USE OF 360 EMPLOYEE APPRAISAL

METHOD IN MARUTI UDYOG LIMITED

Submitted in partial fulfilment of the requirements

for the award of the degree B.Com., LL.B. (Hons)

Submitted by

KRISHNA B.A
BC0150010
Submitted to

Professor P. KUMARESAN

TAMIL NADU NATIONAL LAW SCHOOL

TIRUCHIRAPPALLI 620 009

OCTOBER, 2017
 Declaration

I, Krishna B.A do hereby declare that the case analysis entitled

USE OF 360 EMPLOYEE APPRAISAL METHOD IN MARUTI
UDYOG LIMITED submitted to Tamil Nadu National law school in
partial fulfilment of requirement of award of degree in undergraduate in
law is a record of original work done by me under the supervision and
guidance of Professor P. KUMARESAN, department of Law, Tamil
Nadu National law school and has not formed basis for award of any
degree or diploma or fellowship or any other title to any candidate of
any university.

Krishna B.A

B.Com.,LL.B (Hons)
 Certificate

This is to certify that the case analysis entitled USE OF 360

EMPLOYEE APPRAISAL METHOD IN MARUTI UDYOG
LIMITED submitted to Tamil Nadu National law school in partial
fulfillment of requirement of award of degree of under graduate in Law
done by Krishna.B.A under the supervision and guidance of Professor
P. KUMARESAN, Department of Commerce, Tamil Nadu National
Law School.

Prof. P. Kumaresan ( )

Place : Tiruchirappalli
 ACKNOWLEDGEMENTS

At the outset, I take this opportunity to thank my Professor P.

KUMARESAN from the bottom of my heart who has been of immense
help during moments of anxiety and torpidity while the project was
taking its crucial shape.
Thirdly, the contribution made by my parents and friends by
foregoing their precious time is unforgettable and highly solicited.
Their valuable advice and timely supervision paved the way for the
successful completion of this project.
Finally, I thank the Almighty who gave me the courage and
stamina to confront all hurdles during the making of this project. Words
arent sufficient to acknowledge the tremendous contributions of various
people involved in this project, as I know Words are Poor Comforters.
I once again wholeheartedly and earnestly thank all the people who
were involved directly or indirectly during this project making which
helped me to come out with flying colours.
 Research Methodology

The research methodology used in this project is analytical and

descriptive. Data has been collected from various materials, journals and
web sources. This project has been done after a thorough research of
materials from various sources and analysing the information carefully.
 TABLE OF CONTENTS

1. INTRODUCTION

2. WHAT IS 360 APPRAISAL?

3. ADVANTAGES OF 360 EMPLOYEE APPRAISAL

4. DISADVANTAGES OF 360 EMPLOYEE APPRAISAL

5. USE OF 360 EMPLOYEE APPRAISAL IN MARUTI UDYOG

LIMITED

6. ANALYSIS

7. CONCLUSION
INTRODUCTION

Human Resource Management is a concept that has developed over the recent years at fast pace.
Human Resource Management is the process of hiring and developing employees so that they become
more valuable to the organization.1

Edwin Flippo defines HRM as planning, organizing, directing, controlling of procurement,

development, compensation, integration, maintenance and separation of human resources to the end
that individual, organizational and social objectives are achieved.2

Human Resource Management is the process of recruitment and selecting employee, providing
orientation and induction, training and development, assessment of employee (performance of
appraisal), providing compensation and benefits, motivating, maintaining proper relations with
employees and with trade unions, maintaining employees safety, welfare and healthy measures in
compliance with labour laws of the land.3

It is the administrative discipline of hiring and developing employees so that they become more
valuable to the organization.

Besides machinery and other resources, human beings are also considered to be a valuable part of the
organisation as the organisation is run by people and a human element is needed to ensure that the
organisation functions smoothly. Human beings are very important to an organisation because it is the
human factors which are very helpful as it can adapt itself to the changing circumstances.

