Acknowledgement

We have made this project report on performance appraisal under the supervision and guidance of Mrs. Aditi ma am. The special thank goes to our helpful supervisor, Mrs Aditi Midha. The supervision and support that she gave truly help the progression and smoothness of the project we have made. The co-operation is much indeed appreciated. Besides, this project report making duration makes us realized the value of working together as a team and as a new experience in working environment, which challenges us every minute. The whole program really brought us together to appreciate the true value of friendship and respect of each other.

Kannu Arora -64 Neetu Singh -72 Subrata Chakraborty-101 Ujjala Nijhawan-111 Pallavi Asthana-121

INTRODUCTION
The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War not more than 60 years ago yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world's second oldest, profession! There is, says Dulwich (1989), "... a basic human tendency to make judgements about those one is working with, as well as about oneself." Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily. The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgements made will be lawful, fair defensible and accurate. A performance appraisal, employee appraisal, performance review, or (career) development discussion is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time typically by the head or corresponding manager. A performance appraisal is a part of guiding and managing career development. It is the process of obtaining, analysing, and recording information about the relative worth of an employee to the organization. Performance appraisal is an analysis of an employee's recent successes and failures, personal strengths and weaknesses, and suitability for promotion or further training. It is also the judgement of an employee's performance in a job based on considerations other than productivity alone.

The performance appraisal system

Traditional Methods

1. ESSAY APPRAISAL METHOD This traditional form of appraisal, also known as "Free Form method" involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator. 2. STRAIGHT RANKING METHOD This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation. 3. PAIRED COMPARISON A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings. 4. CHECKLIST METHOD The rater is given a checklist of the descriptions of the behavior of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees.
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5. CRITICAL INCIDENTS METHODS In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behavior as and when they occur. 6. FIELD REVIEW In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors personal bias.

7. GRAPHIC RATING SCALE In this method, an employees quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on the job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory. 8. FORCED DISTRIBUTION To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion.

Modern methods

1.ASSESSMENT CENTRES An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics. The major competencies that are judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. assessment centres are also an effective way to determine the training and development needs of the targeted employees. 2.BEHAVIORALLY ANCHORED RATING SCALE.. Behaviourally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioural statements describing important job performance qualities as good or bad (for eg. the qualities like inter personal relationships, adaptability and reliability, job knowledge etc.). These statements are developed from critical incidents. In this method, an employees actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert.knowledge.
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3.HUMAN RESOURCE METHOD........

ACCOUNTING

Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judged in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in monetary terms). The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them.

4. 360 degree feedback, also known as'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job... 360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors anyone who comes into contact with the employee and can provide valuable insights and information regarding the "onthe-job" performance of the. Employee.

360 degree appraisal has four integral components: self-appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superiors appraisal forms the traditional part of the 360 degree performance appraisal where the employees responsibilities and actual performance is rated by superior. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superiors ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees abilities to work in a team, co-operation and sensitivity towards others Self-assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behaviour and performance. It provides a "360-degree review" of the employees performance and is considered to be one of the most credible performance appraisal methods... 360 degree performance appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.

Self-assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behaviour and performance. It provides a "360-degree review" of the employees performance and is considered to be one of the most credible performance appraisal methods. 360 degree performance appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.

One controversial issue

360 degree performance appraisal is said to be one of the best techniques available to improve efficiency in the work place. The method is put in place in order to make a good analysis of the human potential of a company or work force. Human resources strategies are put into place that in turn analyze performance as well as skills of the workers. 360 degree feedback on an employee s performance is confidential and often starts with a questionnaire or selfappraising. Self-assessment is seen as a reliable method by which an employee can be monitored. The results of these tests are therefore available to the employer for each member of his work force and for his general perusal. There are controversies over using this method of appraising co-workers and there are some very evident weak and strong points on relying on such methods. Starting with a positive issue, this kind of appraisal is good for identifying both the strong and weak points of each and every member of staff individually and it can be said to save a lot of time over other methods as the appraisal is done by all workers, therefore multiplying the results on an instant. Another plus point for using this system is the wide range of evaluation and techniques used. The individual methods chosen within a company are generally chosen by the human resources department, but this can also be seen as a downside. When the human resources department is left to choose the topics and subjects for discussion, it can be done in a manner that is too subjective, or even in one that will be unfair to certain staff areas where it is the intention to show one group in a better light than another.

