criticism there is very negligible or no amount of work
being carried out by the authorities to improve the performance and quality of the
network. BSNL claims to offer seamless coverage in almost all forests of India in
collaboration with state forest department.
Censorship

BSNL enforces censorship of online content as per orders of Indian Department of

Telecom.
Bayimg.com blocked by orders of Department of Telecom on BSNL network
These are biased comments. The services offered by BSNL are at par with other
telecom providers in India. In fact only BSNL is providing the services as per
QOS parameters.

 To carry out the study of BSNL, we framed the following objectives

Identification of the technique of performance appraisal followed in BSNL.
Employee attitude towards the present appraisal system.
Review of the current appraisal system in order to
Enhance productivity

 Attain global standards

To provide suggestions & recommendations from the study conducted.
To maintain records in order to determine compensation packages, wage structure, salaries

raises, etc.
To identify the strengths and weaknesses of employees to place right men on right job.
To maintain and assess the potential present in a person for further growth and

development.
To provide a feedback to employees regarding their performance and related status.

The scope of any performance appraisal should include the following: provide
employees with a better understanding of their role and responsibilities; increase
confidence through recognizing strengths while identifying training needs to improve
weaknesses; improve working relationships and communication between supervisors
and subordinates; increase commitment to organizational goals; develop employees
into future supervisors; assist in personnel decisions such as promotions or allocating
rewards; and allow time for self-reflection, self-appraisal and personal goal setting.
(See Reference 3: Performance Appraisal System)

Considerations
Although performance appraisals have many intended benefits for both the organization
and employee, if the process isn't carefully implemented and managed, it can result in
employee backlash. Constructive criticism can help improve performance, but there is a
fine line between providing helpful feedback and upsetting an employee. Management
should always make sure to recognize and reward excellent performance to avoid
coming off as too negative. Employees who work hard and take pride in their work will
have a hard time correctly utilizing the feedback if none of their accomplishments or
positive contributions are noticed and appreciated.

APPLICATIONS
A central reason for the utilization of performance appraisals (PAs) is performance
improvement (initially at the level of the individual employee, and ultimately at the level of
the organization).[10] Other fundamental reasons include as a basis for employment decisions
(e.g. promotions, terminations, transfers), as criteria in research (e.g. test validation), to aid
with communication (e.g. allowing employees to know how they are doing and organizational
expectations), to establish personal objectives for training programs, for transmission of
objective feedback for personal development, as a means of documentation to aid in keeping
track of decisions and legal requirements and in wage and salary administration.[1]
Additionally, PAs can aid in the formulation of job criteria and selection of individuals who
are best suited to perform the required organizational tasks. A PA can be part of guiding and
monitoring employee career development. PAs can also be used to aid in work motivation
through the use of reward systems.

RATIONALE OF THE STUDY

Performance Appraisal is the important aspect in the organization to evaluate the
employees performance. It helps in understanding the employees work culture,

involvement, and satisfaction. It helps the organization in deciding employees

promotion, transfer, incentives, and pay increase.

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

Determining Data Collection Design

Determining Data Methods

Determining Data Sources

Determining Primary Data Collection Methods

Developing Questionnaires

Determining Sampling Plan

(1) Exploratory Research Design:

Exploratory studies are undertaken with a view to know more about the problem.
These studies help in a proper definition of the problem, and development of
specific hypothesis is to be tested later by more conclusive research designs. Its
basic purpose is to identify factors underlying a problem and to determine which
one of them need to be further researched by using rigorous conclusive research
designs.
Exploratory research helps determine the best research design, data collection
method and selection of subjects. It should draw definitive conclusions only with
extreme caution. Given its fundamental nature, exploratory research often
concludes that a perceived problem does not actually exist.

(2) Conclusive Research Design:

Conclusive Research Studies are more formal in nature and are conducted with a
view to eliciting more precise information for purpose of making marketing
decisions.
These studies can be either:
a) Descriptive or
b) Experimental

Sources of Information

Primary Data

(PRIMARY DATA is data that has not been previously published, i.e. the data is
derived from a new or original research study and collected at the source, e.g., in
marketing, it is information that is obtained directly from first-hand sources by
means of surveys, observation or experimentation.)