The aim of Human Resource Management is to develop the skills of the employees and to improve
their potential so as to benefit the employees personally and the organisation as a whole. Human
Resource Management is also about harmonising the goals of the employees with that of the
organisation so that both the parties can benefit mutually.

In Human Resource Management, Performance appraisal is the evaluation of an employees

Iperformance in relation to achieving the organisational goals. It is done so as to improve the
performance of the employee in order to achieve the organisations goals efficiently and effectively.

Performance Appraisal is solely aimed at enhancing the productivity of the employees.

Dale S. Beach has defined "Performance appraisal is systematic evaluation of the individual with
respect to his or her performance on the job and his or her potential for development".4

1
http://www.businessdictionary.com/definition/human-resource-management-HRM.html
2
http://www.whatishumanresource.com/human-resource-management
3
http://www.whatishumanresource.com/human-resource-management
4
Ibid
Performance appraisal helps in understanding how productive or useful an employee is to the
organisation and also helps to identify whether an employee is suitable for promotions, what are the
skills he needs to develop in order to be more efficient at work and improve the competencies of the
employees in order to benefit both the employee and the organisation.

For evaluating or appraising an employees performance there are 2 methods of evaluating an

employees performance. Past Oriented methods and future oriented methods.

Past Oriented Methods of performance appraisal is done based on the past performance of the
employee over a specific time period

Future Oriented performance appraisal is done with the intention to measure the performance of the
measure the performance of the employees in the future.

360 DEGREE EMPLOYEE APPRAISALS OR FEEDBACK

360 degree performance appraisal is a future oriented employee performance appraisal method which
is used to measure the performance of the employee as to how the employee will perform in the
future.

Under the 360 degree method, feedback regarding the employee is received from all those personnel
who work with the employee including superiors, peers and subordinates in order to evaluate the
performance of the employee. This method was first developed by General Electric Company in
United States in the year 1992. Then it gradually spread to other parts of the world. In India, this
method of appraisal is followed by Reliance Industries, Wipro Corporation, Infosys Technologies,
Thermax, Thomas Cook etc,.5

This feedback based method is generally used for ascertaining training and development
requirements, rather than for pay increases.6

This performance appraisal technique is systematic in its collation of data on group performance
where specific groups of individuals are evaluated. These comprise team members, customers,
stakeholders, supervisors and peers. Anyone with useful information on improving an employees
productivity or job performance can be enlisted as an appraiser.7

Generally the sources of feedback are the fellow employees of the worker and his superiors and
subordinates. This method of appraisal involves feedback about an employee being received from all
those who work with the employee including peers, superiors, subordinates and other such related

5
http://www.yourarticlelibrary.com/performance-appraisal/performance-appraisal-methods-traditional-and-
modern-methods-with-example/35492/
6
Ibid
7
http://blog.mentishrms.com/types-of-performance-appraisal-methods/
personnel in the organisation. 360 degree feedback is a multi source assessment, where individuals
performance is assessed and feedback is recorded from a number of people that may include
Managers, Subordinates, Colleagues and customers.8 This method of appraisal is helpful in finding
out potential candidates for promotions to replace ageing or leaving members. It also helps in
identifying the areas in which the organisation can develop or can find out a gap in the knowledge of
the employees which requires to be filled in to improve the organisation.

ADVANTAGES AND DISADVANTAGES OF 360 DEGREE FEEDBACK

ADVANTAGES OF 360 DEGREE APPRAISAL

Individuals get a broader perspective as to how they are perceived by others

The feedback provides a more rounded view of their performance
Enhanced awareness and relevance of competencies
Awareness for senior management too, as they will get to know their need for development
Feedback is perceived more valid and objective as its collected from varied sources.9
Brings people together
Identifies development opportunities
360 degree feedback is helpful in ascertaining whether the core competencies of the
organisation are being adhered to.10
Offer a more comprehensive view towards the performance of employees.
Such colleagues feedback will help strengthen self-development.
The mix of ideas can make the assessment more accurate.
People who undervalue themselves are often motivated by feedback from others.11

