A

PROJECT REPORT

ON

“"A Study on the Performance Appraisal System at Max New York Life
Insurance Company Limited"

A Project Report submitted to Hyderabad Business School in partial

fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

(SESSION: 2017-19) - MBA VI TRIMESTER

Submitted by
M.V.Ashish Teja

221723602002

Under the guidance of

Dr. S. Suman Babu

Assistant Professor
 GITAM
(DEEMED TO BE UNIVERSITY)

Rudraram, Patancheru (M), Sangareddy Dist., Telangana

 DECLARATION

I hereby declare that this Project Report titled “A Study on the

Performance Appraisal System at Max New York Life Insurance
Company Limited.”

Submitted by me to the Hyderabad Business School, GITAM University,

Hyderabad, is a bonafide work undertaken by me and it is not submitted to
any other University or Institution for the award of any degree diploma
/certificate or published any time before.

Name and Roll. No of the Student Signature of

the Student

M.V.Ashish Teja

221723602002
 CERTIFICATE

This is to certify that the Project Report title “A Study on the Performance
Appraisal System at Max New York Life Insurance Company
Limited.”submitted in partial fulfilment for the award of MBA Programme of
Hyderabad Business School, GITAM University, Hyderabad, was carried out by
M.V.AshishTeja under my guidance. This has not been submitted to any other
University or Institution for the award of any degree/diploma/certificate.

Name and Designation of the Guide : Signature of the Guide

Dr. S. Suman Babu

Assistant Professor
Hyderabad Business School
GITAM University
Hyderabad

ACKNOWLEDGEMENTS
I wish to take this opportunity to express my deepest gratitude to my
professor Dr. S Suman Babu (Assistant Professor in Gitam Hyderabad
Business School) for the keen interest,inspiring guidance, continuous
encouragement, valuable suggestions and constructive criticism

throughout the pursuance of this report.

I am thankful to Prof. Y Lakshman Kumar Dean and Director for granting

me the permission to undertake the study. I would like to convey thanks to
my project guide Dr. S Suman Babu Assistant Professor for ready assistance,
keen interest and valuable suggestions.

Last but not least it would be unfair if I don’t extend my gratitude to all my
faculties, to my parents and all my friends for their active cooperation which
was of great help during the course of my training process. Without the
support of all the above mentioned people this study would not have been
successful. I Once again thank you all for your great interest and support
throughout my study.

Thank you.

M.V.Ashish Teja

221723602002
MBA (2017-2019)

GITAM Hyderabad Business School

 TABLE OF CONTENTS

TOPIC PAGE NUMBERS

Chapter-I

INTRODUCTION

Need for the Study

Importance of the Study

Objectives of the Study

Concept of Performance Appraisal

Chapter—II

Industry Profile

Chapter-III

Company profile

Chapter-IV

Job Profile

Chapter-V

Research Methodology

Limitations

Data Analysis & Interpretation

Findings

Suggestions

Reference and Bibliography

Annexure
 ABSTRACT
The research is on the basis of "A Study on Performance Appraisal System
at Max New York Life Insurance Company Limited", is a process of setting
objectives, making plans to achieve those objectives and accomplishing the
desired results. This project describes about the Performance Management
System which is followed in Max New York Life Insurance. This project
also describes the problems faced by the appraisee and the appraisers in this
system. It also elaborates about the steps taken by the appraisers to improve
the performances of the appraisee so that their efficiency can be increased
and later the rewards and recognitions are given in the form of promotions,
incentives and empowerment.In Max New York Life Insurance, system have
been devised to cascade Organizational Goals into individual goals by
framing out objectives of the company from the MOU at corporate level and
there by preparing a Balance Score Card both at corporate and unit level.
 CHAPTER - I

INTRODUCTION

Human Resources Management :

Human Resources Management is concerned with human beings, who are

the energetic elements of management. The success of any organization or
an enterprise will depend upon the ability, strength and motivation of
person's working in it. Human Resource Management (FIRM) is the
function within an organization that focuses on recruitment, management
and providing direction for the people who work in the organization. Human
Resource Management can also be performed by line managers.

Human Resource Management is the organizational function that deals with

issues related to people such as compensation, hiring, performance
management, organization development, safety, wellness, benefits, employee
motivation, communication, administration, and training.

Human resource management (HRM) is the strategic and coherent approach

to the management of an organization's most valued assets - the people
working there who individually and collectively contribute to the
achievement of the objectives of the business.fil The terms "human resource
management" and "human resources" (HR) have largely replaced the term
"personnel management" as a description of the processes involved in
managing people in organizations.fil In simple words, HRM means
employing people, developing their capacities, utilizing, maintaining and
compensating their services in tune with the job and organizational
requirement.