Secondary Data
(Secondary data, on the other hand, is basically primary data collected by
someone else. Researchers reuse and repurpose information as secondary data
because it is easier and less expensive to collect. However, it is seldom as useful
and accurate as primary data.)

DATA COLLECTION:
DATA SOURCES:

Secondary Data through Internet

Primary Data through Questionnaire

Contact Method

Personal Interaction

WHAT IS PERFORMANCE APPRAISAL?

Performance Appraisal is defined as the process of assessing the performance and
progress of an employee or a group of employees on a given job and his / their
potential for future development. It consists of all formal procedures used in
working organizations and potential of employees. Performance appraisals are a
part of career development and consist of regular reviews of employee
performance within organizations.

CHARACTERISTICS
1.

2.

Performance Appraisal is a process.

It is the systematic examination of the strengths and weakness of an
employee in terms of his job.

3.

It is scientific and objective study. Formal procedures are used in the

study.

4.

It is an ongoing and continuous process wherein the evaluations are

arranged periodically according to a definite plan.

5.

The main purpose of Performance Appraisal is to secure information

necessary for making objective and correct decision an employee.

PROCESS
The process of performance appraisal:
1.

Establishing performance standards

2.

Communicating the Standards

3. Measuring Performance
4. Comparing the actual with the standards
5. Discussing the appraisal
6. Taking Corrective Action

METHODS OF PERFORMANCE APPRAISAL

ESSAY APPRAISAL

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

GRAPHIC RATING SCALE

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

FIELD REVIEW

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

FORCED-CHOICE RATING

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

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

For comparative purposes, particularly when it is necessary to compare people

who work for different supervisors, individual statements, ratings, or appraisal
forms are not particularly useful. Instead, it is necessary to recognize that
comparisons involve an overall subjective judgment to which a host of additional

facts and impressions must somehow be added. There is no single form or way to
do this.
The best approach appears to be a ranking technique involving pooled judgment.
The two most effective methods are alternation ranking and paired comparison
ranking.
1.

Alternation ranking:

Ranking of employees from best to worst on a trait or traits is another method for
evaluating employees. Since it is usually easier to distinguish between the worst
and the best employees than to rank them, an alternation ranking method is most
popular. Here subordinates to be rated are listed and the names of those not well
enough to rank are crossed. Then on a form as shown below, the employee who is
highest on the characteristic being measured and the one who is the lowest are
indicated. Then chose the next highest and the next lowest, alternating between
highest and lowest until all the employees to be rated have been ranked.
2.

Paired-comparison ranking:

This technique is probably just as accurate as alternation ranking and might be

more so. But with large numbers of employees it becomes extremely time
consuming and cumbersome.
Both ranking techniques, particularly when combined with multiple rankings (i.e.,
when two or more people are asked to make independent rankings of the same
work group and their lists are averaged), are among the best available for
generating valid order-of-merit rankings for salary administration purposes.
ASSESSMENT CENTERS

So far, we have been talking about assessing past performance. What about the
assessment of future performance or potential? In any placement decision and
even more in promotion decisions, some prediction of future performance is
necessary. How can this kind of prediction be made most validly and most fairly?
360 DEGREE FEEDBACKS
Many firms have expanded the idea of upward feedback into what the call 360-degree
feedback. The feedback is generally used for training and development, rather than for pay
increases.

Most 360 Degree Feedback system contains several common features. Appropriate parties
peers, supervisors, subordinates and customers, for instance complete survey, questionnaires
on an individual. 360 degree feedback is also known as the multi-rater feedback, whereby
ratings are not given just by the next manager up in the organizational hierarchy, but also by
peers and subordinates. Appropriates customer ratings are also included, along with the
element of self appraisal. Once gathered in, the assessment from the various quarters are

compared with one another and the results communicated to the manager concerned.

Another technique that is useful for coaching purposes is, of course, MBO. Like the critical
incident method, it focuses on actual behavior and actual results, which can be discussed
objectively and constructively, with little or no need for a supervisor to "play God."
Variable objectives may cause employee confusion. It is also possible that fluid objectives
may be distorted to disguise or justify failures in performance.