8
http://www.mnestudies.com/human-resource/advantages-disadvantages-360-degree-feedback
9
http://www.mnestudies.com/human-resource/advantages-disadvantages-360-degree-feedback
10
https://blog.impraise.com/360-feedback/advantages-and-disadvantages-of-360-degree-feedback-
performance-review
11
http://hrmpractice.com/advantages-disadvantages-360-degree-appraisal/
DISADVANTAGES OF 360 DEGREE PERFORMANCE APPRAISAL.

This performance appraisal system consumes a lot of time, and being complex in
administration.
Extension of exchange feedback can cause troubles and tensions to several staff. Since
feedback regarding an employee is given by other employees who work alongside the
employee being appraised, it may lead to a lot of distrust among the employees.
Since the feedback is given by other employees themselves, their personal bias and other such
emotions may have a detrimental effect on the feedback being given about the employee.12
This kind of feedback process can be more difficult for smaller organizations because there
may not be a large enough pool of employees to effectively provide feedback. It is good to
have 5-6 reviewers that represent as many different disciplines within the organization.13 The
American Management institute has mandated that for an effective appraisal, at least 10-12
people must be able to provide feedback.
It takes a bit of professional maturity to handle those inevitable negative comments. It is not
uncommon for employees to be in denial about feedback and fail to see the developmental
opportunities. When employees focus on who said what and not on how can I improve
myself, it can affect morale and general work relationships.14
It does not link feedbacks to achieving goals, which is the primary objective of performance
appraisal.
When the feedback of an employee is taken and not considered, then the employee will feel
that his feedback was not taken seriously and this will breed discontent among the
employees.15
360 programs that get driven by HR without much attention from the boss are not effective.
The 360 tool/questions are too vague. Since it is based on personality profiles, the questions
are not definite.
If there is a follow-up post-360 plan, it happens only once. In some cases, only feedback is
collected and no other steps are taken.
360 degree employee appraisal system lacks confidentiality of the information gathered about
the workers. People who have never gone through the 360 process before are usually initially
worried about how the data will be used and if it will remain confidential.

12
Ibid
13
https://thethrivingsmallbusiness.com/advantages-and-disadvantages-of-360%C2%B0-feedback/
14
https://thethrivingsmallbusiness.com/advantages-and-disadvantages-of-360%C2%B0-feedback/
15
https://www.enotes.com/homework-help/what-advantages-disadvatnages-360-degree-feedback-353184
 Some companies totally disregard the strengths that get uncovered in the 360 process. The
attitude seems to be only to discover weaknesses and eliminate them instead of finding out
new areas of strength.16

The 360 degree feedback may help the managers find out the top performers in the organisation and
also find out viable candidates for promotion. The only drawback of this system of appraisal is that it
is subject to a lot of biased opinion from the reviewers and the process of collecting the feedback and
reviewing it is time consuming and difficult. Since the feedback provided by the reviewer is
subjective, the possibility of misleading and highly biased information being provided is high. This
may have a detrimental effect on the future of a high performing employee. The negative feedback
provided may prove to have a decisive effect on his prospects of promotion or a raise.

If used properly, this system of feedback will benefit both the organisation and the employee. It will
help the organisation improve and diversify and also helps the organisation to improve the employees
and the organisation consequently.

360 degree employee appraisal is a modern form of appraisal that uses past feedback to appraise the
employee and also measure the utility and importance of the employee to the organisation in the long
term future.

16
https://www.forbes.com/sites/ericjackson/2012/08/17/the-7-reasons-why-360-degree-feedback-programs-
fail/#5a7559a6279d
USAGE OF 360 DEGREE APPRAISALS IN AN ORGANISATION

360 degree employee appraisal system is a modern form of employee appraisal that is utilised by
many companies and organisations in recent years to appraise the suitability and performance of the
employee over a longer period of time.

