A STUDY ON PERFORMANCE APPRAISAL

AT ASHOK LEYLAND
CHENNAI, TAMIL NADU
SUMMER INTERNSHIP REPORT
Submitted to the
DEPARTMENT OF MANAGEMENT SCIENCES
In partial fulfillment of the requirements for the award of the Degree
of
MASTER OF BUSINESS ADMINISTRATION

Submitted by
Ms. ATCHAYA M
(REG.NO:113019631003)
VEL TECH HIGH TECH Dr. RANGARAJAN
Dr. SAKUNTHALA ENGINEERING COLLEGE
Approved by AICTE, Affiliated to Anna University, Chennai,
ISO 9001:2008 Certified Institution,
Accredited By NBA, New Delhi and
Accredited by NAAC with “A” Grade & CGPA of 3.27
#60 Avadi – Vel Tech Road, Chennai – 600 062. Tamil Nadu, India.

ANNA UNIVERSITY, CHENNAI – 600 025

OCTOBER – 2020
 SUMMER TRAINING REPORT
SUBMITTED TO THE
DEPARTMENT OF MANAGEMENT SCIENCES

ANNA UNIVERSITY, CHENNAI-600025

IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD Of
THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

BY

Ms. ATCHAYA M
(REG.NO:113019631003)
UNDER THE GUIDANCE OF

DR.R.VIGNESH B.E., MBA.,(PHD)

.
DEPARTMENT OF MANAGEMENT SCIENCES
VEL TECH HIGH TECH Dr. RANGARAJAN Dr. SAKUNTHALA
ENGINEERING COLLEGE
Approved by AICTE, Affiliated to Anna University, Chennai,
ISO 9001:2008 Certified Institution,
Accredited By NBA, New Delhi and Accredited by NAAC with “A” Grade &
CGPA of 3.27
#60 Avadi – Vel Tech Road, Chennai – 600 062. Tamil Nadu, India
 VELTECH HIGH TECH Dr. RANGARAJAN
Dr. SAKUNTHALA ENGINEERING COLLEGE
Approved by AICTE, Affiliated to Anna University, Chennai,
ISO 9001:2008 Certified Institution,
Accredited By NBA, New Delhi and Accredited by NAAC with “A”
Grade & CGPA of 3.27#60 Avadi – Vel Tech Road,
Chennai – 600 062. Tamil Nadu, India.

BONAFIDE CERTIFICATE

Certified that the project report titled “PERFORMANCE APPRAISAL

AT ASHOK LEYLAND” is a bonafide work of Ms. ATCHAYA M

(REG.NO:113019631003) who carried out the research under my
supervision. Certified further, that to the best of my knowledge the
work reported here does not form part of any other project report or
dissertation on the basis of which a degree or award was conferred on
an earlier occasion on this or any other candidate.

INTERNAL GUIDE HEAD OF THE DEPARTMENT

Submitted for the viva-voce Examination heldon at Vel Tech High

tech Dr.Rangarajan Dr. Sakunthala Engineering College, Alamathi
Road, Avadi,Chennai62.

INTERNAL EXAMINER EXTERNAL EXAMINER

 ACKNOWLEDGEMENT

I am highly indebted and grateful to the founder chairman col. Prof. vel. shri.
Dr. R. Rangarajan, B.E. (elect), B.E. (mech), M.S.(AUTO), Ph.D., Vice
president Mr. K. V. D. Kishore Kumar, M.B.A (U.S.A) and principal Dr. E.
Kamalanaban., ME., Ph.D.Vel Tech High Tech Dr. Rangarajan & Dr.
Sakunthala Engineering College For giving me the opportunity to undertake
the project.

I feel proud to thank my organizational guide PERFORMANCE

APPRAISAL at ASHOK LEYLANDfor his valuable guidance, suggestions
and support during project.

I wish to express my deep sense of gratitude to Dr. A. SURESH KUMAR,

MBA., Ph.D., HOD, Department of Management Sciences, Vel Tech High
Tech Dr. Rangarajan Dr. Sakunthala Engineering College for the valuable
suggestions during the curse of the study.

I am indeed grateful to my project guide MR. R. VIGNESH B.E., MBA.,

Ph.D., Department of Management Sciences, Vel Tech High Tech Dr.
Rangarajan & Dr. Sakunthala Engineering College for supporting me
through proper direction and guidance in a flexible manner to bring out this
project as successful one. 

STATION: CHENNAI                                           

DATE:   ATCHAYA M
 INDEX

CHAPTER TITLE PG. NO.

1 INTRODUCTION

2 REVIEW OF LITERATURE
&
RESEARCH METHODOLOGY

3 COMPANY PROFILE

4 WORK EXPERIENCE

5 RECOMMENDATION AND
SUGGESTIONS

6 CONCULSIONS
 CHAPTER 1
INTRODUCTION

INTRODUCTION
 The performance appraisal is the process of obtaining, analyzing
and recording information about the relative worth of an employee.

The main purpose of the study is to identify the best approach

towards Performance Appraisal system, which leads towards
achieving organizational and employee’s goals on time. To increase
the effectiveness of an organization a best appraisal system should be
implemented by the organization. Its aim is to measure what an
employee does.

The causes of ineffective performance can be rooted in the person,

the job, the manager, or the company. Usually ineffective
performance is caused by a combination of several factors. It is
divided into seven steps that could be followed in sequence and are to
define effective or acceptance performance, to detect deviation from
acceptable performance, to confront the substandard performer, to set
improvement goals, to select and implement an action plan for
improvement, to reevaluate performance after a time interval and to
continue or discontinue the action plan.

Corrective actions for ineffective performers are divided into

managerial actions and techniques, and organizational programs.
Managerial actions include close supervision and corrective
discipline. Organizational programs include career counseling,
outplacement, and job redesign. Business today may use counseling
and constructive criticism to deal with poor performers.
Performance appraisals are regular reviews of employee performance
within organizations. Generally, the aims of a performance appraisal
are too:

 Give feedback on performance to employees.

 Identify employee training needs.

 Document criteria used to allocate organizational rewards.

 Provide the opportunity for organizational diagnosis and

development.

 Facilitate communication between employee and administration.

 Form a basis for personnel decisions; salary increases,

promotions, disciplinary actions, etc.

It is a powerful tool to calibrate, refine and reward the

performance of the employee. It helps to analyze his achievements
and evaluate his contribution towards the achievements of the overall
organizational goals. By focusing the attention on performance,
performance appraisal goes to the heart of personnel management and
reflects the management’s interest in the progress of the employees.

People differ in their abilities and their aptitudes. There is always

some difference between the quality and quantity of the same work
on the same job being done by two different people. Therefore,
performance management and performance appraisal is necessary to
understand each employee’s abilities, competencies and relative merit
and worth to the organization.

Performance appraisal rates the employee in terms of their

performance. Performance appraisal takes into account the past
performance of the employees and focuses on the improvement of the
future performance of the employees.

The study on Performance Appraisal of employees was carried out

at “ASHOK LEYLAND”. The main aim of the study was to explore
the method which is followed and effectiveness of the employees.

The primary data required for the study were collected through
structured questionnaire, personal interviews and informal talks. The
second data was from the company manuals and the company. The
data were analyzed and findings were arrived at the basis of which
suggestions are made.

SCOPE OF THE STUDY

 The study aims at measuring the performance analysis, covers
employees of Ashok Leyland.

 A survey was conducted for information about the performance

appraisal system that was used in the company.

 The study focuses on type, effectiveness and employee attitude of

the appraisal system.

 To help management plan future development and growth.

 This study was conducted for the period of one month for
recruiters, and it is limited to Chennai branch only.

 The research is based on the past research studies with the suitable
modification.

 The study helps to analyse workers expectation about the project.

 The study helps to analyse the needs and fulfillment of workers.

OBJECTIVES OF THE STUDY

 Identification of the technique of performance appraisal in
Ashok Leyland.

 Employee attitude towards the present appraisal system.

 To identity the effectiveness of performance appraisal system for

employees.

 Identifying performance appraisal leading to the discovery of

unfound talents amongst the employees.

 To provide suggestions and recommendations to improve the

performance appraisal effectiveness.

 Help identifying employees for the purpose of motivating, training

and developing them.

LIMITATION OF THE STUDY

 The employees were biased to give the information.

 Some of the information might not be exactly correct.

 Time constraint was a serious problem as time was limited.

 It is difficult to make information based a rich report in a short

time of period.
 CHAPTER 2
REVIEW OF THE
LITERATURE

REVIEW OF THE LITERATURE

Meaning of Performance Appraisal:

Appraisal means evaluation about the worth of an object or person

and performance appraisal means evaluation of employees’ worth in
terms of organisational performance. Judgment of employees’
performance at work can be done formally and informally.
Informally, superiors continuously judge the performance of
employees on a subjective basis. It may have an element of bias
towards employees.

Informal evaluation, however, is not enough to arrive at realistic

and correct assessment of the worth of employees in absolute or
relative terms. The ultimate goal of evaluation programme is to make
the employees more valuable to the company.

A proper evaluation and appraisal system can be valuable to the

company. For this, performance evaluation programme should
involve the study of employees (their habits, aptitude and skills) and
their work record (efforts and accomplishments).

In the organisational context, performance appraisal is done in a

more formal way through formal appraisal techniques which are
objective in nature. Objective appraisal aims at systematic and
accurate measurement free of bias and prejudice.
 Performance appraisal is, thus, more of a formal exercise where
managers evaluate the employees, in terms of their contribution
towards organizational objectives. It evaluates their strengths and
weaknesses in terms of attributes and behaviours to meet the
organisational objectives. It appraises the performance of employees
on continuous or intermittent basis and provides them feedback about
their performance.

“Performance appraisal is the process of defining expectations for

employee’s performance; measuring, evaluating and recording
employee performance relative to those expectations; and providing
feedback to the employee.”

