i have attached the file on performance appraisal system. hope it may help for the one who is in need...." some thing is better than nothing ..".....

1. THEORETICAL BACKGROUD
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 resourced 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. Performance appraisal, two rather simple words
that often arouse a raft of strong reactions, emotions, and opinions when
brought together in the organizational context of a formal appraisal
procedure. Most organizations throughout the world regardless of whether
they are large or small, public or private, service or manufacturing, use
performance appraisal, with varying degrees of success, as a tool to achieve
a variety of human resource management objectives.
DEFINITIONS:
Performance appraisal as “an evaluation and grading exercise
undertaken by as organization on all its employees either periodically or
annually, on the outcomes of performance based on the job requirement
and personal behavior in the position”
-Prof. Yong

2. “Performance appraisal is a systematic / periodic evaluation of an
individual / someone in position to observe his performance”.
- RogerBello
PERPOSE OF PERFORMANCE APPRAISAL
1. It assists in management for management of work force planning,
for developing successive plans and for preparing training
schedules.
2. To decide upon a pay increase where regular pay scales has not
been fixed.
3. To effect promotion based on competence and performance of
employees.
4. Relationships between management and subordinate are
improved because of two way communication reinforced by
regular appraisal interviews.
5. Appraisal enables the manager to identify the training needs.
6. Helps to strengthen weak areas.
7. To let the employees know where they stand so for as their
performance is concerned and to assist them with constructive
criticism and guidance for the purpose of their development.
Performance Appraisal
Performance appraisal: It is the process of obtaining, analyzing and
recording information about the relative worth of an employee. The focus
of the performance appraisal is measuring and improving the actual
performance of the employee and also the future potential of the
employee. Its aim is to measure what an employee does. This is necessary
to evaluate the contribution of the employee during the past year and to

3. provide feedback for improvement. Performance appraisal is also a vital to
deciding the appropriate compensation decision. It also helps decide on
promotions and helps the supervisor determine the appropriate training
that may be necessary to enhance the employee performance.
According to Flippo, a prominent personality in the field of Human
resources, "performance appraisal is the systematic, periodic and an
impartial rating of an employee’s excellence in the matters pertaining to his
present job and his potential for a better job". Performance appraisal is a
systematic way of reviewing and assessing the performance of an employee
during a given period of time and planning for his future.
Objectives of Performance appraisal:
To review the performance of the employees over a given period of
time.
To judge the gap between the actual and the desired performance.
To help the management in exercising organizational control.
Helps to strengthen the relationship and communication between
superior – subordinates and management – employees.
To diagnose the strengths and weaknesses of the individuals so as to
identify the training and development needs of the future.
To provide feedback to the employees regarding their past
performance.
Provide information to assist in the other personal decisions in the
organization.
Provide clarity of the expectations and responsibilities of the
functions to be performed by the employees.

4. 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.
Performance evaluation also helps build confidence as the employee has an
opportunity to voice his opinions and his grievances to his superior. There
must be number of methods of performance appraisal. No single method
can be considered ideal in all circumstances. This method of performance
appraisal can be broadly classified into two categories: traditional and
modern methods.
Traditional methods are the relatively older methods of performance
appraisal. These methods are based on the studying the personal qualities
of the employees. These may include knowledge, initiative, loyalty,
leadership and judgment.
KEY BENEFITS OF PERFORMANCE MANAGEMENT
PM FOCUSES ON RESULTS, RATHER THAN BEHAVIORS AND ACTIVITIES
A common misconception among supervisors is that behaviors and
activities are the same as results. Thus, an employee may appear
extremely busy, but mot be contributing at all toward the goals of the
organization. An example is the employee who manually reviews
completion of every form and procedure, rather than supporting
automation of the review. The supervisor may conclude the employee is
very committed to the organization and works very hard, thus, deserving a
very high performance rating.