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When there is however a large workforce to test, software applications can indeed be used that will allow for fair testing all-round. This method should not only be used if you have a large and varied workforce; it is now preferred as the less controversial and fair method and should replace an either biased or inexperienced HR department. Other controversy that surrounds 360 degree performance appraisal is that it is heavily and unfairly biased towards large companies with large resources, and that it is totally unsuitable for a small firm where there are only a handful of workers to give their opinion each other. However, one controversial issue that is very real for any size of company when using such a method is that there is a severe lack of objectivity. The method is supposed to analyse with subjectivity and objectivity, but this causes problems when workers have to analyse their subordinates. In fact, rivalry between workers can make the whole process totally non-objective and this can lead to a whole stack of false findings and results.

In conclusion, the 360 degree performance appraisal is a great way for all companies to track the performance of the workers. A third party vendor can offer an unbiased and more accurate appraisal for analyzing key leadership positions within an organization. This is especially true for the CEO position, the outside vendor can ensure transparency and accuracy when handling the data. Often a customized 360 performance appraisal can be a great tool for the CEO because it allows the board of directors a clear unbiased analysis of the CEOs performance. Performance management (PM) includes activities that ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas.
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THE APPRAISAL PROCESS

1.

ESTABLISHING

PERFORMANCE

STANDARDS-

The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards......... 2. COMMUNICATING THE STANDARDS-----------------------Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.
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3. MEASURING THE ACTUAL PERFORMANCE---------------The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work. 4. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCEThe actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees performance... 5. DISCUSSING RESULTS-----------------------------------------The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.

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Need & purpose of appraisal

Performance Appraisal is being practiced in 90% of the organizations worldwide. Self-appraisal and potential appraisal also form a part of the performance appraisal processes.

y To review the performance of the employees over a given period of time

y To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. To diagnose the training and development needs of the future. Provide information to assist in the HR decisions like promotions, transfers,etc. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees. To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development. To reduce the grievances of the employees.

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According to a recent survey, the percentage of organizations (out of the total organizations surveyed i.e. 50) using performance appraisal for the various purposes are as shown in the diagram-below:-:-.

The most significant reasons of using Performance appraisal are:y

Making payroll and compensation decisions 80%. Training and development needs 71%.

Identifying the gaps in desired and actual performance and its cause 76%. Deciding future goals and course of action 42%. Promotions, demotions and transfers 49%.

Other purposes 6% (including job analysis and providing superior support, assistance and counselling).

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Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfil their responsibilities.

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THE MBO PROCESS

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UNIQUE FEATURES AND ADVANTAGES OF MBO The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals.. Some of the important features and advantages of MBO are:


Clarity of goals With MBO, came the concept of SMART goals i.e. goals that are:--------------------------------Specific, Measurable, Achievable, Realistic, and Time bound. The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees. The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. Better communication and Coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.

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Limitations

1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes. 2. It underemphasizes the importance of the environment or context in which the goals are set in .In1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity. 3. It did not address the importance of successfully responding to obstacles and constraints as essential to reaching a goal. The model didnt adequately cope with the obstacles of: Defects in resources, planning and methodology, The increasing burden organization challenge, of managing the information

The impact of a rapidly changing environment, which could alter the landscape enough to make yesterdays goals and action plans irrelevant to the present.

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APPRAISAL SYSTEMS OF FEW COMPAANIES IN INDIA

1. ONGC
With a view to bringing about a performance driven culture within the organization, ONGC has an annual objective oriented performance appraisal system, which is implemented uniformly across the Organization. The appraisal system used in ONGC is the oldest one. It is a three tier system where an employee is evaluated in three stages by the Reporting Officer under whom employee is working.

By the Reviewing Officer.

By the accepting officer

Self-appraisal is also there.

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2. NRL

The appraisal system implemented in NRL is CR. At first KPI s are fixed, Then each employee is appraised by his DMGR.Here employees are appraised only by the superiors. But very soon the appraisal system of NRL is supposed to be changed from CR to 360 degree appraisal.

3.IOC, 4.HPCL

5.BPCL

6.NTPC

The PMS used by M/s IOC, HPCL, SAP are IT enabled. PMS in BPCL ad NTPC are paper based. M/s IOC follows a executives. no pen no paper approach only for

At IOC and at HPCL, the IT enablement has been achieved using separate servers with offline linkages to HR Master data. The package used is customer specific with in house consultants support.

At IOC, the database used is Oracle and Java is the programming language, package developed by third party solution provider. In absence of ERP payroll, the performance based incentives are paid by extracting information from data base.

