HUMCAP

ADVISORY

A PROJECT REPORT SUBMITTED

ON

PERFORMANCE MANAGEMENT SYSTEM OF FMCG FIRM

Submitted in partial fulfilment for the award of the degree of

POST GRADUATE DIPLOMA

IN
HUMAN RESOURCE MANAGEMENT

BY
Kumar Shauryajeet
(1808044)

Under the guidance of

Mr.A RAKESH PHANINDRA, M.Tech(CSE), MCA

IT FACILITATOR

INSTITUTE OF PUBLIC ENTERPRISE,

SHAMIRPET CAMPUS, HYDERABAD – 500101

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 DECLARATION

I hereby declare that this project report titled “PERFORMANCE MANAGEMENT

SYSTEM OF FMCG FIRM” submitted by me to Institute of Public Enterprise, is a
bonafide and original work undertaken by me.

I also declare that this project report is not submitted to any other university or institution
for the award of any degree/diploma/certificate or published any time before.

Kumar Shauryajeet

Place: Signature of the student

Date:

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 ACKNOWLEDGEMENTS

First I need to express my sincere gratitude towards my parents for their positive
support continuing this project.

I expressed my sincere gratitude to my mentor A RAKESH PHANINDRA Assistant

Professor, Institute of Public Enterprise, for his unfailing interest & inspiring guidance
in the conduct of the project reported here. In spite of his extremely busy schedule he
always had time to spare for this study. His academic prominence & attention to detail in
going through this report and valuable comments greatly helped me in improving its
presentation.

I also express my sincere gratitude to our coordinator for PGDM-HRM, Dr. Shulagna
Sarkar.

However, it would not have been possible without the outstanding support and amazing
inputs from my organization guides Mr. Aseem Dutt (Manager) and Ms. Ashesha
Nandkeolyar (Manager). I would like to extend my sincere big thanks to them.

I would like to express my gratitude towards my parents and members of People value
Consulting for their kind co-operation and encouragement which helped me in
completion of this project. My thanks and an appreciation also goes to people who have
willingly helped me out with their abilities.

(Kumar Shauryajeet)

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 TABLE OF CONTENTS

Sn. No CHAPTER Page No.

Declaration------------------------------------------------------- ii
Acknowledgment ----------------------------------------------- iii
Abstract----------------------------------------------------------- iv
Executive Summary 5
1. CHAPTER I ---------------------------------------------------------------- 6
1.0. Introduction to the Report -------------------------------
1.1. Human Resource Audit -----------------------------------
1.1.0. What is the HR Process Audit -----------------
1.2.0. Purpose of a HR Process Audit ------------------
1.2.1. Why Conduct an Audit --------------
1.2.2. Approaches to HR Auditing -------
1.2.3. Objectives of the HR Audit ----
1.2. Methodology -----------------------------------------------
1.3. Audit Objective & Scope ---------------------------------
1.3.1. Objectives of the Audit
1.3.2. Scope of the Audit
2. CHAPTER II -------------------------- 11
2.0. Literature Review -------------------
2.1. Literature Review to the Assignment ---------
2.2.
3. CHAPTER III---------------------------------------- 28

3.0. Industry Profile

3.0.1. Human Resource Consultancy

3.0.2. Benefits of HR Consultancy

3.1. Profile Of the Company

3.1.1. HumCap Advisory

3.1.2 HumCap Advisory Culture

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 3.1.3. HumCap Advisory Culture Philosophy and Style

3.1.4. Why HumCap Advisory ?

4. Data Analysis & Interpretation--------------------- 34

5. Suggestions & Recommendations
6. References

Annexure
I. Questionnaire
II. Checklist
III. Documents Verified

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 EXECUTIVE SUMMARY

The performance is directly related to satisfaction of the employee. Today, companies are

working hard to satisfy their employees to an extent where they can perform to their best. The

analysis of performance of an employee was very difficult. The industry has itself a tough

competition to face they are in a cut-throat competition. Every employee was doing their best

but the better opportunities options pulls them away and creates an opportunity cost for the

society. There is a huge attrition in the entry level of the company because of huge workforce

required and better opportunity cost. The analysis of these level of people are quiet difficult

because of their tendency to leave. There was quiet descriptive interaction with the mid- level

and high- level management. We had a lot of time to interact with them he answered to a lot

of question which was prepared for them to answer. A questionnaire was prepared which had

to be questioned related to each and every topic which was to be reviewed in the HR Audit.

The questions prepared were critically analyzed and each question was made keeping the

employee in mind and the general acceptance of policies in the other companies. The

questionnaire which was prepared by a team which consisted of 5 people. Each of members

was assigned to particular topic and the every gist is taken while preparing the questions.

Some questions were generalist while some were specific. Some answers given were of

Yes/No type while some were Narrative. The answer was promptly replied as they gave us

the necessary documents which were asked by them. The checklists which were asked by

them are:

 Performance appraisal manual [ Framework for Planning, implementing, analysing &

interpretation]
 Performance Review/Evaluation Form
 Performance Improvement Plans/Disciplinary Action Forms

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 CHAPTER I

1.0. Introduction to the report

According to the project given to us for the subject of HRM Auditing we have to
select a company, study their HR Audit system, understand how it is being
practiced, compare it with the theories we learned and present our
recommendations & conclusions. So according to accomplish that task we have
selected Dukes INDIA Pvt. Ltd. and carried out our assignment.

There is a widespread feeling that HR department has not lived up to the

potentials of either the top management or the line managers. There are examples
of corporations where HR has taken the driver’s seat and has given a lot of
benefits. In today’s competitive world, “people” or s can give a good degree of
competitive advantage to the company. To get the best out of HR function, there
should be a good alignment of the function, its strategies, structure systems, and
styles with business goals. It should be allied, if it is not aligned the HR function
can become a big liability to organizations and they will have no alternative but
to close their HR section. Besides this alignment, the skills and styles of the HR
staff, line managers & top management should be in collaboration with the HR
goals and strategies. HR audit is an effort to measure these alignments and ensure
that they take place.

Auditing as a formal process is rooted in this feature of listening. Consequently,

it is a diagnostic tool to gauge not only the current status of things but also the
gaps between the current status and the desired status in the area that is being
audited.

Like any audit, the Human Resource Audit is

also a systematic formal process, which is designed to examine the strategies,
policies, procedures, documentation, structure, systems and practices with respect
to the organization’s human resource management. It systematically and
scientifically assesses the strengths, limitations, and developmental needs of the
existing human resources from the larger point of view of enhancing
organisational performance.

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Human Resource Audit means the systematic verification of job analysis and
design, recruitment and selection, orientation and placemen t, training and
development, performance appraisal and job evaluation, and executive
remuneration, motivation and morale, participative management,
communication, welfare and social security, safety and health, industrial
relations, trade unionism, and disputes and their resolution.

OBJECTIVES OF HUMAN RESOURCE AUDIT

HR Audit is of great importance in today’s competitive environment. Firms

conduct it keeping in view variety of objectives. Such audit is needed due to
following reasons.
 Alignment and realignment of HR with business goals.
 To make HR business driven.
 Promotion of professionalism among s and company.
 Understanding the reasons for lower productivity and attrition; and
improving the same.
 To review and improve effectiveness of various HR systems like
manpower planning and recruitment, training and development,
performance appraisal, etc.
 To create high return on investment on HR.

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 Methodology

We a team of auditors have visited the corporation and using a variety of

methodologies assessed the appropriateness and adequacy of the various HRD
systems, strategies, structures, competencies, culture, processes etc. The
methodology used includes:
 Interviews Questionnaires.
 Observation.
 Secondary data analysis.
 Examination of documents and communications.
The audit starts with a brief by the Chief of HR who may set an agenda and focal
areas of evaluation. The interview with the top management starts with finding
out details of the future plans of the organizations and used it as a base for
outlining the competency requirements of the organization. The current
competencies, structures, HRD systems etc. are assessed in terms of their
capability to prepare the organization for the future. Suggestions are made to
improve for achieving the future business goals and plans. The HRD audit is
contextual and at the same time uses the available knowledge of the potential of
the HRD systems in helping the corporation achieve its goals.
1.0. Human Resource Audit

What is the Human Resource Audit Process?

