It is available in word format for Rs 1000/-. Contact hema_nt05@yahoo.co.in

1. HRM Project
MEASURING HUMAN
CAPITAL: PERFORMANCE
APPRAISAL EFFECTIVENESS
1|Page

2. Acknowledgement
“Vital to every operation is co-operation”. We really agree to this wonderful
quotation put forth by Mr. Frank Tyger. This project was successful due to
the co-operation extended by people who have truly contributed towards it.
We gratefully acknowledge Prof. T V Rao who’s deep sharing and synergy
has moved us many levels beyond our own thinking. We want to thank the
management of various companies who gave us the permission to conduct
research. We would also like to thank all the employees and HR executives
who empowered us with valuable information. And finally to those whose
lives and writings has come the wisdom of the ages. We have tried to learn
from your legacy.
Abstract
Appraisal is a continuous process and done annually as a formal exercise
before completion of the financial year. Appraisal has tremendous
motivational impact on people through meaningful feedback and is a
powerful tool for recognition. This project explains performance appraisal
system and tries to find out how efficiently Performance Appraisal is
conducted. And if performance appraisal doesn’t meet its objective then,
what are the factors causing failure.
2|Page

3. Objective of our research
Measuring human performance has long been of interest to researchers and
practitioners (Avery & Murphy, 1998, Bernardin & Beatty, 1984, and
Hyde, 2001). One process in measuring and evaluating human capital
that has received much attention in the literature is performance
appraisal (Avery and Murphy, 1998). Performance appraisal research
has three general streams (Bretz, et al. 1992). First, research has
focused on developing and honing instruments to more accurately
and objectively measure human performance (for examples see Tznier
et al. 2001, Tznier, et al., 1993). Second, research has focused on
supervisor and employee characteristics as sources of potential and
actual bias in the performance appraisal ratings (Cleveland &
Murphy, 1992; Dewberry, 2001; Ford et al., 1986; Feldman 1981).
And third, research has focused on the uses and types of
performance appraisal systems within organizations (Scott &
Einstein, 2001, and Lam & Schaubroeck, 1999). Literature to date
has helped organizations adopt more efficient and effective
performance appraisal systems. It has helped administrators
understand the challenges with objectively measuring behavior as
well as some of the pitfalls associated with employee and supervisor
bias in administering performance appraisals. Questions that have
yet to be pursued in the literature include: what leads to performance
appraisal system effectiveness and how can performance appraisal
system effectiveness be defined? Research shows that the measures
and systems we now have are not free from bias (Cleveland &
Murphy, 1992; Dewberry, 2001; Scott & Einstein, 2001; and Lam &
Schaubroeck, 1999), but, how can organizations understand if their
performance appraisal system is effectively producing their desired
results? This study is an initial attempt at answering these
questions.
3|Page

4.  The various objectives of our research are as follows:
 To examine why an appraisal system is important.
 To study existing appraisal system in various organizations across
sectors like BPO, IT & Telecom.
 To find the expectation of appraiser and appraisee
 To determine the satisfaction level of the appraisee
 To reveal the various loopholes in the appraisal system if any
 To find the consequences of an inappropriately conducted appraisal
system
Research Methodology
The data source: Primary as well as Secondary.
The research approach: Survey Method.
The research instrument: Questionnaire.
The respondents: The Managers & Employees of various
organizations.
The primary data was collected with the help of survey information. A
concise questionnaire was prepared keeping in mind the information
specifications.
4|Page

5. 5|Page

6. TABLE OF CONTENTS
7-
INTRODUCTION 10
PURPOSE OF PERFORMANCE 11-
APPRAISAL 12
PROCESS OF PERFORMANCE 13-
APPRAISAL 14
15-
METHODS OF APPRAISALS 18
ERRORS IN PERFORMANCE 19-
MEASUREMENT 20
IMPORTANCE OF
PERFORMANCE APPRAISAL 22
BENEFITS OF PERFORMANCE
APPRAISAL 23
UNDERSTANDING
PERFORMANCE
MANAGEMENT 24
IMPORTANCE OF
PERFORMANCE
MANAGEMENT 25
PERFORMANCE 26
6|Page

7. MANAGEMENT CYCLE
TRENDS OF PERFORMANCE
MANAGEMENT 27
RESEARCH AND SURVEY 28
29-
FINDINGS 32
33-
RECOMMENDATIONS 39
SUMMARY 40
CONCLUSION 41
BIBLIOGRAPHY 42
ANNEXURES
SUMMARY OF APPRAISEE
FEEDBACK
SUMMARY OF APPRAISER
FEEDBACK
PERFORMANCE APPRAISAL KEY
TERMS
APPENDICES
QUESTIONS FOR APPRAISEE
QUESTIONS FOR APPRAISER
7|Page