Human Resources Development :

Human Resource Development (HRD) is the framework for helping

employees develops their personal and organizational skills, knowledge, and
abilities. Human Resource Development includes such opportunities as
employee training, employee career development, performance management
and development, coaching, mentoring, succession planning . key employee
identification, tuition assistance, and Organization development. The focus
of all aspects of Human Resource Development is on developing the most
superior workforce so that the organization and individual employees can
accomplish their work goals in service to customers. Human Resource
Development can be formal such as in classroom training, a cvllo, course, or
an organizational planned change effort. Or, Human Resource Development
can he informal as in employee coaching by a manager. Healthy
organizations believe in Human Resource Development and cover all of
these bases.

Performance Appraisal System :

Performance appraisal refers to all the formal procedures used to evaluate an

individual, his contributions and potential. In other words, it is to plan and
measure the performance of an individual in terms of the requirement of the
job or it is a process of finding out how effective the organization has been
at hiring and placing an employee.

Performance appraisal is a formal system of review and evaluation of

individual or team task performance. While evaluation of team performance
is critical when teams exist in an organization, the focus of performance
appraisal in most firms remains on the individual employees. Regardless of
the emphasis, an effective appraisal evaluates accomplishments and initiates
plans for development, goals and objectives.

Company :

The Max New York Life Insurance Limited was established as a public
limited company on 23r may 1975. Late Sr_ BH.Vijay Kumar Raju and
Andhra Pradesh industrial development corporation (APIDC) on 18th
September 1975 promoted the Max New York Life Insurance Limited; the
company started its commercial production on 7th April 1977, In 1978 the
initial production capacity was 30 tones per day. In 1986, Max Nev York
Life Insurance Limited under took an expansion project to double its
capacity to 60 tones per day. Now the capacity of the plant is 115 tones per
day.

NEED FOR THE STUDY

Appraising the performance of individuals, groups and organizations is a

common practice of all societies. While in some instances these appraisal
processes are structured and formally sanctioned, in other instances they are
an informal and integral part of daily activities. Consciously or
unconsciously evaluate our own actions from time to time. In social
interactions, performance appraisal is conducted in a systematic and planned
manner to achieve widespread popularity in recent years.

Performance appraisal is essential to understand and improve the employee's

performance through Human Resource Development. In fact, performance
appraisal is the basis for HRD. It was viewed that performance appraisal is
useful to decide upon employee promotion / transfer, salary determination
and the like. But the recent developments in human resource management
indicate that performance appraisal is the basis for employee development.
Performance appraisal indicates the level of desired performance level, level
of actual performance and the gap between these two. This gap should be
bridged through human resources development techniques like training
executive development etc. According to the past survey it was noticed that
the performance appraisal system in this company was not up to the mark.
Hence there would be scope for giving few suggestions as per my
knowledge to improve the performance appraisal system which was quite
essential for the better performance of the employees.

The researcher tries to measure the performance of the organization and its
working capital management in terms of financial wealth.
 OBJECTIVES OF THE STUDY

• The major objective of this project is to evaluate the present

performance appraisal scheme in "Max New York Life Insurance".

• To check the satisfaction level among the employees of the organization.

• To identify whether the performance appraisal helps Training and
Development needs.

·0 Help employee to his overcome weaknesses, and improve his strengths,

and thus enable him to improve his performance and that of the
department.

·1 Generate adequate feedback and guidelines from the reporting officers to

the employee.

·2 Contribution to the growth and development of the employee thru

helping in realistic goal setting

·3 Help identifying employees for the porpoise of motivating, training and

developing them. Generate significant relevant, free and valid
information about employees

·4 Thus good performance appraisal and review system should primarily

focus of employee development.

CONCEPT OF PERFORMANCE APPRAISAL SYSTEM

Introduction :
Appraising the performance or individuals, groups and organizations is ti
common practice of all societies. While in some instances these appraisal
processes are structured and formally sanctioned, in other instances they are
an informal and integral part of daily activities. Thus, teachers evaluate the
performance or students, bankers evaluate the performance of creditors,
parents evaluate the behaviour of their children, and all of us, consciously at
unconsciously evaluate our "own actions from time to time. In social
interactions, performance is conducted in a systematic and planned manner
to achieve widespread popularity in recent years.