Evaluating employees is a complex task because they perform a

variety of activities and apply different skills in different work
situations. They exhibit different personal qualities in different work
areas. It is, thus, important that organizations have a sound
monitoring system or performance appraisal system to evaluate their
work performance.

Performance appraisal system involves setting performance

standards and comparing actual performance with the standards to
know the extent to which employees have contributed towards
corporate profits. “It is a process whereby managers and their
subordinates share understanding about what has to be accomplished,
and the manager will naturally be concerned about how best to bring
about those accomplishments by adept management and development
of people in the short and long terms.”

It also helps in:

(i) Developing inter-personal relationships between manager and his

team.

(ii) Motivating employees to achieve their targets.

(iii) Identifying the need for training the workforce.

(iv) Improving use of working tools like demonstration, material,

working documents etc.

(v) Determining and re-allocating employees’ territories and work

assignments.

(vi)Determining sound compensation and incentives plans for the

employees.
Objectives of Performance Appraisal:

Performance appraisal has the following objectives:

1. Appraisal is a judgment which requires definite standards. Actual

performance is compared with standards and goals. Such standards
should be worked out by organisations and conveyed to all the
employees, otherwise, judgment will be one way only. In a sound
appraisal system, goal setting must be high; and accordingly high
performance is expected.

Goal setting must be a mutual process and appraisal system should be

transparent and known to employees. If there is no system of
appraisal, superiors will waste time in making decisions. Also, in
absence of specific knowledge, they will depend upon chance. To
avoid this situation, there should be high goals and high performance
appraisal system.

2. To judge means to apply a set of values. Value judgments without

clear, sharp and public standards are irrational and arbitrary. Such
judgment or appraisal will demotivate the manager and subordinates.
It should, thus, be based on sound and objective appraisal standards.

3. Performance appraisal depends on “Merit Rating”. Merit rating

refers to what the employee is. Performance appraisal refers to what
the employee does. Appraisal records what is done by the employee.
Merit rating gives information about “Potential”, “Personality” and

“Promise” but appraisal tells about performance. It, thus, helps in

deciding employees worthy of promotion or transfer to work areas
that meet their skills and capabilities.

4. Standards consider what work was assigned, what resources were

granted and what promises were given regarding salary/rewards.
They, thus, provide a measure of evaluation.

5. One can only build in strength. One can only achieve by doing.
One cannot achieve anything with what one does not do. Appraisal
must, therefore, aim at bringing out what a man can do. Only when a
man’s strengths are known and understood, it makes some sense.
Weaknesses, by themselves, are of no interest.

Appraisal should refer to knowing more, doing better and behaving

differently. If these three things are accomplished, the manager will
be better, stronger and effective in managing people.

6. Appraisal should be an integral part of the system of managing. It

is an essential element in the whole system of managing and in the
sub-system of managerial staffing. Knowing how well a manager
plans, organises, staffs, directs, leads and controls is the only way to
assure that those occupying managerial positions are actually
managing effectively. If a business is to reach its goals effectively
and efficiently, there should be ways of accurately measuring and
implementing management performance.

7. It is human tendency to recall only the latest events or

achievements. Similarly only latest failures are remembered.
Appraisals should cover some specific periods where an employee
was involved fully, or even in his absence, how the deputy was doing,
to what extent there was delegation of authority and responsibility. It
should reflect a whole picture so that corrective measures can be
taken.

8. It provides feedback to employees about their performance.

Feedback helps in overcoming deficiencies in the work, promoting
performance and relating his work to organisational objectives.

9. It helps in designing personal improvement plans to overcome the

weaknesses of employees on the job and devising training and
development programmes to strengthen their capabilities.
Merit Rating and Performance Appraisal:

Performance appraisal is an extension of merit rating. Merit rating

emphasis on personal attributes of a person regarding what the person
is. It determines qualification and skills of a person on the job to
identify his chances for promotion, demotion or transfer.

It is more of a one-to-one comparison amongst people based on

rating scales. Each employee is rated in comparison to others.
Superiors communicate the rating to employees which helps in
determining the wage structure. A higher wage rate is determined for
those who stand high on merit and vice-versa.

Rather than merely rating employees to determine their wage

structure, performance appraisal aims at overall appraisal of
performance in terms of what he does in order to promote his
performance on the job and develop him to exploit his future
potential.
 While initially, appraisal was in the form of merit rating only
(based on personal attributes), it developed to a much larger area
where factors like performance, behaviour, skills etc. are also taken
into consideration. There are mutual goal-setting processes,
comparison and conformance of actual performance to standard
performance targets and promoting desirable behaviour in line with
organisational objectives.

Merit rating, thus, refers to what a person is and performance

appraisal refers to what the employee does with his merit skills. Merit
rating identifies the potential of a person and performance appraisal
appraises the extent to which the potential has been exploited to
convert it into performance.

Importance of Performance Appraisal:

Evaluating employees is a complex task as they perform a variety

of activities. Different situations demand different types of skills.
There is also difference in degree of personal qualities. Performance
evaluation consists of setting performance standards, both qualitative
and quantitative to measure actual performance and judge the
employees in terms of their contribution to objectives.

The key concept is productivity which means contribution to

profits and sales. Productivity should be greater than the cost incurred
by the company on their work efforts. Managers should “make the
events happen” and not “let the events happen”. Every management
activity has to be planned, otherwise it will be left to chance.
Managers cannot rely on chance element.

The performance appraisal provides important and useful

information for the assessment of employee’s sill, knowledge, ability
and overall job performance. The following are the points which
indicate the importance of performance appraisal in an organization:

Performance appraisal helps supervisors to assess the work

performance of their subordinates.

Performance appraisal helps to assess the training and

development needs of the employees.

Performance appraisal provides rounds for employees to correct

their mistakes and it also provides proper guidance and criticism for
employee’s development.

Performance appraisal provides rewards for better performance.

Performance appraisal evaluates whether human resource program

being implemented in the organization have been effective.
 Performance appraisal helps to prepare pay structure for each
employee working in the organization.

Performance appraisal helps to review the potentially of

employees so their future capability is anticipated.

The following reasons explain the need for making appraisals:

1. To know the quality of managers:

Every organisation sets high goals and objectives for which it

needs competent managers. When an employee is recruited, he
appears to be very promising and enthusiastic. He is called “a
potential candidate”. This potential has to be converted into
performance. Just to have potential is theory, but converting it into
performance is practice.

If a candidate is theoretically strong but weak in execution, the

organisation may not get a competent manager. Hence, the foremost
advantage of appraisals is that the organisation gets to know the level
of competence of managers. It enables the managers to know ‘where
we are’ and ‘where we would like to go’. If an executive has proved
his potential, the organisation can focus on it and en-cash his best
merit points.
2.  To put right man on the right job:

Every position has a job design or description. There should be a

man to fit the position. There must be right man for the right job. This
is possible by an appraisal method. What will happen if the
organisation gets a wrong man?

For example, in the design department, there is a wonderful design

engineer. He is expert in making designs, and is well versed with his
work. Over a period, he attains specialisation in his work. He is now
senior most in the department. The organisation is in need of a
dynamic person to head the design department.

This design engineer does not have managerial skills. However,

he is a competent engineer. If he is promoted as Head of design
department, when he is not competent, what will be the result? The
organisation will miss a good designer and get a bad manager to head
the department. Hence, appraisal helps in getting right man for the
right job.

3. To re-structure the organisation:

Basic advantage of appraisals is to know the innermost merit point

of every employee. With the help of appraisal system, it is possible to
rotate executives in a scientific way. The advantage of job rotation is
that the organisation gets a good General Manager. Every
organisation has a chart.

There are slots in the organisation which should be filled by the

most competent person. When this is known, it would be possible to
re-structure the organisation. Organisations today are flexible and
dynamic. There is need to re-structure the organisations and have

changing roles for the managers. This is possible only through

competent appraisal systems.

4. To give feedback to employees:

Appraisal is a good tool for communication. When managers talk

to employees about their achievements or failures, they take help of
appraisals. In appraisals, there are objective facts and goals which are
set jointly. Thus, it becomes easy for managers to convince
employees and give them feedback on inputs and outputs.

In some organisations, appraisals are signed by both boss and

subordinates so that it is easy to give feedback to employees
especially on weak areas.

5. To develop employees:

 A progressive organisation is concerned about employee
development. Organisations have long-term objectives and plans. To
get success, they groom people to shoulder future responsibilities of
the organisation. This is called development process.

To achieve development, organisations develop Executive

Development Programmes with the help of appraisals. There are
different methods by which employees can be developed. Appraisal
system helps to select an appropriate method. It involves resources
(time and money) to develop employees and a sound appraisal system
helps in making best use of resources to develop the employees.

6. To recommend rewards/transfers:

Appraisals are effective when they are tied with the reward
system. Compensation for achievement is the most powerful
motivating force. One of the strong motivating factors is promotion.
There can be increments and cash awards. There can also be transfers
on employee’s request or organisation’s requirement. Such decisions
need sufficient data and cases. This is possible through appraisals.

For a good performance appraisal method, it is important to have a

judicious mix of quantitative and qualitative standards against which
performance can be compared. Many companies use quantitative
standards. However, the tendency of using quantity as the only
yardstick of performance is no longer prevalent. The manager selects
a combination of qualitative and quantitative standards to appraise
and assess different situations.

Approaches to Performance Appraisal:

There are two approaches to measure the performance of

employees:

1. Informal Approach

2. Formal Approach

1. Informal approach:

This approach of performance appraisal measures the performance

of employees on a continuous basis. It continuously informs them
about how well they are doing. Managers inform the subordinates of
the desirable and undesirable attributes

2. Formal approach:

Rather than assessing performance on a continuous basis, formal

approach conducts performance appraisal at regular intervals to rank
the employees on the basis of their merit. This helps managers find
candidates suitable for promotions. Those who are not performing up
to the mark may be transferred to other departments.

Persons Responsible for Performance Appraisal:

There are different approaches to the responsibility of
conducting a formal performance appraisal:

1. Performance appraisal by superiors:

Performance appraisal in most cases is done by immediate

superiors.