8. INTRODUCTION
8|Page

9. 9|Page

10. PERFORMANCE
Performance is synonymous with behaviour; it is what people actually do.
Performance includes those actions that are relevant to the organizational
growth and can be measured in terms of each individual’s proficiency (level
of contribution). Effectiveness Performance refers to the evaluation of
results of performance that is beyond the influence or control of the
individual.
10 | P a g e

11. Performance Standards
Performance Standards. The benchmark against
which performance is measured.
11 | P a g e

12. PURPOSE OF PERFORMANCE APPRAISAL
An HRD oriented performance appraisal is used as a mechanism to:
i) Understand the difficulties of their subordinates and try to remove
these difficulties & encouraging them to accept more
responsibilities & challenges.
ii) Understand the strength and weaknesses of their subordinates
and help the subordinates to realise these.
iii) Help the subordinates to become aware of their positive
contributions.
Potential Appraisal and Development
It is assumed under this system that the company is growing continuously.
A dynamic and growing organization needs to continually review its
structure and systems, creating new roles and assigning new
responsibilities. Capabilities to perform new roles and responsibilities must
continually be developed among employees.
Feedback and Performance Coaching
Supervisors in HRD system have the responsibility for ongoing observation
and feedback to subordinates about their strengths and their weaknesses,
as well as for guidance in improving performance capabilities.
Career Planning
The HRD philosophy says that people perform better when they feel trusted
and see meaning in what they are doing. In the HRD system, corporate
growth plans should not be kept secret. Long-range plans for the
organization are made known to the employees. Most people want to know
the possibilities for their own growth and career opportunities. Because
managers and supervisors have information about the growth plans of the
company, it is their responsibility to transmit information to their
12 | P a g e

13. subordinates and to assist them in planning their careers within the
organization.
Training
Training is linked with performance appraisal and career development.
Employees generally are trained on the job or through special-in-house
training programs.
Organization Development
This function includes research to ascertain the psychological health of the
organization. This generally is accomplished by means of periodic employee
surveys. Efforts are made to improve organizational health through various
means in order to maintain a psychological climate that is conducive to
productivity.
Rewards
Rewarding employee performance and behavior is an important part of
HRD. Appropriate reward is not only to recognize and motivate employees,
but also communicate the organization's values to the employees. In HRD
systems, innovations and use of capabilities are rewarded in order to
encourage the acquisition and application of positive attitudes and skills.
Employee Welfare and Quality of Work Life
Quality-of-work-life programs generally focus on the environment within the
organization. HRD systems focus on employee welfare and quality of work
life by continually examining employee needs and meeting them to the
extent feasible.
13 | P a g e

14. Basic Perform an ce Appraisal Process
Conduct a Job Analysis (e.g.,
specify tasks and KSAs)
Develop Performance Standards
(e.g., define what is superior,
acceptable, and poor job
performance)
Develop or Choose a Performance
Appraisal System
14 | P a g e

15. Perfo rm an c e Appraisal Pro c ess
Observation
• Selective Attention
• Timing
• Structure
• Frequency
Storage
• Encoding of Information (e.g., categorization)
• Short vs. Long-term
• Memory
Evaluation
• Retrieve Information
• Combine information
• Decision-making (judgment)
15 | P a g e

16. METHODS OF APPRAISALS
16 | P a g e

17. Su b je c tive Appraisal
M th o ds (c an b e u se d
e
w ith an y type o f jo b )
Relative Methods
1) Ranking
1st _____
2nd_____
3rd _____
2) Pair Comparison
Employee-1 _____ versus Employee-2 _____
Employee-1 _____ versus Employee-3 _____ etc.
• Both are difficult to use with a large number of subordinates
Su b je c tive A raisal M th o ds
pp e
Absolute Methods
1) Narrative essay
• Unstructured (e.g., content, length)
• Affected by the writing ability of supervisors and
time availability
2) Graphic Rating Scale (most common)
_____ _____ _____ _____ _____
Very Average Excellent
Poor
17 | P a g e

18. Su b je c tive Appraisal M th o ds
e
Behavioral Methods (use of critical incidents; examples
of good and poor job behavior collected by job experts
over time)
Behavior Observation Scales (BOS)
• Rate the frequency in which critical incidents are
performed by employees
• Sum the ratings for a total “performance” score
1) Assists others in job duties.
_____ _____ _____ _____ _____
Never Usually Always
2) Cleans equipment after each use.
_____ _____ _____ _____ _____
Never Usually Always
Ob j e c tiv e A p r aisal Data
p
1) Production Data (e.g., sales volume, units produced)
• When observation occurs (timing), and how data is
collected
• Fairness and relevancy issue
• Potential limited variability
• Limitations regarding supervisory personnel
2) Personnel Data
• Absenteeism (excused versus unexcused)
• Tardiness
• Accidents (fault issue)
18 | P a g e