It is now understood that many leading organisations use the 360 degree method to appraise their
employees in a much more intense and creative manner.17

It is widely used by Information Technology Industries to build their organisational capability by

making use of the 360 degree appraisal method.

In most cases, a simple questionnaire consisting of a number of questions were asked to a number of
persons in the organisation.

It is understood that in most cases, the 360 degree feedback is used as a developmental tool and in
only 11% of the cases is it used for assessing an employees suitability for promotion.

It is understood that in most cases, the 360 degree feedback is used as a developmental tool and in
only 11% of the cases is it used for assessing an employees suitability for promotion.

This method of performance appraisal is famously used in Maruti Udyog Limited.

MARUTI UDYOG LIMITED

Maruti Udyog Limited, now known as Maruti Suzuki India Limited. It was previously known as
Maruti Udyog Limited and was established in the year 1981 as Maruti Udyog Limited. It is the largest
manufacturer of passenger cars in India. It has been in a Joint Venture agreement with Suzuki Motor
Corporation since 1982.18

The company launched its first passenger car, the highly successful Maruti Suzuki 800 in the year
1986. This car is the most successful and the model that is associated with this company.

They are one of the most successful and profitable car manufacturers in India and are a subsidiary of
the Suzuki Motor Corporation. It is told that almost half the passenger cars sold in India is produced
by Maruti Suzuki.

Maruti Suzuki has produced both economical passenger cars as well as high end luxury cars. They
were born as a government company, with Suzuki as a minor partner, to make a people's car for

17
http://tracksurveys.co.uk/how-leading-organisations-are-using-360-degree-feedback-every-day/
18
http://profit.ndtv.com/stock/maruti-suzuki-india-ltd_maruti/reports
middle class India. Over the years, its product range has widened, ownership has changed hands and
the customer has evolved.19

The company has two highly equipped state of the art manufacturing plants in India. The first facility
is at Gurgaon spread over 300 acres and the other facility is at Manesar, spread over 600 acres in
North India. The Gurgaon facility Maruti Suzuki's facility in Gurgaon houses three fully integrated
plants. While the three plants have a total installed capacity of 350,000 cars per year, several
productivity improvements or shop floor Kaizens over the years have enabled the company to
manufacture nearly 700,000 cars/ annum at the Gurgaon facilities.

The other such facility is located in Manesar, which is located near Gurgaon. This plant has been a
source of controversy in recent times because in this particular facility, a section of the workers who
were working indulged in violence and had inflicited serious injuries on the management personnel
who were supervising the factory in July 2012.20

Maruti Suzuki Limited was plagued by years of low margins. In order to counter this and improve the
quality of work in its units, Maruti Suzuki opted to adopt the 360 degree method of appraising
employees.21

Maruti has handled this by getting E&Y and other consultants to make detailed presentations to the
senior management personnel before the process got under way. The company has a committee of
general managers, called Human Resource Inter Divisional Committee (HRIDC), which is consulted
on all major HR issues.

This system is to be implemented in the top management first, where the feedback will be gathered
from the junior managers and other subordinates. The company has introduced a unique 360-degree
feedback system, starting with its senior leadership. The new system has been co-developed with
Ernst & Young and has been implemented.22

The process of implementing the new 360 degree appraisal system for the organisation MUL has
traditionally had a performance-based component of about 30 per cent in its compensation package
for its executives. But now it has gone the whole and decided that in addition to the hike in individual
perquisites, increments to even the basic salary will now depend on the employees' performance
during the year.

19
Ibid
20
http://www.hindustantimes.com/gurgaon/maruti-factory-violence-verdict-a-brief-history-of-the-case/story-
hXMxAHf6I3DuJHCflV47YN.html
21
http://www.thehindubusinessline.com/todays-paper/maruti-adopts-360-degree-appraisal-
system/article1648522.ece
22
Ibid
In short, they had replaced a partially performance based payment system with a performance system
that was entirely based on performance. The payment for a worker or the top management now
depended on the performance of each other in the organisation respectively.23

The Company, along with co-ordination by Ernst and Young had developed a questionnaire which
can be answered even through the internet. There have been calls by the management to the
employees to support the initiative and answer the questionnaire.