2. Performance appraisal by a group of superiors:

A Committee is formed consisting of several managers who

evaluate the performance of subordinates. Since evaluation is not
done by the immediate boss but by a group of bosses, the immediate
boss is generally not biased against the employees. This is a time
consuming approach of performance appraisal but more scientific and
reliable than the appraisal by immediate superior.

3. Performance appraisal by the peer group:

Though not much in use, some organizations follow the practice

of performance appraisal by the peer group or co-workers. They
evaluate the performance of employees working at the same level.
This enables managers find a suitable candidate for promotion from
employees working at the same level, selected by employees
themselves. This approach is accepted by employees as those who are
not selected for promotion do not feel dissatisfied. Rather, they work
hard to get promotions in future.
3.  Performance appraisal by subordinates:

Very few organisations follow the approach of subordinates

evaluating managers’ performance. Some educational institutions
follow this approach where students evaluate the performance of
teachers on the basis of certain predetermined criteria.

Methods of Performance Appraisal:

The methods of performance appraisal fall into two major

categories:

I. Performance results-oriented methods

II. Employee behaviour-oriented methods

I. Performance results-oriented methods:

These methods measure actual performance of employees and bring it
in conformity with the pre-determined standards.

1. Graphic Scales:

These scales “list a number of rating factors, including general

behaviours and characteristics, on which an employee is rated by the
supervisor.” Depending on the factors that need to be rated like
quality or quantity of work, technical knowledge, punctuality,
integrity, cooperativeness, initiative, creativity, analytical ability,
decisiveness etc., supervisors prepare a graphic scale with different
grades and employees are rated on the basis of their performance on
that scale. The appraiser goes through these set of factors on the
rating scale where highest grade (A or 1) would denote the best
rating.

The usual dimensions of a graphic scale are:

Grade A = Outstanding

Grade B = Above average

Grade C = Average

Grade D = Below average

Grade E = Unsatisfactory

The advantage of this scale is that grading of employee on the

scale highlights the need for improvement in his abilities to perform
the job. If an employee is placed at Grade D, his performance is
below average and he needs to improve upon it.

The limitation of this method is that every manager does not

follow the same method of rating people at a particular grade. An
employee who is assigned Grade A by one manager may be assigned
Grade B or C by another manager. This method is, thus, sensitive to
errors.

Different types of rating errors are:

(i) Halo effect:

(ii)This is a presumption by managers that a person doing well in one

area will be doing well in other areas also. This is not always the
case. A person good at sales may not be good in production or vice
versa.

(ii) Horns effect:

It is the opposite of halo effect. Managers presume that employees

who do not perform well in one area are poor performers in other
areas too. They tend to give such employees a low grade if they have
performed badly on one job while they may have actually performed
better on other jobs.

(iii) Contrast error:

Managers rate the subordinates by comparing their individual

performances rather than measuring their performance against the
standards. When two sub-standard employees are rated on this basis,
manager will give Grade A to one and B to another while both of
them may actually fall in Grade E.

(iv) Recency error:

The employees are rated on the basis of their latest or recent

performance. The earlier performance is ignored. An outstanding

employee who, for some reason, has not been able to do well in the
latest assignment, shall be placed in Grade D or E. This is not a
satisfactory method of rating.
(v) Leniency error:

Supervisors give lenient rating to all the employees without

measuring their actual performance. The results are, thus, likely to be
biased.

(vi) Severity error:

This is the opposite of leniency error. The supervisor gives low

rating to all the employees, without appraising their actual
performance. The results would, therefore, be again inaccurate.

(vii) Central tendency error:

An average rating or grade is given to everyone, disregarding their

actual performance. The rater marks all the people as average without
discriminating as superiors or inferiors. This may happen because the
rater does not have sufficient knowledge about employees or because
he is indifferent towards employees.

(viii) Constant errors:

Some raters have the habit of rating people as high or low. They
either rate everyone high or everyone low. Some rate on the basis of

present performance while others on the basis of potential to perform

in future. The results of two raters are, thus, not comparable.
How to make rating effective:

The graphic scale is a simple and effective method to rank

performance against standards but it is highly sensitive to a wide
range of errors. Steps must, therefore, be taken to make this
programme effective. The rater training programmes are organised to
train the raters who hold biased opinion about rating the subordinates.
These programmes develop general consensus among the raters to
rate the subordinates according to a common standard and improve
their perceptions about rating their performance.

2. Behaviourally anchored rating scales:

This method of performance appraisal is an extension of graphic

scale method. These rating scales are used in situations where number
of employees are performing similar work and high degree of
precision is required in their job behaviours. Rather than assessing the
performance as above average or below average, a range of levels of
performance, from very high to very low is specified on the rating
scale.
 Unsatisfactory performance, for example, can further be labelled
as very unsatisfactory or marginally unsatisfactory. Above average
can also be ranked as slightly above average or much above average.

Five grades in the graphic scale can be developed as:

A wide range of performance is specified on the graphic scale and

the raters are much less sensitive to bias by the range of errors that
inhibit their rating capacity on the graphic scale. Though this method
is more accurate and scientific than the graphic scale, it is more time
consuming and expensive.

It also needs high precision on the part of raters to rate the

subordinates as different rating levels form part of the same grade.
Managers, therefore, often seek assistance of experts in preparing this
scale.

3. Essay evaluation:

This is an unstructured form of performance appraisal where

grades are not assigned to performance parameters. As the employees
perform their jobs, the evaluators or raters keep track of the
performance and note their positive and negative job attributes like
quality and quantity of performance, knowledge about the job skills
and organisational policies, employees’ strengths and weaknesses,
their potential to work, need for training etc.
 At the end of the period, they analyse all these points and give
brief description of their performance in the form of an essay. This
method has the merit of rating the employees purely on the basis of
their actual performance. It reduces personal bias of the raters.
However, different raters have styles and perception about rating the
qualities of a person and this method, thus, may not be totally error
free.

II. Employee behaviour-oriented methods:

These methods are also known as comparative methods of

evaluation. They compare performance of employees against each
other and rank them accordingly.

1. Straight ranking:

This is the simplest method of ranking where employees are rated

as rank 1, 2, 3, 4 or 5. Where an employer has to consider one of his
subordinates for promotion to higher job; he would simply see each
person’s performance in the respective area of operation, say
production, and the one having produced the maximum number of
units would be given rank 1 followed by ranks 2 through 5, and
accordingly considered for promotion.
 People are, thus, given ranks on the basis of their traits. This
method is effective when few number of persons have to be ranked as
some of the traits for ranking cannot be quantified. For less number
of people, however, personal observations can also be used for
ranking.

Ranking method does not indicate differences in ranks as equal to

differences in ability of people being ranked. This is only a
comparative method of ranking where one is better than the other;
how much better is not indicated through rankings.

2. Alternation ranking:

Rather than ranking the employees in ascending order of

performance, the raters first pick up the best and give him rank 1,
then the worst and rank him 5, then they pick up workers to be ranked
as 2 and 4 and proceed this way until all the employees are ranked.
This method is similar to straight ranking method with the difference
in the approach towards picking up different ranks.

3. Paired comparison:

In this method of ranking, each person is compared with others in

the group on the basis of specific traits, usually one trait as otherwise
huge number of comparisons have to be made which can make rating
a time-consuming process. A list is prepared containing the names of
persons to be ranked in pairs. The rater puts a tick mark against the
person who is better between the two.

The person who is ticked marked as better for maximum number

of times is given the highest rank. The number of comparisons to be
made is calculated by using the formula n(n – l)/2 where n is the total
number of persons to be compared. For instance, paired comparison
has to be made amongst 5 people. This requires 10 comparisons [5(5
– 1)/2] to rank who gets the highest rank in terms of being better than
the others.

The comparisons are as follows:

Every person will be compared with 4 others (1 with 2, 3, 4, 5 / 2

with 1, 3, 4, 5 / 3 with 1, 2, 4, 5 / 4 with 1, 2, 3, 5 and 5 with 1, 2, 3,
4) and one who is most preferred gets the highest rank followed by
others. Though everyone is compared with everyone else in this
method, it is difficult to use this method when large number of people
are involved.

4. Forced-distribution method:

When more than one employee are rated as almost the same, it
becomes difficult for the rater to rate them as 1 or 2. As many
employees are rated around a similar point on the rating scale, one
employee is not given one rank; but a group of employees are placed
in one rank.

For example, the manager might place 5% of the employees in

rank 1.10% in rank 2, 20% in rank 3, 30% in rank 4 and remaining
35% in rank 5. In case of ranking 100 employees, therefore, 5
employees will be placed in rank 1 and 35 in rank 5. This method is
suitable where supervisor has to rank a large number of employees
and individual ranking is not possible.

5. Forced choice method:

This method of rating involves appraising the performance of

employees by choosing between two or more statements that describe
the characteristics of the employees. The statements may be positive
or negative. They are closely similar to each other but the rater has to
choose the most appropriate statement that describes the employee.
Many sets of such statements (positive and negative) are prepared to
analyse the performance of employees and the final rating is done on
the basis of results of all the statements.
These statements could be as follows:

One Set of Statement:

1. He is an honest employee.

2. He is always fair in his dealings (financial and non-financial) with

others.

Second Set

1. He is very hard working.

2. He completes his assignments in scheduled time even if he has to

work overtime.

Third Set

1. He has leadership qualities that help him guide his peer group of
friends.

2. People come to him for guidance to which he always gives the

right advice.

The statements in each set describe characteristics like honesty,

hard working and leadership which are very close in meaning to each
other. The rater is forced to choose the most effective statement that
describes the individual. This statement is most descriptive of the
employee. Thus, one statement is chosen from different sets for final

analysis. The final rating is done on the basis of statement chosen

from all sets of statements.

This method avoids subjectivity in rating as the rater chooses the

most appropriate statement out of those which closely describe the
positive or negative behaviour of the employees.

