PERFRMANCE APPRISAL

A DISSERTATION PROJECT REPORT ON Performance appraisal

Acknowledgement
The satiation and euphoric that accompany the successful completion of task, would be incomplete without the mention of the people who made it possible. After all, the success is the epitome of hard work, severance, undeterred, zeal, stead fast determination and most of all encouraging guidance. So with immense gratitude, I acknowledge all those whose guidance and encouragement served as a beacon light and crowned our efforts with success. With a deep sense of gratitude and indebtedness, I sincerely and whole heartedly thank Amlan Dasgupta, my project guide for giving me valuable suggestions and advice throughout the execution of the project.

Last but not the least, I would like to thank almighty God, my parents, and my friends who helped me gather these data and have sat with me for hours discussing about the project

CONTENTS
CHAPTERS
CHAPTER - 1

SUBJECTS
INTRODUCTION

PAGE NO.S
1 - 15

Introduction to the study. Objectives of the study. Scope of the study. Method. Limitation of the study

CHAPTER - 2

PERFORMANCE & APPRAISAL ANALYSIS

17-30

Appraisal feedback.

CHAPTER 3

CONCLUSIONS

32 33

Conclusion
Bibliography

INTRODUCTION TO THE STUDY

The public sector in most countries, small or big, are going through profound restructuring, trying to provide improved services while at the same time having to drastically downsize in the face of major fiscal constraints. A significant element of such reforms in the public sector is the initiatives underway to reform public administration, to reinvent government to use a popular expression. This process of reforming public administration is seen as necessary to meet the dual challenges of improved services with fewer resources. One of the most popular tools used for reform activities at present is Performance Appraisal Systems. Strengthening government performance improving the productivity, quality, timeliness, responsiveness, and effectiveness of public agencies and programs is important to all, as beneficiaries of public service and as taxpayers. However, as Whole has also suggested, a number of political, bureaucratic, and technical obstacles constrain government performance. Furthermore, Performance Appraisal (PA) is considered to be a particularly controversial management practice anywhere it is being practiced. At this point it is essential to provide few definitions of what performance appraisal means. With the growing amount of literature on performance appraisal, so has the definitions increased over the years. Therefore, the following definitions have been chosen which could be regarded as most relevant to this study.

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Performance appraisal today is the assessment of an employees job performance. It has two purposes:

* First appraisal serves an administrative purpose. It provides information for making salary, promotion, and layoff as well as providing documentation that can justify this decision in court. * Second, and perhaps more importantly, performance appraisal serves a development purpose. The information can be used to diagnose training needs, career planning, and the like. Feedback and coaching based appraisal information provide the basis for improving day-to-day performance.

Performance appraisal is defined as evaluating an employees current or past performance relative to his or her performance standards. The appraisal process therefore involves: * Setting work standards; * Assessing the employees actual performance relative to these standards; and * Providing feedback to the employee with the aim of motivating that person to eliminate performance deficiencies or to continue to perform above par. Performance appraisal is the process of identifying, evaluating and developing the work performance of employee in the organization, so that the organizational goals and objectives are more effectively achieved, while at the same time benefiting employees in terms of recognition, receiving feedback, catering or work and offer in career guidance.

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OBJECTIVE OF THE STUDY

Performance appraisal could be taken either for evaluating the performance of employees or for developing them. The evaluation is of two types: telling the employee where he stands and using the data for personnel decisions concerning pay, promotions, etc. The developmental objectives focus on finding individual and organizational strengths and weaknesses; developing healthy superiorsubordinate relations; and offering appropriate counseling/coaching to the employee with a view to develop his potential in future. Appraisal of employees serves several useful purposes:

(a) Compensation decisions: It can serve as a basis for pay raises. Managers need performance appraisal to identify employees who are performing at or above expected levels. This approach to compensation is at the heart of the idea that raises should be given for merit rather than for seniority. Under merit systems employee receives raises based on performance. (b) Promotion decisions: It can serve as a useful basis for job change or promotion. When merit is the basis for reward, the person doing the best job receives the promotion. If relevant work aspects are measured properly, it helps in minimizing feelings of frustration of those who are not promoted. (c) Training and development programmers: It can serve as a guide for formulating a suitable training and development programmed. Performance appraisal can inform employees about their progress and tell them what skills they need to develop to become eligible for pay raises or promotions or both. (d) Feedback: Performance appraisal enables the employee to know how well he is doing on the job. It tells him what he can do to improve his present performance and go up the organizational ladder. (e) Personal development: Performance appraisal can help reveal the causes of good and poor employee performance. Through discussions with individual employees, a line manager can find out why they perform as they do and what steps can be initiated to improve their performance. (3)

