“PERFOR

“ MANCE
APPRAISAL AT ITC LIMITED”
A PROJECT REPORT

Submitted by

ABHISHEK GUPTA
201710702010053
“MBA 42”

in partial fulfillment for the award of the degree of MBA

DEPARTMENT OF MANAGEMENT & COMMERCE

SHRI RAMSWAROOP MEMORIAL UNIVERSITY

LUCKNOW

(2018-19)

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 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide

Dr. Ruchi Singh, Assistant Manager, Shri Ramswaroop Memorial University for

his/her exemplary guidance, monitoring and constant encouragement throughout the

course of this project. The blessings help and guidance given by him/her time to time

shall carry me a long way in journey of life on which I am to embark.

I also take this opportunity to express a deep sense of gratitude to Dr. Ruchi Singh,

Admission Head, Shri Ramswaroop Memorial University for his/her cordial support,

valuable information and guidance which helped me in completing this task through

various stages.

I am also obliged to staff members of Shri Ramswaroop Memorial University for the

valuable information provided by them in their respective fields. I am grateful for their

cooperation during the period of my summer training.

Finally, I am thankful to almighty, my parents, family and friends for the consistent

encouragement without which this project would have not been completed.

_________________________

Roll No.: ___________

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 DEPARTMENT OF MANAGEMENT & COMMERCE
SRMU

CERTIFICATE OF ORGINALITY

I __________________ of, a full time bonafide student of third year of Master of

Business Administration (MBA) of Shri Ramswaroop Memorial University. I here certify

that for this project report carried out by me at PERFORMANCE APPRAISAL AT

ITC LIMITED the report submitted in partial fulfillment of the requirement of of the

program is an original work of mine carried out under the guidance of _______________

and it is not based or reproduced from any existing work of any other person or on any

earlier work undertaken at any other time or for any other purpose, and has not been

submitted anywhere else at any time to the best of my knowledge.

______________ ___________________

Project Guide Dean, Institute of Management,

Commerce & Economics

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 DEPARTMENT OF MANAGEMENT & COMMERCE
SRMU

DECLARATION

I hereby declare that the project entitled “PERFORMANCE APPRAISAL AT ITC

LIMITED” submitted by me in the partial fulfillment of the requirements for the award

of the degree of the Master of Business Administration of Shri Ramswaroop Memorial

University, is a record of my own work carried under the suppression and guidance of

_________________.

To the best of my knowledge this project has not been submitted to Shri Ram Swaroop

Memorial University or any other university or institute for the award of any degree.

_________________________

Roll No.: ___________

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 PREFACE

In our two year degree program of M.B.A, there is a provision for doing research work in

the specialization in last semester. The essential purpose of this project is to give an

exposure and detailed outlook of the practical concepts. For this purpose I was assigned

the project on “PERFORMANCE APPRAISAL AT ITC LIMITED”

This has given me an altogether new experience, which I believe, would be immense help in

my days to come. The project was informative, interesting and inspiring.

I hope the readers would find the information found in this report useful and interesting.

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 TABLE OF CONTENT

Page no.

1. Introduction of the topic

2. Company profile
3. Objective of study
4. Research methodology-

5. Data analysis and interpretation

6. Findings

7. Conclusions

8. Suggestion and recommendations

9. Limitations of study

10. Bibliography

11. Annexure (questionnaire, special diagrams or notes)

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 INTRODUCTION

Performance appraisals are a systematic way of evaluating the standard of an employee’s

performance.

Steps for developing a systematic performance appraisal

.1. Identify key performance criteria

Development of key performance criteria should be based on a comprehensive job

description and undertaken in consultation with employees.

2. Develop appraisal measures

In order to obtain accurate and valid performance appraisals, appraisal measures should

be tailored to the specific job or “job family” (i.e., groups of similar jobs). An evaluation

of factors in the work environment which help or hinder performance is also

recommended. This ensures that realistic expectations are set for employee’s

performance, and is also likely to increase the perceived fairness and acceptability of

performance appraisals.

3. Collect performance information from different sources

Traditionally, it has been the sole responsibility of managers / supervisors to assess

performance. However, other organisational members (e.g., clients, coworkers,

subordinates) can be a valuable source of information as they are likely to have exposure

to different aspects of an employee’s performance. Collecting information from multiple

sources can increase the accuracy of performance evaluation (i.e., reduce bias), and

increase employee’s perceptions of fairness.

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4. Conduct an appraisal interview

The two central purposes of the appraisal interview are to:

1. Reflect on past performances to identify major achievements, areas for further

improvement, and barriers / facilitators to effective performance.

2. Identify goals and strategies for future work practice.

The appraisal interview should be a constructive, two-way exchange between the

supervisor and employee, with preparation for the interview done by both parties

beforehand.

5. Evaluate the appraisal process

The performance appraisal process should undergo regular review and improvement. For

example, focus groups or surveys could be conducted to gauge employee’s perceptions of

the appraisal process. A successful performance appraisal process should demonstrate a

change in both the ratings of employee’s performance and aspects of the work

environment that impact upon work performance.

Best Practice In Performance Appraisal

In essence, best practice in performance appraisals involves:

 Integrating performance appraisal into a formal goal setting system

 Basing appraisals on accurate and current job descriptions
 Offering adequate support and assistance to employees to improve their performance

(e.g., professional development opportunities).

 Ensuring that appraisers have adequate knowledge and direct experience of the

employee’s performance

 Conducting appraisals on a regular basis.

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 Meaning and Definition of Performance Appraisal

Performance appraisal is a formal system that evaluates the quality of a employee’s

performance. An appraisal should not be viewed as an end in itself, but rather as an

important process within a broader performance management system that links:

• Organizational objectives

• Day-to-day performance

• Professional development

• Rewards and incentives

In simple terms, appraisal may be understood as the assessment of an individual’s

performance in a systematic way, the performance being measured against such factors as

job knowledge, quality, and quantity of output, initiative, leadership abilities, supervision,

dependability, co-operation, judgment, versatility, health, and the like. Assessment should

not be confined to past performance alone. Potentials of the employee for future

performance must also be assessed.

A formal definition of performance appraisal is:

“It is the systematic evaluation of the individual with respect to his or her performance on

the job and his or her potential for development.”

A more comprehensive definition is:

“Performance appraisal is a formal, structured system of measuring and evaluating an

employee’s job related behaviors and outcomes to discover how and why the employee is

presently performing on the job and how the employee can perform more effectively in

the future so that the employee, organization, and society all benefit.”

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“Performance appraisal is the process of obtaining, analyzing and recognition

information about the relative worth of an employee.”

Performance appraisal is also known as performance management, performance

evaluation and performance review.

Traditional Performance Appraisal

The history of performance appraisal is quite brief. Its roots in the early 20th century can

be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for

the same may be said about almost everything in the field of modern human resources

management. During the First World War, appraisals concept was adopted by US army

which was in the form of merit rating. It was man-to-man rating system for evaluation of

military personnel. From the army this concept entered the business field and was

restricted to hourly-paid workers. During 1920s, relational wage structures for hourly-

paid workers were adopted in industrial units and each worker was used to be rated in

comparison to other for determining wages rates. This system was called merit rating.