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7. DABUR INDIA LIMITED

In Dabur India Limited they have the system of performance appraisal of their employees. The main objective of this performance appraisal system is to evaluate the performance, promote their employees and to arrange for their various training programs if they require for enhancing their skills in their respective areas and in contribution enhancement.

Employees are evaluated by how well they accomplish a specific set of objectives that have been determined to be critical in the successful completion of their job. This approach is frequently referred to as management by objectives.

8. MARUTI UDYOG The company has introduced a unique 360-degree feedback system, starting with its senior leadership from the year 2007. It is for the top management such as chief general managers and general managers, whose performance is assessed based on feedback from their peers and junior management employees within the same department. Till the year 2006, their performance was being appraised only by the Directors and the

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Components of a Good Appraisal System Prior to discussing the advantages of a performance evaluation system, a format for one needs to be established. A good performance appraisal consists of three components: Expectations, Feedback and Development. Expectations: This includes the job description, goals, training and behaviors expected from the employees. For example, the job description might include the expected work hours and the daily, weekly and monthly duties of the position. The goals talk about what the employee is expected to produce: 30 pieces a day with a 99% accuracy ratio, for instance. Training includes what the employee needs to do to keep current with his position. Maybe he needs to learn advanced Excel or take some onthe-job monthly technical classes to maintain his skills. Finally, behavioral measurement includes how the employee adapts when situations change, or how he gets along with coworkers. Feedback: This speaks to what sources will be used to measure performance. Weekly computer-generated production and quality reports or attendance records are examples. Observation can be another valid measurement tool. Feedback from other areas may also be solicited. For example, it's not uncommon for workers from other departments to provide feedback where appropriate. In fact, performance reviews called 360's extend the feedback to managers, peers, different departments, customers and the employee himself. This provides a complete feedback circle. For feedback to be effective, it must be immediate. Telling an employee in a yearly review for the first time about something that happened at the start of the review period may not be remembered by the employee. It's simply not fair. So, feedback needs to be given as soon as possible after situations that will be commented upon occurred.
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Development Plan: This is where all the feedback leads to--further developing the employee in each department to be competent in current roles and to aspire to more beyond that. A development plan needs to be agreed upon by the supervisor and the employee to make the performance process complete. Ongoing consistency is the key to a good performance evaluation administration system.

Performance Appraisal System Advantages

A good performance appraisal system provides the following five advantages for the employee, supervisor and company:Compensation and Rewards: A well-administered program gives credibility to assigning the proper salary increases and bonuses to employees. It allows the supervisor to reward the right employees and the company to budget properly. - Performers: Just as important as rewarding good work, a platform exists to deal with employees who need improvement. The documentation sets the stage for performance improvement plans and any other actions that may,follow. - Good Morale: If employees can count on the fact they will receive thoughtful, consistent and ongoing performance evaluations, morale improves; productivity increases. - Documentation: These valuable records can be used in any legal proceedings to explain why certain actions were taken. They're also proof that company policies and employee and company rights have been adhered to. - It's the Right Thing to Do: This may sound trite but companies have an inherent responsibility to be fair to their employees about their performance. A well-constructed performance evaluation program, administered fairly by trained supervisors and managers, is the best thing a company can do for itself, and for its entire people.

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Drawbacks of Performance Appraisal

In its most basic form, a performance appraisal is an evaluation and feedback process. It is a report card on an employee's performance for the previous year. It was first introduced in 1911 by Fredrick Taylor as part of his scientific management model of business. In Taylor's model, pay was directly tied to productivity. If employees exceeded management expectations, their pay was increased. If they failed to meet expectations, their pay was cut. Since that time, the concept of the performance appraisal has evolved. Ideally, performance appraisals are used to identify training needs, reward performance, motivate employees, document performance to identify candidates for layoff or promotion, support the company's strategic objectives, etc.

Time Requirement

Effective performance appraisals are not just an annual event. Managers must monitor and document performance for each employee throughout the year. Documentation must include both problems and successes. In addition, the manager must write the evaluation report, meet with the employee to discuss it and take follow-up actions as necessary, such as setting performance goals for the next year. If a manager has many employees, the process can take a great deal of time.