ADVANTAGES OF PERFORMANCE APPRAISAL

1. Promotion:

Performance Appraisal helps the supervisors to chalk out the promotion

programmes for efficient employees. In this regards, inefficient workers can
be dismissed or demoted in case.
2. Compensation:

Performance Appraisal helps in chalking out compensation packages for

employees. Merit rating is possible through performance appraisal.

Performance Appraisal tries to give worth to a performance. Compensation

packages which include bonus, high salary rates, extra benefits, allowances
and pre-requisites are dependent on performance appraisal. The criteria
should be merit rather than seniority.
3. Employees Development:

The systematic procedure of performance appraisal helps the supervisors to

frame training policies and programmes. It helps to analyze strengths and
weaknesses of employees so that new jobs can be designed for efficient
employees. It also helps in framing future development programmes.
4. Selection Validation:

Performance Appraisal helps the supervisors to understand the validity and

importance of the selection procedure. The supervisors come to know the
validity and thereby the strengths and weaknesses of selection procedure.
Future changes in selection methods can be made in this regard.
5. Communication:

For an organization, effective communication between employees and

employers is very important. Through performance appraisal,
communication can be sought for in the following ways:
a.

Through performance appraisal, the employers can understand and

accept skills of subordinates.

b.

The subordinates can also understand and create a trust and confidence
in superiors.

c.

It also helps in maintaining cordial and congenial labour management

relationship.

d.

It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

6. Motivation:

Performance appraisal serves as a motivation tool. Through evaluating

performance of employees, a persons efficiency can be determined if the
targets are achieved. This very well motivates a person for better job and
helps him to improve his performance in the future.
7.

Measures an employees performance.

8.

Helps in clarifying, defining, redefining priorities and objectives.

9.

Motivates the employee through achievement and feedback.

10. Facilitates

assessment and agreement of training needs.

11. Helps

in identification of personal strengths and weaknesses.

12. Plays

an important role in Personal career and succession planning.

13. Clarifies

14. Plays

team roles and facilitates team building.

major role in organizational training needs assessment and analysis.

15. Improves

reporting

understanding and relationship between the employee and the

manager

and

also

helps

in

resolving

confusions

and

misunderstandings.
16. Plays

an important tool for communicating the organizations philosophies,

values, aims, strategies, priorities, etc among its employees.

17. Helps

in counseling and feedback.

DISADVANTAGES OF PERFORMANCE APPRAISAL

If not done appropriately, can be a negative experience.

Are very time consuming, especially for a manager with many employees.

Are based on human assessment and are subject to rater errors and biases.

If not done right can be a complete waste of time.

Can be stressful for all involved.

RATING ERRORS IN PERFORMANCE APPRAISALS

Performance appraisals are subject to a wide variety of inaccuracies and biases
referred to as 'rating errors'. These errors can seriously affect assessment results.
Some of the most common rating errors are: Leniency or severity: -

Leniency or severity on the part of the rater makes the assessment subjective.
Subjective assessment defeats the very purpose of performance appraisal. Ratings
are lenient for the following reasons:
a)

The rater may feel that anyone under his or her jurisdiction who is
rated unfavorably will reflect poorly on his or her own worthiness.

b)

He/She may feel that a derogatory rating will be revealed to the rate
to detriment the relations between the rater and the ratee.

c)

He/She may rate leniently in order to win promotions for the

subordinates and therefore, indirectly increase his/her hold over him.

Central tendency: This occurs when employees are incorrectly rated near the average or middle of
the scale. The attitude of the rater is to play safe. This safe playing attitude stems
from certain doubts and anxieties, which the raters have been assessing the rates.
Halo error: A halo error takes place when one aspect of an individual's performance
influences the evaluation of the entire performance of the individual. The halo
error occurs when an employee who works late constantly might be rated high on
productivity and quality of output as well ax on motivation. Similarly, an
attractive or popular personality might be given a high overall rating. Rating
employees separately on each of the performance measures and encouraging
raters to guard against the halo effect are the two ways to reduce the halo effect.