The process was firmly linked to material outcomes. If an employee's performance was

found to be less than ideal, a cut in pay would follow. On the other hand, if their

performance was better than the supervisor expected, a pay rise was in order. Little

consideration, if any, was given to the developmental possibilities of appraisal. If was felt

that a cut in pay, or a rise, should provide the only required impetus for an employee to

either improve or continue to perform well. Sometimes this basic system succeeded in

getting the results that were intended; but more often than not, it failed.

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Modern Performance Appraisal

Performance appraisal may be defined as a structured formal interaction between a

subordinate and supervisor, that usually takes the form of a periodic interview (annual or

semi-annual), in which the work performance of the subordinate is examined and

discussed, with a view to identifying weaknesses and strengths as well as opportunities

for improvement and skills development.

In many organizations - but not all - appraisal results are used, either directly or

indirectly, to help determine reward outcomes. That is, the appraisal results are used to

identify the better performing employees who should get the majority of available merit

pay increases, bonuses, and promotion.

By the same token, appraisal results are used to identify the poorer performers who may

require some form of counseling, or in extreme cases, demotion, dismissal or decreases in

pay. (Organizations need to be aware of laws in their country that might restrict their

capacity to dismiss employees or decrease pay.)

Whether this is an appropriate use of performance appraisal - the assignment and

justification of rewards and penalties - is a very uncertain and contentious matter.

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 A Framework of Performance Appraisal
1. Develop clear job description.

2. Select an appropriate people with an appropriate selection process.

3. Provide effective orientation, education and training.

4. Provide ongoing coaching and feedback.

5. Conduct quarterly performance development discussion.

6. Design effective compensation system.

7. Provide promotion and career development opportunities.

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 Objective of Performance Appraisal

Salary Increase

Performance appraisal plays a role in making decision about salary increase.

Normally salary increase of an employee depends upon on how he is performing his

job. There is continuous evaluation of his performance either formally or informally.

This may disclose how well an employee is performing and how much he should be

compensated by way of salary increases.

Promotion

Performance appraisal plays significant role where promotion is based on merit and

seniority. Performance appraisal discloses how an employee is working in his present

job and what are his strong and weak points. In the light of these, it can be decided

whether he can be promoted to the next higher position.

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Training and Development

Performance appraisal tries to identify the strengths and weakness of an employee on

his present job. This information can be used for devising training and development

programmes appropriate for overcoming weaknesses of employees.

Feedback

Performance appraisal provides feedback to employees about their performance. A

person works better when he knows how he is working. This works in two ways,

firstly, the person gets feedback about his performance. Secondly, when the person

gets feedback about his performance, he can relate his work to the organizational

objectives.

Pressure on Employees

Performance appraisal puts a sort of pressure on employees for better performance. If

the employees are conscious that they are being appraised in respect of certain factors

and their future largely depends on such appraisal.

Communication

1. To provide feedback to employees so that they come to know where they

stand and can improve their job performance.

2. To clearly establish goals i.e. what is expected of the employee in terms of

performance and future work assignments.

3. To provide coaching, counseling, career planning and motivation to

employees.
4. To develop positive superior subordinate relations and thereby reduce

grievance.

Career development objectives

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1. To assess the strong and weak points in the working of the employees and finding

remedies for weak points through training.

2. To determine career potential.
3. To plan career goals.

Others

1) Identifying systemic factors that are barriers to, or facilitators of, effective

performance.

2) To confirm the services of probationary employees upon their completing the

Probationary period satisfactorily.

3) To improve communication. Performance appraisal provides a format for

dialogue between the superior and the subordinate, and improves

understanding of personal goals and concerns. This can also have the effect of

increasing the trust between the rater and the rate.

4) To determine whether HR programmers such as selection, training, and

transfer

have been effective or not.

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 How to Conduct a Performance Appraisal Process

The following five-step approach to conducting a systematic performance appraisal is

recommended:

1. Identify key performance criteria

2. Develop appraisal measures

3. Collect performance information from different sources

4. Conduct an appraisal interview

5. Evaluate the appraisal process.

Step 1: Identify Key Performance Criteria

Perhaps one of the most challenging aspects of setting up a performance appraisal is

deciding what to assess. In essence, four key dimensions of performance should be

considered in a performance appraisal.

Key Dimensions of Performance

Competencies Knowledge, skills, and abilities relevant to performance

Behaviours Specific actions conducted and / or tasks performed
Results / outcomes Outputs, quantifiable results, measurable outcomes and

achievements, objectives attained

Organisational Actions that are over and above usual job responsibilities

citizenship behaviours

Step 2: Develop Appraisal Measures

Once clear and specific performance criteria have been developed, the next step is to

decide how to assess employee’s performance. It is recommended that a structured and

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systematic approach is taken to assessing performance. Problems that arise when an

unstructured “blank sheet” approach is used include:

 Increased chance of appraiser errors (i.e., reduced accuracy)

 Knowledge, skills and abilities most critical to job performance may be

overlooked

 (i.e., feedback may have limited impact on performance effectiveness)

 Reduced consistency between appraisers (i.e., evaluations may reflect

differences between appraisers rather than actual differences in a

employee’s performance)

 Perceptions of “subjectivity” in evaluations, which may in turn, reduce

employee’s satisfaction with, and acceptance of appraisals.

There are three important considerations in the design of appraisal measures:

i) Generic versus individually tailored measures

ii) Objective versus subjective assessments

iii) Assessing the impact of the work environment on performance.

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Step 3: Collect Performance Information from Different

Sources

Once the appraisal measures are developed, the next step involves collection of accurate

performance information. A common trap is to begin noting observations of employees

just before conducting appraisals. This is likely to give an inaccurate picture of a

employee’s performance. Ideally, employee’s performance should be observed in a

systematic way over time (e.g., in a diary). This method ensures the accuracy of

information about their performances.

Many employees in the organisation operate with a relatively high degree of autonomy.

This combined with the heavy workload of most managers / supervisors, may limit

opportunities to conduct regular observation of employee’s performance. In addition,

perceptions of ongoing monitoring may foster a sense of surveillance which can damage

staff morale. A more suitable approach may be to keep critical incident reports that note

specific examples of both excellent and unsatisfactory performances. Supervisors can

also encourage employees to keep track of their own performance records such as emails

or letters that commend them on their achievements.

Traditionally, it has been the sole responsibility of managers / supervisors to assess

performance. However, other organisational members can be a valuable source of

information as they are likely to have exposure to different aspects of a employee’s

performance. This approach is known as 360-degree feedback. For instance, coworkers

can provide valuable information on teamwork skills, and subordinates can provide

useful information on leadership style.

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There are many advantages to obtaining feedback on performance from sources other

than supervisors or managers. Key benefits include:

 Accuracy and reduced bias (incorrect information from one source can be

corrected from another)

 Increased likelihood that employees will perceive the performance

appraisal system to be a fair and accurate reflection of their performance

(compared to relying on supervisor ratings alone).

If time and resources are limited, it is recommended that supervisor appraisals be

conducted in conjunction with self-assessment. Including self-assessments as part of the

appraisal process is likely to enhance employee’s commitment to, and satisfaction with,

the appraisal process. It also provides employees with an opportunity to identify barriers

and facilitators to effective performance in their work environment.

Five different sources of performance appraisal information are considered here:

i) Manager / supervisor appraisals

ii) Self appraisals

iii) Coworker appraisals

iv) Subordinate appraisals

v) Client appraisals.

