PROJECT REPORT PERFORMANCE APPRAISAL SYSTEM OF XYZ TEXTILE LTD.

The project on performance appraisal system has studied procedures and problems of XYZ Textile Ltd. The aim of this project is to study present performance appraisal system XYZ Textile Ltd. sufficient data was collected for completion of this project to enable one of make some extrapolation and draw further inferences which could serve as guidelines for designing appraisal system in public undertaking in India. It is concluded, on the basis of study, that there exists some shortcoming in the structure, implementation and follow up of the system. Appraisal is a critical activity and sensitive as well. Therefore sophisticated personal departments and professional behavioral scientists have been engaged in developing new concepts, modifying old ones, and designing new procedures and systems. The whole thrust in the area of Managerial Appraisal has now shifted from being judgmental and control -oriented and being enabling and development-oriented. There are two parties involved in improvement of managerial performance: The individual, who is the actual performer; the organization that has to provide a friendly and supportive climate, necessary resources and adequate information and guidance to the performer. The system, in order to practicable, must be acceptable to the people who are affected by them. The appraisal system cant be viewed in isolation from other organizational system related to human resources. The unique needs and priorities of organization may change; the appraisal system must by periodically review to align it with latest realities within the organization. There can be a Model Appraisal System that would be applicable to any organization. It is in this frame of reference that some guidelines are being provided, in the end, for a review of existing performance appraisal system in the enterprises considered for project studies. THEORETICAL BACKGROUND OF THE PROJECT REPORT : Performance appraisal system is the step where the management finds out how effective it has been at hiring and placing employees. An effective use of materials, machines, money and human resources is essential to achieve higher level of productivity in an industry. While other resources has limitation, the most vibrant and active human resource has unlimited potential. Hence, for optimization of human resources, measuring its performance continuously is of paramount importance, performance appraisal may be defined as: Performance appraisal system is the process of evaluating the performance and qualification of employees in terms of requirements of the job for which he is employed, for purposes of administration including placement, selection for per motions, providing financial rewards and other actions which require differential treatment among the members of a group as distinguish from actions affecting all members equally. There are two parties to the appraisal process: the organization, the individual who is being apprised. The appraisal system must generate adequate, relevant, timely and clear information, and result in action program that would be helpful to both the parties. The appraisal should lead up to improved organizational health, viability and growth through

optimal utilization of human resources in service of organization. It should also be instrumental in motivating the appraisee towards giving his best to the organization. It is evident that if we wish to install an effective appraisal system in an organization, we must first set our house in order. Organization should decide its targets as whole and unit wise and individual employees as well. It should decide upon its resources and information and sufficient guidance to employees to use them efficiently. Is should provide effective supervision and relevant and relatively objective appraisal. Thus following are the prerequisites of a model performance appraisal system:1. A clear definition of organizational purposes, targets and priorities; 2. A participative style of objective setting; 3. Clear explanations of roles and responsibilities preferably through talks between manager and his or her boss. 4. Effective managerial man power planning, selection and placement polices and procedures; 5. Realistic development and training programs. Performance appraisal is the process of reviewing an individuals performance and progress in a job and assessing his potential for further promotion. It includes identification measurement and management of human performance in an organization. It is like any other any personal function, forms eventually line responsibilities although involving assistance and advice. It involves comparisons of performance measures of different individuals holding similar areas of work responsibilities and relate to determination of worth of measures for the accomplishment of organizational goals. It may be define in the following words. An outgoing evaluation of the quality, quantity, style and determinates of present performance and behavior, and the growth potential of and employee, with a view to provide control information to the organizational, leading to an action program and an enabling feedback to the individual, aimed at his performance, improvement, personal growth and satisfaction. The criterion for an effective performance system may be explained as:1. Appraisal system must be job related, performance based, uniform, fair and equitable. 2. The performance requirements of the organizational must be fully reflected in appraisal criteria. 3. Appraisal system must generate relevant, sufficient, timely and representative information. 4. All appraisers must be trained in the use of appraisal system and in techniques of performance counseling. 5. There should be provision for a peals of appraisals to ensure confidence of employee and there unions.