Rater effect:
-This includes favoritism, stereotyping, and hostility. Extensively high or low
score are given only to certain individuals or groups based on the rater's attitude
towards them and not on actual outcomes or behaviors; sex, age, race and
friendship biases are examples of this type of error.
Primacy and Regency effects: The rater's rating is heavily influenced either by behavior exhibited by the ratee
during his early stage of the review period (primacy) or by the outcomes, or
behavior exhibited by the ratee near the end of the review period (regency).
For example, if a salesperson captures an important contract/sale just before the
completion of the appraisal, the timing of the incident may inflate his or her
standing, even though the overall performance of the sales person may not have
been encouraging. One way of guarding against such an error is to ask the rater to
consider the composite performance of the rate and not to be influenced by one
incident or an achievement.
Performance dimension order: Two or more dimensions on a performance instrument follow each other and both
describe or rotate to a similar quality. The rater rates the first dimensions
accurately and then rates the second dimension to the first because of the
proximity. If the dimensions had been arranged in a significantly different order,
the ratings might have been different.

Spillover effect: This refers lo allowing past performance appraisal rating lo unjustifiably influence
current ratings. Past ratings, good or bad, result in similar rating for current period
although the demonstrated behavior docs not deserve the rating, good or bad.

KEY CONCEPTS IN PMS

In order to understand the Performance Management System at BSNL, some
concepts need to be explained which play a very important role in using the PMS
successfully. They are:

KRAS (KEY RESULT AREAS):

The performance of an employee is largely dependent on the KRA score
achieved by the employee during that particular year. Thus, it is necessary to
answer a few basic questions i.e.

What are the guidelines for setting the KRAs for an employee?

How does an employee write down his KRAs for a particular

financial year?

How is the KRA score calculated for an employee on the basis of

the targets sets and targets achieved?

BEHAVIORAL TRAITS:
Some of the qualitative aspects of an employees performance combined
with the general behavioral traits displayed by the employee during a year
constitutes his behavior traits. An employee is assigned the rating on the

basis of the intensity of the behavior displayed by him. They play a very
important role in the deciding the final performance rating for an employee
as is even capable of shifting the rating one level upwards/downwards.

BHARTI 2013 LEADERSHIP COMPETENCY FRAMEWORK:

This competency framework is a simple and structured way to describe the
elements of behaviors required to perform a role effectively. This framework
also tries to assess the performance of an employee objectively.

THE PERFORMANCE RATING PROCESS:

The rating process tries to explain the different types of rating that an
employee can achieve. It also explains the criteria, which is considered for
awarding any of these ratings to the employee.

PROMOTION AND RATING DISRTRIBUTION GUIDELINES:

The promotion and normal distribution guidelines provide the framework
within which the performance appraisal process has to work. It is very
important that the HR department pays due attention to these guidelines
while preparing the bell curves for various functions and the consolidated
bell curve for all the functions. These guidelines also help in deciding upon
the promotion cases in a year.

PERFORMANCE RATING PROCESS

EXCEPTIONAL CONTRIBUTOR (EC)

Performs

consistently

substantially

SIGNIFICANT CONTRIBUTOR (SC)