Essentials of a Good Appraisal System:

Depending on the need to carry out performance appraisal of

employees, i.e., whether work performance has to be evaluated or
behaviour is to be evaluated or inter-employee comparisons have to
be made, the appropriate method of performance appraisal should be
selected.

Whatever method is adopted, it should have the following

features:

1. It is easily understandable.

2. It is fit for organization’s operations.

3. It takes care of needs of the organisation and its work force.

4. It should adapt to the size of the organization.

5. It defines the responsibility of the manager and the work force.

6. It provides support to management to design the compensation

plan.

7. It maintains balance between efforts and rewards.

8. It is result-oriented and focuses on customers and sales.

9. It minimizes procedural formalities in designing the appraisal

system and compensation plan.

10. It must pinpoint that aspect of employee performance (behaviour

or results) for which it is adopted.

11. It must be reliable, that is, free from errors.

Issues Involved in Performance Evaluation System:

A good performance evaluation system does not depend upon

single criterion of performance. It involves multiple criteria to judge
employees’ efficiency in achieving targets.

The following issues must be considered while designing the

performance evaluation system:

1. Qualitative and quantitative criteria:

 Employees cannot be judged purely on qualitative or quantitative
basis. Qualitative assessment involves personal bias and subjective
value judgment. Quantitative assessment based on statistical data, on
the other hand, ignores important determinants of employee’s

effectiveness like personal skills in handling problems, ability to

impress clients etc. Judging the performance on the basis of only
quantitative records does not provide adequate basis of comparison.

Sales made by different sales groups, for example, cannot be

compared merely on the basis of the accounting data. Salesmen’s
convincing power, customer friendliness also have to be taken into
account. Managers should, therefore, have judicious mix of
qualitative and quantitative criteria to evaluate their personnel.

2. Comparison amongst employees:

Comparison amongst employees cannot be made on ‘man-to-man’

basis as human element is involved in such comparisons which
differs in different situations. Different employees work under
different environmental conditions and deal with different products
and customers differently.

3. Determining standards of performance:

 The standards of performance should be scientific and realistic
because the whole performance evaluation process depends upon
standards. If standards are unrealistic, the purpose of performance
evaluation gets defeated.

4. Periodicity of evaluation:

The period of evaluation should be neither too long nor too short.
Very short-term evaluation ignores the factors valuable for the firm in
the long-run like developing good customer relations. Very long-term
evaluation also does not give satisfactory results because it ignores
operating results of the company.

Though yearly evaluation is a common practice followed by

companies, the period depends upon the type of product sold,
practices followed in the industry and outlook of the management.
Capital goods and industrial goods companies usually follow a period
longer than one year.

Process of Performance Appraisal:

Performance appraisal process consists of the following steps:

Step 1: Establish performance standards

Performance standards are set to ensure achievement of

departmental goals and objectives and the organization’s overall
strategy and objectives. Standards are based on the position, rather
than an individual. In order to be clearly understood and perceived as
objective, standards should adhere to the same rules that apply to
goal-setting; that is, they should be “SMART:” specific, measurable,
achievable, relevant and time bound.

Step 2: Communicate performance standards

In order to be effective, performance standards must be clearly

communicated and understood to be expectations. Performance
standards assume that an individual is competent, so initial and
corrective training should be factored into the performance
management process. If there is a specific training period after which
an employee is assumed to be competent and performing to
standards, that should be communicated as well.

Step 3: Measure performance

Performance that is expressed in numeric terms—for example,

cost, quantity, quality, timeliness—is relatively easy to measure.
Performance in the area of soft skills—for example, communication,
customer service and leadership—is more difficult to evaluate.
DeCenzo, Robbins and Verhulst recommend using a variety of
sources of information including personal observation, oral reports
and written reports. They note, however, that what is measured is
probably more critical than how an aspect is measured. The focus
should be on measuring what matters rather than measuring what’s
easy to measure.

Step 4: Compare actual performance to performance standards

In this step of the appraisal process, actual performance is

compared to the performance standards. Documentation should
highlight actions and results.
Indiana University’s Human Resource department identifies the
following characteristics of effective documentation:[3]

 Accurate

 Specific

 Consistent (covering the entire review period)

 Factual (not based on conjecture)

 Balanced, including instances of both positive and unsatisfactory

performance

 In writing

Step 5: Discuss the appraisal with the employee

This is generally the step in the process that is the most difficult
for managers and employees alike and it can be a challenge to
manage emotions and expectations. Even when performance is
strong, there can be differences of opinion on the next action. A
significant difference of opinion regarding performance can create an
emotionally-charged situation. If the manager is providing feedback
and coaching on a regular basis, this shouldn’t be the case. Related
point: If an employee has consistently poor performance, the issue
should be addressed—corrective action taken—in a timely manner
and not deferred to an annual review. To identify and prepare for
differences of opinion, management can ask employees to complete
and submit a self-evaluation prior to the appraisal meeting. A key
point to keep in mind is that the manager’s ability to remain calm and
civil will have a significant impact on the employee’s confidence,
motivation and future performance.

Step 6: Implement personnel action

The final step in the appraisal process is the discussion and/or

implementation of any next steps: a reward of some sort—a raise,
promotion or coveted development opportunity—or corrective action
—a performance plan or termination. Note, however, that corrective
action that might help an employee achieve expectations shouldn’t be
tabled until the next formal appraisal. As performance gaps are
identified, supervisors and managers should take the time to identify
why performance is not meeting expectations and determine whether
the employee can meet expectations with additional training and/or
coaching. As mentioned above, if performance is such that
termination is warranted, that action should be taken in a timely
manner as well.

In the performance evaluation system, manager should not just

perform his role theoretically but really look forward to apply
fundamentals to practice i.e. implementation. In addition to basic
managerial functions, he should focus on other areas of concern like
personality, cooperation, maturity, intelligence, loyalty, a good
trainer etc.

These areas should be used in conjunction with appraisal of plans

and goals. Appraisal system is a continuous and sequential activity
performed by managers to institute a sound reward system for its
personnel and also promote market share for its products.

Performance Appraisal for Promotion:

Though performance appraisal is usually related to measuring

present performance of employees, it is not necessarily so.
Employees of the organisation are trained and developed to perform
present jobs and assume jobs of higher importance in future. The
appraisal system should measure not only their present performance
but also future performance on higher- order jobs.

Thus, a potential appraisal is carried to know the potential of

employee’s success on future jobs. These are largely promotions
which involve better status and responsibilities on the future jobs.
The appraisal carried for this purpose is called potential appraisal.
While performance appraisal is related to the present job, potential
appraisal is related to future jobs. It discovers future talent of a
person’s attributes to perform future jobs.
Promotion can take two forms:

1. Horizontal promotion:

It increases the position of a person with no change in the type of

work performed by him. Promotion of a lecturer to senior lecturer has
no added job assignment to the post. A lower division clerk promoted
to an upper division clerk also has, by and large, same responsibilities
to discharge.

2. Vertical promotion:

It increases the position and status of a person along with job

assignment and responsibilities. A worker promoted as foreman or a
foreman as superintendent performs jobs of higher importance.

Promotion is necessary as it provides satisfaction to employees in

terms of jobs, morale and economic status. It increases organisational
productivity and provides people from within the organisation who
are familiar with its policies, procedures and structure.

The organisation, thus, saves time and money in conducting

orientation programmes to acquaint new people to the organisation
structure.

Promotion is, beneficial for both organisation and the members:

(a) It allows people to satisfy their growth needs within the
organisation. Though people move from one organisation to the other
for higher scales, promotions within the organisation reduce the
labour turnover rate and thus, costs for the organisation.

(b) It motivates people to work hard as they know they will step up
the organisational ladder and earn better financial and non-financial
rewards. Promotion is, thus, an incentive to improve one’s work
performance. If organisational policies allow for higher positions to
be filled through outside recruitments only, members within the
organisation will have no motivation to work hard.

Basis for Promotion:

Promotion can be done on two basis — Merit and Seniority:

(a) Promotion on the basis of merit:

It gives promotion on the basis of performance of employees. The

best performing employee is promoted to the higher post.
Competence of a person is, thus, the basis for promotion and ensures
efficiency in the organisation as the person promoted can understand
and perform the job of higher order based on his potential. Merit,
thus, promotes people on the basis of their competence and potential
to perform higher-order jobs.
Limitations:

Promotion on merit basis suffers from the following weaknesses:

(i) There is no objective criterion to measure merit. Though

performance measures like test scores, skills and attitudes of a person
can be used, they are not free from errors. They may involve biased
judgment in favour of a person,

(ii) Though a person may be good at his present post, he may not be
able to perform well at higher positions. Present knowledge may not
necessarily be the criterion to judge a person’s future potential.

(b) Promotion on the basis of seniority:

It is a widely recognised basis of promotion where a person is

promoted on the basis of his length of service. It is an objective
method of promotion as people cannot be biased on the basis of non-
measurable performance parameters.

Those who have served the organisation longest are considered for
promotion followed by the chain of tenure. Most of the government
organisations follow this basis of promotion though, however, it is a
matter of dispute in business organisations between management and
employees’ union.
While deciding seniority as the basis for promotion, the following
points must be taken into consideration:

1. The basis of seniority should be clearly defined.

2. It should follow a defined set of rules to avoid conflicts amongst

members. For example, if an employee goes on leave with pay and
another employee goes on leave without pay, whether both the leave
periods are counted for considering seniority or not should be clearly
defined.

3. Seniority list should be maintained in the office and employees

should have access to it. Transparency avoids conflicts amongst
members while deciding about promotions.

4. Responsibilities at each level of seniority should be clearly laid

down. Some senior positions have frequent touring or overtime
without additional allowance, loss of vacation etc. People moving to
higher positions should know the privileges or otherwise of the
positions they are moving to. It is heard that some people do not
move to managerial positions in banks as this position has
transferable posts. People thus, refuse seniority and maintain their
status quo for family or other considerations.
Merits:

This system of promotion has the following merits:

(i) It is an objective basis of judgment as promotion depends upon the

length of service which can be measured.