Systems are organized way of making things happen. They assist in planning,
prediction and bringing professionalism, discipline and security. Every system
has its own objectives, elements and process. The purpose of HR system is to
build competencies and commitment of entire organization. The HR audit helps
in assessing the orientation, process and mechanisms, degree of participation,
cost-effectiveness and efficiency of overall HR systems and subsystems. HR
audit focuses on all systems that exist in the organization and assesses them for
their clarity of objectives, structure (scientific base and comprehensiveness), its
understanding by users, implementation and relevance in achieving
organizational goals.

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1.1. Purpose of a Human Resource Audit?
Why conduct an audit?
Nankervis et al. (1993:514) state if HR wants to become managerial in its operations,
then it will have to account for its activities in the same way as other managers, and
use a 'value-based, capital investment approach to HR decisions'. CCH (1987:422)
states the purpose of an HR audit is to make an objective assessment of its current
strengths and weaknesses. It is like taking a 'snapshot' of the organization and such
snapshots should be taken regularly. Nankervis et al. (1993:531) further explain that
the `HR audit can enhance the professionalism of the HR function and demonstrate its
specific contributions to organizational effectiveness, productivity and profitability'.

Approaches to HR Auditing?

Evolution of HR auditing in recent era’s suspended its traditional role of just a control
instrument, to become a necessary instrument for decision making in matters related
to human resources based on the global aims of the organization. This resulted in the
fact that all HR auditing proficiencies and functions have been expanded
tremendously. Walker (1998) distinguished between two approaches in regards to HR
auditing, the internal centered functions, and the external ones. From the internal
perspective, just like the case with any other staff function, the trend is to value its
actions as a result of the undertaken activities, and the cost of it of course. Hence,
capability of the department can be measured by its ability to provide specific services
to the organization at the lowest possible costs. Under such perspective, the used
operational measurements are the ones referring to quality, quantity, and reliability, or
simply cost and speed, so focusing on activities, costs, or productivity rations. From
an external perspective, if it is understood that the ultimate appraisal of the
effectiveness of HR is based on their impact on the company’s results, then the
measurements should include results obtained outside the function. Another well-
known classification of HR audit approaches, which is used to structure the present
work, is the difference between three focuses, which are the legal audit of
performance or conformity, the operative or efficacy-based audit, and the strategic
audit.

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 CHAPTER II
2.0. LITERATURE REVIEW

Alford and Beatty- "A performance appraisal is the evaluation or appraisal of relative worth
to the company of man’s services on his job.”

Wayne Cascio- "Performance appraisal is the systematic description of an 's job relevant
strengths and weaknesses.”

According to a popular saying "A SUCCESSFUL MAN'IS ONE WHO CAN LAY A FIRM
FOUNDATION WIT] THE BRICKS OTHERS HAVE THROWN AT HIM". Performance
appraisal should provide answers to important questions for both the and the organization.

"How well am I doing?”

"How can I do better?”

"How well are our s doing individually and collectively?"

Armstrong and Baron, 1998 claimed, “Performance management is a strategic and
integrated approach to delivering sustained success to organizations by improving the
performance of the people who work in them and by developing the capabilities of teams and
individual contributors.”
Performance management can be distinct as an ongoing process of improving individual,
team and organizational performance (Bussim 2012). It has to be the core of all
establishments since it gives strategic direction and how resources are going to be allocated
towards the achievement of determined goals and objectives. The main target of performance
management is to improve product/service delivery through effective and efficient
solicitation of resources.

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2.1. Literature Review to Assignment

Overview to the theoretical concepts that we are addressing throughout the report

Mission

A mission statement expresses the reason for specific organization existence. The
mission statement should guide the activities of the organization, spell out its overall
goal, provide a path, and guide decision-making. It provides "the framework or context
within which the company's strategies are formulated. Effective mission statements
regularly clarify the organization's purpose.
The mission statement must answer three questions:

 What is the basic service the organization is providing?


 What is the market being served?


 Which functions are to be performed?



PERFORMANCE MANAGEMNT SYSTEM
Performance Management System has a closed cycle such as performance measurement,
performance evaluation, diagnostic process, and follow-up of the diagnostic process.
Innovation management is the implementation of an application, process, and a new
management structure that represents an important beginning for the company to transform
into a better direction (Mol & Birkinshaw, 2006; Wibisono, 2006; Atkin & Brooks, 2009;
Suhardi, 2015). The process of innovation management is a process that is gradual and can
be deployed. Management of innovation processes in progress for several years in their
implementation.
The management system has performance measurement, performance evaluation, diagnosis
and follow-up of the process among stakeholders. Bacal (1998) reveal five basic views in
the performance management system:

1. Integrative model for organizational performance. The structure of performance

management as an integrative system of continuous mutual inter-aspects.

2. Focus on the process and results. Performance management into a system that not only
results-oriented. The process of becoming one of the aspects important support in the
determination of good results.

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3. The involvement of related parties in achieving the goals. Employed as the main subjects
that perform business process organization directly, the involvement of to support the
achievement of organizational goals.
4. Assessment of objective performance and hit the target. Performance management
includes objective performance assessment and compliance with the objectives of each part
of the organization concerned.

5. Evaluation and learning between superiors and subordinates. Good performance

management is able to provide a measurable performance evaluation results. The evaluation
results can provide information between supervisors and subordinates.

Stages of Performance Management Systems:

1. Performance evaluation is an assessment of performance compared with the plan or
standards that have been agreed. At each performance measurement standards should be
established as a means of achieving the review of an appeal which can be done internally
and externally.

2. Diagnostic performance is a process to obtain the causes of the deviation of performance

and find ways to achieve targeted performance. What is needed in the diagnostic of the
cause of inaccuracy is getting the production, not just looking for possibilities.
3. Follow-up. There are two aspects of the remedial measures, technical and strategic
aspects. Focuses in the technical aspects are usually aimed at the short-term and focus on
the strategic aspects of decision-making at the level of higher management and for the long
term.
4. Maintain and keep technology advances. The performance management system is
designed to be a dynamic and technology advances guarded against new developments, both
related to changes in the environment of competition, government regulation, the demands
of society, the development of customer needs, the latest technological developments.

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BASIC PRINCIPLES OF EFFECTIVE PMS
Quality and effectiveness of PMS is a reality in organizations only when certain basic and
fundamental tenets/ principles or practices of management are followed. These include:
1. Transparency – Decisions relating to performance improvement and measurement such
as planning, work allocation, guidance and counseling and monitoring, performance review
etc., should be effectively communicated to the manages and other members in the
organization.
2. development and empowerment – Effective participation of s (individuals and teams)
in the decision – making process and treating them as partners in the enterprise.
Recognizing s of their merit, talent and capabilities, rewarding and giving more authority
and responsibility etc., come under the umbrella this principle.
3. Values – a fair treatment and ensuring due satisfaction to the stakeholders of the
organisation, empathy and trust and treating people as human beings rather than as mere s
form the basic foundation, apart from others.

4. Congenial work environment – the management need to create a conducive and

congenial work culture and climate that would help people to share their experience
knowledge and information to fulfill the employees aspirations and achieve organisational
goals. The employees/

s should be well informed about the organisational mission, objectives, values and the
framework for managing and developing individuals and teams for better performance.
5. External environment – effective and contextual management of external environment to
overcome the obstacles and impediments in the way of effective managerial performance.

FEATURES OR CHARACTERISTICS OF EFFECTIVE PMS

PMS is a complex concept that encompasses different dimensions of the organization and
the people. The mission, the objectives and the goals of the organization should be well
designed. Performance planning, development and reward systems enable the employees to
realize their true potential in order to contribute for organizational growth and development.
The employees ‘performance and quality is a function of several prerequisites that managers
need to take care of. The following constitute the prerequisites /characteristics to ensure
effective practice of PMS:

1. Clarity of organizational goals – the managers need to clearly and precisely lay down the
organizational goals, objectives and ensure that these are well informed to the employees

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and other s and make them to realize what the organization expects from them. The
organizational goals need to be translated into individual, team and departmental/ divisional
goals.
2. Evaluation – the individual, team, department/ divisional performance needs to be
evaluated on continuous basis. The organization should develop an evaluation system and
process, which is designed and developed on scientific lines.