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Step 4: Conduct an Appraisal Interview

The next step in a performance appraisal is to conduct the appraisal interview. The two

central purposes of the appraisal interview are to:

 Reflect on past performance to identify major achievements, areas that

require further development, and barriers / facilitators to effective

performance

 Identify goals and strategies for future work practice.

As discussed below, supervisors and managers can use a range of strategies to ensure that

the appraisal interview is positive, constructive and of greatest benefit for employee’s

effectiveness.

Step 5: Evaluate the Appraisal Process

As with any organisational system, the performance appraisal process should undergo

regular review and improvement. For example, the process of performance appraisal

could be evaluated by conducting focus groups or surveys with employees to gauge their

satisfaction with the appraisal process (and suggestions for improvements). It may also be

useful to monitor the types of issues raised by supervisors and employees over time. A

successful performance appraisal process should demonstrate a change in both the ratings

of employee’s performance (i.e., ideally performance ratings should improve, or at least

remain at a satisfactorily stable level over time) and the work environment (i.e., evidence

that significant barriers to work practice are being addressed by the organisation).

METHODS OF PERFORMANCE APPRAISAL

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 A) PAST-ORIENTED METHODS

1) Rating Scales:
The rating scale method offers a high degree of structure for appraisals. Each employee

trait or characteristic is rated on a bipolar scale that usually has several points ranging

from “poor” to “excellent” (or some similar arrangement).

The traits assessed on these scales include employee attributes such as cooperation,

communications ability, initiative, punctuality and technical (work skills) competence.

The nature and scope of the traits selected for inclusion is limited only by the imagination

of the scale’s designer, or by the organization’s need to know. The one major provision in

selecting traits is that they should be in some way relevant to the appraisee’s job.

Check-list Method:

Under this method, checklist of “Statements of Traits” of employee in the form of Yes

or No based questions is prepared. Here, the rater only does the reporting or checking

and HR department does the actual evaluation. The rater concerned has to tick

appropriate answers relevant to the appraisees. When the check-list is completed, it is

sent to HR department for further processing. Various questions in the check list may

have either equal weightage or more weightage may be given to those questions which

are more important. The HR department then calculates the total scores which show the

appraisal result of an employee.

• Advantages – economy, ease of administration, limited training required,

standardization.

• Disadvantages – Rater’s biases, use of improper weights by HR Dept, does not allow

rater to give relative ratings.

3. Force Choice Method:

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 A series of statements arranged in the blocks of two or more are given and the

rater indicates which statement is true or false. The rater is forced to make a

choice. HR department does actual assessment.

• Advantages – Absence of personal biases because of forced choice.

• Disadvantages – Statements may not be correctly framed.

4. Force Distribution Method:

One of the problems faced in large organizations is relative assessment tendencies of

raters. Some are too lenient and others too severe. This method overcomes that problem.

It forces every one to do a comparative rating of all the employees on a predetermined

distribution pattern of good to bad. Say 10% employees in Excellent Grade, 20% in Good

Grade, 40% in Average Grade, 20% in Below Average Grade and 10% in Unsatisfied

grade. The real problem of this method occurs in organizations where there is a tendency

to pack certain key departments with all good employees and some other departments

with discards and laggards. Relatively good employees of key departments get poor

rating and relatively poor employees of laggards’ departments get good rating.

5. Critical Incident Method:

In this method, only critical incidents and behavior associated with these incidents are

taken for evaluation. This method involves three steps. A test of noteworthy on the job

behavior is prepared. A group of experts then assigns scale values to them depending on

the degree of desirability for the job. Finally, a checklist of incidents which define good

and bad employees is prepared.

• Advantages ---This method is very useful for discovering potential of employees who

can be useful in critical situation.

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• Disadvantages --- a) Negative incidents are, generally, more noticeable than positive

ones.

b) The recording of incidents is a core to the superior and may be

put off and easily forgotten.

c) Overly close supervision may result.

Essay Method:

In the essay method approach, the appraiser prepares a written statement about the

employee being appraised. The statement usually concentrates on describing specific

strengths and weaknesses in job performance. It also suggests courses of action to remedy

the identified problem areas. The statement may be written and edited by the appraiser

alone, or it be composed in collaboration with the appraisee.

Advantages

The essay method is far less structured and confining than the rating scale method. It

permits the appraiser to examine almost any relevant issue or attribute of performance.

This contrasts sharply with methods where the appraisal criteria are rigidly defined.

Appraisers may place whatever degree of emphasis on issues or attributes that they feel

appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked

into an appraisal system the limits expression or assumes that employee traits can be

neatly dissected and scaled.

 Disadvantages

Essay methods are time-consuming and difficult to administer. Appraisers often find the

essay technique more demanding than methods such as rating scales.

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The techniques greatest advantage - freedom of expression - is also its greatest handicap.

The varying writing skills of appraisers can upset and distort the whole process. The

process is subjective and, in consequence, it is difficult to compare and contrast the

results of individuals or to draw any broad conclusions about organizational needs.

7) Grading:

In this method, certain categories of abilities of performance are defined well in advance

and person are put in particular category depending on their traits and characteristics.

Such categories may be definitional like outstanding, good, average, poor, very poor or

may be in terms of letter like A, B, C, D etc with A indicating the best and D indicating

the worst. This method, however, suffers from one basic limitation that the rater may rate

most of the employees at higher grades.

8) Performance Tests & Observations:

This is based on the test of knowledge or skills. The tests may be written or an actual

presentation of skills. Tests must be reliable and validated to be useful.

• Advantage – Tests only measure potential and not attitude. Actual performance is more

a function of attitude of person than potential.

• Disadvantages – Some times costs of test development or administration are high.

9) Confidential Reports:

Though popular with government departments, its application in industry is not ruled

out. Here the report is given in the form of Annual Confidentiality Report (ACR). The

system is highly secretive and confidential. Feedback to the assessee is given only in case

of an adverse entry. Disadvantage is that it is highly prone to biases and recency effect

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and ratings can be manipulated because the evaluations are linked to future rewards like

promotions, good postings, etc.

10) Comparative Evaluation Method (Ranking & Paired Comparisons):

These are collection of different methods that compare performance with that of other co-

workers. The usual techniques used may be ranking methods and paired comparison

method.

 Ranking Method:

Superior ranks his worker based on merit, from best to worst. However how best and why

best are not elaborated in this method. It is easy to administer.

 Paired Comparison Method:

In this method each employee is paired with every other employee in the same cadre and

then comparative rating done in pairs so formed.

The number of comparisons may be calculated with the help of a formula – N x (N-1) / 2.

The method is too tedious for large departments and often such exact details are not

available with rater.

B) Future-Oriented Methods

1) MBO (management by objective) :

The use of management objectives was first widely advocated in the 1950s by the noted

management theorist Peter Drucker. MBO (management by objectives) methods of

performance appraisal are results-oriented. That is, they seek to measure employee

performance by examining the extent to which predetermined work objectives have been

met. Usually the objectives are established jointly by the supervisor and subordinate.

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Once an objective is agreed, the employee is usually expected to self-audit; that is, to

identify the skills needed to achieve the objective. Typically they do not rely on others to

locate and specify their strengths and weaknesses. They are expected to monitor their

own development and progress.