Meaning:

Performance appraisal is a method of evaluating the behavior of employees

in the work spot, normally including both the quantitative and qualitative
aspects of hob performance. Performance here refers to the degree of
accomplishment of the tasks that make up an individual's job. It indicates
how well an individual is fulfilling the job demands. Often the term is
confused with effort, but performance is always measured in terms of results
and not efforts. Some of the important features of performance appraisal
given, they are:

1. Performance appraisal is the systematic description of an employee's job-

relevant strengths and weaknesses.

2. The basic purpose is to find out how well the employee is performing the
job and establish a plan of improvement.

3. Appraisals are arranged periodically according to a definite plan.

4. Performance appraisal is not job evaluation. Performance appraisal refers

to how well someone is doing the assigned job. Job evaluation determines
how much a job is worth to the organization and, therefore, what range of
pay should be assigned to the job.

use of Performance Appraisal:

• Performance appraisal is helpful in assessing a firms human resources, data
must be available that describe the promobility and potential of all
employees. • A well designed appraisal system provides a profile of the
organization's human resource strengths and weaknesses to support this
effort. Performance evaluation ratings may be helpful in predicting the
performance of job applicants.

• Performance appraisal will point out employee specific needs for training
and development.

• Performance appraisal is useful in career planning and development.

• Performance appraisal results provide a basis for rational decisions

regarding compensation programmes.

• Performance appraisal data are also frequently used for decisions in several
areas of internal employee relations, including promotion, demotion,
termination, lay-off. and transfer.

• Performance appraisal is useful in assessment of employee potential.

• Performance appraisal can be used to determine whether HR programmes

such as selection, training, and transfers have been effective or not.

Objectives of Performance Appraisal :

Performance appraisal aims at attaining the different objectives, they are

I. To create and maintain a satisfactory level of performance.

2. To contribute to the employee growth and development through training,

self and management development programmes.

3. To help the superiors to have a proper understanding about their

subordinates

4. To facilitate fair and equitable compensation based on performance.

5. To facilitate for testing and .validating selection tests, interview
techniques through comparing their scores with performance appraisal ranks.

6. Top rovide information for making decisions regarding lay off,

retrenchment etc.

7 To ensure organizational effectiveness through correctin g employee for

standard and improved performance, and suggesting the change in employee
behavior.

Appraisal Process :

Each step in the process is crucial and is arranged logically. Many

organizations make everY effort to approximate the ideal process, resulting
in first-rate appraisal systems. unfortunately, many others fail to consider
one or more of the steps and, therefore have leas-effective appraisal system.
1. Objectives of Appraisal :

Objectives of appraisal include effecting promotions and transfers, assessing

training needs, awarding pay increases, and the like. The emphasis in all
these is to correct the problems.

2. Establish job expectations:

The second step in the appraisal process is to establish job expectations. This
includes informing the employee what is expected of him or her on the job.

3.Design appraisal programme:

Designing an appraisal programme posses several questions which need
answers.

They are:

(i) Formal versus informal appraisal;

(ii) Whose performance is to be assessed?

(iii) Who are the raters?

(iv)What problems are encountered?

(v) How to solve the problems?

(vi) What should be evaluated?

(vii) When to evaluate?

(viii) What methods of appraisal are to be used?

4. Performance Interview:

Performance interview is another step in the appraisal process. Once

appraisal has been made of employees, the raters should discuss and review
the performance with the rates, so that they will receive feedback about
where they stand in the eyes of superiors.

5. Use of Appraisal data:

The final step in the evaluation process is the use of evaluation data. The
data and informationgenei ated throughsperformance evaluation must be
used by the HR department.

Methods of Performance Appraisal :

(1) Graphic Rating Scales:

 Graphic rating scales compare individual performance to an absolute
standard. In this method, judgments about performance are recorded on a
scale. This is the oldest and widely used technique. This method is also
known as linear rating scale or simple rating scale. The appraisers are
supplied with printed forms, one for each employee. These forms contain a
number of objectives, behavior and trait - based Qualities and characters to
be rated like quality and volume of work, job knowledge, dependability,
initiative, attitude etc., in the case of workers and analytical ability, creative
ability, initiative, leadership qualities, emotional stability in the case of
managerial personnel. These forms contain rating of scales. Rating scales are
of two types, viz., continuous rating scale and discontinuous rating scales. In
continuous order like 0,1,2,3,4 and 5 and in discontinuous scale the
appraiser assigns the point to each degree. The points given by the rater
know performance regarding each character. The points given by the rater to
each character are added up to find out the overall performance. Employees
are ranked on the basis of total points assigned to each one of them.

One reason for the popularity of the rating scales is its simplicity, which
permits many employees to be quickly evaluated. Such scales have relatively
low.