One of the key beneficial aspects of this particular method of appraisal developed by Maruti Udyog
Limited is that every general manager has to appraise his/her own performance now.

Till then, the performance of the employees was analysed by the Directors and General Managers
alone. But now even the subordinates have a chance of appraising the performances of their superiors
and their peers.

Maruti Udyog Limited became the first company in India to implement the 360 degree employee
appraisal scheme. This was done my Maruti to improve the overall efficiency of the organisation at all
levels. The questionnaire prepared by the organisation is made with the competencies which are
required by Maruti Udyog in line with the leadership competencies required.24

This 360 degree method of feedback has four components. These components are

1. Self appraisal: The component of self appraisal lets the employee to look into their own
strengths and weaknesses. This allows the employee to be a judge of his own performance.
The employees can give an honest opinion about their own performance from their own point
of view.
2. Superiors appraisal: The component of appraisal by the superiors is the traditional
component of 360 degree performance appraisal. This form of appraisal is the traditional
method where the immediate superior or any other superior of an employee in the
organisation reviews the performance of the employee. This is the only traditional part of the
360 degree appraisal method.
3. Subordinates appraisal: This is one of the new aspect or the unconventional aspect of 360
degree appraisal. In this particular part of the appraisal method, the subordinates under a
particular position can give their feedback regarding the superiors gives a chance to judge the
employee on the parameters like communication and motivating abilities, superiors ability to
delegate the work, leadership qualities etc.25

23
Ibid
24
Human Resource Management by Durai Pravin, Page 288.
25
http://www.whatishumanresource.com/360-degrees-performance-appraisal
4. Peer appraisal: Peer appraisal is one of the basic features of this method of feedback. In this
people or personnel who work along with the employee provide their opinion regarding the
employee. This is particularly helpful in finding out whether an employee is good in the
organisation well and whether the peers are happy with him or not. It is also helpful in finding
an employees influence on other employees and his part in maintaining a conductive and
positive workplace atmosphere.

PROBABLE QUESTIONNAIRE WHICH CAN BE ASKED TO AN EMPLOYEE IN MARUTI

SUZUKI INDIA LIMITED

1. Whom would you like to evaluate?

a. Supervisor
b. Co-worker
c. Subordinate
2. On a Scale of 10, how much do you consider to be the apt rating for your supervisor, co-
worker or subordinate?
3. How helpful is your supervisor/co-worker /subordinate in the workplace?
a. Not helpful
b. Somewhat helpful
c. Very helpful
4. How available is the supervisor/co-worker /subordinate in case of availability to discuss any
matter?
a. Not available
b. Somewhat available
c. Highly available
5. What is the duration of feedback given to you?
a. Very frequent
b. Infrequent
c. Not at all
6. Is the feedback given by the appraisal system helpful in improving your performance?
a. Highly helpful.
b. Helpful to an extent.
c. Not helpful at all.
7. Do you think your supervisor/co-worker /subordinate has good leadership skills?
a. Yes
b. No
c. Maybe
d. No comment
8. Is the training program which is given to you to improve your performance helpful?
a. Highly useful
b. Moderately useful
c. A little useful
d. Not useful at all.
9. Is the work atmosphere in the organisation good?
a. Highly conducive
b. Good
c. Neutral
d. Not a good atmosphere for work.
10. How satisfied with the work conditions are you?
a. Highly satisfied
b. Somewhat satisfied
c. No opinion
d. Not satisfied
11. On a scale of 1-10, how effective is your supervisor/subordinate/ peer?