Every organization has to decide upon the content to be appraised before the programmed approved. Generally, the content to be appraised is determined on the basis of job analysis. The content to be appraised may be in the form of contribution to organizational objectives (measures) like production, savings in terms of cost, return on capital, etc. Other measures are based on (1) behaviors which measure observable physical actions, movements, (2) objectives which measure job related results like amount of deposits mobilized, and (3) traits which are measured in terms of personal characteristics observable in employees job activities. The content to be appraised may vary with the purpose of appraisal and type and level of employees.

SCOPE OF THE STUDY Performance appraisal is broader term than Merit Rating. In the past managers used to focus on the traits on an employee while ranking people for promotions and salary increases Employees traits such as honesty, dependability, drive, personality, etc., were compared with others and ranked or rated. The attempt was to find what the person has (traits) rather than what he does (performance); the focus was on the input and not on the output. This kind of evaluation was open to criticism because of the doubtful relationship between performance and mere possession of certain traits. The main characteristics of performance appraisal may be listed thus: * The appraisal is a systematic process. It tries to evaluate performance in the same manner using the same approach. A number of steps are followed to evaluate an employees strength and weaknesses. * It provides an objective description of an employees jobs relevant strengths and weakness. * It tries to find out how well the employee is performing the job and tries to establish a plan for further improvement.

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* The appraisal is carried out periodically, according to a definite plan. It is certainly not a one-shot dead. * Performance evaluation is not job evaluation. Performance appraisal refers to how well someone is doing an assigned job. Job evaluation, on the other hand, determines how much a job is worth to the organization, and therefore, what range of pay should be assigned to the job. * Performance appraisal may be formal or informal. The informal evaluation is more likely to be subjective and influenced by personal factors. Some employees are liked better than others and have, for that reason only, better chances of receiving various kinds of rewards than others. The formal system is likely to be more fair and objective, since it is carried out in a systematic manner, using printed appraisal forms.

METHOD OF PERFORMANCE APPRISAL A number of methods are now available to assess the performance of an employee. The method broadly classified in two groups: Traditional Method Modern Method

Methods of performance appraisal

Traditional method
1. Ranking method 2. Paired comparison 3. Grading

Modern method
1. MBO 2. BARS 3. 360 degree appraisal

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4. Forced distribution method 5. Checklist method 6. Graphical scale method 7. Critical incident method 8. Forced choice method 9. Essay method 10. Field review 11. Confidential report

4. Assessment centre 5. Cost accounting method

1) TRADITIONAL METHODS:-

1. RANKING METHODS : It is the oldest & simplest method. In this one employee is compared with all others for the purpose of placing them in a simple rank order of worth. The employees are ranked from the highest to the lowest or from the best to the worth. Through this employee of good, bad performance well differentiated.

2. PAIRED COMPARISON: In this method, each employee is compared with other employee on one-on-one basis, usual based on trail only. The rate is provided with a lunch of slips each containing a pair of names, the rates. Puls a lick mark against the employee whom he considers the better of z. The number of possible pairs for a given number of employees. No. of comparison = N (N-1) Z

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K K L M N O

L 1

M 2 5

N 3 6 8

O 4 7 9 10

The advantages of this comparison give complete information &

also arrange in rank.

The dis-advantages of this method not suitable with when the

organization is large.

3. GRADING METHOD: Under this method analytical ability, co-cooperativeness, dependability, job-knowledge, etc. are selected for evaluation. The employees are given grades according to the judgment : grades in mind. A : Outstanding B : Above Average C : Average D : Bellow Average E : Poor

The actual performance of every employee is rated with various

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4. FORCED DISTRIBUTION METHOD: Evolved by Tiffin. The method assumes that employees performance level confirms to normal statistical distribution. Some rates suffers from a constant error ice either they rate of employees as good, average or poor. They do not evaluate employee properly. This system minimizes rates bias so that all employees are not similarly rated. The rates ask to Place 10% person in outstanding group Place 20% person in above average Place 40% person in average group Place 20% person in below average Place 10% person in poor The main idea in this system is to spread rating in a number of grades & suitable for large employees.