Design cost and high in ease of administration. They can easily pinpoint
significant dimensions of thejob. The major draw back to these scales is their
subjectivity and low reliability. Another limitation is that the descriptive
words often used in such lies may have different meanings to different
raters.

(2) Ranking Method:

Under this method the employees are ranked from best to worst on some
characteristics. The rater first finds the employee with the highest
performance and the employees with the lowest performance in that
particular job category and rates the former as the best and the later as the
poorest. Then the rater selects the next highest and next lowest and so on
until he rates all the employees in that group. Ranking can be relatively easy
and inexpensive, but its reliability and validity may be open to doubt. It may
be affected by rater bias or varying performance standards. Ranking also
means that somebody would always be in the backbench. It ls possible that
the low ranked individual in one group may turn out to be superstar in
another group. One important limitation of the ranking method is that size of
the different between individuals is not well defined. For instance, there may
be little difference between those ranks third and fourth.

(3) Paired Comparison Method:

This method is relatively simple. Under this method, the appraiser ranks the
employees by comparing one employee with all other employees in the
group, one at a time. As illustrated, this method results in each employee
being given a positive comparison total and a certain %age total positive
evaluation.

(4) Forced Distribution Method:

The rater may rate his employees at the higher or at the lower end of the
scale under the earlier methods. Forced distribution method is developed to
prevent the raters from rating too high or too low. Under this method, the
rater after assigning the points to theperformance of each , employee has to
distribute his ratings in a pattern to conform to normal frequency
distribution.
Thus, similar to the ranking technique, forced distribution requires the raters
(supervisors) to spread their employee evaluation in a prescribed
distribution. This method eliminates central tendency and leniency biases.
However, in this method employees are placed in certain ranked categories
but not ranked within the categories. Quite often work groups do not reflect
a normal distribution or individual performance.

This method is based on the questionable assumption, as group of

employees will have the same distribution of excellent, average and poor
performers. If one department has all outstanding employees, the supervisor
would find it extremely difficult to decide who should be placed in the lower
categories. Difficulties can also arise when the raters most explain to the
employee why he was placed in one grouping and others were placed in
higher groupings.

(5) Checklist Methods:

The Checklist is a simple rating technique in which the supervisor is given a

list of statement or words and asked to check statements representing the
characteristics and performance of each employee. There are three types of
checklist methods, viz, simple checklist, weighted checklist and forced
choice method.

(a) Simple Checklist Method:

The checklist consists of large number of statements concerning employee

behavior.

Example:

Simple Checklist Method,

Wadia Industries Ltd.,

Performance Appraisal Form

Name of Employee:

Number:
Designation:

Department:

Checklist of Qualities:

1. Behavior is the employee punctual in attending the office?

A) Yes B)No

2. Does the employee behave courteously with his superiors?

A) Yes B) No

3. Does the employee maintain sound customer relations'?

A) Yes B) No

4. Is the employee sincere in doing his job?

A) Yes B) No

The rater checks to include if the behavior of an employee is positive or

negative to each statement. Employee performance is rated on the basis of
number of positive checks. The negative checks are not considered in this
method. A difficulty often arises because the statements may appear to be
virtually identical in describing the employee. The words or statements may
have different meanings to different raters.
(b)Weighted Checklist :

The weighted checklist method involves weighting different items in the

checklist having a series of statements about an individual, to indicate that
some are more important than others. The rater is expected to look into the
questions relating to the employee's behavior, the attached rating scale (or
simply positive /negative statements where such a scale is not provided) and
tick those traits that closely describe the employee behavior. Often the
weights are not given to the supervisors who complete the appraisal process,
but are computed and tabulated by someone else, such Its a member of the
Personnel unit. In this method the performance ratings of the onployee are
multiplied by the weights of' the statements and coefficients are added up,
The con)u., ,ltivc coefficient is the weighted performance score of the
employee. Weighted performance score is Compared with the overall
assessment standards in order to find out the overall performance of the
employee. The weighted checklist, however, is expensive to design to
design, since checklist for och different job in the organization must be
produced. This may prove time consuming also in the encl. Though the
weighted checklist method is evaluative as well as development, it has the
basic problem of the evaluator not knowing the items, which contribute
mostly of successful performance.