3. Cooperation but not control – the managers should nurture the practice of getting work
done through the system of obtaining employees ‘consensus rather than through control or
coercion.
4. Self-management teams – the management need to encourage the individual and teams
for self-management of their performance. This procedure creates in the employees a sense
of responsibility and develops a spirit to work with commitment and evaluate his/her
strengths and weaknesses from time to time and plan for reducing the performance gaps.
5. Leadership development – the managers need to identify such of the employees who have
leadership potential and apart from sincerity and honesty to ensure better and effective two-
way communication between the managers and the employees.

6. System of feedback – the organization must have a foolproof feedback system of

employees/ individuals/ teams/ departments ‘performance. It should be monitored
continuously and generate feedback loops for better performance management.
There must be a system that would help to monitor and measure all performance against the
set standards and the employees need to be informed of their shortcomings. The evaluation
system should be made transparent so as to repose employee‘s faith in the system.

THE PROCESS OF PMS

The process of Performance Management is comprised of three important parts
 Planning Employee Performance and Development;

 Monitoring Employee Performance and Development and

 Annual Stock Taking.

These occur in a specified sequence. Planning is made at the beginning of the year while
monitoring and mentoring is continued throughout the year as the plans are executed.
Stocktaking takes place at the end of the year. Each one of these phases requires certain
concrete actions by the managers and the employee. Both these parties (manager and
employee) provide appropriate inputs by keeping the whole process in perspective. The

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whole process of the performance management can be approached in a different mode.
Planning, review and stock taking can happen through out the year, more specifically at the
time of periodic review during the monitoring and mentoring phase. As such, these three
phases are dynamic and a continuously interact with one-another. The plans are periodically
reviewed and feasibility is tested the context of changing events and influences that could
not be adequately forcing. Since the process involves in both the managers and the
employees it has a participatory character. The following flow chart exhibits performance
management process in an organization.

Fig. The Performance Management Process

The chart exhibits that individual roles and their description, indices for monitoring
performance. Performance standards naturally cascade from organizational mission, goals,
strategy and operational plans. Since performance management aims to improve quality of
coordination among people in the organization, role-wise performance plans and
expectations must flow from both. Organization‘s mission, strategy and operational plan,
and individual employee‘s role and his/her contribution to organizational process are
cardinal inputs to performance plans. The performance plans of all the employee‘s in the
organization must finally add up to the organizational goals to be achieved during the year.
Employee‘s performance and development plans are subjected to monitoring and
mentoring. Without cogent plans, for task accomplishment, it is not possible to decide a
benchmark to achievement against set goals. Mentoring and development draws it direction
from both development plan and requirements. Mentoring can also include briefing the
employee before each training and development activity – both on the job and off the job.
Briefing focuses on the employee learning agenda. Debriefing the employee crystallize
his/her learning achieved during the training.

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Stock taking both periodical and annual attempts to continuously assess the extent of work
as well as learning opportunity that have been optimally avail by the employee. Inputs to
stocktaking are provided by performance plans and monitoring and mentoring records.
Stock taking also provides several inputs to future performance plan. Review in task
assignments, task systems and tools are also possible through stocktaking. An assessment of
employee‘s development needs of future tasks and responsibilities is done more realistically
to stocktaking.
There are certain special features that will make PMS more effective and qualitative in
achievement of organizational goals. These include –
1. Continuous process: Performance management should be a continuous process and
should be carried out throughout the year, in its totality i.e., planning employee performance
and development, monitoring employee performance and mentoring employee development
and annual stock taking. These three phases should be implemented sequentially.
2. Flexible: The Performance management process should be flexible and should ensure the
manager and employee acting together. However, each one of these parties should have
sufficient maneuverability to design their own process within the overall framework for
performance management.
3. Futuristic: Performance management should be futuristic. All the three parts of
performance management are oriented towards the future planning and improvement.
Evaluation system gives necessary inputs for future actions.

4. Participatory: PMS is participatory in character. It provides for regular and frequent

dialogue between the manager and the employee to address performance as well as
development needs.
5. Controlling: PMS aims at measuring employee‘s actual performance against planned
performance i.e., targets, standards or indicators.
6. Behavioural in Content: PMS is completely development nature and concerns itself
vigorously with employee‘s psychological behavioural aspects and personality traits, which
are critical inputs to the performance process. PMS specify these personal attributes and
behaviour of each employee and meticulously assess the extent of their contribution to
employee level of performance. This paves the way to identify employee‘s future
development needs; and
7. Win-Win Philosophy: PMS provides the frame work in which manager must support
their employees to succeed and to win.

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Performance Management System Model
Each model has its importance as a system for managing organizational performance,
managing employee performance, and for integrating the management of organizational and
employee performance. Performance management involves multiple levels of analysis, and is
clearly linked to the topics studied in strategic HRM as well as performance appraisal.
Different terms refer to performance management initiatives in organizations, for example,
performance-based budgeting, pay-for-performance, planning, programming and budgeting,
and management by objectives (Heinrich, 2002). A performance management system,
according to Rudman (2003), is increasingly seen as a means of integrating HRM activities
with the business objectives of the organization, where management and HR activities are
working together to influence individual and collective behavior to support the organization's
strategy. Besides, he also stressed that the performance management system must fit with the
organization's culture. Performance management system is a kind of completed and
integrated cycle for performance management. The emphasis of performance management
systems is on continuously improving organizational performance, and this is achieved
through improved individual employee performance (Macky & Johnson, 2000). Similarly
from the suggestion of Lawler (2003), the objectives often include motivating performance,
helping individuals develop their skills, building a performance culture, determining who
should be promoted, eliminating individuals who are poor performers, and helping implement
business strategies. The main purpose of the performance management system is to ensure
that:
1.The work performed by employees accomplishes the work of the company;
2. Employees have a clear understanding of the quality and quantity of work expected from
them;
3. Employees receive ongoing information about how effectively they are performing relative
to expectations;
4. Awards and salary increases based on employee performance are distributed accordingly;
5. Opportunities for employee development are identified; and
6. Employee performance that does not meet expectations is addressed
Developing a performance management system is essential for an organization. Developing a
performance management system, according to Schneier, Beatty and Baird (1987), is
classified into a development, planning, managing, reviewing and rewarding phase. In 2000,
Macky and Johnson suggested that a typical performance management system would include:

18
the organization communicates its mission/strategies to its employees; the setting of
individual performance targets to meet the employees' individual team and ultimately the
organization's mission/strategies; the regular appraisal of these individuals against the agreed
set targets; use of the results for identification of development and/or for administrative
decisions; and the continual review of the performance management system to ensure it
continues to contribute to the organizational performance, ideally through consultation with
employees. Fletcher (1996) suggested that the main building blocks of a performance
management system approach include: development of the organization's mission and
objectives; enhancing communication within the organization so that employees are not only
aware of the objectives and the business plan, but can contribute to their formulation;
clarifying individual responsibilities and accountabilities; defining and measuring individual
performance; implementing appropriate reward strategies, and developing staff to improve
performance, and their career progression further in the future.
4.2 The stages of Performance Management System
According to Schneier, Beatty and Baird (1987), a performance management system is
classified into a development, planning, managing, reviewing and rewarding phase. Figure
2.1 below shows the contents of three phases according Schneier, Beatty and Baird (1987).