19. Be h avio rally A c h o re d R g Sc ale
n atin
(BA S) P c e ss
R ro
1) Generate critical incidents (examples of good and poor job
performance)
2) Place Critical Incidents Into performance dimensions (e.g.,
Responsibility, Initiative, Safety)
3) Retranslation Step (do step # 2 again with a separate
group of job experts. Discard incidents where
disagreement exists as to which dimension in which they
belong)
4) Calculate the mean and standard deviation of each critical
incident (discard those with a large standard deviation)
5) Place critical incidents on a vertical scale
BA S (P s an d C o n s)
R ro
• Process involves various employees (increases
the likelihood of usage)
• Job specificity (different BARS need to be
developed for each position)
• Not any better at reducing common rating scale
errors (e.g., leniency, halo)
• Time consuming
19 | P a g e

20. 20 | P a g e

21. C o m m o n R g Sc ale E r r o r s
atin
1) Leniency (positive bias)
X
_____ _____ _____ _____ _____
Very Average Excellent
Poor
All lead to a
2) Severity (negative bias) restriction in the
range of
X performance
_____ _____ _____ _____ _____
Very Average Excellent scores
Poor
3)Central Tendency (midpoint)
X
_____ _____ _____ _____ _____
Very Average Excellent
Poor
H E rro r
alo
Responsibility
Commitment
Initiative
Sensitivity
Judgment
Communication
High ratings on other Observation of specific
performance behavior (s) (e.g.,
dimensions volunteers to work
overtime)
21 | P a g e

22. Example of rating scale and more general
guidelines
EEE – Exceeds Expectations Exceptionally
Consistently and significantly above what is expected from someone at this level of
experience. Exceptionally good competence and performance level, which is usually
very hard and unconventional to reach. Is rewarded by base salary and by maximum
pay for performance. Good career development.
……(more categories usually in between)
MSE – Meets Some Expectations
Whilst meeting requirements in some areas, requires further development in others.
Performance meets expectations in some areas. Staying at this level leads to
stopping of career and wage development.
BE - Below Expectations
Below what is expected from someone at this level of experience. Competence and
performance level, which can not be accepted as such (can be accepted only
temporarily). Staying at this level leads to counseling out process.
22 | P a g e

23. IMPORTANCE OF PERFORMANCE
APPRAISAL
Today’s working climate demands a great deal of commitment and effort
from employees, who in turn naturally expect a great deal more from their
employers. Performance appraisal is designed to maximize effectiveness by
bringing participation to more individual level in that it provides a forum for
consultation about standards of work, potential, aspirations and concerns.
It is an opportunity for employees to have significantly greater influence
upon the quality of their working lives. In these times of emphasis on
“quality”, there is a natural equation: better quality goods and services from
employees who enjoy better quality “goods and services” from their
employers.
Performance appraisal must be seen as an intrinsic part of a manager’s
responsibility and not an unwelcome and time-consuming addition to them.
It is about improving performance and ultimate effectiveness.
Performance appraisal is a systematic means of ensuring that managers
and their staff meet regularly to discuss post and present performance
issues and to agree what future is appropriate on both sides.
23 | P a g e

24. BENEFITS OF PERFORMANCE APPRAISAL
For the appraisee
 Better understanding of his role in the organization—what is expected
and what needs to be done to meet those expectations
 Clear understanding of his strengths and weaknesses to develop
himself into a better performer in future
 Increased motivation, job satisfaction, and self-esteem
 Opportunity to discuss work problems and how they can be overcome
 Opportunity to discuss aspirations and any guidance, support or
training needed to fulfil those aspirations
 Improved working relationships with supervisors
For the Management
 Identification of performers and non-performers and their
development towards better performance
 Opportunity to prepare employees for assuming higher
responsibilities
 Opportunity to improve communication between the employees and
management
 Identification of training and development needs
 Generation of ideas for improvements
 Better identification of potential and formulation of career plans
For the Organization
 Improved performance throughout the organization
 Creation of a culture of continuous improvement and success
24 | P a g e

25.  Conveying the message that people are valued
UNDERSTANDING PERFORMANCE
MANAGEMENT
25 | P a g e

26. IMPORTANCE OF A PERFORMANCE
MANAGEMENT PLAN
• Links employee performance to unit objectives
• Communicates performance goals to employees for shared
understanding
• Recognizes and acknowledges good performance
• Recognizes areas where performance must be improved
26 | P a g e