(C) Forced Choice Method :

This method was developed at the close of World War II. Under this method,
a large number of statements in groups are prepared. Each group consists of
four descriptive statements (treated) concerning employee behavior. Two
statements are most descriptive (favorable) and two are least descriptive
(unfavorable) of each in tetrad. Sometimes there may be five statements in
each group out of which one would be neutral. The actual weightings of the
statements are kept secret.
 The appraiser is asked to select one statement that that mostly describes
employee's behavior out of the two favorable statements are kept secret. The
appraiser is asked to select one statement that that mostly describes
employee's behavior out of the two unfavorable statements. The items are
usually a mixture of positive and negative statements. The intent is to
eliminate or greatly reduce the rater's personal bias, specially the tendency to
assign all high or low ratings_ The items are designed to discriminate
effective from ineffective workers as well as reflect valuable personal
qualities.

(6) Critical Incident Method:

Employees are rated discontinuously, i.e., once in a year or six months

under the earlier methods. The performance rated may not reflect real and
overall performance, as the rater would be serious about appraisal method,
i.e., critical incident method has been developed. Under this method, the
supervisor Continuously records the critical incidents of the employee
performance relating to all characteristics (both positive and negative) in a
specially designed or behavior notebook. The supervisor rates the
performance of his subordinates on the basis of notes taken by him. Since
the critical incident method does not necessarily have to be a separate rating
system, it can be fruitfully employed as documentation of the reasons why
an employee was rated in a certain way.

The critical incident method has the advantage of being objective because
the rater considers the records of performance rather than the subjective
points of opinion.

(7) Essay or Free From Appraisal :

 This method requires the manager to write a short essay describing each
employee's performance during the rating period. This format emphasizes
evaluation of overall performance, based on strengths weakness of employee
performance, rather than specific job dimensions. By asking supervisors to
enumerate specific examples of employee behavior, the essay technique
minimizes supervisory bias and halo effect.

(8) Group Appraisal :

Under this method, an employee is appraised by a group of appraisers. This

group consists of the immediate supervisor of the employee, to other
supervisors who have close contact with employee's work, manager or head
of the department and consultants. The head of the department or manager
may be the chairman of the group and the immediate supervisor may act as
the coordinator for the group activities. This group uses any one or multiple
techniques discussed earlier. The immediate supervisor enlightens others
members about the job characters, c. Then the group appraises the
performance of the demands, standards of performance et employee,
compares the actual performance with standards, find out the deviations,
discusses the reasons therefore, suggests ways for improvement of
erformance, prepares action plans.

Modern Methods

(1) Behaviorally Anchored Rating Scales (BARS):

The Behaviorally Anchored Rating Scales (BARS) method combines
elements of the traditional rating scales and critical incidents methods. Using
BARS, job behaviors from critical incidents - effective and ineffecti ve
behaviors are described more objectively. The method employs individuals
who are familiar with a particular job to identify its major components. They
then rank and validate specific behaviors for each of the components. BARS
require considerable employee participation; its acceptance by both
supervisors and their subordinates may be greater. Proponents of BARS also
claim that such a system differentiates among behavior, performance and
results, and consequently is able to provide a basis for setting developmental
goals for the employee. Because it is job - specific and identities observable
and measurable behavior, it is more reliable and valid method for
performance appraisal.

(2) Assessment Centre:

This method of appraising was first applied in German Army in 1930. Later
business and houses started using this method. This is not a technique of
performance appraisal by indilifsirInialfact it is a system or organization,
where assessment is done by several individUals and it- . various experts by
using various techniques. also by v In tut , .s approach individual from
various departments are brought together to spend two or three days working
on an individual or a group assignment similar too the ones they'd be
handling Nvlien promoted. All assess get an equal opportunity to show their
talents and capabilities and secure promotion based on merit. An assessment
model is shown below. Human Resource Accounting deals with cost of and
contribution of human resource to the organization. Cost of the employee
includes cost of manpower planning, recruitment, selection, induction,
placement, training, development, wages and benefits etc. employee
contribution is the money value of employee service which can be measured
by Workers productivity or value added by human resources.

(3) Management by objectives:

 Although the concept or management by objectives was advanced by Peter
F.Duckers way back in 1954, it was described only recently as 'large range'
in performance appraisal. Refinements brought out by George Odione,
Valentines, Humble and others have enriched the concept and made it more
acceptable all over the globe as an MBO in their work settings. Some of the
companies which implemented MBO reported excellent results, others
disappointments, and many in decisions. Started briefly, MBO is a process
whereby the superiors and subordinate managers of an organization j ointly
identify its common goals, define each individual's major areas of
responsibility in terms of results excepted of him, and use these measures of
guides for operating the unit and assessing the contribution of its members.
Generally, the unit and assessing the contribution of its members. Generally
the MBO is undertaken along the following lines.