5. ALIGNS ORGANIZATIONAL ACTIVITIES AND PRODESSES TO THE GOALS OF
THE ORGANIZATION:
PM identifies organizational goals, results needed to achieve those
goals, measures of effectiveness or efficiency (outcomes) toward the goals,
and means (drivers) to achieve the goals. This chain of measurement is
examined to ensure alignment with overall results of the organization.
CULTIVATES A SYSTEM-WIDE, LONG-TERM VIEW OF THE ORGANIZATION:
An effective performance improvement process must follow a
systems-based approach while looking at outcomes and drivers. Otherwise,
the effort produces a flawed picture. For ex: laying off people will likely
produce short-term profits. However, the organization may eventually
experience reduced productivity, resulting in long-term profit loss.
PRODUCES MEANINGFUL MEASUREMENTS:
These measurements have a wide variety of useful applications. They
are useful in benchmarking, or setting standards for comparison with best
practices in other organizations. They provide consistent basis for
comparison with best practices in other organizations. They provide
consistent basis for comparison during internal change efforts. They
indicate results during improvement efforts, such as employee training,
management development, quality programs, etc. they help ensure
equitable and fair treatment to employees based on performance.

6. PERFORMANCE APPRAISAL FEEDBACK TOOLS:
1. Job Results / Outcome
Though not an appraisal method per se, job results are in themselves
a source of data that can be used to appraise performance. Typically,
an employee's results are compared against some objective
standards of performance. This standard can be absolute or relative
to the performance of others.
2. Essay Method:
The essay method involves an evaluator's written report appraising
an employee's performance, usually in terms of job behaviors or
results. The subject of an essay appraisal is often justification of pay,
promotion, or termination decisions, but essays can be used for
developmental purposes as well.
3. Ranking:
Ranking method compare one employee to another, resulting in an
ordering of employees in relation to one another. Rankings often
result in overall assessments of employees, rather than in specific
judgments about a number of job components.
4. Forced Distribution:
Forced distribution is primarily used to eliminate rating errors such as
leniency and central tendency, but the method itself can cause rating
errors because it forces discriminations between employees even
where job performance is quite similar.

7. 5. Graphic Rating Scale:
Graphic rating scales are one of the most common methods of
performance appraisal. Graphic rating scales require an evaluator to
indicate on a scale the degree to which an employee demonstrates a
particular trait, behavior, or performance result. Rating forms are
composed of a number of scales, each relating to a certain job or
performance-related dimension, such as job knowledge,
responsibility, or quality of work.
6. Behavioral Checklist:
Behavioral checklists are well suited to employee development
because they focus on behavior and results, and use absolute rather
comparative standards. An advantage of behavioral checklists is that
evaluators are asked to describe rather than evaluate a subordinate's
behavior. For this reason, behavioral checklists may meet with less
evaluator resistance than some other methods. An obvious
disadvantage of behavioral checklists is that much time and money
must be invested to contract the instrument.
7. BARS – Behaviorally Anchored Rating Scales:There are 4 steps:
*Listing of all the important dimensions of performance for a job or
jobs.
*Collection of critical incidents of effective and ineffective behavior.
*Classification of effective and ineffective behaviors to appropriate
performance dimensions.
*Assignment of numerical values to each behavior within each
dimension.

8. 8. MBO – Management by objectives:
MBO consist of six main steps:
*Setting the organization's goals.
*Setting of departmental goals.
*Discussing and allocating department goals.
*Defining expected results ( set individual goals ).
*Performance review and measurement of results.
*Providing feedback.
The traditional methods are:
Unstructured methods: In this method, the appraisal process does not
follow any specific structure. It is based on the description of the
employee by the superior. The unstructured nature of this method
makes this extremely subjective.
Straight ranking method: In this method, the superior is asked to rate all
the employee during a specific job from best to the poorest based on
specification criteria. While it is easy to select the best and the worst
employee, selection of employees who are mediocre is difficult. This
model also suffers from subjectivity.
Paired comparison method: The paired comparison method involves
comparing each employee with every other employee in the group.
Based on the comparison a ranking system is developed. This ranking
system is considered more reliable as it is based on systematic method
of comparison and evaluation.
Man to man analysis: In this method, the performance of the employee
is based on certain factors that are selected. The factors can include