(ii) Since biased judgment is not involved, it does not affect

employees’ morale and organisation’s productivity.

(iii) It reduces the labour turnover rate as employees are promoted on

the basis of years of service in the organisation. People prefer to work
in the same organisation rather than moving to other organisation.
Long serving years also promote loyalty amongst employees and
organisations save money on conducting orientation and training
programmes for new employees.
Limitations:

Promotion on seniority suffers from the following limitations:

(i) After a specific point, length of service is not the criterion for
promotions. Continued service does not bring much gain to
employees and, therefore, they look for other jobs.

(ii) It promotes lethargy as employees are assured of promotion after

a specific period of time.

Merit Versus Seniority:

Both merit and seniority have benefits and limitations. Neither of

the two should be the sole criterion for promotion. Organisations
maintain balance between seniority and merit and generally follow
the practice of promoting people at lower levels on the basis of
seniority and at higher levels on the basis of merit.

This assures people at lower levels of time-bound promotions and

provides them the satisfaction of assured promotion. At higher levels,
however, only those who are worthy of assuming positions of higher
importance are considered for promotion. Length of service or merit
should not be the sole factor affecting promotion. From the most able,
the senior most should be selected and minimum specific length of
service should be considered before recommending a case for
promotion.

A combined ladder based on both merit and seniority at different

levels can be analysed as follows:

1. Consider promotion on the basis of length of service (seniority).

2. After a particular level, ignore promotions for those who do not

prove on the merit standards (merit).

3. Amongst those selected, consider those who have served for the
longest time period (seniority).

4. Consider further promotion only on the basis of merit (merit).

12. Barriers to Performance Appraisal:

The following barriers may arise in making appraisals:

1. Despite best efforts to be objective in making appraisals,

appraisers’ may become subjective in their judgment.
2. Appraisals based on the assumption that appraisal system is perfect
cannot give accurate results. Targets and techniques of appraisal
cannot be standardized forever.

3. Holding personal opinion about appraises can make appraisals a

mere formality. Appraisers do not spend sufficient time in designing
the appraisal system and completing the appraisal forms. This lacks a
systematic review of performance, both present and potential.

4. Appraisal is like a check on employees’ performance. Therefore,

they may be resistant to appraisals. They often tend to provide faulty
or disguised information about their performance. This makes
appraisal ineffective in nature.

5. Sometimes, appraisals are affected by psychological blocks to

appraisals.

They may:

(a) Take appraisals as an added burden on them

(b) Dislike to find faults with appraises’ performance

(c) Dislike that employees’ promotions are withheld or deferred

because of their rating.

(d) Be afraid of becoming unpopular amongst employees, etc.

 These fears are a hindrance to effective appraisals resulting in
subjective appraisals.

Appraisers tend to give high ratings to those whom they want to

favour irrespective of their performance. This defeats the very
purpose of appraisals.

7. Appraisals are done by comparing actual performance with

standard performance as stated in the appraisal form. If these forms

are not properly designed, the desired information cannot be

extracted from the appraises. Performance criteria may be non-
measurable (honesty, politeness etc.) or ambiguous (contribution to
output or number of hours worked). When performance traits are not
exactly measurable, they can be interpreted differently by different
people. This fails to give effective ratings to employees’
performance.

7. Despite the best efforts in making performance appraisal error free,

errors may occur, consciously or otherwise.
GOALS OF PERFORMANCE APPRAISAL

General Goals Specific Goals

Individual needs

Development Use Performance feedback

Transfers and Placements

Strengths and Development needs

Salary

Promotion
Administrative Decisions / Uses Retention/Termination

Recognition

Layoffs

Poor Performance identification

Organizational Maintenance HR Planning

Training Needs

Organizational Goal
Achievements

Goal Identification

HR Systems Evaluation

Reinforcement of organizational
needs

Documentation Validation Research

For HR Decisions
Advantages of the performance appraisal are as follows:

1. Right Placement:

Performance appraisal is beneficial for assessing strengths and

weaknesses of an employee. It enables to find out areas / tasks in
which the employee is competent. Basically, the process is useful for
identifying true potential and interests of the employees. Such
analysis helps HR Department to assign right jobs according to the
skill and competencies of employees.
2. Assistance to Improve Performance:

The manager / team head shares evaluation result with the

respective employees. Such feedback is useful as it enables
employees to focus on improving their strengths. The managers also
suggest ideas and methods through which employees can overcome
their weaknesses. Thus, the process helps in personal & career
development of employees.

3. Acts as a Motivator:

The process involves recognizing & rewarding employee’s efforts

and performance. It boosts their morale and confidence. Further,
greater awareness of one’s true potential motivates employees to give
their best performance. The organization acknowledges efforts of
employees by giving higher salary, higher responsibilities, certificates

and other monetary and non-monetary benefits. These benefits and

recognition also motivates other employees to perform better at their
job.

4. Planning and Designing Training Programmes:

The assessment of strengths and weaknesses of employees is

useful for HR department to plan and design training programmes.
The employees are provided with right training at right time to
overcome their weaknesses and to develop their strengths. The
content and method of training can be modified according to the
human resource requirements.

5. Improves Employee and Management Relationship:

Performance appraisal is also an opportunity for the employees to

discuss work related problems with their superiors & to find out ways
to resolve them. Promotions and transfers are done on the basis of
performance of employees. The fair promotion and transfer policies
improve relationship between employees & management. It also
facilitates good work atmosphere which directly benefits the final
output.

6. Human Resource Planning and Development:

Performance appraisal is useful for taking inventory of quality of

human resources available in the organization. This information helps

in future planning and development of human resources. As per the

assessment, the HRD can plan to recruit new employees or develop
the quality of existing workforce in the organization. This ensures
that organization has required quality and quantity of manpower to
carry out its activities.

7. Improves Employee Communication with Managers:

 Performance appraisal is also an opportunity for the employees to
convey their needs and expectations to superiors. Further, employee
can seek guidance of their managers to improve performance and also
for career advancement. In short, the process gives a platform to
improve employee communication.

8. Personal Development:

Appraisal facilitates acknowledgement of employee’s efforts and

achievements. This motivates employees to learn and acquire new
skills that aid them in personal and career development. This process
boosts employees’ confidence and encourages them to take
challenging tasks. During appraisal, managers also suggest ideas and
methods to improve their attitude, behaviour, mental ability,
emotional stability and so on.

9. Promotion and Transfers:

Performance appraisal is beneficial for identifying talented

employees in the organization. This information helps the
organization in grooming and developing competent employees. The
organization acknowledges the efforts and achievement of employees
through promotion, deputation, transfer etc. Performance appraisal
ensures that promotion and transfer is only offered to employees
based on merit and experience, not on the basis of seniority and
favouritism.

1. This system provides information of great assistance in making and

enforcing decisions about promotions, pay increase, layoffs and
transfers.

2. It serves as a guide for employee’s development.

3. Performance appraisal puts a psychological pressure on workers to

improve their performance on the job.

4. This serves to maintain fair relationship in groups.

5. This system avoids errors of nepotism, self-interest and

discrimination while promoting and enhancing wages and salaries.

6. Personnel decision can be taken on the basis of this performance

appraisal system

7. It is an efficient device for rating their personnel as it enhances

proper control on sub-ordinates.
8. Timely, systematically, up to date, honestly and sincerely
performance appraisal creates mutual understanding, trust and
confidence among the supervisor – sub – ordinate relationship.

Thus, it has been seen that performance appraisal is an important

tool of personnel management.

Disadvantages of the performance appraisal are as follows:

1. Time Consuming Process:

Every manager or supervisor is responsible for preparing

performance report for his team members. He is required to fill up an
appraisal form for every team member and note down strengths,
achievements, weaknesses and other observations of his team
members. The process includes lot of procedures and is a time
consuming process.

2. Inexperienced Evaluators:

Sometimes, appraisal may not be conducted by skilled or trained

managers. The evaluation process may not be carried out properly
owing to lack of knowledge and experience of evaluator.

3. Defective Rating or Personal Bias:

 Managers avoid giving negative remarks or poor ratings as
employees may not always view feedback in a positive manner. The
managers try to avoid possible future conflicts or arguments with
employees. Moreover, they also fear non- cooperation from
employees in future.

It results in managers giving favourable ratings, so that work

environment and relationships are not affected. Moreover, the
evaluator’s personal relation with the employee also affects the
process. Sometimes, managers may give higher ratings to favorite’s
employees. They may also give low rating to deserving employees
due to jealousy or fear that such employees might replace them.

4. Difficulty in Selection of Appraisal Method:

There are number of techniques to evaluate performance of

employees. The appraisal technique must be selected on basis of the
nature of organization, number of employees, work policies, budget
etc. However, evaluators may not always select appraisal method that
is suitable for the organization. They select appraisal method that is
simple, less time consuming in order to reduce workload.
5. Central Tendency:

Managers have the tendency to give average rating to employees

irrespective of their actual performance. It means average rating is
given to both, the underperformers as well as the over performers.
Generally, managers resort to this kind of behaviour in order to avoid
displeasing other employees, future conflicts, jealousy and tension in
the team. However, it is unfair for those employees who actually
deserve high ratings but are given average score.

6. Horn & Halo Effect:

The behaviour to look only on negative aspects and ignore the

positive aspects of a person is called as horn effect. It occurs when an
appraiser makes his decision only on the basis of employee’s
negative attributes. For instance, the appraiser gives overall low
rating to an employee because he is overly focused on employee’s
lack of communication and presentation skills.

He totally overlooks the fact that the employee is proficient in his

job and completes tasks within the specified time. Halo effect is the
opposite of Horn effect. In this, positive qualities of the employee are
overshadowed by negative qualities of the employee. It means the
appraiser gives high rating to employees also in those areas where he
is not proficient.
7. Lack of Participation from Employees:

Employees resist performance appraisal system because they

consider that the whole process of appraisal is only for pointing out
their mistakes and criticizing their performance. Thus, they may not
be actively involved in the evaluation process.