The subordinate and superior jointly determine goals to be accomplished

during the appraisal period and what level of performance is necessary for
the subordinate to satisfactory achieve specific goals. . During the appraisal
period the superior and subordinate update and later goals as necessary due
to changes in the business environment.

(4) psychological Appraisal:

psychological appraisal are conducted to asses the employee potential,

Psychological i.i app raisal consist of

(a) In-depth interviews.

(b) Psychological tests
(d) Discussions with the superior's sub-ordinates and peers
(c) Consultations and discussions with the employee
(e) Reviews of others evaluations.
Evaluation is conducted in the areas of :
(a) employee's intellectual abilities,
(b)Emotional stability,
(c) motivational responses,
(d) sociability, (e)
employees ability to comprehend the vents,
(f) ability to foresee the future.

(5) Counseling:

After the performance of the employee is appraised, the superior should

inform the employee about the level of his performance, the reason for the
same, need for and the methods of improving the performance. The superior
should counsel the employee about his performance and the methods of
improving it.

Counseling is a planned, systematic intervention in the life of an individual

who is capable of choosing the goal and the direction of his development.
Thus, the purpose of counseling is to help the employee aware of his own
performance, his strengths and weakness, opportunities availabilities
available for performance counseling can be done in the form of
performance interview by the superior.

The Post Appraisal Interview :

 The post appraisal interview has been considered by most of the
organizations, as well as employees, as the most essential part of appraisal
system. This interview provides the employee the feedback information, and
an opportunity to appraiser to explain the employee his rating, the traits and
behavior he has taken into consideration for appraisal etc.
It also gives the opportunity to employee to explain his views about the
rates, standards or goals, rating scale, internal and external environment
causes for low level of performance, his resources responsible for
performance etc. further it helps both the parties to review standards, set new
standards based on the reality factors, and helps the appraiser to offer his
suggestions, help, guide and coach the employee for his advancement.

Thus, the post appraisal interview is designed to achieve the following

objectives.

1. To let employees know where they stand.

2. To help employees do a better job by clarifying what is expected of them;

3. To plan opportunities for development and growth; 4. To strengthen the
superior -subordinate working relationship by developing a mutual
agreement of goals; 5. To provide an opportunity for employees to
experience themselves on performance related issues.

Relating Performance Appraisal to Rewarding: Management should

recognize and performance.

The forms of recognizing and rewarding performance include:

(a) Private and public praise,

(b) Written commendation, (c)
published commendation,
(d) increased autonomy,
(e) change in job title,
(f) Status symbols like office space, furnishings,
(g) performance bonuses,

(h) salary increases,

(i) promotion in grade, or increase in responsibilities and
(j) various forms of supplementary compensation.

Managers should match the rewards both with performance and with the
perception and needs of the employee.

(6) Managerial Appraisal:

It is relatively easy to appraise the performance of technical or operative

employees comPared to managerial personnel. This is because; the
performance of operative employees can be Measured quantitatively,
whereas the perfortnance of managers cannot be determined terms. Harold
Koontz has developed quantitative leading motivating, staffing and
controlling. Performing a number of or a concept of managerial functions,
viz., series of activities can perform each of these functions.

For example:

performing staffing functions requires performing a series of activities like

analyzing jobs of his department, playing for human resources, deciding
upon internal and external recruitment.
Thus each function and sub functions of manager are elaborated into a series
of activities.

The checklist contain the questions in these areas is prepared with a five
degree rating scale, i.e. externally poor performance,
neither poor nor fair performance and externally fair performance.

Thus this technique measures the performance of managers in managing

organizational environment.

Importance of performance appraisal :

For many organizations the primary goal of an appraisal system is to
improve individual and organizational performance. There may be other
goals, however. In fact, performance appraisal data are potentially valuable
for virtually every human resource functional area.

KEY ELEMENTS OF PA SYSTEMS

1) Performance Improvement:-

Performance feedback allows the employee, manager, and

personnel specialists to interview with appropriate action to improve

performance.

2) Compensation Adjustments:-

Performance evaluations help decision – makers determine who

should receive pay raises.

Many firms grants part or all of their pay increase and bonuses based

upon merit, which is determine mostly through performance appraisal.

3) Placement Decisions:-

Promotions, transfers, and demotions are usually based on past on

anticipated performance.

4) Training and Development Needs:-

Poor performance may indicate the need for retraining. Likewise,

good performance indicate untapped potential that should be developed.