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Negative Impact on Employees

y

If not done properly, performance appraisals can have adverse results. For example, if a manager does not keep notes on employee performance throughout the year, the process focuses on work done in the weeks leading up to the appraisal. So, accomplishments or problems from earlier in the year are not reflected in the evaluation. In addition, some managers focus only on the negative or positive aspects of an employee's performance. In other instances, everyone in the department receives the same rating so that the appraisal is meaningless. Rather than motivating employees to improve their performance, such appraisals can discourage them from trying and reduce productivity.

Manager Perceptions
Performance appraisals are based on managers' perceptions and experience and, as such, are subject to rater error. Personal bias and experience can influence rating decisions. According to Florida State University researcher James Bowman, managers may make compatibility errors by rating employees who are "similar to me" higher than those who are not. Managers may also be subject to spillover -- the halo or black mark effect. In this type of error, because an employee does one thing exceptionally well or poorly, the manager rates the employee's overall performance as exceptionally good or bad.

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Subjective or Objective Measures Frequently, performance appraisals focus on subjective skills such as customer service or problem solving, which are difficult to measure and are subject to rater error. This happens because the appraisal is not linked to a current, accurate job description and no measurable performance goals were set at the previous year's performance review. For example, a call center manager may tell employees to reduce the number of dropped calls. In this case, there is not definition of what the manager means by reduce the number. A reduction of three dropped calls a month is a reduction but may not be what the manager had in mind. Whereas, instructing call center employees that they most reduce the dropped call rate to less than 1 percent a month is a goal that can be easily tracked and measured by most call center telephone systems and gives employees a specific performance standard to meet.

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Performance Standards

How does the Team Leader decide what's acceptable and what's unacceptable performance? The answer to this question is the first step in establishing written standards. Performance expectations are the basis for appraising employee performance. Written performance standards let the Team Leader to compare the employee's performance with mutually understood expectations and minimize ambiguity in providing feedback. Having performance standards is not a new concept; standards exist whether or not they are discussed or put in writing. When the Team Leader observes an employee's performance, he usually makes a judgment about whether that performance is acceptable. Standards identify a baseline for measuring performance. From performance standards, the Team Leader can provide specific feedback describing the gap between expected and actual performance.

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Characteristics of Performance Standards

Standards describe the conditions that must exist before the performance can be rated satisfactory. A performance standard should:y Be realistic, in other words, attainable by any qualified, competent, and fully trained person who has the authority and resources to achieve the desired result. y Describe the conditions that exist when performance meets expectations. y Be expressed in terms of quantity, quality, time, cost, effect, manner of performance, or method of doing. y Be measurable, with specified method(s) of gathering performance data and measuring performance against standards.

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Expressing Standards

The terms for expressing performance standards are outlined below:

Quantity: Specifies how much work must be completed within a certain period of time. Quality: Describes how well the work must be accomplished. Specifies accuracy, precision, appearance, or effectiveness. Timeliness: Answers the questions, by when? , How soon? , Or within what period? Effective Use of Resources: Used when performance can be assessed in terms of utilization of resources: money saved, waste reduced. Effects of Effort: Addresses the ultimate effect to be obtained; expands statements of effectiveness by using phrases such as: so that, in order to, or as shown by. Manner of Performance: Describes conditions in which an individual's personal behaviour has an effect on performance, e.g., assists other employees in the work unit in accomplishing assignments. Method of Performing Assignments: Describes requirements; used when only the officially prescribed policy, procedure, or rule for accomplishing the work is acceptable.

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The following are the suggestions and conclusions derived from this particular:Objectivity of the manager and he must ensure One manager's idea of "self-starting ability" can be quite different than another's idea. The question then arises as to how one objectively evaluates "creativity? If greater amount of objectivity can be infused into the Appraisal system, it can help to bring more transparency. Effective Communication One function of performance appraisals is to help employees develop so they can contribute more effectively. In order for the employees to develop and learn they need to know what they need to change, where (specifically) they have fallen short, and what they need to do. If a manager assigns a 1 (unsatisfactory) on a scale of 5, it does not convey much information to an employee. It just says the manager is dissatisfied with something. In order to make it meaningful and promote growth, far more information must be added to the appraisal process and the related information should be transparently shared with the employee . Fairness Most employees resist being classified at the low end of the scale. Employees who are low rated are more likely to resist the evaluation of the superior and argue, claiming that personal bias was involved in the ratings. Managerial Efficiency The implementation of a Performance Appraisal System rests on the shoulders that it is done properly. A good manager can make an average appraisal system work and vice-versa.