and
above

expectations in all areas

Achieves a final score greater

Consistently

Achieves final score between

100-114%

delivers

Performs above expectations in

all areas

than or equal to 115%

on

Versatile in his/ her area of

operation

stretch targets

Is proactive

Spots

and

problems,

require

anticipates
implements

Sees

and

exploits

opportunities

Delivers ahead of time

Sees

the

wider

picture-

little

minimal

supervision

solutions

Develops creative solutions and

Sets examples for others

Take

ownership

of

own

development

Coaches others

Demonstrates business initiative

Is self motivated

Supportive team player

Leads

impacts across business

Focuses on whats good for

the business

Seen as role model by others

Recognized as exceptional by
other functions as well

Motivates others to solve

own

effectively

team

very

problems

Develops others

Provides open and honest

Demonstrate

functional

initiative

feedback

Able to establish and lead

cross-functional teams

Latham and Wexley (1994) refer to the performance appraisal as any personnel
decision that affect the status of employees regarding their retention, termination,
promotion, transfer, salary increase or decrease, or admission into training
programs. This definition shows that performance appraisal is the key in
controlling people within the organization. The definition by Latham and Wexley
is in line with Fletcher and Williams (1986) as both of them claimed that
performance appraisal is determined by the management and it is the central part
of personnel management activity, linking it with almost every other aspect of
human resource activity.
In addition, Leap and Crino (1993) defined performance appraisal as a process of
assessing the quantitative and qualitative aspects of an employees job
performance. However, according to Sisson (1991), performance appraisal is
the process whereby current performance in a job is observed and discussed for
the purpose of adding to the level of performance. On the other hand, Harvey and
Bowin (1996) defined performance appraisal as the accomplishment of
employees assigned duties and the outcome produced in a specified job function
or activity during a specified time period while performing their jobs. Milkovich
& Boudreau (1997) referred to performance assessment or performance appraisal
as the process that measures

employee performance and employee performance is the degree to which

employees accomplish work requirements.

Armstrong (1993) defined performance appraisal as a means of getting better

result from the organization, teams and individual by understanding and managing
performance within an agreed framework of planned goals, objectives and
standards. However, according to Fletcher (2001) performance appraisal is a
general heading for a variety of activities through which organizations seek to
assess employees and develop their competence, enhance performance and
distribute reward.

EFFECTIVENESS OF PERFORMANCE APPRAISAL

Performance appraisal effectiveness refers to the accuracy of
performance observations and ratings as well as the ability of the
performance appraisal process to improve the rates future
performance (Cynthia, 1985). Hammond 1980, 1981(as cited in
Cynthia 1985) has suggested that different types of tasks require
different cognitive processes for effective performance.
According to Feldman (in press) (as cited in Cynthia 1985), the
cognitive processes engendered by different tasks affect raters
perception and categorization of persons during performance
appraisal, which influences recall and judgment. The rater must
be trained to observe, gather, process, and integrate behaviorrelevant information in order to improve performance appraisal
effectiveness (Cynthia 1985).
Lawler (1994) define that, reactions to appraisal and the
appraisal process are believed to significantly influence the
effectiveness and the overall viability of appraisal system.
Scullen (as cited in Robert E, 2008) is reported that among the
many outcomes of the appraisal process, accuracy of ratings and
perceived effectiveness of the interview is critical. However,
according to Ilgen (1992) the use of appraisal ratings as inputs to
a range of administrative decisions, such as training and
development, compensation and promotion contributed to the
focus on appraisal accuracy as the primary criterion of appraisal
effectiveness. Consistent with this emphasis, performance
appraisal researchers Forgas and George (2001) in the past paid

more attention to errors in information processing and judgments

than to understanding what appraisers do well.
Lawler, Mohrman, and Resnick 1984 (as cited in Clinton, Patrick,
Kathlyn 1988) argued the need to better understand differences
in managers and subordinates perceptions of the appraisal
process. They postulated that performance appraisal systems will
be effective (i.e accomplish the intended purpose) to extent that
managers and subordinates have a shared perception of the
purpose and function served by appraisal and the extent to
which the process satisfies the needs of both parties.
The functions effectively served by the appraisal process are a
source of continuing debate, as academics seek to better
understand the appraisal process and organizations seek way to
increase its effectiveness. Further research suggests that having
a technically sound appraisal system and procedure is not
guarantee that an organizations appraisal process will be
effective. Manager and subordinates must have a shared
perception of the purposes and functions of the process and the
belief that the appraisal process is useful to them on an
individual basic. Thus, an effective appraisal is one that satisfies
the needs of the parties involved in the process. To be effective
managers must have not only the skills necessary to conduct
effective appraisals but also the willingness to do so (Clinton and
Stephen 1992).