2) Assessment Center Method:

This technique was first developed in USA and UK in 1943. An assessment centre is a

central location where managers may come together to have their participation in job

related exercises evaluated by trained observers. It is more focused on observation of

behaviours across a series of select exercises or work samples. Assesses are requested to

participate in in-basket exercises, work groups, computer simulations, role playing and

other similar activities which require same attributes for successful performance in actual

job.

3) 360o Appraisal:

It is a technique in which performance data/feedback/rating is collected from all sections

of people employee interacts in the course of his job like immediate supervisors, team

members, customers, peers, subordinates and self with different weightage to each group

of raters. This technique has been found to be extremely useful and effective. It is

especially useful to measure inter-personal skills, customer satisfaction and team building

skills.

One of the biggest advantages of this system is that assesssees cannot afford to neglect

any constituency and has to show all-round performance. However, on the negative side,

receiving feedback from multiple sources can be intimidating, threatening, expensive and

time consuming.

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 4) Psychological Appraisals:

These appraisals are more directed to assess employees potential for future performance

rather than the past one. It is done in the form of in-depth interviews, psychological tests,

and discussion with supervisors and review of other evaluations. It is more focused on

employees emotional, intellectual, and motivational and other personal characteristics

affecting his performance.

This approach is slow and costly and may be useful for bright young members who may

have considerable potential. However quality of these appraisals largely depends upon

the skills of psychologists who perform the evaluation.

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 COMPANY PROFILE

COMPANY PROFILE
ITC is one of India's foremost private sector

companies with a market capitalization of over US $

22 billion and a turnover of over US $ 5 billion.* ITC

is rated among the World's Best Big Companies,

Asia's 'Fab 50' and the World's Most Reputable

Companies by Forbes magazine, among India's Most

Respected Companies by Business World and among

India's Most Valuable Companies by Business Today.

ITC ranks among India's `10 Most Valuable (Company) BranDealer Salesperson', in a

study conducted by Brand Finance and published by the Economic Times. ITC also ranks

among Asia's 50 best performing companies compiled by Business Week.

ITC has a diversified presence in Cigarettes, Hotels, PaperboarDealer Salesperson &

Specialty Papers, Packaging, Agri-Business, Packaged FooDealer Salesperson &

Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery,

Safety Matches and other FMCG products. While ITC is an outstanding market leader in

its traditional businesses of Cigarettes, Hotels, PaperboarDealer Salesperson, Packaging

and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of

Packaged FooDealer Salesperson & Confectionery, Branded Apparel, Personal Care and

Stationery.

As one of India's most valuable and respected corporations, ITC is widely perceived to be

dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a

22
commitment beyond the market". In his own worDealer Salesperson: "ITC believes that

its aspiration to create enduring value for the nation provides the motive force to sustain

growing shareholder value. ITC practices this philosophy by not only driving each of its

businesses towarDealer Salesperson international competitiveness but by also

consciously contributing to enhancing the competitiveness of the larger value chain of

which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple

drivers of growth anchored on its time-tested core competencies: unmatched distribution

reach, superior brand-building capabilities, effective supply chain management and

acknowledged service skills in hoteliering. Over time, the strategic forays into new

businesses are expected to garner a significant share of these emerging high-growth

markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one

of the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade).

The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance

its competitiveness by empowering Indian farmers through the power of the Internet. This

transformational strategy, which has already become the subject matter of a case study at

Harvard Business School, is expected to progressively create for ITC a huge rural

distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Ltd,

provides IT services and solutions to leading global customers. ITC InfoTech has carved

a niche for itself by addressing customer challenges through innovative IT solutions.

23
ITC's production facilities and hotels have won numerous national and international

awarDealer Salesperson for quality, productivity, safety and environment management

systems. ITC was the first company in India to voluntarily seek a corporate governance

rating.

ITC employs over 26,000 people at more than 60 locations across India. The Company

continuously endeavors to enhance its wealth generating capabilities in a globalizing

environment to consistently reward more than 3, 42,000 shareholders, fulfill the

aspirations of its stakeholders and meet societal expectations. This over-arching vision of

the company is expressively captured in its corporate positioning statement: "Enduring

Value. For the nation. For the Shareholder."

HISTORY & EVOLUTION

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company

of India Limited. As the Company's ownership progressively Indianised, the name of the

Company was changed from Imperial Tobacco Company of India Limited to India

Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition

of the Company's multi-business portfolio encompassing a wide range of businesses

- Fast Moving Consumer Goods comprising Foods, Personal Care, Cigarettes and

Cigars, Branded Apparel, Education and Stationery Products, Incense Sticks and Safety

Matches, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and

Information Technology - the full stops in the Company's name were removed effective

September 18, 2001. The Company now stands rechristened 'ITC Limited,'where

‘ITC’ is today no longer an acronym or an initialised form.

24
A Modest Beginning

The Company's beginnings were humble. A leased office on Radha Bazar Lane, Kolkata,

was the centre of the Company's existence. The Company celebrated its 16th birthday on

August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now

renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the

Company was historic in more ways than one. It was to mark the beginning of a long and

eventful journey into India's future. The Company's headquarter building, 'Virginia

House', which came up on that plot of land two years later, would go on to become one of

Kolkata's most venerated landmarks.

1925: Packaging and Printing: Backward Integration

Though the first six decades of the Company's existence were primarily devoted to the

growth and consolidation of the Cigarettes and Leaf Tobacco businesses, ITC's

Packaging & Printing Business was set up in 1925 as a strategic backward integration

for ITC's Cigarettes business. It is today India's most sophisticated packaging house.

1975: Entry into the Hospitality Sector - A 'Welcom' Move

The Seventies witnessed the beginnings of a corporate transformation that would usher in

momentous changes in the life of the Company. In 1975, the Company launched

its Hotels business with the acquisition of a hotel in Chennai which was

rechristened 'ITC-Welcomgroup Hotel Chola' (now renamed My Fortune, Chennai).

The objective of ITC's entry into the hotels business was rooted in the concept of creating

value for the nation. ITC chose the Hotels business for its potential to earn high levels of

foreign exchange, create tourism infrastructure and generate large scale direct and

indirect employment. Since then ITC's Hotels business has grown to occupy a position of

25
leadership, with over 100 owned and managed properties spread across India under four

brands namely, ITC Hotels - Luxury Collection, WelcomHotels, Fortune Hotels and

WelcomHeritage.

ITC Hotels recently took its first step toward international expansion with an upcoming

super premium luxury hotel in Colombo, Sri Lanka. In addition, ITC Hotels also

recently tied up with RP Group Hotels & Resorts to manage 5 hotels in Dubai and

India under ITC Hotels' 5-star 'WelcomHotel' brand and the mid-market to upscale

'Fortune' brand.

1979: Paperboards & Specialty Papers - Development of a Backward Area

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

Paperboards Limited. Bhadrachalam Paperboards amalgamated with the Company

effective March 13, 2002 and became a Division of the Company, Bhadrachalam

Paperboards Division. In November 2002, this division merged with the Company's

Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC's

paperboards' technology, productivity, quality and manufacturing processes are

comparable to the best in the world. It has also made an immense contribution to the

development of Sarapaka, an economically backward area in the state of Andhra Pradesh.

It is directly involved in education, environmental protection and community

development. In 2004, ITC acquired the paperboard manufacturing facility of BILT

Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit

allows ITC to improve customer service with reduced lead time and a wider product

range.