8. Spill Over Effect:

The behaviour to ignore employee’s current performance and to

make decision on the basis of past performance and overall
impression of the employee is termed as spillover effect. For
instance, if the employee had a good performance during the last
year, the supervisor by default rates him high even in the current year
without considering his actual performance.

9. Attitude of Evaluator:

Mind set of manager also affects the evaluation process. The

managers who are strict and have high expectations from his
employees may give low ratings to all employees in spite, of good
performance from employees. The lenient managers give high rating
to all employees irrespective of their performance. Such evaluations
are not valuable to the organization or the employees.
10. Inadequate Attention to Human Resource Development:

The main aim of appraisal system is to assess the performance of

employees at current job so that they can be motivated and developed
further. However, the performance reports may not be actually used
by the managers to achieve this goal. The managers prepare these
reports only to fulfil their duties and obligation of company policy.
They may not always find time to evaluate actual performances of
employees and to develop their abilities.

11. Expensive:

The organization has to allot huge funds for setting up assessment

centres. Further, technical experts are to be hired to plan and design
evaluation techniques. Sometimes, organizations also have to hire
professional experts from outside to conduct the evaluation process.

1. Errors in Rating:

Performance appraisal may not be valid indicator of

performance and potential of employees due to the following
types of errors:

(a) Halo Effect – It is the tendency to rate an employee consistently

high or low on the basis of overall impression.
(b) Stereotyping – It implies forming a mental picture of a person on
the basis of his age, sex, caste or religion.

(c) Central Tendency – It means assigning average ratings to all the

employees in order to avoid commitment or involvement

(d) Constant Error – This tendency may be avoided by holding

meetings so that the raters understand what is required of them.

(e) Personal Bias – Performance appraisal may become invalid

because the rater dislikes an employee,

(f) Spillover effect – This arises when post- performance affects

assessment of present performance. For instance, recent behaviour or
performance of an employee may be used to judge him.

2. Lack of Reliability:

Reliability implies stability and consistency in the measurement.

Inconsistent use of measuring standards and lack of training in
appraisal techniques may also reduce reliability. Factors like initiative
are highly subjective and cannot be quantified.

3. Incompetence:

Raters may fail to evaluate performance accurately due to lack of

knowledge and experience. Past appraisal interview is often handled
ineffectively.
4. Negative Approach:

Performance appraisal loses most of its value when the focus of

management is on punishment rather than on development of
employees.

5. Multiple Objectives:

Raters may get confused due to too many objectives or unclear

objectives of performance appraisal.

6. Resistance:

Trade unions may resist performance appraisal on the ground that it

involves discrimination among its members. Negative ratings may
affect interpersonal relations and industrial relations particularly
when employees or unions do not have faith in the system of
performance appraisal.

7. Lack of Knowledge:

The staff appraising performance of employees might not be trained

and experienced enough to make correct appraisal.
USES OF PERFORMANCE APPRAISAL

Performance appraisal is crucial tool in the hands of the

management to bring about greater agility and responsiveness in
human resources of an organization. Performance appraisal is the
foundations of much human resource decision. Therefore, it has
multifarious uses as depicted below:

Performance Improvement: Performane feedback allows the

employee, manager and personnel specialists to intervene with
appropriate actions to improve performance.

Compensation adjustments: Performance evaluations help

decision-makers determine who should receive pay raises. Many
firms grant part or all pay increases and bonuses based upon merit,
which is determined mostly through performance appraisals.

Placement Decisions: Promotions, transfers an demotions are

usually based on past of anticipated performance. Often promotions
are a reward for past performance.

Training and Development Needs: Poor performance may

indicate the need for retaining, Likewise, good performance may
indicate untapped potential that should be developed.
 Career planning and development: performance feedback guides
career decisions about specific career paths one should investigate.

Staffing process deficiencies: Good or bad performance implies

strengths pr weakness in the personnel department’s staffing
procedures.

Informational inaccuracies : Poor performance may indicate

errors in job analysis information, human resources plans, or other
parts of the personnel management information system. Reliance on
inaccurate information may have led to inappropriate hiring, training,
or counseling decisions.

Job Design Errors: Poor performance may b a symptom of ill-

conceived job designs. Appraisals help diagnose these errors.

External Challenges: Sometimes performance is influenced by

factors outside the work environment such as family, financial, health
or other personal matters. If uncovered through appraisals, the
human resource department may be able to provide assistance.

Feedback to Human Resources:

Good/bad performances throughout the organization indicates

how well the human resource function is performing advertisements.
 RESEARCH METHODOLOGY

Research methodology is a systematic way, which consists of series

of actions or steps necessary to effectively carry out research and the
desired sequencing of these steps.
Research:
Research refers to the search for knowledge. One can also define
as the scientific and systematic search for candidates’ information on
specific topic. Research is a careful investigation or inquiry
especially through search for new fact in any branch of knowledge.
Research hypothesis or suggested solution; collecting, organizing and
evaluating data; making deductions and reaching conclusions; and at
last carefully testing the conclusion to determine whether they fit the
formulating hypothesis.

“Methodology” is defined as ‘the study of methods processes

imposed on research the problems arising from the nature of its
matter’.

Field of study:

The research has been conducted among the HR Teams, who were
involved in the recruitment process.
Objectives of the research:

 Formulating the objective of the study

Designing the methods of data collection
 Selecting the sample plan
 Collecting the data.
 Processing and analyzing the data.

Research Design:

Research design is the basis framework which provides guidelines

for the rest of research process. It is a map or blueprint according to
which the research is to be conducted. A typical research design of a
company basically tries to resolve the following issues:

 Determining Data Collection Design

 Determining Data Methods
 Determining Data Sources
 Determining Primary Data Collection Methods
 Determining Questionnaires
 Determining Sampling Plan

Explorative Research Design: Explorative studies are undertaken

with a view to know more about the problem. These studies help in a
proper definition of the problem, and development of specific
hypothesis is to be tested later by more conclusive research designs.

Its basic purpose is to identify factors underlying a problem and to

determine which one of them need to be further researched by using
rigorous conclusive research designs.

Conclusive Research Designs: Conclusive Research Studies are

more formal in nature and are conducted with a view to elicit more
practice information for purpose of making marketing decisions.

These studies can be either:

 Descriptive or
 Experimental

Thus, it was mix of both the tools of Research Design that is,
Explorative or Conclusive.

Needs for Research Designs:

Research design in needed because it facilitates the smooth sailing

of the various maximum information with minimum expenditure of
effect, time and money research design in fact stand for Advance
planning methods to be collected.

Data sources:
 Both the primary and secondary data were used in the research of
primary data is gathered for a specific purpose or or a specific
research project. Secondary data are data were collected for another
purpose and already exists somewhere.

Primary Data:

The primary data are the data which do not exists already in record
and publications. Primary data was collected through

 Survey research

 Observational research

Survey Research:
Survey research as a name suggests, is distinguished by the fact
that the data are collected from the people who have the desired
information, through questionnaire.

Observational Research:

The observational research, data’s collected by observational,

researchers ask no questions and instead they keep track the objects
or action in which there are interest.

Secondary Data:
Secondary data is a data which already exists and may be used for
an investigation but has not been collected for this specific purpose.m
 The secondary data was collected through sources a journal in
information gathered by professional organizations and associated.

The secondary data was helpful in analyzing and frames

suggesting and recommendations for this report secondary data are
either internal or external to the company considering their use.
 CHAPTER 3
COMPANY PROFILE
 PROFILE OF THE ORGANISTION
COMPANY PROFILE

Ashok Leyland is an Indian automobile company headquartered

in Chennai, India. It is owned by the Hinduja Group. It was founded
in 1948 as Ashok Motors and became Ashok Leyland in the year
1955.

Ashok Leyland, flagship of the Hinduja group, is the 2nd largest

manufacturer of commercial vehicles in India, the 3rd largest
manufacturer of buses in the world, and the 10th largest
manufacturers of trucks. Headquartered in Chennai, 9 manufacturing
plants gives an international footprint - 7 in India, a bus
manufacturing facility in Ras Al Khaimah (UAE), one at Leeds,
United Kingdom and a joint venture with the Alteams Group for the
manufacture of high-press die-casting extruded aluminum
components for the automotive and telecommunications sectors,
Ashok Leyland has a well-diversified portfolio across the automobile
industry. Ashok Leyland has recently been ranked as 34th best brand
in India.

The origin of Ashok Leyland, a Hinduja group company can be

traced to the urge for self–reliance, felt by independent India. Pandit
Jawaharlal Nehru, India's first Prime Minister persuaded
Raghunandan Saran, an industrialist, to enter automotive

manufacture. In 1948, Ashok Motors was set up in what was then

Madras, for the assembly of Austin Cars. The Company's destiny
and name changed soon with equity participation by British Leyland
and Ashok Leyland commenced manufacture of commercial
vehicles in 1955.

Since then Ashok Leyland has been a major presence in India's

commercial vehicle industry with a tradition of technological
leadership, achieved through tie–ups with international technology
leaders and through vigorous in–house R&D. Access to
international technology enabled the Company to set a tradition to
be first with technology. Be it full air brakes, power steering or rear
engine busses, Ashok Leyland pioneered all these concepts.
Responding to the operating conditions and practices in the country,
the Company made its vehicles strong, over–engineering them with
extra metallic muscles. 'Designing durable products that make
economic sense to the consumer, using appropriate technology',
became the design philosophy of the Company, which in turn has
moulded consumer attitudes and the brand personality.

The Hinduja Group is a transnational conglomerate that provides

a wide range of products in over fifty countries worldwide. Today,
the Hinduja Group has become one of the largest transnational
business conglomerates in the world with diversified operations,
spanning all the continents. The Group employs over 25,000 people

and has offices in many key cities of the world and all the major
cities in India.Ashok Leyland vehicles have built a reputation for
reliability and ruggedness.