JUSTICE AND FAIRNESS

I.M Jawahar (2007) suggest that perception of fairness are

important to all human resource processes, e.g. selection,
performance appraisal, and compensation, and particularly so, to
the performance appraisal process. Cardy and Dobbins, 1994 (as
cited in I.M Jawahar, 2007) asserted that with dissatisfaction and
feeling of unfairness in process and inequity in evaluations, any
appraisal system will be doomed to failure. In practice perceived
fairness of evaluation, the procedures used to evaluate
performance, and the manner in which performance-related
information is communicated likely play an integral role in
shaping ratees reactions to critical elements of the appraisal
process. (I.M Jawahar 2007). Besides that, Taylor (1995) has also
acknowledged the importance of fairness to the success or failure
of appraisal system.
According to James Brown, 2007 (as cited in Abuduaini, 2009), he
defines, fairness as equal treatment, receiving the same services
and benefits as other people. Fairness means different thing to
different people, and our view of whether or not something is fair
often depends on the circumstances (Klesh, J.1979 as cited in
Abuduaini, 2009). Konovsky, 2000 (as cited in Sharon and Mark
2008) argues that the importance of fairness lies in its role as a
primary organizational value and in understanding the
consequences of employee fairness perception. Research has
demonstrated that perceptions of fairness result in increased
favorable employee attitudes and behavior, such as
organizational citizenship behaviors (Skarlicki and Latham
1996,1997 as cited in Sharon and Mark 2008) and organizational
commitment (Folger and Konoveky 1989 as cited in Sharon and
Mark 2008).
Fairness and equity in performance appraisal can best be defined
as the quality of being fair in a formal situation where no one
person has an unfair advantage in indentifying, measuring, and
managing human performance in an organization. This mean we
must appraisal someone equally and in a formal situation (to put
aside any relationship or misunderstandings with the person
being appraised). If the performance rating mechanism is used
accurately but is perceived by subordinates as unfair, it will have

negative outcome. However, if it happened that performance

appraisal mechanism is used inaccurately but perceived by
subordinates as fair, a possibility of negative outcome can be
hindered (Ab. Aziz Yusof, 2009, p.170).
There are three components of justice that need to be upheld
during the implementation of performance appraisal. These are
distributive justice, procedural justice and interaction justice.
Distributive justice
The study of distributive justice deals with the perceived fairness
of the outcomes or allocations that individuals in organizations
receive (Folger and Cropanzano, 1998 as cited in Lawrence
2005). Distributive justice is based on the equity theory of
motivation introduced by Adam Smith in 1965. According to him,
individuals in the organization tend to compare their contribution
and rewards with that of other individuals in the organization.
Employees hope to get what they deserve, not less and not
more. By comparing himself with others, the individual will tend
to make more effort and be more committed if he/she finds that
the rewards gained is just compared with others contribution
and reward. On the other hand, if he/she perceives that his/her
rewards are unfair compared with other peoples input and
outcome, there is tendency that they will withdraw or make less
effort or change their perception of inputs and outcomes. In other
words, the employee is prepared to change his/her behavior,
attitudes or both as result of his/her perception of distributive
justice in the organization (Ab. Aziz Yusof,2009, p171).
Procedural justice
The study of procedural justice focuses in the fairness of methods
that are used in organizations to arrive at distributive justice. It
addresses fairness issues concerning the methods, mechanisms,
and processes use to determine outcomes (Folger and
Cropanzano, 1998 as cited in Lawrence 2005). Perception of
procedural justice reflect an appraisal of the process by which an
allocation decision is (or was) made (Folger and Cropanzano,
1998 as cited in Lawrence 2005). Procedural justice in
performance appraisal emphasizes the process of evaluation

during which decisions made are not in conflict with various

parties involved in the process. Levental 1976, (as cited in Ab.
Aziz Yusof 2009) also maintained that there are three principles
affecting perceptions of procedural justice. There are:
Correct ability rules- procedures should increase employee input
into the decision process.
Accuracy rules- procedures should enhance the accuracy of
information used in the decision process.
Bias suppression rules- procedures should discourage managers
from using bias in their decision.
Interaction justice
Interaction justice refers to justice appraisals based on the
quality of the interpersonal treatment (people) receive (Bies and
Moag, 1986, as quoted in Cropanzano and Randall 1993 as cited
in Lawrence 2005). Bies and Moag argued for the inclusion of an
intervening factor that influences perceptions of organizational
justice. They held that organizational justice is a function of the
procedures in place, the interaction among members, and
resulting outcomes. A concern with interactional justice therefore
involves raising questions about the type of interpersonal
sensitivity and other aspects of social conduct that characterize
social exchange between parties, including the explanation
offered for certain decisions made about the individual (Folger
and Cropanzano,1998 as cited in Lawrence 2005).
According to Tyler and Bies 1989(as cited in Ab. Aziz Yusof 2009),
procedural fairness is found to be a function of the perceived
sincerity and adequacy of the explanation. This finding is
particularly relevant to termination decision. An adequate
explanation for a termination reduces the time taken by the
subordinate, as well as colleagues, to come to terms with the
situation. It help to focus the thinking and actions of the
terminated subordinate toward looking for a new job. Greenberg
& McCarty 1990(as cited in Ab. Aziz Yusof, 2009) claimed that the
most important factor affecting perceptions of procedural justice
is how subordinates feel about the quality of their interaction
with the management. This emphasis on interaction justice may