26
1985: Nepal Subsidiary - First Steps beyond National Borders

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint

venture. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its

name was changed to Surya Nepal Private Limited (Surya Nepal). In 2004, the

company diversified into manufacturing and exports of garments.

1990: Paperboards & Specialty Papers - Consolidation and Expansion

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing

company and a major supplier of tissue paper to the cigarette industry. The merged entity

was named the Tribeni Tissues Division (TTD). To harness strategic and operational

synergies, TTD was merged with the Bhadrachalam Paperboards Division to form

the Paperboards & Specialty Papers Division in November 2002.

1990: Agri Business - Strengthening Farmer Linkages

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business

Division for export of agri-commodities. The Division is today one of India's largest

exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in

2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4

million farmers. Also, through the 'Choupal Pradarshan Khet' initiative, the agri services

vertical has been focusing on improving productivity of crops while deepening the

relationship with the farming community.

2002: Education & Stationery Products - Offering the Greenest products

ITC launched line of premium range of notebooks under brand Paperkraft in 2002. To

augment its offering and to reach a wider student population, the Classmate range of

notebooks was launched in 2003. Classmate over the years has grown to become India's

27
largest notebook brand and has also increased its portfolio to occupy a greater share of

the school bag. Years 2007- 2009 saw the launch of Practical Books, Drawing Books,

Geometry Boxes, Pens and Pencils under the 'Classmate' brand. In 2008, ITC positioned

the business as the Education and Stationery Products Business and launched India's

first environment friendly premium business paper under

the 'Paperkraft' Brand. 'Paperkraft' offers a diverse portfolio in the premium executive

stationery and office consumables segment. In 2010, Colour Crew was launched as a

new brand of art stationery.

2000: Lifestyle Retailing - Premium Offerings

ITC also entered the Lifestyle Retailing business with the Wills Sport range of

international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain

of exclusive stores later expanded its range to include Wills Classic formal wear (2002)

and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular

segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle

became title partner of the country's most premier fashion event - Wills Lifestyle India

Fashion Week - that has gained recognition from buyers and retailers as the single

largest B-2-B platform for the Fashion Design industry. To mark the occasion, ITC

launched a special 'Wills Signature', taking the event forward to consumers.

2000: Information Technology - Business Friendly Solutions

In 2000, ITC spun off its information technology business into a wholly owned

subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging

opportunities in this area. Today ITC Infotech is one of India's fastest growing global IT

and IT-enabled services companies and has established itself as a key player in offshore

28
outsourcing, providing outsourced IT solutions and services to leading global customers

across key focus verticals - Banking Financial Services & Insurance (BFSI), Consumer

Packaged Goods (CPG), Retail, Manufacturing, Engineering Services, Media &

Entertainment, Travel, Hospitality, Life Sciences and Transportation & Logistics.

2001: Branded Packaged Foods - Delighting Millions of Households

ITC's foray into the Foods business is an outstanding example of successfully blending

multiple internal competencies to create a new driver of business growth. It began in

August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet

dishes. In 2002, ITC entered the confectionery and staples segments with the launch of

the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour).

2003 witnessed the introduction of Sunfeast as the Company entered the biscuits

segment. ITC entered the fast growing branded snacks category with Bingo! in 2007. In

2010, ITC launched Sunfeast Yippee! to enter the Indian instant noodles market. In just

over a decade, the Foods business has grown to a significant size under seven distinctive

brands, with an enviable distribution reach, a rapidly growing market share and a solid

market standing.

2002: Agarbattis & Safety Matches - Supporting the Small and Cottage Sector

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire

value chain found yet another expression in the Safety Matches initiative. ITC now

markets popular safety matches brands like iKno, Mangaldeep and Aim.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the

manifestation of its partnership with the cottage sector. Mangaldeep is a highly

29
established national brand and is available across a range of fragrances like Rose,

Jasmine, Bouquet, Sandalwood and 'Fragrance of Temple'.

2005: Personal Care Products - Expert Solutions for Discerning Consumers

ITC entered the Personal Care Business in 2005. In eight years, the Personal Care

portfolio has grown under 'Essenza Di Wills', 'Fiama', 'Vivel' and 'Superia' brands

which have received encouraging consumer response and have been progressively

extended nationally. In May 2013, the business expanded its product portfolio with the

launch of Engage - one of India's first range of 'couple deodorants'

2010: Expanding the Tobacco Portfolio

In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market.

Armenteros cigars are available exclusively at tobacco selling outlets in select hotels, fine

dining restaurants and exclusive clubs.

30
ITC VISION

Sustain ITC's position as one of India's most valuable corporations through world class

performance, creating growing value for the Indian economy and the Company's

stakeholders

ITC MISSION

To enhance the wealth generating capability of the enterprise in a globalising

environment, delivering superior and sustainable stakeholder value

CORE VALUES

ITC's Core Values are aimed at developing a customer-focused, high-performance

organisation which creates value for all its stakeholders:

Trusteeship

As professional managers, we are conscious that ITC has been given to us in "trust" by all

our stakeholders. We will actualise stakeholder value and interest on a long term

sustainable basis.

Customer Focus

We are always customer focused and will deliver what the customer needs in terms of

value, quality and satisfaction.

Respect For People

We are result oriented, setting high performance standards for ourselves as individuals

and teams.

We will simultaneously respect and value people and uphold humanness and human

dignity.

31
We acknowledge that every individual brings different perspectives and capabilities to the

team and that a strong team is founded on a variety of perspectives.

We want individuals to dream, value differences, create and experiment in pursuit of

opportunities and achieve leadership through teamwork.

Excellence

We do what is right, do it well and win. We will strive for excellence in whatever we do.

Innovation

We will constantly pursue newer and better processes, products, services and

management practices.

Nation Orientation

We are aware of our responsibility to generate economic value for the Nation. In pursuit

of our goals, we will make no compromise in complying with applicable laws and

regulations at all levels.

32
CORPORATE STRATEGY

ITC is a board-managed professional company, committed to creating enduring value for

the nation and the shareholder. It has a rich organisational culture rooted in its core values

of respect for people and belief in empowerment. Its philosophy of all-round value

creation is backed by strong corporate governance policies and systems.

ITC’s corporate strategies are :

 Create multiple drivers of growth by developing a portfolio of world class

businesses that best matches organisational capability with opportunities in

domestic and export markets.

 Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards

& Packaging, Agri Business and Information Technology.

 Benchmark the health of each business comprehensively across the criteria of

Market Standing, Profitability and Internal Vitality.

 Ensure that each of its businesses is world class and internationally competitive.

 Enhance the competitive power of the portfolio through synergies derived by

blending the diverse skills and capabilities residing in ITC’s various businesses.

 Create distributed leadership within the organisation by nurturing talented and

focused top management teams for each of the businesses.

 Continuously strengthen and refine Corporate Governance processes and systems

to catalyse the entrepreneurial energies of management by striking the golden

balance between executive freedom and the need for effective control and

accountability.