9. initiative, leadership etc. a scale is developed for each factor and each
individual is evaluated according to the scale. However, there is
considerable difficulty in developing a scale.
Grading method: In this method, the performance of the employee are
determined in advance and defined as categories. The categories can be
Grade ‘A’ for an outstanding performance, Grade ‘B’ for excellent
performance; ‘C’ can be for average and ‘D’ for poor etc.
Checklist method: In this method a checklist consisting of objective
statement in prepared such as;
1. Is the worker regular at work
2. Does the employee command respect among his subordinates
3. Is the employee helpful to his peers
Questions such as these are used in rating: The superior has to say ‘yes’
or ‘no’ to each question. The difficulty lies in this method lies in
constructing such a checklist.
Critical incidents method: This method uses critical incidents such as
accidents, major lapses on the employee to rate his performance
Field review method: In this method a human resource specialist
conducts the appraisal by asking a series of questions about employee to
the superior. After the session in over the specialist makes notes based
on his interaction with his superiors. These notes are approved by the
specialist and are placed in the employee’s file.
Confidential report: This method involves preparation of a confidential
report by the supervisor on the employee’s performance. The
disadvantage of this method is the obvious subjectivity and secrecy
which results in low credibility of these methods.

10. Forced Distribution method: Under this system it is assumed that it is
possible and desirable to rate only two factors viz. job performance and
promotability. For this purpose, a fine point performance scale is used
without any statement. Employees are placed between the two
extremes of ‘good’ and ‘bad’ job performance. This forced distribution
method assumes that of the total personnel. Certain percentage of the
rate is distributed in the five grades. In addition to job performance,
employees are rated for promotability.
A three point scale is often used for this purpose
Very likely promotional material
May or may not be promotional material
Very unlikely to be promotional material
Checklist Method Under this method, the rater does not evaluate
employee performance. He supplies report about it and the
personnel department does the final rating. A series of questions are
presented concerning an employee on his behavior. The rater, then
checks to indicate if the answer to the question about an employee is
positive or negative. The value of each question may be weighted
equally or certain question may be weighted more heavily than
others may.
Free Essay Method: Under this method, the supervisor makes a free
form, open ended appraisal of an employee in his own words and put
down his impression about the employee. The description always as
factual and concrete as possible no attempt is made. Evaluation is
done of an employee in a quantitative manner.

11. Group Appraisal Method Under this method, employees are rated by
an appraisal group. Consisting of their supervisor and three or four
other supervisors, who have some knowledge of their performance.
The group discuss the standard of performance for a job and the
actual performance of the jobholder; the cause of their particular
level of performance and offers suggestion for future improvements.
Modern methods: Modern methods were devised to improve upon
the traditional methods. Modern methods attempt to remove the
shortcomings of the old methods such as subjectivity, bias etc.
Some of the modern methods are:
BARS (Behaviorally anchored rating scales): In this system scales are
devised based on aspects of the employees’ behavior. The superior is
asked to rate the performance of the employees on the bases of
these scales.
MBO: MBO stands for management by objectives. MBO appraisals
are based on predetermined objectives which are decided and
agreed upon by the superior and the employee. It is a process of goal
setting and feedback. This process introduces greater objectivity in
the evaluation process. The employee is aware of what is expected of
him and is able to focus attention towards the goals.
Psychological appraisal: These appraisal involves assessment of the
intellectual abilities, emotional stability, reason and analytical skills,
sociability etc. these methods can be useful when talking decision
about placement of employees, development and training
360 degree feedback: this method enables the employee to receive
feedback from the superior, his peers and his subordinates. This