Source: Drawn according to interpretation-Original source: Schneier, Beatty and Baird,

(1987:98)

From above figure and according to Schneier, Beatty and Baird (1987), the performance
management system consists of three phases: developing and planning performance is the

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Phase 1 which includes outlining development plans, setting objectives and getting
commitment activities; managing and reviewing performance is the Phase 2 which includes
assessing against objectives, seeking feedback, coaching and document reviews activities;
rewarding performance is the last phase which has personal development, results of
performance and link to pay activities. In the last chapter, I introduced the performance
management system definition from Fletcher. He mentioned that a performance management
system approach should include developing organization’s mission and objectives, enhancing
communication within organization, clarifying individual responsibilities and
accountabilities, then defining and measuring individual performance and rewarding
performance, and finally improving staff performance and developing career progression in
the future. There is an apparent difference of definition between Schineier and Fletcher, it is
the communication. Fletcher pointed that enhancing communication within the organization
so that employees are aware of the objectives and the business plan, and employees can
continue communication in the production process for exchanging information, discussing
problems and seeking feedbacks. Thus, I would combine the definition of performance
management system from Macky, Johnson, Fletcher and Schneier. Clear and detailed
employee performance objectives play a crucial role in helping companies to perform in
accordance with their business plan and achieve their strategic goals. Then, the managing
performance activities like seeking feedback and coaching, also evaluation and rewarding are
included in the theories of both authors. In addition to this, according to Fletcher (1996), I
would analysis the continuous communication activity in the managing performance phase as
well. The reason why I concluded communication activity in the performance system is that
communication between managers and employees and communication within employees
could make employees understand the objectives and make managers supervise the progress
of daily work. Next, the details and contents in each phase would be introduced and discussed
adequately.

Phase1: Developing and planning performance Planning is the first stage in the performance
management system process cycle and offers the foundation for an effective process.
Planning is a continuous process in performance management and should be executed with
great care (Schneier et al., 1987). Planning helps to encourage commitment and
understanding by linking the employees' work with the organization's goals and objectives
(Schneier et al., 1987). It usually includes identifying key value drivers of stakeholders, for
example, shareholders, customers and employees of the organization. Similarly, according to
Armstrong and Baron (2004), objectives or goals describe something to be accomplished by

20
individuals, departments and organizations over a period of time. They can be expressed as
targets to be met, for instance, sales, and tasks to be completed before the deadline.
Armstrong and Baron (2004) further state that objectives need to be defined and agreed on.
The objectives relate to the overall purpose of the job and define performance areas--all the
aspects of the job that contribute to achieving its overall purpose. Targets then are set for
each performance area. Rogers and Hunter (1991) stated that goal setting is the fundamental
aspect for an organization. They further indicated that productivity gains will correlate with
the extent of top management support for and employees' participation in the process of
setting objectives. It is a motivational process which also gives the individual the feeling of
being involved and creates a sense of ownership for employees. At the same time, part of the
planning phase includes the agreement on a formal development plan for the employees.
Actually this plan should be based on requisite skills, behaviors and knowledge and key
competencies that will be required to achieve the objectives and targets set. The development
plan can also include long-term development initiatives which are usually based on potential
and good performance (Nyembezi, 2009).
In this planning phase, the supervisors and subordinates are involved in a joint participative
process and set organizational goals, as well as specific goals for an individual. Objectives,
on the other hand, also create the environment in which an individual will be measured
according to his or her own performance and output, with set standards for evaluation
(Nyembezi, 2009).
Phase 2: Managing and Reviewing performance Managing performance is the second
element of the performance management system cycle. This step distinguishes performance
management as a process from performance appraisal as an activity (Schneier et al., 1987).
According to Schneier et al. (1987), every employee is responsible for managing his or her
own work performance. This involves:
(1) Maintaining a positive approach to work,
(2) Updating and revising initial objectives, performance standards and job competency areas
as conditions change,
(3) Requesting feedback from a supervisor,
(4) Providing feedback to supervisor,
(5) Suggesting career development experiences, and
(6) Employees and supervisors working together, managing the performance management
process.
According to the view of Fletcher, in the second stage,
enhancing communication within an organization is important for employees to be aware of

21
objectives and contribute to the future development.
Amrstrong and Baron (2004) pointed that at its best,
performance management is a tool to ensure that managers manage effectively. Therefore,
performance management system should ensure the manager of employees or teams know
and understand what is expected of them, and have the skills and ability to deliver on these
expectations and be supported by the organization to develop the capacity to meet these
expectation are given feedback on their performance; and have the opportunity to discuss and
contribute to individual and team aims and objectives. Moreover, according to Armstrong and
Baron (2004), performance management system is also about ensuring that managers
themselves are aware of the impact of their own behavior on the people they manage, and are
encouraged to identify and exhibit positive behaviors. The actual performance is compared to
the desired performance, so the outcome is evaluated and a development plan is set according
to the weakness with reference the strategy. This outcome also provides a feedback
mechanism to employees. In order to improve the feedback and update and discuss initial
objectives, the organization should also focus on communication within employees and
between employees and managers. It is important for managers to develop a fully integrated
strategy which enables the different forms of communication to contribute to the success of
the firm's mission or common goal (Marion, 1998). Moreover, continuous communication or
exchanging information between an organization's strategic managers and its internal
stakeholders should be designed to promote commitment to the organization and aware of its
changing environment and understanding of its evolving aims (Welch&Jackson, 2007).

In the second phase, it includes the performance

reviews which can be regarded as learning events. Individuals could be encouraged to think
about how and in which ways they want to develop. Research by Ashford and Cummings
(1983) demonstrates that feedback has strong positive effects on the performance of both
individuals and groups, specifically through role clarification, improved self-efficacy, the
establishment of behavior reward contingencies and increased self-regulatory control
processes (Ashford & Cummings, 1983). Similarly, according to Armstrong and Baron
(2004), the actual performance could also be compared to the desired performance, therefore
the outcome is evaluated and a development plan is set based on the weakness. This
comparative approach also provides a feedback mechanism to employees. Figure 2.2 shows
the structure of performance comparing according to the view of Ashford and Cummings
(1983).

22
 Additionally, in this phase, coaching and training is an important
tool in learning and development. Coaching is developing a person's skills and knowledge so
that employees' job performance improves, and helps them to achieve of organizational
objectives. Managers should identify and implement training and other actions necessary to
improve individual performance (Bevan and Thompson, 1991). According to Armstrong
(2004), performance management is a strategic and integrated approach to delivering
sustained success to organizations by improving the performance of the people who work in
them and by developing the capabilities of teams and individual contributors. Similarly,
Black, SE & Lynch, LM (1996) suggest that the training courses that are offered by
organizations must be designed through considering the present and future needs of the
employees and facilitate the learning of these skills. A good training or coaching course
should improve the quantity and quality of organizations output; increase the chance of
organizational success; decrease the organizational costs and expenses. Moreover, coaching
is increasingly being recognized as a significant responsibility of managers, and can play an
important role in an employee's working life. In 2006, Cunneen stressed that coaching comes
naturally, and could take place during the review meetings or should be carried out
throughout the year. Also, in this phase, training may be needed to improve their skills.
Phase 3: Rewarding Performance
According to Schneier, Beatty and Baird (1987), the rewarding performance phase includes
three activities: personnel development, linking to pay and identifying the results or
performance. In Rahdert's (1960) view, the function of personnel development is that the
growth of people can be accelerated over and above that which would take place naturally
and normally, and then maximum the employees' contribution to personal and group goals.
Personnel development has some development principles. First one is personal involvement.
All personnel development is basically self-development. Opportunity for development is
valuable only if the individual capitalizes on it himself. In fact, the organization can and
should offer encouragement and help, but development activities seem to be successful only
to the degree that individuals become personally involved in them. Second one mutual
objective. The premise of any development activity in organization, there should be a clear
understanding and acceptance of mutual objectives by both the individual and organization. If
the objectives are understood and accepted, the efforts expended will be far more likely to
succeed. The company should offer universal opportunity to every employee instead of single
out a few of its people and make opportunities available only to them. In fact, it is difficult to
make long-term predictions concerning the ambition, drive, and growth potential of
individuals. The forth principle is individual planning. Development is individual and should