27. THE PERFORMANCE MANAGEMENT CYCLE
27 | P a g e

28. When:
1) Annual Performance Review
Preplanning
The Performance
The Performance 2) New hire or new position
3) Change in organizational priorities
Management
Management
Cycle
Cycle Performance and
Development Plan
Planning When: Ongoing;
Merit
Interim daily, weekly,
Determination
Coaching monthly as needed
(if available)
Annual Performance Appraisal Coaching Progress
Appraisal Review
When: Annually Employee Self Appraisal Interim
Coaching
Informal
Feedback on
Performance
28 | P a g e

29. 29 | P a g e

30. RESEARCH AND SURVEY:
Statement of the Problem:
Performance appraisal is a process of assessing, summarizing and
developing the work performance of an employee. In order to be effective
and constructive, the performance manager should make every effort to
obtain as much objective information about the employee's performance as
possible. Low performance can push the organization back in today’s tough
competition scenario. The project is aimed at analyzing the performance
appraisal in companies.
30 | P a g e

31. FINDINGS
 From the survey results its evident that both the appraisee’s and
appraisers expectation from Performance appraisal system are the
same i.e. “Determination of Promotion or Transfer” and “Salary
Administration and Benefits”. Hence a single performance
appraisal system can satisfy needs of both the Appraiser and
appraisee. Therefore the Performance appraisal program would be
designed in such a way that the appraiser would be able to
analyse the contribution of the employee to the orgaisation
periodically and all the employees who have been performing well
would be rewarded suitably either by an increase in the salary or a
promotion. Through this the appraiser can also motivate the
employees who felt that they had no growth in the organisation
and serves the purpose of employee development.Thus
performance appraisals can be used as a significant tool fo career
lanning.
 Analyzing ones own strengths and weaknesses is the best way of
identifying the potentials available, rather than the other person
telling. Self-appraisal is a tool to analyze oneself. One of the most
important findings was that almost all the employees wanted self-
rating to be a part of performance appraisal program carried out
by the organisation. From the responses of the appraiser we can
also see that Self rating is not encouraged by the organisations.
This could therefore be an important factor which leads to
dissatisfaction among the appraisees. At the end of the year of the
appraisal period the appraisal process should begin with self-
appraisal by every employee. To appraise ones own self on key
performing targets and qualities, the appraisee would go through a
process of reflection and review. It is an established fact that
31 | P a g e

32. change is faster when it is self initiated. If any employee has to
improve or do better, he must first feel the need to do so.
Reflection and review is a process that enables him to feel the need
and improve more upon his strengths and weaknesses
 Another point to be noticed is that even in the other forms of
Performance Appraisal also the employees expect that they should
be given a chance to rate their own performance. This can allow
the employee to analyze ones own performance which gives new
insights on how one is performing and what are the critical points
where he has to put his best and improve upon
 The existence of a proper complain channel was also of utmost
importance to the appraisees. They should be given a chance to
convey their greviences to the top management.
 The appraisees also expect that their comments and suggestions
should be taken in to account while conducting the appraisals.
This expectation is not fulfilled as the appraisers do not take their
comments and suggestions into consideration. Therefore they
should look into this matter before it leads to dissatisfaction
among the employees.
 The results also indicate that the there is no communication of top
management plans and business goal to the appraisee. The
appraisers on the other hand feel that the goals and plans have
been clearly communicated to the appraisees. Communication is
very essential for any system to function efficiently. Therefore the
appraisers should look into this matter and see to it that the goals
and plans are communicated effectively.
32 | P a g e

33.  The findings suggest that for success of Appraisal system the
credibility of appraiser is of utmost importance.
 As per the Appraiser, a poorly conducted appraisal system would
lead to demotivation and ineffective teamwok which will result in
inefficient functioning and low productivity in the organization.
Therefore, if at all they feel there is dissatisfaction among the
appraisee’s they should motivate them. Achievement, recogntion,
invelvement, job satisfaction and development can motivate the
employees to a large extent. Along with this satisfactory working
conditions and appropraite awards also play an important role.
 Also a majority of employees were satisfied with the current
appraisal system although they requested for some changes.
 Most of the employees were also not clear about the criteria on
which ratings were given to each employee while conducting the
performance appraisal. Instead of secrecy there should be
openess. Because of lack of communication, employees may not
know how they are rated. The standards by which employees think
they are being judged are sometimes different from those their
superiors actually use. Proper communication of these ratings can
help the employers achieve the level of acceptability and
commitment which is required from the employ.
 From the survey we can also derive that the appraisee’s expect a
post appraisal interview to be conducted wherein they are given a
proper feedback on their performance and they can also put
forward their complaints if any. The appraisal should also be
followed up with a session of counseling which is often neglected
33 | P a g e