be especially important in minimizing wrongful dismissal suits,

which often reflect a desire to get even with the person who
made the decision to terminate the subordinate.

FINDINGS AND ANALYSIS

1. Employees Opinion as to the Purpose of Performance Appraisal

Options
Yes

Response
84

No

16

2. Awareness of technique of Performance Appraisal being followed at BSNL

among Employees

Options

Response

Yes

72

No

28

3. Number of Employees being appraised during their service period

Options

Response

Yes

68

No

32

4. Employees opinion as to the present appraisal system

Options

Responses (in %)

Fully Satisfied

Satisfied

24

Cant Say

44

Dissatisfied

30

5. Employee perception as to the frequency of appraisal

Options
Once
The
Period

During
Service

Response (in %)
2

Continuous

92

Never

Cant Say

6. If continuous appraisal what should be the gap between two appraisal

period
Options

Response (in %)

Quarterly

20

Half Yearly

44

Yearly

36

7. How Performance Appraisal affects the productivity of the employees

Motivated

Indifferent

Demotivated

38

12

12

10

28

24

21

+ Feedback

- Feedback

Neutral

8.

Who should do the appraisal?

Options

Response ( in % )

Superior

24

Peer

Subordinate

Self Appraisal

Consultant

All of the above

48

9. Does appraisal help in polishing skills and performance area?

Options

Response ( in % )

Yes

74

No

10

Somewhat

16

If the process of appraisal does not lead to the improvement of the skills and
proficiency of the employees, the purpose of appraisal becomes illogical. In
the survey conducted it was observed that nearly 74 % of the respondents
agree that Performance Appraisal does leads to polishing the skills of the
employees. Nearly 10 % of the respondents view that it does not serve this
purpose and around 16 % were not able to respond as to whether it serve any
such purposes or not.

10. Does personal bias creeps-in while appraising an employee

Options

Response ( in % )

Yes

82

No

18

In the process of appraising, both the parties are human being, that is, the
one who is being apprised and the other who is appraising. Thus, there
bound to be subjectivity involved, be it an objective way of appraising.
Thus, when asked from among the sample size of 50 respondents, as huge as
82 % respond that personal bias do creep in while appraising an individual.
Hence, it is inevitable to say that personal likings do not come in the process
of appraisal. It is the extent to which the appraiser manages it so that it does
not become very partial and bias.

11. Does personal bias creeps-in while appraising an employee

Options

Response ( in % )

Yes

82

No

18

In the process of appraising, both the parties are human being, that

is, the one

who is being apprised and the other who is appraising. Thus, there bound to be
subjectivity involved, be it an objective way of appraising.
Thus, when asked from among the sample size of 50 respondents, as huge as
82 % respond that personal bias do creep in while appraising an individual.
Hence, it is inevitable to say that personal likings do not come in the process
of appraisal. It is the extent to which the appraiser manages it so that it does
not become very partial and bias.

12. If given a chance, would employees like to review the current appraisal
technique?
Options

Response ( in % )

Yes

72

No

Cant Say

24

13. Appropriate method of conducting the performance appraisal

Options

Response ( in % )

Ranking Method

12

Paired Comparison

Critical Incidents

20

MBO

58

Assessment Centre

360 degree

14. Does performance appraisal leads to identification of hidden potential

Options

Response ( in % )

Yes

96

No

15. What in your opinion should be the time period of conducting continous appraisal?

Quaterly

70%

Yearly

20%

Half Yearly

10%

16. Does performance appraisal helps in improving the productivity of employees?

Yes

80%

No

20%

17. Should appraisal process be?

Continuous

90%

Never

10%

After having analyzed the data, it was observed that practically there was no appraisal in the
organization. To be an effective tool, it has to be on the continuous basis. This is the thing
that has been mentioned time and again in the report, as, in the absence of continuity, it

becomes a redundant exercise. Before actually deciding drafting what should be the kind of
appraisal the following things should be taken care of:

1.