12. How flexible is your supervisor/subordinate/ peer?

a. Highly flexible
b. Somewhat flexible
c. Not flexible at all.
13. Do you consider your supervisor/subordinate/ peer to have high professional standards?
a. Yes
b. No
c. Maybe
d. Not known
14. How good are your supervisor/subordinate/ peer in team work?
a. Very good
b. Good
c. Decent
d. Bad
15. On the whole, on a scale of 1-10, how much will you award your supervisor/subordinate/
peer?
ANALYSIS

From the above we have been able to find out that Maruti is the very first organisation in the country
to introduce the 360 degree employee appraisal method. The method so being followed is made to suit
the organisation. It aims at improving the performance of the employees from the top to bottom in the
organisation. In fact, it can be understood that they first introduced it to appraise the performance of
the top level managers and personnel at that level. They also changed the system from a partially
performance based one to a completely performance based system. This now means that the personnel
that all levels will get their respective salaries and other job related incentives only if all the
departments and all the personnel cooperate with each other to achieve the goals of the organisation.
The system is made in such a way that everyone at all levels must cooperate among themselves in
order to ensure that they receive adequate compensation as well as reviews from their fellow
workmen.

It is the observation of the researcher that this system ensures proper coordination and teamwork
among the employees as well as the top level management. This coordination is very important for
achieving high levels of efficiency and the desired goals.

Furthermore, the initial reaction towards this was apprehension. It is understood that the employees
were apprehensive of the idea of evaluating their superiors or their peers. So, the employees were not
receptive to the idea of filling the online questionnaire. When the employees were given assurances
regarding the confidentiality of their appraisal of their fellow workers, the support for this system
increased. Even the Human Resource Managers who were not receptive to this idea and viewed it as a
break from the traditional methods of performance appraisal. This method of appraisal is now
considered to be a tool for the development of personnel within the organisation and since the
employees are able to give their views about their peers, superiors and subordinates, the top level
management is able to assess the situation and take action accordingly.

This system of employee appraisal has had a positive effect within the structure of Maruti Udyog
Limted and helped them to improve their organisation from within and also helped them to maintain
their status as the leading car manufacturer and retailer within India.
CONCLUSION

The 360 degree method is indeed an innovative method which is being handled by Maruti Suzuki is
one ground breaking issue as it was the very first organisation in India which adopted a modern form
of employee appraisal in a country which was still in the clutches of the traditional methods of
appraisals by the superiors.

One of the most important advantages of this method of appraisal is that since all the personnel in the
organisation are evaluated by all those who work with and around them; it does not allow the
superiors to exercise their powers arbitrarily. All the workers at all levels will understand how the
workplace and those with whom he is working with think and feel about him. He can understand how
people around him perceive him both as a worker as well as a colleague.

Maruti Suzuki was able to provide that the information provided by the workers remained
confidential. Hence the workers started responding well to the 360 degree feedback method. The
method, the way in which performance appraisal is linked with the salaries and other such incentives
and benefits at Maruti Suzuki will make personnel at all levels cooperate with each other and achieve
a high level of production, which Maruti Suzuki has done over the past years.

We can see that the 360 degree employee appraisal is a good method of appraising employees if it is
implemented properly. It can also be seen that the employees also acclimatised to this process once
they were guaranteed that their opinions and views will be confidential. This new method of appraisal
has invigorated the working process and has yielded positive results to Maruti Suzuki India Limited.

It is observed from this particular study that 360 degree performance appraisal is an effective tool for
appraising the employees and it is also helpful for the future of both the organisation and the
employee. It allows the management to discover if there are avenues of promotion for employees or
for developing them and also find out if the employee has leadership qualities needed by the
organisation.

From the above example of Maruti Suzuki India Limited, we are able to understand that 360 degree
appraisal system, when implemented in accordance to the organisation can be a highly effective tool
for appraisal as well as for improving the efficiency of the organisation. The successful
implementation of this particular method of appraisal if done correctly, will pay the organisation rich
rewards in the future