34. in many organizations. Counseling involves helping an employee to
identify his strengths and weaknesses to contribute to his growth
and development. Purpose is to help an employee improve his
performance level, maintain his morale, guide him to identify and
develop his strong points, overcome his weak points, develop new
capabilities to handle more responsibilities, identify his training
needs.
Current trends
• Current trends in performance appraisal include greater
employee ownership and involvement
- Preparation of report on their performance / self-evaluation
- Preparation of desired development focuses
- Preparation of goals for next period
• Forced distributions have spread – in particular in the US
- They are fiercely debated
34 | P a g e

35. RECOMMENDATIONS
Keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who
35 | P a g e

36. 36 | P a g e

37. 37 | P a g e

38. 38 | P a g e

39. 39 | P a g e

40. 40 | P a g e

41. Performance Appraisal
‘Higher-level’
strategies and
objectives
SMART
GOALS
• Specific Agreeing on Evaluation of
• Measurable performance period’s performance
• Agreed objectives & feedback
• Realistic
Key issues: Procedural and
• Timed distributive justice, focus &
Deciding effectiveness of incentives
on training and
Performance-based
development
compensation
plans
Career
Planning &
Counceling
41 | P a g e

42. Summary
 Prepare for the appraisal discussion
 Discuss employee’s dreams, goals
 Set mutual goals; put them in writing
 Give positive and corrective feedback
 Use up-to-date job descriptions
 Evaluate your performance
 Involve the employee in the discussion
 Be open, candid and specific
 Evaluate performance—not personality
 Sincerely care about your employees
42 | P a g e

43. CONCLUSION
With rewards being directly linked to achievement of objectives, goal
setting and Performance Appraisal assumes utmost importance. The
Performance Appraisal System has been professionally designed and
it is monitored by HRD. The implementation is the responsibility of
each and every employee along with their supervisor. There should be
adequate training to the evaluator that will go a long way in
answering the quality of Performance Appraisal. In conclusion, a
Performance Appraisal is a very important tool used to influence
employees. A formal Performance review is important as it gives an
opportunity to get an overall view of job performance and staff
development. It encourages systematic and regular joint-stocking and
planning for the future. Good performance reviews therefore don’t
just summarize the past they help determine future performance.
43 | P a g e

44. BIBLIOGRAPHY
BOOKS
 Organizational Behavior by Steve Robbins
 The Art of HRD, Reward Management, Volume 9 by Micheal
Armstrong and Helen Murlis
 Performance Management, Concepts, Practices and Strategies
for Organisation success by S. K. Bhatia
44 | P a g e

45. ANNEXURE 1
SUMMARY OF APPRAISEE FEEDBACK
Expectations from Appraisal System :
Respondents were asked to rank the various options according to
their preference. (Rank 1 being most preferred and rank 6 being least
preferred). Then scoring was given on the basis of ranks. 1 mark was
allotted to rank 1, 2 marks for rank 2 and so on.
Particular Score Overall
Rank
Salary Administration and Benefits 87 1
Determination of promotion or 109 2
transfer
Assistance in goal 228 3
Guideline for training plan 254 4
An insight into your strengths and 312 5
weakness
Decision to layoff 354 6
From the above table it can be seen that employees expect “Salary
Administration and Benefits” to be the main reason for conducting a
45 | P a g e

46. Performance Appraisal. “Decision to layoff” is of least importance as
per the appraisee.
Awareness about Responsibilities :
From the graph it can be seen that majority of employees are aware
about their responsibilities, which implies that the appraisers have
efficiently communicated to the appraisees all the parameters that
will be taken into account during appraisal.
Satisfaction Level among appraise regarding Appraisal System :
46 | P a g e

47. From graph it can be seen that majority of the respondents are
satisfied with the appraisal system. Only a meager 30% were
dissatisfied with the Performance Appraisal programs.
Awareness about performance ratings :
This clearly shows that majority of the employees are not aware about
the performance ratings that are taken into account while conducting
a performance appraisal.
Allowing Self ratings :
47 | P a g e

48. From graph it can be seen that majority of respondents want self
rating to be a method of conducting the appraisals .
Chance to rate your own performance :
From the graph we can see that majority of the employees are not
given a chance to rate their own performance in the organization.
Timing of Appraisals :
This shows that most of the organisations conduct their Performance
Appraisal programs annually. A very small percentage of the
organisations conduct Performance Appraisals on a half yearly basis.
48 | P a g e