23
be tailored to fit the individual and the situation; attempts to squeeze everyone into the same
model may even prove a waste of effort. Moreover, development should be designed to
improve performance on the current job firstly, and then prepare the employee for promotion.
Employees who get promoted are those who are currently doing outstanding work and thus
have been able to demonstrate their capacity to assume greater responsibilities. Next principle
is continuity. If a man who abandoned his efforts to keep updating skills or information, he
will become antiquated. Especially for nowadays, the new knowledge and skills are
constantly being introduced. Rahdert (1960) also points out that the benefit of personnel
development. For employees, if the individual skills or knowledge increase, he may create
more value and as a result he may receive a sense of satisfaction in the achievement of
personal goals and attainment of professional recognition. On the other hand, for
organization, personnel development is able to achieve competitive advantages because of a
better qualified and a more highly motivated team, and is able to utilize advanced technology
because of the effectively trained employees. Furthermore, training activities should ideally
be based on performance gaps that are identified during the performance review phase (Teke,
2002). By linking training to identified performance gaps, training will be focused, specific
and relevant. Teke (2002) also points out that relevant training and development interventions
and regular performance feedback are important factors in skills retention. Therefore, the
training, development strategy and the performance management system process should be
aligned tightly with the overall retention strategy of the organization. Development
programmes are reflecting the needs of succession plans and seeking to foster leadership
skills. In addition, there is a growing interest in pay-for-performance plans focused on small
groups or teams. Small group pay plans provide monetary rewards based on the measured
performance of the group or team.
Evaluation and checking feedback are both important activities in this period. In most
organizations, they will not have only one corporate scorecard for the company as a whole,
but will also have separate scorecards for each division/employee that feeds into the overall
scorecard (Huang & Hu, 2007). See Figure2.3, the first process is translating the vision which
helps managers build a consensus around the organization’s vision and strategy. For
employee to act on the words in vision and strategy statements, those statements must be
expressed as an integrated set of objectives and measures, agreed upon by all senior
executives, that describe the long-term drivers of success. From financial perspective,
organization should form some kind of profit measure for organization and employee
performance. Financial performance measures might include shareholder value such as
economic value added, profitability and growth such as sales volume growth and cost

24
reduction, and liquidity and solvency such as inventory turnover and ratio of debt to assets.
Then, organizations and employees also need to fulfill customers' commands and needs. The
customer perspective measures include client satisfaction, client profitability or time, price
and quality (Kaplan&Norton, 1996). The measures needed in the internal business processes
perspective can be summarized in the company's value chain. For instance, the organization
could create new products and services to penetrate new markets and customer segments, also
to achieve operational excellence through improving internal process and asset utilization
(Kaplan&Norton, 2000). The last perspective is learning and growth, managers will define
the employee capabilities and skills, technology, and corporate climate needed to support a
strategy. According to Kaplan and Norton (1996), organization should pay attention to assess
the effectiveness of their research and development process. Then, employee retention,
workforce productivity, the number of suggestions made by employees and the number of
suggestions implemented could be treated as the performance measures.
In this phase, pay-for-performance could be
used together as a tool to assess the performance. Moreover, in the organization, employees
are most likely to perceive that pay differences are made fairly when they are provided with
information regarding the appraisal process and employees are allowed to discuss the
appraisal results. According to the view of Locke (2004), the pay-for-performance principle
involves providing monetary rewards through carefully designed compensation system that
base pay on measured performance within the control participants. According to Delery and
Doty (1996:802), employee performance appraisal is defined as 'the process of identifying,
evaluating and developing the work performance of the employee in the organization, so that
organizational goals and objectives are effectively achieved while, at the same time,
benefiting employees in terms of recognition, receiving feedback, and offering career
guidance'. Appraisals can be based on results or behavior. Behavior-based appraisals focus on
the behaviors of individuals necessary to perform the job effectively, whereas results-oriented
appraisals focus merely on the consequences of those behaviors (Delery&Doty, 1996).
Therefore, procedural justice concerns are central to ensuring that employees perceive the
process of performance appraisals, and the linkage of appraisal to pay, to be fair (Greenberg,
1996). In most situations, properly designed pay-for-performance systems will lead to better
performance results. Pay-for-performance systems make major contributions to performance
through two main mechanisms. First, they positively influence the motivation to perform.
Second, they impact the attraction and retention patterns of organizations, thereby affecting
the ability of individuals available to perform. Pay-for-performance systems can deliver
monetary rewards at the individual, small group, and/or divisional or organizational level. All

25
of this impact of different levels can positively impact performance.

Managing and Reviewing performance

In this second stage, there are lots of activities that include observing and document
efforts and accomplishments; provide feedback, coach and counsel employee
regarding performance. In this stage, enhancing communication within the
organization, so that employees are not only aware of the objectives and the business
plan but can contribute to their formulation. Besides, employee communication
could be discussed in the narrowly defined context of mediated communication, for
instance, the impact of internal newsletters or specialized internal communication
tactics. However, Cameron and McCollum (1993) found that employees tended to
prefer direct interpersonal communication to mediated communication when they
need more information on ongoing issues of their corporations. According to
Robertson (2005), an effective communication climate is based on such topics: job,
personal, operational and strategic issue. Moreover, Hargie &Tourish (2009)
concluded top six topics were cited for 'information needed'--how problems that I
report in my job are dealt with; how my job contributes to the organization; how
decisions that affect my job are reached; things that go wrong in my organization;
staff development opportunities, my performance in my job. According to Ainspan
and Dell (2000), favorable employee communication has been shown to increase job
satisfaction and employee performance and finally result in organizational success
(Baskin, Aronoff, & Lattimore, 1996). On the other way, providing the quantitative
and qualitative standards for judging individual and organizational performance are
important elements in managing performance. As a result, individual employees
would be aware of the standards which will encourage them and be the main
objectives of them. Performance reviews can be regarded as learning events, in
which individuals can be encouraged to think about how and in which ways they
want to develop (Teke, 2002). Performance feedback has significant potential to
benefit employees in terms of individual and team performance. Taylor, Fisher and
Ilgen (1984) suggest that feedback is essential for organizational effectiveness and
that a lack of feedback can lead to anxiety, inaccurate self-evaluations, and a
diversion of effort toward feedback gathering activities. Moreover, effective
performance feedback has the potential to enhance employee engagement,
motivation, and job satisfaction (Aguinis, Gottfredson, Joo, 2011). Performance
feedback is a critical component of all performance management systems. It can be

26
 defined as information about an employee's past behaviors with respect to
established standards of employee behaviors and results. Effective performance
feedback is timely, specific, behavioral in nature, and presented by a credible source.
The goals of performance feedback are to improve individual and team performance,
as well as employee engagement, motivation, and job satisfaction (Aguinis, 2009).
Performance feedback is effective in changing employee work behavior and
enhances employee job satisfaction and performance (Islam&Rasad, 2006). On the
other hand, it is necessary to analysis and understands the feedback which is always
ignored its complexities. Feedback may improve performance under some
conditions. However, in other conditions, feedback may not impact performance or
even prove detrimental to performance (Kluger & DeNisi, 1996; Locke & Latham,
1990). According to this perspective, it further indicates that a number of factors,
including characteristics of the feedback source and message, and timing issues such
as the amount and frequency of feedback employees received attitudinal outcomes of
feedback.
Coaching is an important tool in learning and
development. Coaching is developing a person's skills and knowledge so that his or her job
performance improves, leading to the achievement of organizational objectives (Cunneen,
2006). Similarly, Apperbaum and Armstrong (2003) pointed that the knowledge bases of
coaching provide the company's employees with a new professional outlook that in the long
term leads to a higher level of productivity. An individual's attitude towards an issue is
factually the vision that he or she form around that entity. Positive attitude affects the
productivity of the organization, affects the productivity of the organization, while skills
refers to the employee's ability in undertaking the practical tasks. The employees feel more
efficient and confident in performing their duties when they learn what material would be
needed, how the material must be collected and interpreted.

27
 CHAPTER III

PROFILE OF THE INDUSTRY

3.1.1 Industry Profile

A consultancy firm or consulting is a business of one or more experts (consultants) that
provides experts advice to an individual or an organization, Management consulting is
one of business earliest instances of subcontracting. Consultancy firms target company
executives and provide them with consultants, also known as industry – specific
specialists and subject matter experts (SME), usually trained in management or business
schools. The deliverable of a consultant is usually assistance or a receipe to follow to
achieve a company objective, leading to a company project. More and more consulting
firms are accompanying the strategic deliverable by providing the means to implement
the recommendations, either with the consultants themselves or by providing techincans
and/or experts. This has opened up new markets for these companies. This is called
outsourcing.
The management consulting industry has received little academic attention due to
variety of reasons. First, it is highly fragmented with a variety of consulting firms,
ranging from the “Big Three” global startegy-consultancy firms to a large number of
individual/independent consultants. Second, the industry has not been regulated, inlike
other professional service firms such as accounting and law, and little attention has been
paid to even the establsihment of proofesional bodies such as consultants’ associations.
Third. Apart from the differences in size and scale, there exists a wide variety in the
positining and the differentiation of the various consulting firms.
There are firms that focus on a variety of issues in the same market such as the strategy-
consulting firms, as there are firms that focus on a specific domain, such as information
technology (IT). Finally, the lack of extensive studies on the consulting industry can be
attributed to the nature of services they oiffer services that are hard to study, measure,
and quantify.