The very concept of performance appraisal should be marketed throughout the

organization. Unless this is done, people would not accept it, be it how important to the
organization.

2.

To market such a concept, it should not start at bottom, instead it should be started by
the initiative of the top management.

This would help in percolating down the concept to the advantage of all, which includes
the top management as well as those below them.

This means that the top management has to take a welcoming and positive approach
towards the change that is intended to be brought.

3.

Further, at the time of confirmation also, the appraisal form should not lead to
duplication of any information. Instead, detailed appraisal of the employees work must

be done which must incorporates both the work related as well as the other personal
attributes that are important for work performance.

4.

It should be noted that the appraisal form for each job position should be different as
each job has different knowledge and skill requirements. There should not be a common
appraisal form for every job position in the organization.

5.

The job and role expected from the employees should be decided well in advance and
that too with the consensus with them.

6.

A neutral panel of people should do the appraisal and to avoid subjectivity to a marked
extent, objective methods should be employed having quantifiable data.

7.

The time period for conducting the appraisal should be revised, so that the exercise
becomes a continuous phenomenon.

8.

Transparency into the system should be ensured through the discussion about the
employees performance with the employee concerned and trying to find out the grey
areas so that training can be implemented to improve on that.

QUESTIONNAIRE

1. Should the appraisal process be?

a) Once during the service period

b) Continuous

c) Never

d) Cant Say

1. What in your opinion should be the time period of conducting continuous

a)

Quarterly

b) Half Yearly

Appraisal?

c) Yearly

Any specific reason

2. Does Performance Appraisal helps in improving the productivity of the employees?

Motivated

Indifferent

Demotivated

+ Feedback
- Feedback
Neutral

3. Who in your opinion should appraise the employee?

a)

Superior

b) Peer

c) Subordinates

d) Self Appraisal

e) Consultant

f) All of the above

4. Does the appraisal system helps in polishing the skills or performance area?

a) Yes

b) No

c) Somewhat

5. Do you think personal bias creeps in while appraising an individual?

a) Yes

b) No

6. If given a chance or an opportunity would you like that the current appraisal procedure

should be reviewed?

a) Yes

b) No

c) Cant Say

7. What according to you should be the appropriate method for conducting performance

appraisal?

a)

Rating the employee on number of traits along with the range of performance for
each by the supervisor.

b)

For every trait, each subordinate is paired with and compared to every
other Subordinate.

c)

Reviewing employees on the basis of identified specific examples of good or

poor performance.

d)

Setting specific measurable goals with each employee and periodically reviewing
the progress made.

e) Reviewing performance through case studies, presentations, role playing, etc. For
future performance.

f)

Receiving feedback from people whose views are considered helpful and relevant
including the appraise himself.

8.

Does Performance Appraisal leads to identification of hidden potential of the

employees?

a) Yes

b) No

9. Suggestions and views...............................

10.

a.

11.

Yes

Employees Opinion as to the Purpose of Performance Appraisal

b) No

. Awareness of technique of Performance Appraisal being followed at BSNL among

Employees.

a) Yes

b) No

13. Number of Employees being appraised during their service period

a) Yes

b) no

14. Employees opinion as to the present appraisal system

a) Satisfied

b) fully satisfied

c) Cant say

d) not satisfied

15. Employee perception as to the frequency of appraisal.

a) Once

b) continuous

c) Never

d) cant say

16. Does performance appraisal helps in improving the productivity of employees?

a) Yes

b) NO

17. What should be the gap between two appraisal periods?

a) Quarterly

b) half yearly

c) yearly

Thank you,

Date --/--/--

BIBLIOGRAPHY

Wikipedia

www.bsnl.com

Gupta C.B., Human Resource Management, Sultan Chand & Sons, New Delhi.

Dcenzo & Robbins Human Resource Management, Prentice-Hall International