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Case study

Case study on new performance appraisal system at xerox Document Transcript

Case Study on New Performance Appraisal System at Xerox, In the mid-1980s Xerox corporation was faced with a problemits performance appraisal system was not working. Rather than motivating the employees, its system was leaving them discouraged and disgruntled. Xerox recognized this problem and developed a new system to eliminate it. Old Performance Appraisal System. The original system used by Xerox encompassed seven main principles: The appraisal occurred once a year. It required employees to document their accomplishments. The manager would assess these accomplishments in writing and assign numerical ratings. The appraisal included a summary written appraisal and a rating from 1 (unsatisfactory) to 5 (exceptional). The ratings were on a forced distribution, controlled at the 3 level or below. Merit increases were tied to the summary rating level. Merit increase information and performance appraisals occurred in one session. This system resulted in inequitable ratings and was cited by employees as a major source of dissatisfaction. In fact, in 1983, the Reprographic Business Group (RBG), Xeroxs main copier division, reported that 95 percent of its employees received either a 3 or 4 on their appraisal. Merit raises for people in these two groups only varied by

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1 to 2 percent. Essentially, across-the-board raises were being given to all employees, regardless of performance. New Performance Appraisal System Rather than attempting to fix the old appraisal system, Xerox formed a task force to create a new system from scratch. The task force itself was made up of senior human resources executives; however, members of the task force also consulted with councils of employees and a council of middle managers. Together they created a new system, which differed form the old one in many key respects: The absence of a numerical rating system. The presence of a half-year feedback session. The provision for development planning. Prohibition in the appraisal guidelines of the use of subjective assessments of performance. The new system has three stages, as opposed to the onestep process of the old system. These stages are spread out over the course of the year. The first stage occurs at the beginning of the year when the manager meets with each employee. Together, they work out a written agreement on the employees goals, objectives, plans, and tasks for the year. Standards of satisfactory performance are explicitly spelled out in measurable, attainable, and specific terms. The second stage is a mid-year, mandatory feedback and discussion session between the manager and the employee. Progress toward objectives and performance strengths and weaknesses are discussed, as well as possible means for improving performance in the latter half of the year. Both the manager and the employee sign an objectives sheet indicating that the meeting took place. The third stage in the appraisal process is the formal performance review, which takes place at years end. Both
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the manager and the employee prepare a written document, stating how well the employee met the preset performance targets. They then meet and discuss the performance of the employee, resolving any discrepancies between the perceptions of the manager and the employee. This meeting emphasizes feedback and improvement. Efforts are made to stress the positive aspects of the employees performance as well as the negative. This stage also includes a developmental planning session in which training, education, or development experiences that can help the employee are discussed. The merit increase discussion takes place in a separate meeting from the performance appraisal, usually a month or two later. The discussion usually centers on the specific reasons for the merit raise amount, such as performance, relationship with peers, and position in salary range. This allows the employee to better see the reasons behind the salary increase amount, as opposed to the summary rank, which tells the employee very little. A follow-up survey was conducted the year after the implementation of the new appraisal system. Results were as follows: 81 percent better understood work group objectives84 percent considered the new appraisal fair72 percent said they understood how their merit raise was determined70 percent met their personal and work objectives77 percent considered the system a step in the right direction In conclusion, it can be clearly seen that the new system is a vast improvement over the previous one. Despite the fact that some of the philosophies, such as the use of selfappraisals, run counter to conventional management practices, the results speak for themselves. Questions: What type of performance appraisal is central to new system at Xerox? Which, if any, of the criteria for a successful appraisal does this new system have?
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Given the emphasis on employee development, what implications does this have for hiring and promotions? How do you think, management feels about the new performance appraisal system? Why?Are there any potential negative aspects of the new performance appraisal system? 2ND GAME

A Sweet Employee Performance Appraisal System for Jelly Belly Candy making is a fun business, and so it's no surprise that it's fun to work at the Jelly Belly Candy Company of Fairfield, California. But at this family-owned company, there's no fooling around when it comes to promoting employee performance and job satisfaction. So when Jelly Belly decided to overhaul and automate its antiquated employee performance and talent management process, it was looking for a serious solution to help give its employees across the United States fair, accurate performance appraisals. The Jelly Belly Candy Company makes Jelly Belly brand jelly beans in over 50 flavors, as well as candy corn and other treats. Introduced in 1976 and named by former U.S. president Ronald Reagan as his favorite candy, the company's jelly beans are exported worldwide. Herman Goelitz Candy was founded in 1869 by Albert and Gustav Goelitz, whose great-grandsons own and run Jelly Belly today. Like almost every smart company, Jelly Belly recognizes that employees are more likely to stay with their employer when they feel connected and recognized for their efforts. Evaluation and performance management programs are critical to aligning corporate and employee values and priorities.