33
 BOARD OF DIRECTORS

CHAIRMAN

Yogesh Chander Deveshwar

CEO & EXECUTIVE DIRECTOR

Sanjiv Puri
EXECUTIVE DIRECTORS

Nakul Anand Rajiv Tandon (CFO)

NON-EXECUTIVE DIRECTORS

Zafir Alam Shilabhadra Banerjee Arun Duggal

Suryakant Balkrishna
Sunil Behari Mathur Nirupama Rao
Mainak

Sahibzada Syed Habib-ur-

Meera Shankar David Robert Simpson
Rehman

34
 COMPANY’S BUSINESS

FMCG

 CIGARETTES
 FOODS
 LIFESTYLE RETAILING
 PERSONAL CARE
 EDUCATION & STATIONERY
 MATCHES
 AGARBATTIES

HOTEL

 WELL- COME GROUP

PAPERBOARDS & PACKAGING

 PAPERBOARD & SPECIALTY PAPER

 PACKAGING

AGRI- BUSINESS

 AGRI COMMODITIES
 e – CHOUPAL
 LEAF TOBACCO

INFORMATION TECHNOLOGY

 ITC INFOTECH

35
 FMCG PRODUCTS
1. FOOD

ITC's Branded Packaged Foods business is one of the fastest growing foods businesses in

India, driven by the market standing and consumer franchise of its popular brands -

Aashirvaad, Sunfeast, Bingo!, Yippee!, Kitchens of India, B Natural, mint-o, Candyman

and GumOn. The Foods business is today represented in multiple categories in the market

- Staples, Spices, Ready-to-Eat, Snack Foods, Bakery & Confectionery and the newly

introduced Juices & Beverages.

ITC's uncompromising commitment to the health and safety of its consumers ensures

adherence to the highest levels of quality, safety and hygiene standards in manufacturing

processes and in the supply chain. All ITC-owned manufacturing units are Hazard

Analysis and Critical Control Point (HACCP) certified. The quality performance of all

manufacturing units is monitored continuously online. Going beyond process control,

ITC ensures that quality standards are scrupulously adhered to while choosing ingredients

that go into the preparation of its food products.

ITC's Foods brands delight millions of households with a wide range of differentiated,

value-added products developed by leveraging ITC's in-house R&D capabilities, relevant

consumer insights, a deep understanding of the Indian palate gained from its Hotels

business, its agri-sourcing & packaging strengths, exciting, innovative communication

and an unmatched distribution network.

The business continues to invest in every aspect of manufacturing, distribution and

marketing to ensure that it can leverage emerging opportunities and fulfill its aspiration of

being the most trusted provider of Branded Packaged Foods in the country. ITC's Foods

36
business also exports its products to the key geographies of North America, Africa,

Middle East and Australia.

SOME FOOD PRODUCTS

37
38
2. PERSONAL CARE

In line with ITC's aspiration to be India's premier FMCG company, recognised for its

world-class quality and enduring consumer trust, ITC forayed into the Personal Care

business in July 2005. In the short period since its entry, ITC has already launched an

array of brands, each of which offers a unique and superior value proposition to

discerning consumers. Anchored on extensive consumer research and product

development, ITC's personal care portfolio brings world-class products with clearly

differentiated benefits to quality-seeking consumers.

ITC's Personal Care portfolio under the 'Essenza Di Wills', 'Fiama', 'Vivel', "Engage" and

'Superia' brands has received encouraging consumer response and is being progressively

extended nationally.

ITC's state-of-the-art manufacturing facility meets stringent requirements of hygiene and

benchmarked manufacturing practices. Contemporary technology and the latest

manufacturing processes have combined to produce distinctly superior products which

rank high on quality and consumer appeal.

Extensive insights gained by ITC through its numerous consumer engagements have

provided the platform for its R&D and Product Development teams to develop superior,

differentiated products that meet the consumer's stated and innate needs. The product

formulations use internationally recognised safe ingredients, subjected to the highest

standards of safety and performance.

39
40
3. CIGARETTES & CIGARS

ITC is the market leader in cigarettes in India. With its wide range of invaluable brands,

ITC has a leadership position in every segment of the market. ITC's highly popular

portfolio of brands includes Insignia, India Kings, Lucky Strike, Classic, Gold Flake,

Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal.

The Company has been able to consolidate its leadership position with single minded

focus on continuous value creation for consumers through significant investments in

creating & bringing to market innovative product designs, maintaining consistent &

superior quality, state-of-the-art manufacturing technology, & superior marketing and

distribution. With consumers & consumer insights driving strategy, ITC has been able to

fortify market standing in the long-term, by developing & delivering contemporary offers

relevant to the changing attitudes & aspirations of the constantly evolving consumer.

ITC's pursuit of international competitiveness is reflected in its initiatives in overseas

markets. In the extremely competitive US market, ITC offers high-quality, value-priced

cigarettes and Roll-your-own solutions. In West Asia, ITC has become a key player in the

GCC markets through its export operations.

ITC's cigarettes are manufactured in state-of-the-art factories at Bengaluru, Munger,

Saharanpur, Kolkata and Pune, with cutting-edge technology & excellent work practices

benchmarked to the best globally. An efficient supply-chain & distribution network

reaches India's popular brands across the length & breadth of the country.

41
4. EDUCATION & STATIONERY

ITC made its entry to the education and stationery business with its Paperkraft brand in

the premium segment in 2002; and later expanded into the popular segment with its

Classmate brand in 2003. By 2007, Classmate became the largest Notebook brand in the

country. Together, Classmate and Paperkraft offer a range of products in the Education &

Stationery space to the discerning consumer, providing unrivalled value in terms of

product & price.

Classmate and Paperkraft have become a natural extension of the consumer. Meticulous

understanding of consumer needs helped creating a relevant and comprehensive portfolio

satisfying the needs of different sets of consumers.

ITC is the manufacturer of India's first Ozone treated environment friendly Elemental

Chlorine Free (ECF) pulp, paper and paperboard. It blends its knowledge of image

processing, printing and conversion garnered from Packaging & Printing Business with

its brand building and trade marketing & distribution strengths resident in its FMCG

business to offer superior value products to consumers.

Paperkraft Business paper and the papers used in Classmate and Paperkraft notebooks are

superior in quality and environment-friendly. Other offerings available in education and

Stationery range are safe and certified non-toxic.

42
5. LIFESTYLE RETAILING

ITC's Lifestyle Retailing Business Division has established a nationwide retailing

presence through Wills Lifestyle & John Players.

Synonymous with elegance and style that is effortless and chic, Wills Lifestyle presents a

premium fashion wardrobe for men and women. Offering a tempting choice of Crisp

Contemporary formals, Stylist suave Casuals, Wills Glamorous evening wear and Wills

Signature designer wear, Wills Lifestyle offers a truly delightful shopping experience for

the discerning customer.

John Players embodies the spirit of the modern youth that is playful, fashionable and

cool. John Players presents a complete wardrobe of meticulously crafted smart formals,

trendy casuals, edgy denims & accessories incorporating the most contemporary trends in

an exciting mix of colours, styling and fits.

43
6. SAFETY MATCHES

As part of its strategic initiative to create multiple drivers of growth in the FMCG sector,

ITC commenced marketing safety matches sourced from the small-scale sector. The

Safety Matches business leverages the core strengths of ITC in marketing and

distribution, brand building, supply chain management and paperboard & packaging to

offer Indian consumers high quality safety matches.