Fincham, Mohe, and seidl (2013) identify three key characteristics of mangementy
consulting: (1) cosnultants provide support in diagnising and/or dealing with management
problems: (2) such consultants are external to the problem that is being addressed, with no
implementation responsabilities; and (3) such support is provided on a temporary basis.
Based on these characteristics, they define management consulting as including “any activity

28
 that has/as its apparent justification the provision of some kind of management domain and
which are contracted by the management on a temporary basis” (Fincham et al., 2013:6).

3.1.2 Human Resource Consultancy:

HR consultants help clients with human capital questions within their orgainzations and/or
with improving the performance of the HR department. Chief topics central to the job
description of HR consultants are, among others, organizational changes, change
management, terms of employement, learning & development, talent managemnt and
retirement. HR consultants are also brought in by organizations to help transform the business
culture within their organization, or transform their HR department, which includes changes
in the areas of , organizational design, processes and systems among others. HR consulting
forms, together with startegy consulting, the two smalllest segments of trhe consultancy
industry, and the number of consultants active in this domain is, therefore, lower than those in
other parts of the industry.

HR consulting is an extended branch of the main stram management consulting profession.

Since management consulting came to be appreciated as a profession, in early 1900’s, there
has been a focus on human aspects of business. Be it the workers as a means to get
throughput in the early 1900 or the importance laid on the working conditions of these
workers to retrieve the same throughput. Human Resource consulting has grown from the
acknowlegement of the facts mentioned above. By 3007, Human Resource consulting had
already developed to an $18.4 billion industry. When the global consulting industry is
estimated to be about $345 billion in 3010 according to the Plunkett research, the HR
consulting market will rise to be a $31.4 billion industry. It is estimated to grow at a
compunded growth rate of 3.9% in 3011.

In modern industrial times, the cocept of consulting in HR domain was rare primarily because
of the limited number and scope of functions the HR department performed in the organized
sector. The human resorce role was typically identified with the conventional department
approach that did all those jobs that were not able to fit anywhere else in a firm. Taking in the
external factors, extensions to the basic concepts of Human Resouce functions like
organizational development resulted in consulting domains like change management. In the
HR consulting domain a lot of reseach work took place, number of professionals increased &
so did the universities with research units dedicated to its study.

29
 HR consultancies vary in their ranges of services and size across the globe

• Large sized firms

• Small Botiques
• Freelancers
• Internal Consultants
3.1.3 Benefits of HR consulting:

Few of the benefits of HR consulting are as follows:

• Benefit from expertise and experience of certified HR professionals.

• Obtain professional advice and guideline of tough HR issues.
• Receive HR advice, tips, tools and best practices that work.
• Meet specific goals in a timely manner.
• Only pay for the time or services use.
• Receive the most flexible solution to fit your needs and budget.
• Stay focused on your core business.

3.2. PROFILE OF THE COMPANY

3.2.0. HUMCAP ADVISORY:

HumCap Advisory consulting was conceptualizd with keeping its core objective, to be able to
source ‘people’ for various organizations and verticals and to add “Value “ to them. Thus,
quality of the services and integrity of the purpose is our primary objective. It is a one stop
shop for all the HR requirements for clients globally. HumCap Advisory knowledge and
expertise in placements has helped us build long and sustainable relationships with both
stakeholders and job seeking professionals. HumCap Advisory provides fast, quality and
cost-effective, end-to-end manpower solutions for it’s clients. It has grown into a highly
sucessful executive and professional search firm.

HumCap Advisory lays emphasis on raising productivity through improved quality,

efficiency and cost-reduction across their total workforce, enabling clients to concentrate on
their core business activities. They generate value and impact business for our clients.

HumCap Advisory takes pride in it’s delivery of niche mandates through head hunting and
market intelligence. They have a passion to nurture diversity hiring and drive special need
hiring! HumCap Advisory is commited to work with people with special needs. They have
successfully helped many multinational and multicultural organizations in sourcing talent

30
 across levels, functions and geographics within strict timelines. They ensure that only the best
are handpicked as per organizational, functional and cultural fit to ensure better hire quality,
retention and productivity of the hired resource.

HumCap Advisory is a young, dynamic organization with a culture built upon a commitment
to clients as well as their candidates and themselves. The company started out of a desire to
excel in a samll, clearly defined field rather than being just good in a broder arena. They offer
specialized recruitment services to organizations throughout India. Their goal is to add value
to clients by sourcing quality candidates in a time and in a cost efficient manner, offering a
service that is deliverd by plain spekaing, experienced and knowledgeable consultants with a
commitment to quality and communication. HumCap Advisory cater to RPO, BPO, KPO,
Heakthcare, Telecom and FMCG, IT & Manufacturing industry in the area of Talent
Acquisition. They have successfully helped many multinational and multicultural
organizations in sourcing talent across levels, functions and geographics within strict
timelines. They ensure that only the best talent are handpicked as per organizational,
functional and cultural fit to ensure better hire quality, retention and productivity of the hired
resource.

3.2.1. HumCap Advisory Culture

HumCap Advisory is known for their straight-forward approach to solving our clients’ most
complex business challenges. HumCap Advisory will work hand-in-hand with clients to
improve business performance, drive shareholder value, and create a competitive advantage.
HumCap Advisory is a young, dynamic organization with a culture built upon a commitment
to clients as well as our candidates and ourselves. The organization was started out of a desire
to excel in a samll, clearly defined field rather than being just good in a braoder arena.

They offer specialized recruitment serbices to organizations throughout India. Their goal is to
add value to their clients by sourcing quality candidates in atime and in a cost efficient
manner, offering a service that is deliverable by plain spekaing, experienced and
knowledgeable consultants with a commitment to quality and communication. HumCap
Advisory would fully understand, comprehend and execute with utmost clarity your
otganizations’ requirements while uphoading your organizations’ values and intrests at all
times.

31
 All of this has enabled us to build enduring relationships with a small but highly respected
client base. Excellent professional and personal relationships between supplier and customer
are critical success factors in the resourcing process. This allows sharing of proproetary
information; complete understanding of each other’s businesses and processes, open and
frank discusiions and finally, qualitative and quantative success. When the supplier becomes
an extension of your HR fiunction, then you have something woth growing and preserving.

HumCap Advisory is the leading consultants, catering to RPO,BPO, KPO, Heakthcare,

Telecom and FMCG, IT & Manufacturing industry in the area of Talent Acquisition. They
have successfully helped many multinational and multicultural organizations in sourcing
talent across levels, functions and geographics within strict timelines. They ensure that only
the best talent are handpicked as per organizational, functional and cultural fit to ensure better
hire quality, retention and productivity of the hired resource.

3.2.2. HumCap Advisory Culture Philosophy and Style

It is the qulaity of employees of People Value-their style, philosophy and character that most
distinguishes their firm. First and foremost, they see the world through their client’s eyes,
from their point of view. They are people who are operating under immense pressure to
complete big and complex projects that will have a huge impact on their organizations.
They’re the ones with the big problem.They are the people who hire us. This prospective
inspires us in everything we do.

At HumCap Advisory, they understand that you need the highest standards of service from
your recruitment providers. They work collaboratively offering an array of consulting
services with the best people and the best in the industry. It is their approach and delivery of
services that truly distinguish HumCap Advisory. Their philosophy of a two- way
communication extends to candidates as well as clients. After all, you may be a candidate
today but you might be a potiential client tomorrow!

They will always discuss potential opportunities as fully as possible with you and gain your
consent before putting you forward. At all stages of your application they will provide you
with impartial, quality feedback. They recognize your right to select your business partners
with caution and they belive they can demonstrate some compelling reasons for us to work
with them.