6. Appraisal system should lead to problem solving rather than fact finding e.g. it must be developmental rather than judgmental. 7. The appraisals programmers must result in clearly define recommendations regarding reorganizations, reward improvements, trainings, promotions etc. 8. The employee should be made of appraisal programs to be implemented and should be encourage expressing themselves freely on performance reports. 9. The appraisee must be evaluated on the basis of determinates of present performance and his major strengths and weaknesses. 10. The P. A. S. should be periodically reviewed in terms of relevance, reliability, usefulness, effectiveness and acceptability. 11. System should not be too elaborate or demand unnecessary efforts from appraiser. Thus performance appraisal is a process of evaluating an employees performance of a job in terms of its requirements. It facilitates developing and organizational climate of mutuality, openness, and collaboration toward achievements of individuals as well as organizational goals. It is a continuous activity. Performance measures also link informations gathering and decision making process which provide a basis for judging the effectiveness of personal sub division such as recruiting, selection, training and compensation. If the system is implemented efficiently, the management can maintain consistent promotion compensation policies throughout the total system. Objectives of Project Report on Performance Appraisal System : 1. To provide feedback to employees so that they come to know where they stand and can improve their job performance. 2. To provide a valid data base for personal decisions concerning placements, pay, promotions, transfer, punishment etc. 3. To diagnose the strength and weakness of individuals so as to identify further training needs. 4. To provide coaching, counseling, career planning and motivation to subordinates. 5. To develop positive superior subordinate relations and thereby reduce grievance. 6. To test the effectiveness of recruitment, selection, placement and induction programs. SIGNIFICANCE OF THE STUDY 1. P. A. provides valuable information for personal decisions such as pay increases, promotion, demotion, transfers and terminations. Management gets an objective basis for discussing salary increases and promotion with the staff. Thus, performance appraisal serves as the basis of suitable personal policies. 2. It helps to judge the effectiveness of recruitment, selection, and placement and orientation system of the organization. 3. It is useful in analyzing training and development needs. These needs can be assessed because performance appraisal prevails people who require further training to remove their weakness. It also identifies individuals with high potential who can be groomed up for higher position. 4. Performance appraisal can be use to improve performance through appropriate feedback, working and counseling to employees. It serves as a means of telling a subordinate how he is doing and suggesting necessity changes in his knowledge behavior and attitudes. It serves to stimulate and guide employees development. 5. Performance appraisals facilitate human resource planning, career planning, and succession planning.

FOCUS OF THE PROBLEM 1. 2. 3. 4. 5. 6. Performance Appraisal Development of the individual. Improve job performance. For managerial and technical personal. Performance, results or accomplishments. Mutual goal setting, critical incidence, group appraisals. Superior stimulate employee to analyze himself and set down goals with the help and counsel of the superiors.

METHODS OF PERFORMANCE APPRAISALS A number of methods of performance appraisals are available. In fact, each organization has its own. This represents variation of one or other of following methods. RATING SCALES:This is the most commonly used method of performance appraisal. Under this method, factors to be rated are employee features include quality such as initiative, leadership, cooperativeness, dependability, industry attitude, enthusiasm, loyalty, creative ability, decisiveness, analytical ability, emotional ability and coordination. Employee contribution includes quality and quantity of work, responsibility assumed, specific goals achieved regularity of attendance, leadership offered, attitude towards superiors and associates, versatility. The degree is usually measured on a scale that can vary from three points (good, average and poor) to several points. The anchor points in most cases are labeled excellent, poor, high low or never always, depending on the format. If traits are merely to be listed, than first to dimensions will be the most appropriate. On the other hand, if a statement such as can he be dependent upon, describes a traits, than never always dimensions are more appropriate. Scales can be presented in three ways:1. A point scale rate anchor define creative ability Excellent 5 Poor 1

2. A point scale with both anchors and scales points defined can be relied upon Always Often Sometimes Seldom Never

3. A point scale with the features initiative ness and a definition of scale point always, seldom, never etc. To some extent, it overcomes the extract ness of numerical scales. These rating used to be validated against other methods of evaluation. Human behavior is complex and traits such as job knowledge, experience, ability to get things done etc. are hardly independent of each other. Besides, each may be a composite of similar traits. The validity of rating also depends on raters features.

The rating methods may permit two employees to have the same total rating, though on specific traits they might get different ratings. E.g. employees a and b may have a total score of twenty, but there distribution on specific features may vary. Lets look at the distribution given below. Characteristics Knowledge of job Ability to get work done Sociability Personality Responsibility Cooperation Total Employees 'A' 3 2 5 4 1 5 20 Employees 'B' 5 4 2 3 4 5 20

If one were to act only on total score, recommendation for A should be similar to those for B. yet A is poor in work related aspects but strong on inter personal behavior while reverse is true for B. The solution for this problem may be to assign various features according to the organization. RANKING METHOD : It is the oldest and the simplest method of measuring the performance, by which the man and his performance are considered as an entity by the rater. No attempt is made to his performance the whole man is compared with the whole man that is, the ranking of a man in a work group is done against that of another. The relative position of each man is tested in terms of his numerical rank. It may also be done by ranking a person on his job performance against that of another member of a competitive group by placing him as a member one or two or three in total group person are tested in order of merit and placed in a simple grouping. This is the simplest method of separating the most efficient from the least efficient and relatively easy to develop and use. But in practice it is very difficult to compare a single individual with human beings having varying different behavior traits. Task of ranking individual becomes difficult when a large number of persons are to be rated. PAIRED COMPARISON METHOD:In the paired comparison method, each employee is compared every trait with all the other persons in pairs one at a time the number of times each individual is compared with another tallied on a piece on paper. These numbers yield the rank order of entire group. The supervisors are provided with a bunch of slips each containing a pair of names. The rater puts a tick mark against the individual whom he consider the better of two and final ranking is determined by number of tines that individual is judged better than the others. The maximum numbers of pairs is indicated by the formula N (N-1)/2, where N is the total number of employees to be evaluated. For example if five employees A, B, C, D, and E are to be evaluated, than above formula 5 (5-1)/2 give 10 pairs which are:A with B, A with C, A with D,