In the populous Indian metros, four out of the five State

Transport Undertaking (STU) buses come from Ashok Leyland.
Some of them like the double–decker and vestibule buses are
unique models from Ashok Leyland, tailor–made for high–density
routes.

In 1987, the overseas holding by Land Rover Leyland

International Holdings Limited (LRLIH) was taken over by a joint
venture between the Hinduja Group, the Non–Resident Indian
transnational group and IVECO. (Since July 2006, the Hinduja
Group is 100% holder of LRLIH). The blueprint prepared for the
future reflected the global ambitions of the company, captured in
four words: Global Standards, Global Markets. This was at a time
when liberalisation and globalisation were not yet in the air. Ashok
Leyland embarked on a major product and process upgradation to
match world–class standards of technology.

For over five decades, Ashok Leyland has been the technology
leader in India's commercial vehicle industry, moulding the
country's commercial vehicle profile by introducing technologies
and product ideas that have gone on to become industry norms.
From 18 seater to 82 seater double–decker buses, from 7.5 tonne to

49 tonne in haulage vehicles, from numerous special application

vehicles to diesel engines for industrial, marine and genset
applications, Ashok Leyland offers a wide range of products. Eight
out of ten metro state transport buses in India are from Ashok
Leyland. With over 60 million passengers a day, Ashok Leyland
buses carry more people than the entire Indian rail network!

Product range of the company includes:

 Trucks

 Engines

 Defence & Special Vehicles

Associates Companies:

 Automotive Coaches & Components Ltd

(ACCL) Lanka Ashok Leyland
 Hinduja Foundries IRIZAR–
TVS

 Ashok Leyland Project Services Limited

Milestones:
 1966 – Introduced full air brakes
1967 – Launched double–decker bus

 1968 – Offered power steering in commercial

vehicles 1979 – Introduced multi–axle trucks

 1980 – Introduced the international concept of integral bus

with air suspension 1982 – Introduced vestibule bus

 1992 – Won self–certification status for defence

supplies 1993 – Received ISO 9002

 1997 – India's first CNG powered bus joined the BEST fleet

 2001 – Received ISO 14001 certification for all manufacturing

units
 2002 – Launched hybrid electric vehicle2003 – Dheeraj Hinduja
Elected Vice Chairman of Ashok Leyland Board

 2004 – The Government of National Capital Territory of Delhi

and Ashok Leyland signed an agreement for setting up a 'state–
of–the–art' Driver Training Institute at Burari

 2005 – State–of–the–art Driver Training Institute opens in Delhi

 2006 – Ashok Leyland and Bosch have joined hands with the
Indian Institute of Technology Madras (IITM) to set up the Ashok

 Leyland and Bosch Centre of Excellence in Engineering Design at

the IITM campus

 2007 – The company unveiled 4921 TT, a 6x4 tractor with a gross
vehicle weight of 49 tonnes

 2008 – The company signed an agreement for a joint venture with

John Deere, for manufacturing and marketing of construction
equipment.

 2009 – Ashok Leyland and Bank of Baroda signed a MoU

wherein Bank of Baroda will fund Ashok Leyland’s end–
customers as well as finance its dealers’ inventory

 2010 – Ashok Leyland has bagged an order for 600 vehicles from
VRL Logistics that comprise 500 numbers of 3123 Multi–Axle
 Vehicle (MAV) in the 8x2 configuration, a newly developed, first
of its kind for the Indian commercial vehicle industry, along with
100 nos. of the Company’s 12–metre buses

 2011–Ashok Leyland forays in small commercial vehicle

segment; launches “DOST” in JV with Nissan Motor.

 2013– Launched the STILE, a stylish Multi–Purpose Vehicle

(MPV) based on a contemporary, award–winning vehicle
platform.

 2013– Launched the BOSS, an intermediate commercial

vehicle (ICV), that seamlessly combines the strength and
ruggedness of a truck with the comfort of a car.

 2014– Launched two new Light Commercial Vehicles (LCV) –

PARTNER truck, India’s first air– conditioned LCV goods
vehicle and MiTR bus, a LCV bus with best–in–class comfort.
After the commercially successful Dost and the recently launched
STiLE, now PARTNER and MiTR are the latest offerings from
the Ashok Leyland – Nissan Joint Venture.

Vision:

Be among the top Indian Corporations acknowledged nationally and

internationally for
  Excellence in quality of its product.

 Excellence in customer focus and service.

Mision:

Be a Leader in the business of commercial vehicles, excelling in

technology, quality and value to customer fully supported by
customer service of the highes order and meeting national and
international environmental and safety standards.

Awards/Achievements
In the journey towards global standards of quality, Ashok Leyland
reached a major milestone in 1993 when it became the first in India's
automobile history to win the ISO 9002 certification. The more
comprehensive ISO 9001 certification came in 1994, QS 9000 in
1998 and ISO 14001 certification for all vehicle manufacturing units
in 2002. It has also become the first Indian auto company to receive
the latest ISO/TS 16949 Corporate Certification (in July 2006) which
is specific to the auto industry.
 CHAPTER 4
WORK EXPERIENCE IN
ASHOK LEYLAND
 The report provides a consolidated preview of the functional
activities of Ashok Leyland, ennore first plant. The referred unit is a
one limb of Ashok Leyland, the nation’s pioneer in automobile
manufacture.

The main purpose of the study is:

 Identification of the technique of performance appraisal in

Ashok Leyland.
 Employees attitude towards the present appraisal system.
 To identify the effectiveness of performance appraisal system
for employees.

OBJECTIVES OF THE STUDY

 The major objective of the study was to get an insight of the
performance appraisal process an other aspect of Human resource
management.

This internship has to gives me the understanding of organizatoin

and also about the elements of strategic thinking, planning and
implementation, and how these things are applied in a real world
organization environment. Following are the objectives that I have in
my mind before working as an internee.

To develop my understanding of the subject:

Performance appraisal system implemented in the organization

varies according to the need and the suitability. Through my
research, i have tried to study the kind of appraisal used in the
organization an the various pros and cons of this type of system.

To conduct a study on social behaviour:

Social behaviour is a very unpredictable aspect of human life but

social research is an attempt to acquire knowledge and to use the
same for social development.

To exercise social control and predict change in behaviour:

The ultimate object of my research is to make it possible to predict

the behaviour of individual by studying the factors that govern and
guide them.
AN OVERVIEW OF PERFORMANCE APPRAISAL

A performance appraisal, also referred to as a performance

review, performance evaluation, (career) development discussion,
or employee appraisal is a method by which the job performance of
an employee is documented and evaluated. Performance appraisals
are a part of career development and consist of regular reviews of
employee performance within organizations. It is an element of the
principal-agent framework, that describes the relationship of
information between the employer and employee, and in this case the
direct effect and response received when a performance review is
conducted.

Six modern performance appraisal methods

1. Management by Objectives (MBO)

 Management by objectives (MBO) is the appraisal method where
managers and employees together identify, plan, organize, and
communicate objectives to focus on during a specific appraisal
period. After setting clear goals, managers and subordinates
periodically discuss the progress made to control and debate on the
feasibility of achieving those set objectives.

This performance appraisal method is used to match the

overarching organizational goals with objectives of employees

effectively while validating objectives using the SMART method to

see if the set objective is specific, measurable, achievable, realistic,
and time-sensitive.

At the end of the review period (quarterly, half-yearly, or annual),

employees are judged by their results. Success is rewarded with
promotion and a salary hike whereas failure is dealt with transfer or
further training. This process usually lays more stress on tangible
goals and intangible aspects like interpersonal skills, commitment,
etc. are often brushed under the rug.

Incorporating MBO into your performance management process

To ensure success, the MBO process needs to be embedded in the

organizational-wide goal setting and appraisal process. By
incorporating MBO into the performance management process,
businesses can improve employee’s commitment, amplify chances
for goal accomplishment, and enable employees to think
futuristically.

Ideal for:

Measuring the quantitative and qualitative output of senior

management like managers, directors, and executive (business of any
size)

Common reason for failure:

Incomplete MBO program, inadequate corporate objectives, lack

of top management involvement
 Steps to implement a successful MBO program:

1. Every manager must have 5-10 goals expressed in specific,

measurable terms
2. Manager can propose their goals in writing, which will be finalized
after review
3. Each goal needs to include a description and a clear plan (list of
tasks) to accomplish it

4. Determine how progress will be measured and how frequently

(minimum quarterly)
5. List down corrective actions that will be taken if progress is not in
accordance with plans
6. Ensure that goals at each level are related to the organizational
objectives and levels above/below

2. 360-Degree Feedback

360-degree feedback is a multidimensional performance appraisal

method that evaluates an employee using feedback collected from the
employee’s circle of influence namely managers, peers, customers,
and direct reports. This method will not only eliminate bias in
performance reviews but also offer a clear understanding of an
individual’s competence.
 A 360-degree feedback (also known as multi-rater
feedback, multi source feedback, or multi source assessment) is a
process through which feedback from an employee's subordinates,
colleagues, and supervisor(s), as well as a self-evaluation by the
employee themselves is gathered. Such feedback can also include,
when relevant, feedback from external sources who interact with the
employee, such as customers and suppliers or other interested
stakeholders.

360-degree feedback is so named because it solicits feedback

regarding an employee's behavior from a variety of points of view
(subordinate, lateral, and supervisory). It therefore may be contrasted
with "downward feedback" (traditional feedback on work behavior
and performance delivered to subordinates by supervisory or
management employees only; see traditional performance appraisal),
or "upward feedback" delivered to supervisory or management
employees by subordinates only.

This appraisal method has five integral components like:

1. Self-appraisals

Self-appraisals offer employees a chance to look back at their

performance and understand their strengths and weaknesses.

However, if self-appraisals are performed without structured forms or

formal procedures, it can become lenient, fickle, and biased.

2. Managerial reviews

Performance reviews done by managers are a part of the

traditional and basic form of appraisals. These reviews must include
individual employee ratings awarded by supervisors as well as the
evaluation of a team or program done by senior managers.