32
1.They won’t waste your valuable time:

They understand and are experienced in hiring for your function and your market sector, they
will optmize your time. Throughout the process, from briefing to the offer stage you will
benefit from dealing with consultants who can talk to you in your own language.

They are able to discuss your requirements authoritatively so they can represent you in the
most professional manner. This, together with their reputation in the market place and their
network of contacts, means that candidates take their approach seriously and they are able to
stimualte intrest at an early stage.

Your chances of securing the best person for the role and therefore enhanced, with the added
advantage that your repuation as a quality employer will be carefully protected.

2.They will keep you informed at all times:

They have adopted a rigiorous approach to capturing information, which means that all bital
data about your organization will be recorded on our database. As a result they provide you
with the information throughout the assignment ensuring that you are kept fully informed
about our progress.

Organization Structure

Provides guidance to all employees by laying out the official reporting relationships that
govern the workflow of the company. A formal outline of a company's structure makes it
easier to add new positions in the company. Detailed outlined structure can also provide a
roadmap for internal promotions, allowing to create solid employee advancement tracks for
entry-level workers.

33
 CHAPTER IV

Data Analysis & Interpretations

 Section IV:
1. Is the appraisal system user friendly and acceptable to both superior and
employees?
(a) Yes
(b) No

S.No Response No.of Respondents % of Respondents

1 Yes 67 73%
2 No 9 27%

27%

73%

Yes Some Extent

34
2. How effective is your PMS in motivating your employees?

(a)Low
(b)Moderate
(c)High

S.No Response No.of Respondents % of Respondents

1 Low 30 23%
2 Moderate 45 62%
3 High 25 15%

15%

23%

62%

Yes Some Extent No

35
3. Do you give a constructive feedback to increase employee’s performance?
(a)Yes
(b)No

S.No Response No.of Respondents % of Respondents

1 Yes 47 88%
2 No 26 12%

12%

88%

Yes No

36
4. Do you include customer satisfaction element in performance evaluations?
(a) Yes
(b) No
(c)Can’t say

S.No Response No.of Respondents % of Respondents

1 Yes 36 23%
2 No 24 62%
3 Can’t say 16 15%

15%

23%

62%

Yes Some Extent No

37
5. Are the performance management system documented?
(a)Yes
(b)No
S.No Response No.of Respondents % of Respondents
1 Yes 67 73%
2 No 9 27%

27%

73%

Yes Some Extent

38
6. Does your employees feel the PMS is fairly calculated?
(a)Yes
(b)No
(c)Can’t say
S.No Response No.of Respondents % of Respondents
1 Yes 36 23%
2 No 24 62%
3 Can’t Say 16 15%

15%

23%

62%

Yes Some Extent No

39
11. Are you going to make any changes to your performance management
system in next 12 months?
(a) Yes
(b) No

S.No Response No.of Respondents % of Respondents

1 Yes 67 73%
2 No 9 27%

27%

73%

Yes Some Extent

40
CONCLUSION:

A healthy HR function in an organization is as important as the physical and mental

well-being of a human body. Typically, the basic reason why organizations prefer to
conduct an HR audit is to get a clear judgment about the overall status of the
organization and also to find out whether certain systems put in place are yielding any
results. HR audit also helps companies to figure out any gaps or lapses and the reason for
the same. Since every company plans certain systems and targets, an HR audit compares
the plans to actual implementation.

Moving to the final outcomes of our HR Audit done, we are able to conclude our findings as
follows with the recommendations. In bird eye view it is possible to grade the final findings
as, overall HR Functions are processing in a satisfactory level. But the ultimate objective of
this audit was to get a thorough understanding about the existing level of the process of HR
department and finding strategies to up lift the existing condition to reach a step ahead as a
department. Therefore, we are suggesting recommendations based on the final figures of the
HR audit.

41
 CHAPTER V

Suggestions & Recommendations

Suggestions:
The following conclusions are drawn based on the analysis made out of the data
collected and interaction with the employees:-
 The Performance Review System should be there to review the system made.
 There should be time to time checking of the performance appraisal system.
 There should be some measures to keep the employee happy.
 The company should work on the retention of its employee.
 The employee should be conscious and work with the diligence
 The Employee should be more dynamic in nature and

6.5 Limitations
 The time was limitation to us.
 The organization was earlier run by family kind of business now they are
shifting to corporate style of business because of these transitions it was
tough for us to perform our work.
 The organization is sales driven so huge workforce was into sales and having
time to talk was quite difficult.

42
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 ANNEXURE

Performance Management
It refers to system of monitoring and measuring the performance of the employees in the
organization. It includes performance planning, performance coaching and performance
appraisal. The dimensions to be audited are:-

A. Performance planning system and performance appraisal

i. Alignment of organizational goals with departmental goals.
ii. Alignment of departmental goals with individual and team goals or KRAs/KPAs.

iii. Breaking of KPA into objectives.

iv. Jointly set targets.

v. Clear weightage of each task/activity.

vi. Recording of time bound goals. vii. Clear communication of behavioral qualities to be
assessed.

viii. Analysis of time spent on various activities.

ix. Support for performance planning through training.

x. Providing review and mid- year evaluation. xi. Accessibility of performance management
manual for employees.

B. Promotion of culture of fairness, objectivity, performance orientation and

motivation

i. Performance review and analysis

a. Quarterly progress review discussions among appraiser and appraise.
b. Discussion contains performance areas co-related with organizational goals.
c. Clear understanding of own performance in light of business goals and environment.

d. Discussion of behavioral traits of the appraise (positive qualities & gaps).

e. Half yearly ratings.

ii. Identification of hindering and facilitating factors in performance

a. Identifying factors that helped individual in achievement of targets.
b. Provision of empathetic environment for discussion of problems, issues and conflicts

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C. Performance feedback, development and counseling
i. Performance feedback
a. System of giving feedback.
b. Seriousness of line managers.

c. Support to employees for acting on feedback.

ii. Employee development

a. Appraisal linkages to training and development and other systems.

iii. Performance counseling

a. Mentoring systems.

b. Counseling practices after appraisal.

D. Performance ratings
i. Clearly defined rating scale and systems.

ii. Training and counseling to appraiser to overcome rater’s bias.

iii. Assessment against pre-determined performance standards.

iv. Use of multi-source feedback mechanism to minimize bias (360º feedback, peer
evaluation).

E. Implementation and facilitation of the process

i. Facilitative role of HRM

a. Designing of simple and suitable system with inputs from functional managers.

b. Availability of manual with guidelines, processes and schedules.

c. Continuous follow-up.

d. Consistency across departments in implementation.

e. Training to managers for review and counseling.

f. Periodic re-assessment of effectiveness of system.

ii. Commitment and implementation by line manager’s

a. Taking process seriously and timely adherence.

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b. Role clarity and understanding of KPAs.
c. Adequate time for periodic review and counseling.

d. Non-threatening atmosphere by empathy toward problems faced by subordinates.

e. Identifying and minimizing rating bias.

f. Opportunity to appraise to voice out difference in opinions and resolve it.

METHODS AND TECHNIQUES OF AUDITING

i. INTERVIEWS:
a. HR manager:
For information regarding:
1. Process of role setting.

2. Involvement of employees in framing KPAs/KRAs.

3. Process of assigning weightages to KPAs.

4. System of performance planning for employees.

5. Confidence of subordinates in system.

6. Training to managers for evaluation.

7. Documentation of the process.

8. Method of analysis and review.

9. Method of feedback to employees.

10. Linkages with other systems.

11. Involvement of line managers.

12. Consistency in implementation.

13. Periodic review of effectiveness of system.

b. Line managers/functional heads:

To know

1. Help and involvement of HR managers in the process.

2. Clarity about targets.

3. Planning of activities for team.

4. Guidance to subordinates in performance planning.

5. Understanding of the system and process.

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 6. Usefulness of performance analysis and review.
7. Expectations from HR managers.