ITC's range of Safety Matches includes popular brands like Aim & i Kno. With

differentiated product features and innovative value additions, these brands effectively

address the needs of different consumer segments. ITC also exports safety matches to

various markets. The acquisition of Wimco Ltd., a subsidiary of ITC has consolidated the

market standing of the Company's Matches business through synergy benefits derived

through combined portfolio of offerings, improved servicing of proximal markets and

freight optimization. Through its participation, ITC aims to enhance the competitiveness

of the small and medium scale sectors through its complementary R&D based product

development and marketing strengths, especially the width and depth of the Company's

trade marketing and distribution.

44
7. AGARBATTIES

As part of ITC's business strategy of creating multiple drivers of growth in the FMCG

sector, the Company commenced marketing Agarbattis (Incense Sticks) sourced from

small-scale and cottage units in 2003. This Business leverages the core strengths of ITC

in nation-wide distribution and marketing, brand building, supply chain management,

manufacture of high quality paperboards and the creation of innovative packaging

solutions to offer Indian consumers high quality Agarbattis. With its participation in the

business, ITC aims to enhance the competitiveness of the small-scale and cottage units

through its complementary R&D based product development and strengths in trade

marketing and distribution.

45
The Business continues to work on various exciting new offerings to the consumers and

is planning to launch them in the near future.

In line with ITC's Triple Bottom Line philosophy of every business contributing to the

nation's economic, environmental and social capital, Mangaldeep agarbattis are

manufactured by small scale and cottage units, providing livelihood opportunities for

more than 14,000 people. Mangaldeep Agarbatti is manufactured at various centres & 5

of the manufacturing units are ISO 9000 certified. Mangaldeep ASHA (Assistance in

Social Habilitation through Agarbattis) is an ITC initiative to improve the quality of raw

agarbatti production and provide better livelihood for women rollers. ITC has also

extended support to NGOs in states and like Bihar, Tripura, Tamil Nadu, who are setting

up agarbatti units, training village women in rolling agarbattis and employing them in

these units. ITC has signed a MoU with ORMAS (Orissa Rural Development &

Marketing Society), an autonomous body under the Pachayat Raj in Odisha. This

initiative provides technical training to rural women & provides employment

opportunities to over 4000 rural women.

46
 SWOT ANALYSIS

Organization performs SWOT (Strength, Weakness, Opportunity, Threats) analysis to

identify and evaluate their competitive position.

STRENGTHS:

 The company has built a strong image among the customers.

 The company has an excellent distribution system.

 The company experiences excellent Brand loyalty for its Products from the

customers.

 The company has made its Packaging attractive which lures the customers and

consequently the products are favorite among the customers.

WEAKNESSES

 Some products have high prices as compared to the other products OF Britannia

& Priyagold.

 The company branches are not spread through out the region; as a result load of

the work at the regional offices are tremendous.

 The company pays less attention toward Dealer Salesperson advertisement as

against its competitors.

 The brewery of the company is old and not up to expectation of modern times.

47
OPPORTUNITIES

 India has a vast potential market, which the company can get hold up.

 The company can prove to be major threats for its competitor’s if it increases its

marketing efforts.

 ITC Ltd. should concentrate on the premium segment market.

THREATS

 The major threat that company faces is from its competitors who are introducing

products with more features at lower cost backed by aggressive promotional

scheme

 The new packaging style introduce by the company for the beer i.e. in Tin is

posing threat to the existing bottle packing system.

 The arrival of the MNC is a major serious threat for the company.

48
 OBJECTIVES OF THE STUDY

The main aim research objective was to understand the relevance of wide variety of

methods and technique that can be explored towards performance of the organizational

goals. For this purpose I have following sub objectives:

 To know the performance appraisal system of the employee.

 To know the frequency of appraisal system.

 To know the different methods of appraisal system.

 To analyses the impact of performance appraisal on the employees.

 To analysis the employees perception towards the performance appraisal

method.

 To know about the ITC Limited.

 To analysis the performance appraisal system in ITC Limited.

49
 RESEARCH METHODOLOGY

Methodology means a simple set of methods or procedures, they relate to a particular

discipline or field of inquiry.

There are mainly three types of research methodology:-

a) Exploratory Research or Formulative Research

b) Descriptive Research
c) Casual Research

Research methodology’ is a way to systematically solve the research problem. It is a

science of studying how research is done scientifically. In it, we study the various steps

that are generally adopted by a researcher in studying his/her research problem along

with the logic behind them.

It includes:

 Research Design
 Data Collection
 Data Analysis

RESEARCH DESIGN

Descriptive Research has been used, which involves surveys and fact findings of different

kinds. The major purpose of descriptive research is the description of the state of affairs,

as it exists at present. The main characteristics of this method are that the researcher has

no control over the variable; he can only report what has happened or what is happening.

50
SAMPLING SIZE

The sampling size for the study was 50 employees from various departments of ITC

Limited. It includes HR, Finance, Sales, and operations.

SAMPLING METHOD

The sampling technique adopted for the study is Stratified Random sampling. A method

of sampling that involves the division of a population into smaller groups known as

strata. In stratified random sampling, the strata are formed based on members'

shared attributes or characteristics.

QUESTIONNAIRE DESIGN

The questionnaire to study the effectiveness of recruitment and selection process consists

of both open and close ended questions the researcher used Questionnaire method for the

purpose of collecting data. “A Questionnaire is a list of questions sent to a number of

persons for them to answer. It secures standardized results that can be tabulated and

calculated.”

The questionnaire were passed to various departments like HR, Marketing, Finance,

Operations, etc

51
METHOD OF DATA COLLECTION

The source of information is generally classified as primary and secondary.

PRIMARY DATA

Primary data refers to information that is generated to meet the specific requirement of

the investigation at hand. The primary data will be collected through the questionnaire

from the employees of ITC limited.

SECONDARY DATA

Secondary data is information that is collected for the purpose other than to solve the

specific problem under investigation. The secondary sources of data collection were

information obtained from books, magazines, websites and articles on the topic etc. In the

study, the researcher would use the secondary data to supplement the primary data.

UNIVERSE

LUCKNOW.

52
 DATA ANALYSIS INTERPRETATION

1. Are you satisfied the performance appraisal system of your organization?

a) Strongly agree 35
b) Agree 8
c) Disagree 5
d) Neither agree nor disagree 2
50

Fig:- percentages of respondent person

Interpretation: Most of the respondents are satisfied the performance appraisal system of
organization.

53
 2. Are you provide adequate training and development programme in your
organization?

a) Strongly agree 37
b) Agree 8
c) Disagree 3
d) Neither agree nor disagree 2
50

Fig:- percentages of respondent person

Interpretation: Most of the respondents said that they have been provided adequate
training and development programme in their organization.

54
 3. Are you satisfied in the promotion policy of your organization?

a) Strongly agree 30
b) Agree 10
c) Disagree 5
d) Neither agree nor disagree 5
50

Fig:- percentages of respondent person

Interpretation: Most of the respondents said that they are satisfied with promotion policy
of their organization.

55
 4. Are you satisfied the working condition of your organization?

a) Strongly agree 32
b) Agree 8
c) Disagree 4
d) Neither agree nor disagree 6
50

Fig:- percentages of respondent person

Interpretation: Most of the respondents are satisfied the working condition of

organization.

56
 5. Are performance appraisal system is helpful to the employee productivity?

a) Strongly agree 39
b) Agree 5
c) Disagree 4
d) Neither agree nor disagree 2
50

Fig:- percentages of respondent person

Interpretation: Most of the respondents said that performance appraisal system is helpful
to the employee productivity.