49. The share of the quarterly and monthly appraisals are extremely
minimal.
Credibility of Appraiser :
This shows that according to the employees/appraisees the credibility
of the appraiser is extremely important and it has an effect on the
overall Performance appraisal program.
Complaint channel for employees :
49 | P a g e

50. This shows that there is no proper complaint channel existing in the
organisations for the employees who are dissatisfied with the
performance appraisal system.
Standards communicated to employees :
From this it can be seen that there is a clear majority among the
employees who say that the standards on the basis of which the
performance appraisal is carried out is not communicated to the
employees before hand.
Performance Appraisal :
50 | P a g e

51. Almost all the Performance Appraisals are carried our by the
Immediate Supervisor in these organisations. In very few
organisations, Rating committees carry out the performance
appraisals. None of the organisations use Peer Appraisals, Appraisals
by subordinates and Self rating as a method of Performance
Appraisal.
Clear understanding of Appraisee’s job :
This shows that the performance Appraisal programs are successful
in giving a clear understanding of the appraisee’s job to both
appraiser and appraisee.
51 | P a g e

52. OBJECTIVES OF APPRAISAL SYSTEM :
From the figure we can derive that the objective for conducting the
Appraisal system is clear only to half of the employees. The remaining
half are not clear about the objective for which the Performance
Appraisal is carried out.
Good communication between top management and business goals :
This shows that the appraisal systems do not provide a good
communication flow of the top-management plans and business goals
to the staff below.
52 | P a g e

53. Comments and suggestions to be considered :
Almost all the employees expect that their comments and suggestions
should be taken into consideration while conducting the Performance
Appraisal.
Post Appraisal interview
As per the response from the employees we can see that there is no
interview conducted after the appraisal program for majority of the
employees.
53 | P a g e

54. ANNEXURE 2
SUMMARY OF APPRAISER FEEDBACK
Purpose of Appraisal
Respondents were asked to rank the various options according to
their preference. (Rank 1 being most preferred and rank 6 being least
preferred). Then scoring was done on basis of these ranks. 1 mark
was allotted to rank 1, 2 marks for rank 2 and so on. Then the total
score for each purpose was calculated and overall ranking was given.
Particular Score Overall
Rank
Determination of promotion or 24 1
transfer
Salary Administration and Benefits 27 2
Decision to layoff 42 3
Guideline for training plan 69 4
Assistance in goal 72 5
An insight into your strengths and 81 6
weakness
54 | P a g e

55. From table it can be seen that appraiser considers “Determination of
promotion or transfer” & “Salary administration and Benefits” as two
important factors for conducting an Appraisal.
Appraisal System
In this question appraiser was asked to rate how helpful the appraisal
system is, from the graph it can be seen that majority of appraisers
have rated 5,4 & 3 which implies that Performance Appraisal system
is very helpful in Planning their work. Also most of the appraisers are
satisfied with the appraisal system.
Support from subordinate
55 | P a g e

56. This question was asked to find out how helpful appraisal system is
in communicating the support that apprasier needs from appraisee.
From results it is seen that the performance appraisal system is very
helpful in communicating the support and help needed by the
appraiser from the appraisee.
Type of Appraisal System
From results its clear that majority of companies prefer to use “360
degree feedback” system for Performance Appraisal. As 360 degree
feedback gives feedback of appraisee from everyone interacting with
him, it is more reliable and hence most preferred.
Performance Appraisal criteria
56 | P a g e

57. From results we can see that Qualitative Process is considered as the
most important criteria for which the Performance appraisal
programs are carried out, which shows that companies consider
Qualitiy of product & service and Customer satisfaction as most
important factors.
Timing of Appraisals
From graphs we can see that most of companies conduct appraisals
on annual basis. Some companies conduct quaterly also.
Effect of poor Appraisal System
57 | P a g e

58. It can be seen from results that most of the employees get De-
motivated because of a poorly conducted appraisal. To some extent
employees dont coordinate with their team members. Thus resulting
in reduction of output.
Communication between top management and staff
All appraisers totally agree that performance appraisal helps in
communicating the top management plans and business goals to staff
at lower level.
Insight to Apprasiee’s strength and weakness
58 | P a g e

59. It is evident from the results that performance appraisal system
doesn’t help the appraiser in understanding strength and weakness of
apraisee.
Appraisee’s comment and suggestion
From the results it can be seen that appraisee’s comments and
suggestion are not taken into consideration before Performance
Appraisal. Performance Appraisal system is designed by appraiser
without consulting appraisee.
Performance Appraisal
59 | P a g e