8. Strengths and weaknesses of the system.

9. Transparency and openness of the system.

ii. DOCUMENTS/SECONDARY DATA

1. Documents of KPAs/KRAs.
2. Documents of goals, objectives etc.

3. Documents of target setting.

4. Performance management manual.

5. Performance appraisal manual.

6. Blank performance management formats.

7. Filled in performance appraisal forms.

8. Data analysis and past year’s results.

9. Reports of performance review discussions.

10. Communication letters to employees.

iii. QUESTIONNAIRE
HR Audit questionnaire

Performance & Management System

1. Do you have a Performance Appraisal Policy?*
2. What are the techniques that are used in your organization for assessing
performance?
Please select (✔) all that apply, If Others (Please Specify in others option)
 Observation
 Assessment & Development
 Checklist
 Others please specify__________
3. Please indicate which of the following methods of performance appraisal
from a part of your system?*
Please select (✔) all that apply, If Others (Please Specify in others option)
 Rating scale
 Behavioral Assessment
 360 degree

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  Balance score card
 Self-appraisal
 180 degree
 Others specify____________

4. Are the following processes a part of your performance management system?

Please select (✔) all that apply, If Others (Please Specify in others option)
 Coaching.
 Training & Development.
 Succession planning
 Career management & development plans.

5. What are your KRA’s? *

6. Are the KRA’s prepared with aligning your JD?

7. How you ascertain the KRA’s?

8. How frequently are the KRA’s reviewed?*

9. How individual goals are made and how you have determined it (base,
procedure)?

10.Who sets the performance goals for individuals?*

Please select (✔) all that apply, If Others (Please Specify in others option)

 Senior manager
 Line manager
 Others specify________________

11. Rank on what basis your current PMS is done?

Please select (✔) all that apply, If Others (Please Specify in others option)
 Retention strategy
 Rewards
 Identification of T&D needs
 Promotions, Termination decisions & Transfers
 Motivational Strategy
 Clarify employee’s requirements
 Identifying barriers of performance

12. How is performance –linked pay related to performance management in your

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 org.
Please select (✔) all that apply, If Others (Please Specify in others option)
 Performance – Linked Incentives
 Promotions coupled with salary increase
 ESOP’S/Benefits
13. What is the relevancy of human judgement in a performance management
system?*
Please select (✔) all that apply, If Others (Please Specify in others option)
 Highly relevant
 Has no place in competency-based performance management

14. Do you give overall rating of performance?

15. If yes, what sort of feedback do you give?*

Please select (✔) all that apply, If Others (Please Specify in others option)
 Numerical/alphabetical
 Verbal (all positive)
 Verbal (Positive Negative)
 Combined of all the above

16. Documentation of performance reviews is the function of?*

Please select (✔) all that apply, If Others (Please Specify in others option)
 HR Department
 Line Manager
 Other ____________

17. Did the following people receive training in performance technique?

Please select (✔) all that apply, If Others (Please Specify in others option)
 All employees
 Other managers
 HOD’S
 HR team

18. What are the stages of performance management which you communicate
with your employees?
Please select (✔) all that apply, If Others (Please Specify in others option)
 Goal setting stage
 Data gathering stage
 Mid reviews

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  Annual

19. What you do when you identify poor performers post your review session?
Please select (✔) all that apply, If Others (Please Specify in others option)
 Training
 Improvement coaching
 Relocation
 Dismissal/Discharge

20. What strategies of your organization have been linked to the

performance management to make it more effective?
Please select (✔) all that apply, If Others (Please Specify in others option)
 Reward Strategy
 Culture Strategy
 Leadership Strategy
 Teamwork

21. Do you give a constructive feedback to increase

employee’s performance?
22. Do you include customer satisfaction element in
performance evaluations?
23. Are the performance management system
documented?
24. Do your employees feel that PMS is fairly calculated?
25. Do you have a feedback after PMS cycle?
26. How often do you review the PMS system?
27.Are you going to make any changes to your
performance management system in next 12 months?
28. Do you feel the training given has improved your
employee performance?
29. Is the appraisal system user friendly and acceptable to
both superior and employees?
30. What is your Performance Improvement Plan (PIP)?
31. How you identify under-performing employee?
32. What are steps taken to increase their performance
(Procedure)?
33. How often do you conduct PIP Progamme?

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34. To whom the PIP plan is discussed with?
35. After the PIP was conducted was there any review to
the employee?

Interpretation I:

1.The motive of asking this question was to know that the firm has performance appraisal
policy or not. The response we got was “Yes”. We asked about the document verification.
We went through the document and got to know that the performance appraisal was done
without any reference. The hike of salary wasn’t based on the performance rather than verbal
as well as terms with the immediate boss,

2.The point of keeping this question was to know whether the appraisal done was on what
basis. Our objective was to know the appraisal done was on what basis what points was kept
in mind while awarding an appraisal to an employee. Was the employee observed for the
work done by him, or any tool was used to assess the employee.

3.The question was added to know whether the appraisal done was standardised or it was
made just like that. The motive of asking these questions was that were the managers aware
of the methods for appraisal. Surprisingly, some methods mentioned in the question were not
in knowledge to them. So every process and its aspect was explained to them.

4.The question is continuation of last question. This question was added to know after the
method used for appraisal were these points inculcated in appraising them. The intention of
adding this question was to know what things the management did in appraising the
employee. Were they given any kind of proper information?

5.The motive of this question was to find who sets goal for them. The target set was done on
what basis was the previous performance of the employee was kept in consideration while
setting up the target. The target of the employee is ascertained by whom, what will be the
outcome of not achieving up the target.

6.The motive of this question was to know what was done after the deadline of the target.
What was done to the employees who achieve the given target, what was done to those
employee who were not able to achieve the targets.

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7.The employee who is given an appraisal what are given them as an appraisal. How are they
ascertained to what kind of appraisal is to be given to whom and in what way they received
and at what time of the year.

8.The motive of adding this question was that whether the firm was measuring just the
quantified way i.e. the target achieved is only measured or the efforts made by the employee
is also taken in consideration.

9.The reason behind adding this question was to know who all received the ratings and what
basis were they scaled and the did the employees receive the ratings were there a discussion
between the employee and the manager behind the scaling provided to them and where they
have to improve their performance.

10.The feedback received by the employee consisted from rating scale in numeric way from
1 to 5 or were they given ratings in alphabetical manner from A to E. Were they given in
verbal way stating away there positive or the negative parts were mentioned or the ratings
included the all parts mentioned.

11.The motive of asking this question was to know where the performance reviewed and
appraised documents are kept by whom. Who are authorised to keep these documents and
who all have the access to these documents for how long these data are maintained.

12.The motive of asking this question was to know apart from team who all trained and have
the knowledge to calculate and observe the performance appraisal system. Did any member
in the organization is trained enough to tell them how to improve their performance and stand
to the expectations of employers.

13.The motive of asking this question was to know at what point of the of time the
performance appraising team communicate with the employees and brief about the
performance appraising is being done.

14.The motive of asking this question was to know what steps were taken by management
post the review. What management decides post the appraising is done were they given
training, coaching or discharging the employees.

15.The objective of asking this question was to with what motive the Performance Appraisal
is being prepared. With inclusion of which strategy does the performance improve of an
employee. Is it possible to make a common performance appraisal for an organisation.

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16.The objective of these questions was to know whether the employee receive there
feedback from the authority. Does management discuss individual performance of them and
tell where the performance can be improved.

17.The objective of asking this question was to know whether official people are involved in
calculating or feedback of the customer is also taken in consideration while calculating in
Performance Appraisal.

18.The objective was to know whether the officials take appraisal feedback and keep the
feedbacks using them in next appraisal or there is no consideration. Or there is no procedure
of taking feedback from employee.

19.The objective was to know did the management update their Performance Management
System every year due to change in the market pattern. Or the same process is being
continued for a long period of time.

20.The objective was to know that will there be up gradation or any change in existing
procedure of Performance appraisal or the same steps will be followed in the next year as
well.

21.The objective was to know that was the performance reviewed by the management is
actually acceptable by the people or they are being enforced to them.

22.The objective of this question was to know after the appraisal system is being done those
who haven’t performed well what steps are taken for them. Is there any scope where
improvement of these person is done or not what steps are taken.

23.The objective was to know how do they calculate the under- performer. What steps was
taken to identify them and was there any mean tried to hint them or improve their
performance.

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