6. Are performance appraisal system is a key of organizational productivity?

a) Strongly agree 40
b) Agree 5
c) Disagree 3
d) Neither agree nor disagree 2
50
57
 Fig:- percentages of respondent person

Interpretation: Most of the respondents said that performance appraisal system is a key of
organizational productivity.

58
 7. Are performance appraisal system improved job satisfaction and better employee
retention?

a) Strongly agree 37
b) Agree 6
c) Disagree 5
d) Neither agree nor disagree 2
50

Fig:- percentages of respondent person

Interpretation: Most of the respondents said that performance appraisal system improved
job satisfaction and better employee retention.

8. Are performance appraisal system is a good competency mapping?

a) Strongly agree 30
b) Agree 15

59
 c) Disagree 3
d) Neither agree nor disagree 2
50

Fig:- percentages of respondent person

Interpretation: Most of the respondents said that performance appraisal system is a good
competency mapping.

60
 FINDINGS

Performance appraisal is play great role for the growth and development of the

organization. In recently year performance appraisal is most important to the every

organization for the purpose of productivity and promotion policy.

Research Findings

 Most of the executives are satisfied with the current scenario of performance

appraisal as compared previous one.

 It also reduces biasness.
 Some appraisees find problem in selecting their KRA’s.
 Most of the appraisers help their appraisees in selecting the KRA’s.
 Formal feedback is given by the appraisers regarding appraisee’s performance.
 Some executives get job related training and they think it really helps them in

their future growth.

Some specific findings:

 Performance appraisal is very helpful to evaluate the employee’s performance.

 Good job performance employees increase the productivity.

 Highly satisfy employees perform very well.

 Motivated employees also perform very well.

 Performance appraisal develops the promotion policy, transfer policy or demotion

policy.

 Performance appraisal to maintain the good relationship between top management

and subordinate.

61
 Every organization, irrespective of its size, has an appraisal system for its

employees. This implies the performance appraisal has become an indispensable

activity in any organization.

 Most of the companies have separate appraisal system for each level of

employees. These appraisal systems differ on the factors on which a person is

rated and the nature of duties handled by him.

 Even when a same appraisal system exists in different organizations, the

probability of its success is not the same.

This can be attributed to the following factors: implementation problems,

organizational climate, and commitment from top management.

 In most of the companies it is seen that the employees are not satisfied with the

way they are appraised or they haven’t been appraised properly. For this matter,

almost all the companies have interview and discussion.

 The frequency of appraisal in all organisations is yearly. Where appraisal is based

on Key Result Areas, a mid-term review is also undertaken.

This data is then compiled and the final appraisal is conducted at the end of the

year.
 In most of the cases the immediate supervisors is the appraiser but some times it

is also the HR department or the HOD.

 All organizations have goal setting as part of appraisal. The performance is

evaluated against these targets.

 On an average 85% of the employees in an organization are motivated by

performance appraisal.
 Most of the companies use the data that is maintained for every employee to

compare the performance over a period of time.

Some companies also use this data for making decision regarding job rotation,

succession planning. Very few companies make use of this data for retrenchment

as proof of poor performance.

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  A good deal of respondents felt that appraisal is likely to be more successful when

it is linked with financial and semi-financial incentives like promotion, bonus, and

increments. This increases the commitment from the parties concerned the

appraisal and the appraise.

 In most of the organizations training is provided for the appraisal system one to

two weeks before the appraisal and also when new or revised Performance

appraisal system is introduced.

 Performance appraisal is surly a good indicator (about 80%) for the training and

developmental need of the employees.

 No monitoring is done to find out any loopholes in the performance appraisal

system and if it exists, it is on informal basis (feedback every year).

 Awareness sessions about the performance appraisal (objectives and importance)

are conducted in a few organizations.

It is normally done for new employees. Almost all the companies are satisfied

with the current performance appraisal system and do not require any changes.

 360o degree feedback system is not very popular in the Indian companies.

 Most of the companies have a separate appraisal system for the new employees,

who are on probation.

CONCLUSION

At ITC the HR team Measures the individual’s performance linked to Organizational

goals by giving employees a feedback, rewarding them, based on their achievements

against set performance goals and required competencies and working out a plan for their

development.

The method which ITC follows for Appraisal is 180-degree. PMS at ITC includes

Developing job descriptions, selecting appropriate people with an appropriate selection

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process and providing effective orientation, education and Training. Coaching and

feedback is provided which is followed by compensation, recognition and reward for

people’s contributions.

Promotional and career development opportunities for staff are provided.

Leadership and other competencies of individuals are assessed and improved through

various workshops and training programs. Developmental gaps are identified during PMS

and Self Development Plans.

Though the Performance Management System applied in ITC is effective, few things

such as Counseling of the employees, attitude training and psychological problem

identification should be incorporated in order to make their PMS more effective.

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 SUGGESTIONS & RECOMMENDATIONS

 Provide continuous training to appraisers to maintain and improve reliability and

standardization

 Provide informal feedback to employees including both positive and negative

feedback on an ongoing basis in addition to the feedback given in four quarterly

appraisals

 Review whether a maximum of 10 KRAs can always cover all important roles

and responsibilities of all employees. However when including more and more

KRAs there can be confusions among employees and must take additional care

 Continue to provide effective training for all employees

 Continue to conduct KRAs planning workshops to ensure that the PMS is aligned

with the objectives of the organization

 Conduct two separate meetings to provide performance feedback and to discuss

implications of performance rating to employee rewards

 Recognize differences in individuals in designing the PMS. For instance, a

particular employee might require frequent feedback and guidance and vice versa

 Listen to the feedback of subordinates when evaluating the performance of

managers

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 LIMITATIONS
 One of the major problems faced was to get the questionnaire filled. Since the

employees were packed with work, it was difficult for the researcher to get their

responses.
 Report could cover a sample size of 100 employees only.

 I had to depend on the information provided by the associates & could not find any

other means of collecting the required information.

 Time was also a constraint as the report had to be compiled in a particular span of

time, which could not be exceeded.

 The report needs a lot of statistical work involving collection and tabulation of data,

interpretation of data and drawing out the necessary results. It requires an able,

efficient and experienced research works.

 Study is limited to the Lucknow only.

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 BIBLIOGRAPHY

REFERENCES

 Human Resource And Personnel Management - K. Aswathappa

 Human Resource Management - P. Subba Rao
 Human Resource Management - S.K.Bhattacharya

WEBSITES

 www.performanceappraisal.com
 www.humanresource.com

 www.managementanswers101.com

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 QUESTIONNAIRE

NAME: …………………………….

DESIGNATION: …………………..

DEPARTMENT: ……………………..

1. Are you satisfied the performance appraisal system of your organization?

a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

2. Are you being provided adequate training and development programmers of your

organization?
a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

3. Are you satisfied in the promotion policy of your organization?

a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

4. Are you satisfied the working condition of your organization?

a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

5. Are performance appraisal systems helpful to the employee productivity?

a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

6. Are performance appraisal system is a key of organizational productivity?

a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

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7. Are performance appraisal system improved job satisfaction and better employee

retention ?
a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

8. Are performance appraisal system is a good competency mapping technique ?

a) Strongly agree
b) Agree
c) Disagree
d) Neither agree nor disagree

THANK YOU

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