12. feedback provides information about the skills and behavior of an
individual. The information is based assessment from different angles
and is more objective
Assessment Center Method: Under this method, many evaluators
jointly judge employee performance is several simulated situations
with the use of a variety of criteria. The assessment is done with the
help of a couple of employees to measure interpersonal skills,
interpersonal competence, planning and organizing ability stress
resistance and communication skills, with the aim of selecting
employees for supervisory positions. The most important features of
this method are job related simulations
IMPORTANCE OF APPRAISAL SYSTEM IN POLYHYDRON
Performance appraisal is mainly applied in the organization so as to
appraise the employee performance, try to understand his needs and
difficulties and help to overcome them. This is one of the best ways to know
the employee in the organization. Thus Polyhydron Pvt. Ltd. has strongly
adopted this system to appraise the employees. A different methodology is
applied in this case where the appraisal system is connected with the
increment provided to the employee in the firm.
According to this appraisal system the employee is evaluated to know
his efficiency level and his contribution to the organization and increments
are given according to his efficiency. It means that a highly efficient person
is paid high increments and the employee who performs low is given the
minimum increment which is set by Government of Karnataka. The
increment for labor depends on the percentage increase per year. Full

13. increment is given to key person who contributes maximum to the
organization; the person who is considered to be above average person, he
is provided with an increment of 3/4th of full increment; the person who is
considered to be average person, he is provided with 1/2 of full increment;
the person who is considered to be below average person gets the least
with 1/4th of full increment. Therefore a key person who has less
experience and fewer wages per hour may get more increments than an
employee with experience and having more wages per hour.
From the increment given we can see that one who performs high
gets more increment than the minimum. As we have see, the employee
category is divided into four groups of below average, average, above
average and key person. The person who does not perform at all comes
under employee who is termed as below average and thus he is provided
with least increment. This provision of minimum wages is very important to
appraise the employee under this category. The person coming under this
category is very greedy and works only to obtain things which comforts him
and is also greedy towards money. Thus to get more increment he will try
to appraise himself.
The time he achieves or attains a higher level he will not only find change in
him but also we can see that he will set principles for himself and also will
improve in nature, character and work. Therefore he moves from darkness
towards light, from unprincipled person to principled person. Thus we can
see changes in many aspects like attitude, work and values.
The people coming under below average have to strive lot to improve
themselves whereas an average person need not strive as much as below
average person does. Similarly it is applied for above average person who

14. may not require much effort to be a key person. Therefore in this process of
appraising employees will help them to lead a quality life and grow their
personal values too. This difference can also be seen in the work they
perform in the organization which is noticeable and be measured.
The wages per hour of the employee goes on increasing as and when
the employee provides more years of service to the organization. Therefore
it means that as the year passes and the status of the employee moves
from trainee to probation to confirmation, the wages increase accordingly.
Thus appraisal system is applied for the people who earn wages above
certain level of Rs 14 per hour. From the calculations done, the increment is
minimum up to certain level even though the person is found to be a key
person. This mainly happens with the employee who is earning very less
wages and it is as low as Rs 12/hr, Rs 13/hr, Rs 14/hr, Rs 16/hr and Rs 17/hr.
This mainly occurs since the person earning these wages is non SSLC or a
SSLC student and he requires time for his personality development and also
it is obtained from calculations done. Therefore increments will be seen
increasing after certain level which also means that as the employee
develops, he becomes more and more eligible to get an increased
increment.

15. SIGNIFICANCE OF PERFORMANCE APPRAISAL
Performance management systems provide an in-depth look at an
organization's overall performance in several different areas. Three main
reasons for utilizing this system are motivating employees to perform,
fostering ethics in administrative action and defining organizational goals.
 Increased Motivation to Perform:
When an employee receives quality feedback about his performance,
he can develop and increase his skills over time. This can provide an
increased sense of confidence, which is necessary to performing well. Being
recognized and valued is a basic human need, so it is critical to an effective
performance management system.
 Ethical Administrative Actions:
Administrative actions include promotions, raises, terminations and
transfers. It is important to make sure that such decisions are handled in
the most ethical way possible. Performance management systems can
provide accurate information about the company's performance to reduce
the amount of administrative errors and increase trust and productivity.
 Well-Defined Organizational Goals:
Goals are made clearer due to the understanding of how the employee's
job relates to the organization's overall success. Performance management
systems clearly define and communicate each employee's role to make sure
that all employees conform to what the organization wants to accomplish.
This helps create goals that are both well-designed and realistic