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Challenge Jelly Belly's search for a new employee performance and talent management system began several years ago, when two branches of the family business were reunited into a single company. One branch was using an outdated EPM software program. The other was doing its employee performance appraisals manually, using paper forms. Having a variety of jelly bean flavors is great - a variety of employee appraisal processes in a single company is not. The task of updating and consolidating the performance management process fell to Margie Poulos, HR Manager of Jelly Belly's Midwest operations. She and a small team of Jelly Belly HR staff were charged with finding a single automated system that could be used for all of Jelly Belly's 600 employees in three locations.

The driving factor behind Jelly Belly's performance management automation was the belief that thorough, accurate reviews help employees to better understand what's expected of them, so that they can set clear, measurable objectives. That translates into higher employee satisfaction, said Jeff Brown, Jelly Belly's Director of Human Resources. "When employees feel they have gotten a thorough and accurate review, it boosts their morale," Brown said. It also leads to improved talent management and employee retention, which management experts know is a key factor in corporate growth and market leadership.

Solution

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To meet their strategic goals, Poulos and her team drew up a list of the criteria that a new system had to meet. Top on the list was ease of use. "We didn't want to end up with a system that is so complicated that the managers wouldn't use it," Poulos said. A new system also had to save time. Because employees were in multiple locations, it needed to be webbased for accessibility. And it had to be flexible, easily incorporating core competencies into different forms.

Jelly Belly's selection committee looked at products from different software vendors. "We eliminated right away those that were geared to very large companies and those that were not web-based," Poulos said. "We also eliminated those that offered too many options for customization. It's one thing to offer options, but another thing when the product requires so much customization that it becomes overwhelming."

The committee selected Halogen eAppraisal, a web-based employee performance and talent management application from Halogen Software. "We liked the way it looked, and we really liked the user-friendliness of it. It's easy for the managers to use and it's customizable without overwhelming them," Poulos said. After two days of training by Halogen staff, four members of Jelly Belly's HR team set out to train the company's supervisors on the new system. About 50 managers received a crash course in using Halogen eAppraisal, and then used it to complete annual employee evaluations in May. Jelly Belly's HR team is now customizing the software to include more relevant competencies and to respond to comments from managers and staff on the new system.

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"The feedback has been really positive, from both managers and employees as well. Some staff said this was the best appraisal they've had," Poulos said, "They felt the evaluations were fair and realistic, and supervisors had the scope to provide more relevant and legitimate comments than they could before. Rather than just clicking on a bunch of canned comments, they were accurately reviewing the employee."

Results

The new automated employee performance appraisal system has completely formalized and organized Jelly Belly's employee evaluation process. "It allows us to standardize competencies across job classifications, add signature and comment sections to make our process more interactive, and increase accessibility for remote managers," Brown said.

Under Jelly Belly's old system, employees conducting reviews started from scratch once a year with new performance journals. Halogen eAppraisal will let them log notes throughout the year and regularly update their on-line appraisals. Employees use one consistent employee evaluation form to add comments and to sign their appraisals.

The web-based product helps remote and traveling managers maintain access to the forms and the data they need to evaluate their staff. "In our old system, a few folks in Chicago would have access to the system. But we have managers in California with Chicago subordinates. It's important that they can share the same forms across the board. And we have folks who are on the road a lot or are working out of home offices,
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so having them be able to access this is a huge point for us," Brown explained.

Organizing and automating the appraisal process results in performance appraisals that are more accurate and fair, Brown noted. "This is important because, after all, an employee appraisal is a legal document," he said.

The new system is also helping Jelly Belly track training requirements and development in its staff, Paulos added. "We've always had a separate training manual. Now we can go in to the evaluations and more easily monitor employees' skills development, see what training is needed by individuals and check the due dates for training and renewal. That makes it much easier for us to keep track," Paulus noted.

The new employee performance and talent management system has proven to be a big time-saver for Jelly Belly's HR team. "Since this year was the first time using the new system, it took us a little longer than it will next year. But the process was a whole lot faster," Paulus said. "It has already saved us a lot of time, and we got everybody's appraisals done in one shot." The new system is also helping Jelly Belly to better align employee goals with the company's business objectives. And for one of America's best-known candy companies, it doesn't get any sweeter than that.

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