3. Peer reviews

As hierarchies move out of the organizational picture, coworkers

get a unique perspective on the employee’s performance making
them the most relevant evaluator. These reviews help determine an
employee’s ability to work well with the team, take up initiatives, and
be a reliable contributor. However, friendship or animosity between
peers may end up distorting the final evaluation results.

4. Subordinates Appraising manager (SAM)

This upward appraisal component of the 360-degree feedback is a

delicate and significant step. Reportees tend to have the most unique
perspective from a managerial point of view. However, reluctance or
fear of retribution can skew appraisal results.

5. Customer or client reviews

The client component of this phase can include either internal

customers such as users of product within the organization or external
customers who are not a part of the company but interact with this
specific employee on a regular basis.

Customer reviews can evaluate the output of an employee better,

however, these external users often do not see the impact of processes
or policies on an employee’s output.
 Advantages of using 360-degree feedback:

 Increase the individual’s awareness of how they perform and the

impact it has on other stakeholders
 Serve as a key to initiate coaching, counselling, and career
development activities
 Encourage employees to invest in self-development and embrace
change management
 Integrate performance feedback with work culture and promote
engagement

Ideal for:
Private sector organizations than public sector organisations as peer
reviews at public sector organizations are more lenient.

Common reason for failure:

Leniency in review, cultural differences, competitiveness, ineffective

planning, and misguided feedback

3. Assessment Centre Method

The concept of assessment centre was introduced way back in 1930

by the German Army but it has been polished and tailored to fit
today’s environment. The assessment centre method enables
employees to get a clear picture of how others observe them and the
impact it has on their performance. The main advantage of this

method is that it will not only assess the existing performance of an

individual but also predict future job performance.
 During the assessment, employees are asked to take part in social-
simulation exercises like in-basket exercises, informal discussions,
fact-finding exercises, decision-making problems, role-play, and
other exercises that ensure success in a role. The major drawback of
this approach is that it is a time and cost intensive process that is
difficult to manage.

Advantages of the assessment centre method:

 Enhance a participant’s knowledge, boost his/her thought process,
and improve employee efficiency
 Can be tailored to fit different roles, competencies, and business
needs
 Offer an insight of the employee’s personality (ethics, tolerance,
problem-solving skill, introversion/extroversion, adaptability, etc.)

Ideal for:

Manufacturing organizations, service-based companies, educational

institutions, and consulting firms to identify future organizational
leaders and managers.

Guidelines to implement assessment centre practice:

1. Use job analysis to determine the components of effective

performance
2. Identify performance metrics that can be measured using this
assessment center
3. Classify meaningful and relevant candidate behavior in the
assessment process
4. Find assessment techniques that can ideally elicit ideal behavioral
information
5. Spot assessors and assessee’s excluding immediate supervisors

6. Provide thorough training to assessors and reviewers

7. Maintain a system of performance records for each candidate
8. Review records and reward employee or provide training
accordingly.

4. Behaviorally Anchored Rating Scale (BARS)

Behaviorally anchored rating scales (BARS) bring out both the

qualitative and quantitative benefits in a performance appraisal
process. BARS compares employee performance with specific
behavioral examples that are anchored to numerical ratings.
Each performance level on a BAR scale is anchored by multiple
BARS statements which describe common behaviors that an
employee routinely exhibits. These statements act as a yardstick to
measure an individual’s performance against predetermined standards
that are applicable to their role and job level.

The first step in BARS creation is generation of critical incidents

that depict typical workplace behavior. The next step is editing these
critical incidents into a common format and removing any
redundancy. After normalization, the critical instances are
randomized and assessed for effectiveness. Remaining critical
incidents are used to create BARS and evaluate employee
performance.

Advantages of using BARS:

 Enjoy clear standards, improved feedback, accurate performance
analysis, and consistent evaluation
 Eliminate construct-irrelevant variance in performance appraisal
ratings by emphasis more on specific, concrete, and observable
behaviors
 Decrease any chance for bias and ensure fairness throughout the
appraisal process

Ideal for:

Businesses of all sizes and industries can use BARS to assess the
performance of their entire workforce from the entry level agent to c-
suite executives

Common drawbacks of BARS:

1. High chance for subjectivity in evaluations

2. Hard to make compensation and promotion decisions
3. Time-consuming to create and implement
4. Demands more from managers and senior executives

5. Psychological Appraisals
 Psychological appraisals come in handy to determine the hidden
potential of employees. This method focuses on analyzing an
employee’s future performance rather than their past work. These
appraisals are used to analyze seven major components of an
employee’s performance such as interpersonal skills, cognitive
abilities, intellectual traits, leadership skills, personality traits,
emotional quotient, and other related skills.

Qualified psychologists conduct a variety of tests (in-depth

interviews, psychological tests, discussions, and more) to assess an
employee effectively. However, it is a rather slow and complex
process and the quality of results is highly dependent on the
psychologist who administers the procedure.

Specific scenarios are taken into account while performing

psychological appraisal. For instance, the way in which an employee
deals with an aggressive customer can be used to appraise his/her
persuasion skills, behavioral response, emotional response, and more.

Advantages of psychological appraisals:

1. Extract measurable, objective data about not just an employee’s
performance but also potential
2. Can be deployed easily when compared with other performance
appraisal methods
3. Offer introverted or shy employees a platform to shine and prove
their potential

Ideal for:

Large enterprises can use psychological appraisals for an array of

reasons including development of leadership pipeline, team building,
conflict resolutions, and more.

Common reasons for failure:

Absence of proper training, lack of trained professionals to

administer reviews, and nervousness or anxiety of candidates can
skew results.

6. Human-Resource (Cost) Accounting Method

Human resource (cost) accounting method analyses an employee’s

performance through the monetary benefits he/she yields to the
company. It is obtained by comparing the cost of retaining an
 employee (cost to company) and the monetary benefits
(contributions) an organization has ascertained from that specific
employee.

When an employee’s performance is evaluated based on cost

accounting methods, factors like unit-wise average service value,
quality, overhead cost, interpersonal relationships, and more are taken
into account. Its high-dependency on the cost and benefit analysis and
the memory power of the reviewer is the drawback of human
resources accounting method.

Advantages of the human cost accounting method:

 Effectively measure the cost and value that an employee brings to the
organization
 Help identify the financial implications that an employee’s
performance has on the organization’s bottom line

Ideal for:

Startups and small businesses where the performance of one

employee can make or break the organization’s success.

Implementation of human resource cost accounting method:

1. Identify the gap between the market and the current package of an
employee
2. Determine the monetary and non-monetary value that an employee
brings to the table
3. List down the things that an employee achieved in the review period
(increase in the subscriber count, improvement in revenue, number of
new deals won, etc.,)

A future-focused employee performance appraisal method

Choosing the right performance appraisal method is more critical

than ever since it reflects what you think of your employees and how
much you care about employee morale. Once you’ve found an ideal
performance review method for your needs, the next step is
implementing it properly to eliminate critical performance gaps and
address pressing issues that impact ROI.
 CHAPTER 5
RECOMMENDATIONS
AND SUGGESTIONS
 SUGGESTIONS AND RECOMMENDATIONS

 Employee attitude towards the current performance appraisal

method is very much satisfactory. From the HR Department,
we have found that all the employees are fully cooperative in
the full appraisal process.
 The company also did provide opportunity for growth and
development and also helped to identity strength, weakness and
hidden talent.
 Presence of a family implemented carer plan-good sense of
growth.
 The very concept of performance appraisal is marketed
throughout the organization, people have accepted it and
understood its importance to the organization.
 To market such a concept, it should not start at bottom, instead
it should be started by the initiative of the top management.
This would help in percolating down th concept to the
advantage of all, which includes the top management as well as
those below them. This means that the top management has to
take a welcoming and positive approach towards the change
that is intended to be brought.
 It should be noted that the appraisal form for each job position
should be different as each job has different knowledge and
skill requirements. There should not be a common appraisal
form for every job position in the organization.
 The job an role expected from the employees should be decided
well in advance and that too with the consensus with them.
 A neutral panel of people should do the appraisal and to avoid
subjectivity to a market extent, objective methods should be
employed having quantifiable data.
 The time and period for conducting the appraisal should be
revised, so that the exercise becomes a continuous phenomenon.
 The feedback doesn’t come from multiple source. It should to
increase the efficiency.
 Implement more methods of performance appraisal and update
the employees about the type of methods used for performance
evaluation.
 The whole performance appraisal should be kept more
transparent and free from bias in the future.
 More opportunities should be provided for expressing their
ideas and plans to implement their level performance.
 Suggestion could be obtained from employees regarding
framing the performance appraisal system.
 Appraisal feedback is very important in any performance
appraisal program. Should be carefully communicated by
 making high performers increase their target and low
performers to build up their confidence.

 Organization climate:
 Well analyzed goals are set.
 Good and effective performance appraisal strategies
applied.
 All the strategies are fair and objective.
 The employees are well aware of what is expected of
them.
 Proper feedback is not given to the management staff.
 Good performance leads to annual increments and
promotion.
 CHAPTER 6
CONCULUSION
CONCULSION

The summer internship and the resulted report have been of great
help to the researcher, as an aspirant manager, to understand the
functioning of a major establishment like Ashok Leyland .

Ashok Leyland is a well known automobile manufacturing

company in India. In ennore fist plant, there is well planned
organisation structure being followed. There is a well integration of
all the functional departments which facilitates the use of the
software like ERP. Retention of the talented people is essential as
they contribute a lot to success of the organisation.

The catalogue training programme and the resulted report have

been of great help to me, an aspirant manager, to understand the
functioning of a major establishment like Ashok Leyland. The
summer internship has also revealed many unknown facts about the
working of a manufacturing unit and familiarize about the assembling
of commercial vehicles.
BIBLIOGRAPHY
BIBLIOGRAPHY

Wikipedia
www.Scribd.com
http://www.linkedin.com