60. It is evident from the results that performance appraisal is conducted
by the Immediate Supervisor in all the companies.
Understanding of Apprasiee’s Job
From this it is clearly seen that according to appraiser there is a clear
and joint understanding of the appraisee’s job.
Standards for Performance Appraisal
60 | P a g e

61. From results it is evident that Performance appraisal standards are
very well communicated to Appraisee before the Appraisal is carried
out.
Self rating in Performance Appraisal
From results it can be clearly seen that the Appraisee is not given a
chance to rate his own performance.
Action after Performance Appraisal
This shows that most of the companies act upon the results of their
Performance Appraisal program.
61 | P a g e

62. ANNEXURE 3
PERFORMANCE APPRAISAL KEY TERMS
Performance appraisal is a universal phenomenon in which the organization
is making judgment about one is working with and about oneself. It serves
as a basic element of effective work performance. Performance appraisal is
essential for the effective management and evaluation of staff. It aims to
improve the organizational performance as well as individual development.
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.
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. Performance appraisals have been
increasingly implemented by most modern organization as a tool for
employee assessment.
Performance is an employee's accomplishment of assigned work as
specified in the critical elements and as measured against standards of the
employee's position. The term “Performance Appraisal” is concerned with
the process of valuing a person’s worth to an organization with a view to
increasing it.
Traditional Appraisal system; Performance appraisal is developed as
a simple method of income justification. Appraisal used to decide whether
the salary of an individual was justified or not. The decrease or increase in
pay depends upon employee’s performance.
Modern Appraisal System: Performance appraisal is defined as a
structured formal interaction between a subordinate and a supervisor that
usually takes the form of a periodic interview, in which the work
performance of the subordinate is examined and discussed with a view to
identify weakness, strength and opportunities for improvement and skills
development.
Performance-Based Actions are the reduction in grade or removal of an
employee based solely on performance at the unacceptable level.
Performance Plans are the documentation of performance expectations
communicated to employees from supervisors. Plans define the critical
elements and the performance standards by which an employee's
performance will be evaluated.
Performance Standards are statements of the expectations or
requirements established by management for a critical element at a
particular rating level. A performance standard may include, but is not
62 | P a g e

63. limited to, factors such as quality, quantity, timeliness, and manner of
performance
Performance Award is a one-time cash payment to recognize the
contributions of an employee and is based on the rating of record. A
performance award does not increase basic pay.
Performance Improvement Plans (PIP) are developed for employees
at any point in the appraisal cycle when performance becomes Level 1
(unacceptable) in one or more critical elements. This plan affords an
employee the opportunity to demonstrate acceptable performance and it is
developed with specific guidance provided by a servicing human resources
office.
Performance Management is the integrated process by which an
agency involves its employees in improving organizational effectiveness in
the accomplishment of agency mission and strategic goals. Performance
Management consists of: performance planning, monitoring employee
performance, employee development, evaluating employee performance, and
recognition.
Performance appraisal system describes how agency will identify
performance standards and core competencies and communicate them to
employees. Periodical appraisal helps the company to compare employee’s
performance and to take apt decisions for further improvement. A
structured business planning depends on the performance of the employee
and it will be successful only when the employees are analyzing their work
performance individually. The formal performance appraisal in a company
is conducted annually for all staff and each staff member is appraised by
their line manager. Generally employees are appraised based on the
structure of the company
Annual performance appraisals evaluate the role of the employee in the
organizational development and also monitoring the standard, expectations,
objectives, efficiency in handling task and responsibilities in a period of
time. Appraisal also helps to analyze the individual training needs of the
employee and planning of future job allocation. It also help to adopt
appropriate strategy based on organizational training needs. Performance
appraisal analyzes employee’s performance and which utilize to review the
grades and modify the annual pay. It generally reviews each individual
performance against the objectives and standard of the organization.
Performance management creating a work environment and it is enabling
the employees to perform best of their abilities. Through performance
management companies are hiring efficient people .Then the company
building up their skills and talents through employee development
programmes.The tools like performance appraisal, performance review, and
appraisal forms create the process of nurturing employee developments.
63 | P a g e

64. Effective appraisal considering increase in staff productivity, knowledge and
contribution. Formal management procedure used the evaluation of work
performance. Effective appraisal helps the employer in providing increased
productivity, knowledge and contribution from the staff. These resources
increase the ability to do performance consulting, measure performance
improvement, and provide resultant training using internal staff, which
increases self-sufficiency in performance consulting and improvement.
Providing feed back about employee’s job performance and the contribution
of reward for their work is very essential in the smooth functioning of an
organization.
Performance appraisal tries to:
1. Give feedback to employees to improve subsequent performance.
2. Identify employee-training needs.
3. Document criteria used to allocate organizational rewards.
4. Form a basis for personnel decisions-salary (merit) increases,
disciplinary actions, etc.
5. Provide the opportunity for organizational diagnosis and development.
Facilitate communication between employee and administrator.
64 | P a g e