A with E, B with C, B with D, B with E, C with D, C with E and D with E. to his score. The main disadvantage of this method is that in a large group of employees, the number of permutations and combinations increase requiring more time and efforts from the evaluators. CRITICAL INCIDENT METHOD The essence of critical incident system is that it attempts to measure workers performance in terms of certain events or episodes that occur in performance of rates job. These events are known as Critical Incidents. This technique involves three steps. A test of note worthy on the job behavior, usually of specific instances is prepared. A group of experts than assigns scale values of them, depending upon degree of desirability of the job. Last step is constructing a checklist that includes incidents which defines goods and bad workers. The supervisors use these lists for evaluating the workers. This method helps to identify key areas in which employees are weak or strong. It emphasis rating of objective evidence rather than on subjective evaluation of traits, finally the supervisors finds counseling easier since he knows subordinates weakness. FORCED DISTRIBUTION METHOD In this method, the rater is forced to distribute his subordinate in to performance category such as good, poor etc. The individuals rated are distributed along one or more scale and fixed percentage of employees are assigned to the best and worst ends of the scale and to the middle bracket. A five point scale for job performance is used. One end of the scale represents best job performance whereas other and poorest job performance. The supervisor is asked to allocate approximately ten percent of his men to the best end of the scale, 20% in the next category, 40% in the middle category, 20% in the bracket next to low end and 10% in low bracket. Poorest 10% Poorer than Average 20% Average 40% Better than Average 20% Best 10%

JOB PERFORMANCE SCALE FIELD REVIEW METHOD:Under job performance scale field review method, a trainer employee from personal department interviews line supervisors to evaluate their respective subordinates. The appraisers is fully equipped with definite test questions, usually memorized in advance, which he puts to the supervisors. The supervisors is required to give his opinion about the progress of his subordinates, the level of performance of each subordinates, his weaknesses, good points, outstanding ability, promote ability, and the possible plans of action in cases requiring further consideration. The questions are asked and answered verbally. The appraiser takes detailed notes of the answers, which are then approved by supervisors and placed in employees personal folder. The success of this system depends upon competence of the interviewer. He can contribute significantly to a reasonably accurate appraisal. He keeps the supervisors on his toes by this evaluation and minimizes his bias and prejudice on his part.

ANNUAL CONFIDENTIAL REPORTS In most of the government departments and public enterprises in India, performance appraisal is done through annual confidential reports. These reports differ from department to department and from level to level. A very casual attitude is found among raters while filling A. C. R. s of employees working under them. Confidential reports combine different techniques of rating. The confidential report if written for a unit of one year and relates to performance, ability and character of the person during that year. The most importer factor on which the success of confidential report depends is objectivity. The object of maintenance character reports is to put an officer on proper line by pointing out the defect. Irremediable defects touching integrity and morality are not to be communicated. Confidential character roll recorded by reporting officers is to be countersign by superior authorities. The countersigning authority may take a view different from that of reporting officer, until countersigning authority gives his remarks will not ordinarily be entertained as the very purpose of such communication is to enable the officer to know his failings to rectify them and the officer should profit by it. The communication should not be taken as a matter of argument to enter into controversy. Confidential reports have a far reaching influence on the career of employees since their future prospects depend upon such reports and, therefore these should be handled scientifically. MODERN METHODS Management by Objectives : It is a goal directed approach to performance appraisals in which workers and their supervisors set goals together for the upcoming evaluation period. The rating than consists of deciding to what extent the goals has been met. This approach provides clear and un ambiguous criteria by which workers performance can be judged. It also eliminates subjectivity and the potential for errors and bias that goes along with it with an MBO approach, workers objectives can easily be adjusted at the beginning of a new e valuation period. Although the system being totally objective, this measure still contains certain disadvantages. The major one is that this outcome measure may give a seriously deficient a distorted view of worker performance levels. Secondly, in some situations, human judgment is more relevant than objective measure. So, this approach is not fit for every situation that may occur in any organization. Another potential difficulty with outcome based performance based measure is the development of a result at any cost mentality. Although, objective goals and other outcomes measures are effective at increasing performance levels, but these measures may not reflect the entire spectrum of performance. 3600 Feedback:3600 feedback method is the combination of pear, subordinates and self appraisal system. 3600 feedback system is rising rapidity one of the reasons being is the trend of fewer management layers. With so many more employees reporting to one supervisor its just not

possible for the supervisor to everyone accurately is out of system with to days emphasize on team work and participate management. This system helps both the supervisors and the workers to go over the list and isolate the causes of any performance difficulty. Self review helps workers to gain insight into the causes of performance problems. The pears and the subordinates judgment help the supervisors to know whether he is aware of or sensitive to the impact of certain factors on the workers performance. The timing and the culture of the organization have to be right for the introduction of these feedback processes. The adoption of a full 360 0 approach needs to stem from a steady evaluation in appraisal and development practice. Many organization have for some years included a few very mild gesture in this direction headings on the appraises pre pertain. Form, inviting them to identify things that management could do to help them improve performance. It is very unlikely that a 3600 scheme would be accepted where there has been little or no history of appraisal of any kind-it would represent to radical a step.