5) Career Planning And Development:-

Performance feedback guides career decisions about specific career

paths.
6) Information Inaccuracies:-

Poor performance indicate errors in job analysis information‟s

human resource plan, or other parts, or the personal management

information‟s systems. Reliance on inaccurate information may have led

to inappropriate hiring, training, or counseling decisions.

7) Job Decision Errors:-

Poor performance may be a system of ill-conceived job designs.

Appraisals help diagnose these others.

8) Equal Employment opportunity:-

Accurate performance appraisals that actually measure job- related

performance ensure that internal placement decisions are not

discriminatory.

9) Feedback to human resource:-

Good/bad performance throughout the organization indicate how

well the human resource function is performing.

Stages Of Performance Appraisal Process:

(1) Perfomance standards are established.

(2) Inform these standards.

(3) Instruction given for appraisal.

(4) Findind out the influence.

(5) Comparing the performance.

(6) Finding out deviation.

(7) Communicating, the actual performance.

(8) Suggesting necessary changes.

(9) Follow-up of performance appraisal report.

System Of Performance Appraisal:

Performance appraisal is a nine-step process:

First stage, The performance standards are established based on the job &
job specification. The standard should be clear, objective and incorporate all
the factors.

Second stage is to inform these standards to all the employees including

appraisers.

Third stage is following the instructions given for appraisal, measurement

of wee performance by the appraisers through observations, interviews,
records and reports.

Fourth stage is finding out the influence of various internal and external
factors on maitaining performance. The influence of these factors may be
either inducing or hindering the perthrmance. The measured performance
may be adjusted according to the influence of external and internal factors.
The performance derived at this stage may be taken actual performance.

Fifth stage is comparing the actual performance with that of other

employees and pen-ious performance of the employee and others. This given
an idea where the employee to the influence of external and internal factors.
The performance derived at this stage may be taken actual performance.
Sixth stage is comparing the actual performance with the standards and
finding out deviations. Deviations may be positive or negative. If employee's
performance is more than standards, it is positive deviation and vice-versa is
negative deviation.

Seventh stage is communicating, the actual performance of the employee

and other employees doing the same job and discuss with him about the
reasons for the positive or negative deviations from thepre-set standards as
the case may be.

Eighth stage is suggestions necessary changes in standards, Job analysis

and Internal & External environment.

Ninth stage is follow-up of performance apprisal report this stage includes

guiding, conseling. coaching and directing the employee or making
arrangements for training and devolopment of the employe in order to ensure
Improved perrormance. If actual performance is very poor and beyond the
ticopu or improvement it is necessary to take steps for demotion or
retrenchment or any other suitable measure.

PROBLEMS OF PERFORMANCE APPRAISAL

The major problem in performance appraisal :-

1) Rating Biases:-

The problem subjective measure (is that rating which is not verifiable by
others) has the opportunity for biases include:-

a) Halo effect

b) The error of central tendency

c) The leniency and strictness biases

d) Personal prejudice

e) The Recency effect

Ø Halo Effect:-
It is the tendency of the raters to defend excessively on the rating of

one trait or behavioral consideration in rating all other traits or behavioral

consideration. One way of minimizing the halo effect is appraising all the

employee by one trait before going to rate basis of another trait.

Ø The Error Central Tendency:-

Some raters fallow play safe policy in-rating-by-rating all the employee on
the middle point of the rating scale and they avoid rating the people at both
the extremes of the scale. They fallow play safe policy because of a
answerability to management or lack of knowledge about the job and person
he is rating or least interest in his job..

Ø The leniency and Strictness:-

The leniency bias crops when some raters have an tendency to be

liberal in their rating by assigning higher rates consistently such rating do

not several any purpose equally damaging one is assigning consistently

low rates.

d) Personal Prejudice : -

If the rater dislike any employee or any group, he may rate them at

the lower them which may distort the rating purpose affect the career of

these employee.

Ø The Recency Effect:-

The raters generally remember the recent actions of the employee at

the time of rating and rate on the basis of this recent action.

1) Favorable or unfavorable rather than on the whole activities.

2) Failure of the superior in conducting performance appraisal and post

performance appraisal interview.

3) Most part of the appraisal is based on subjectivity.

4) Less reliability and validity of the performance appraisal technique.

5) Negative ratings affect interpersonal relations system.

WHY APPRAISAL TECHNIQUES PROVE FAILURE

Performance appraisal techniques techniques have often failed to give a

correct

assessment of the employee. The causes of such failure are:-

1) The supervisor plays dual and conflicting role of the both the judge and
the

helper.

2) Too many objectives often cause confusion.

3) The supervisor feels that subordinate appraisal is not rewarding.

4) A considerable time gap exist between two appraisal programs.