65. APPENDIX 1
QUESTIONS FOR APPRAISEE
Name: ___________________________ Contact No: __________________________
1. What do you expect from a Performance appraisal :
(Rank the options from 1 to 6; 1 being most preferred & 6 being least
preferred)
Detail Rank
Salary Administration and Benefits
Determination of promotion or transfer
Decision on layoff
Assistance in goal
Guideline for training Plan
An insight into your strengths and weakness
2. Do you know what exactly is expected from you at work?
a. Yes b. No
3. Are you satisfied with the appraisal system?
1 2 3 4 5
(1 = Least satisfied; 5 = Most satisfied)
4. Are you aware of performance ratings?
a. Yes b. No
5. Do you think you should be given an opportunity to rate your own
performance?
65 | P a g e

66. a. Yes b. No
6. Are you given a chance to rate your own performance?
a. Yes b. No
7. Timing of Appraisals
a. Monthly
b. Quarterly
c. Half Yearly
d. Annual
e. Anytime
8. Does the credibility of Appraiser affect the Performance Appraisal System?
a. Yes b. No
9. Is there a complaint channel for the employees who are dissatisfied with the
performance appraisal system?
a. Yes b. No
10.Are the standards on the basis of which the performance appraisal is
carried out communicated to the employees before hand?
a. Yes b. No
11.Who conducts the performance appraisal”?
a. Immediate supervisor
b. Peer appraisal
c. Rating committees
d. Self-rating
66 | P a g e

67. e. Appraisal by subordinates
12.Is the performance Appraisal successful in giving a clear understanding of
the appraisee’s job to both appraiser and appraise?
a. Yes b. No
13.Are the objectives of appraisal system clear to you?
a. Yes b. No
14.Does the appraisal system provide a good communication between the top-
management plans and business goals to staff below?
a. Yes b. No
15.Do you want your comments and suggestions to be taken into consideration
during appraisal?
a. Yes b. No
16.Is there a post appraisal interview conducted?
a. Yes b. No
APPENDIX 2
QUESTIONS FOR APPRAISER
Name: ___________________________ Contact No: __________________________
1. Purpose of Performance appraisal :
(Rank the options from 1 to 6; 1 being main purpose & 6 being last
purpose)
Detail Rank
Salary Administration and Benefits
Retain performing employees
Determination of promotion or transfer
67 | P a g e

68. Decision on layoff
Assistance in goal
Guideline for training Plan
2. Is the Performance Appraisal helping you to plan your work well?
1 2 3 4 5
(1 = Least helpful; 5 = Most helpful)
3. Does the system provide you a chance to communicate the support
you need from your subordinate to perform the job well.
a. Yes b. No
4. Which appraisal system is being employed in the company?
a. Assessment centre
b. MBO
c. BARS
d. 360 degree feedback
e. Balance scorecard
5. Performance Appraisal criteria
a. Quantitative outcome criteria (Sales volume, Sales price, Productivity,
Goal accomplishment rate)
b. Qualitative process criteria (Quality of product or service, Customer
satisfaction)
c. Quantitative process criteria (Efficiency, Cost/expenses, Attendance)
d. Qualitative process criteria (Judgment, Work attitude, Leadership,
Conduct /Trait)
6. Timing of Appraisals
a. Monthly
b. Quarterly
68 | P a g e

69. c. Half Yearly
d. Annual
e. Anytime
7. What do you think is the effect of a poor appraisal system
a. De-motivation
b. Retention
c. Ineffective teamwork
8. Does the appraisal system provide a good communication between the top-
management plans and business goals to staff below?
a. Yes b. No
9. Does it give insight to appraisee regarding his strength or weakness?
a. Yes b. No
10. Are employee’s comments and suggestions taken into consideration
before the appraisal?
a. Yes b. No
11.Who conducts the performance appraisal”
a. Immediate supervisor
b. Peer appraisal
c. Rating committees
d. Self-rating
e. Appraisal by subordinates
12.Is the performance Appraisal successful in giving a clear understanding of
the appraisee’s job to both appraiser and appraise?
b. Yes b. No
13.Are the standards on the basis of which the performance appraisal is
carried out communicated to the employees before hand?
a. Yes b. No
69 | P a g e

70. 14.Do you give an opportunity to the appraisee to rate his own performance?
a. Yes b. No
15.Do you act upon the results of your performance appraisal?
a. Yes b. No
70 | P a g e

71. 16.If yes, then mention the remedial measures taken?
71 | P a g e