5) The skills required for daily administration and employee development

are

in conflict.

6) Poor communication keeps employees in the dark about what is expected

of

them.

7) There is the difference of opinion between a supervisor and a subordinate

concerning the liter‟s performance.

8) Feedback on appraisal is generally unpleasant for both supervisor and

subordinate.

9) Unwillingness on the part of supervisor to tell employee plainly how to

improve their performance.

About Employee:-

v Safe and Friendly Work Environment-:

What sort of environment are you providing your employees.

v Use of Employees-:

Is the business maximizing it‟s use of employee to best suit the business

needs?

v Employee Knowledge-:

How familiar (what knowledge) are your employee with the running of

machine/equipments, products of the companies? Does employee require

training?

v Employee Happiness-:

Are the employees happy with Performance Matrix

In principle the Individual Performance Matrix (IPM) can be notionally

divided into two parts-:

Ø Team matrix

Ø Individual Matrix

KRA 1 to 5
v For achievement of the set targets, the prescribed credit points would

accrue to all team members for the team performance and to an individual

for the individual performance.

v Any drop / deviation from the targets will lead to „ Debit ‟ to while the

overall debit points for the negative variance vis-à-vis has been prescribed

for the team the individual will be liable to the lose additional points bin

case of direct responsibility for deviation.

v These „debit‟ points will be determine depending on gravity of error,

quantum of loss, extraneous/ inhibiting factors, etc. as a part of

appraisal process.

KRA 6

It is intended to cover every individual distinguishing contribution/ efforts

made in respect of either assigned projects or innovations, cost saving

measures value additions etc. this has been specifically design to

acknowledgement and reward individual excellence.

KRA 7

(Health. Safety/fire, Environment) “Debit” will apply to an individual and

his

superiors but his not peers / others who may not be connected with the safety

incident. Similarly there is scope to earn separate credit points for an

individual

through safety suggestion and reporting of “near misses ” and unsafe acts/

conditions/

KRA 8
(Training and HR) this is intended to cover self training, training of

subordinates, for the training programs organized by learning centre are HR

based on individual need assessment of self & subordinates.

These also include quarterly review, counseling and maintaining of

performance diary.

KRA 9

(Quality System & Documentation) this include proper maintenance of each

and every documents of ISO 9000 and 14001 for surveillance audits, also

revision of SOPs / SOCs decided by the plant.

KRA 10

(Industrial Relations ) there is a scope for a team to earn separate credit

points

based on the number of implement suggestions. In this case the team means
the

concern immediate supervisor, production / department manager and plant

manager.

Disciplinary Action

It will be deemed to be complete when the matter is brought to logical

Conclusion resulting in either appropriate punishment or withdrawal of

Charge sheet. However no debit will be accrued in the event of

Prolonged enquiry beyond the control of the employee. Further for the

Discipline violations not reported and discovered.

Tier - II

The appraisal for managerial key dimension determined carder wise

With 20% weightage.

Performance Diary

The performance diary is a meant to track / capture the significant

performance events whether positive or negative (Credit or Debit). This is

also the tool for recording the personal contribution in terms of innovative

ideas, suggestions, cost saving efforts etc.

The filling up the performance diary is most critical and important aspect on

which the entire system rests. Each and every individual has responsibility to

highlight „event‟ in the performance diary, timely and properly.

While for an individual on the other hand, it may mean establishing clear

responsibility for a fault/formal operation / misjudgment etc. on the other

hand it will mean recording of credits worthy efforts / contribution which

may otherwise go unnoticed.

It is also essential to mention the impact of the incident in the terms of

beneficial and detrimental consequences as the case may be. Where ever

possible, the consequence needs to be quantified.

Two important factors

which is likely to be recorded in the Performance Diary are as follows-:

Facilitating Factor:

Are those factors that are beyond the control of the appraise that have led to

better performance. Example: Availability of resources in time .

Inhibiting Factor:

Are those factors that are beyond the control of the appraise they have led to

poor performance.

Example: power failure that has led to loss of output.

Whom it will be Available:

The performance diary will remain in custody of the immediate superior and

it will be the joint responsibility of the appraise to maintain the sanctity of

this instrument through timely and meticulous recording. Infect,

maintenance

of “performance diary” has been kept as the important parameter for

performance assessment.

Who will be The Appraiser:

The appraiser will be the sectional head / departmental head.

 CHAPTER - II

INDUSTRY ANALYSIS
 CHAPTER - III

COMPANY ANALYSIS

CHAPTER - IV
DATA ANALYSIS AND INTERPRETATION