5. CHECKLIST METHOD: A checklist is simple form, with descriptive/objective statements about employee & his behavior in YES/NO. The basic purpose is to case the evaluation burden upon the rates. The checklist is the presented to the rate to tick appropriate answer relevant to the appraisal. Each question carries a weight age in relationship to their importance. When the checklist is completed, it is sent to HR department to prepare final scores for all the appraisals based on all questions.

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Checklist
Simple checklist method Weight checklist method

a) Simple Check list Method:It simply consists of large number of statements concerning employee behaviors.

VODA TEL

PERFORMANCE APPRAISAL FORM

Name of employee: Designation: Checklist of Qualities: 1. Is regular on the job? 2. Does maintain discipline well? 3. Does the employee maintain soUnd relation with customer? 4. Does the employee behave well With the public outside the organization? 5. Does the employee behave courtEouslywith his supervisor?

YES

NO

b) Weighted Check list Method :In this method, weights are assigned to different statements

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Characters

Weights assigned

Performance

i. ii. iii. iv. v. vi.

Regularity Knowledge Dependability Interpersonal Relations Locality Leadership Potential

0.5 1.0 1.5 2.0 2.0 1.5

Weight =

6. GRAPHICAL SCALE METHOD : A variety of traits may be used in this type of sailing device; the most common are quantity & quality of work. The rating scale can also be adapted by including traits that the company considers important for effectiveness on the job. In this method, the printed appraisal form is used to appraisal each employee. The form has performance factor/traits. A range of job performance characteristics (from unsatisfactory to outstanding) for each trait.

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EMPLOYEE NAME :DEPARTMENT :DATE :PERFORMANCE FACTOR PERFORMANCE RATING Unsatisfactory I. II. Quality of work Quantity of work Below Average Average Above Average Outstanding

III. IV.

Knowledge of job Attitude

V.

Dependability

This method merits that it is good for measuring various job behaviors of an employee. The de-merits are it has rates bias & this not clear to appraisal the employees performance.

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7. CRITICAL INCIDENT METHOD : This method attempts to measure works performance in terms of certain events or incidents that occur in the course of work. The employee behaviourkeenly observed & evaluated. For example how the manager handle the customer. In this method these are 3 steps :a) Prepare the list of incident. b) Experts/manager will study/evaluate the behavior of employee in that event. c) Finally a checklist is prepared with yes & no options. This method plays an important role to find out which employee can perform better in which dilation & another impotent thing that it focus on behavior. Demerits that lot of paper work as list of incident are collected & generally negative incident are more noticeable than positive incidents. 8.FORCED CHOICE METHOD : Developed by J.P Guild ford. It contains series of statements, which two statements are made with one positive & another negative, & series of statements classified +ve & -ve. Ex- Gives good &clear instruction to the sub-ordinate. Can be depended upon to complete any job assigned. 9.FIELD REVIEW METHOD :In this method the HR manager takes interview of supervisor & collect information about the sub ordinates.

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10.ESSAY METHOD :The appraiser write down all strength & weakness of the employee & also prepare easy regarding 1. 2. 3. 4. Demerits ;1. Highly subjective 2. Time taken Employees understanding regarding organization policy, objective. Job knowledge Ability, aptitude Attitude

11.Confidential report ;1. Applied in government organization. 2. Appraise will prepare a report at the end of every year 3. The report is kept secret MODERN METHOD:1. MBO (Management by objective):-In this management set specific goal with, each employee & then periodically discuss his progress toward this goal. It consists of following step. Set org. goal: - First of all organization goal was set up. Set departmental goal: - After setting of organization goal departmental goal was set by the department head & their senior & with junior. Set individual goal: - Department head set the goal of individual goal after discuss with each individual.

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 Measure the result: - The performance gets evaluated. Provide feedback: - The feedback given to the employee about their performance. 2. 360 DEGREE: - It is the method in which systematic collection of data of performance of an individual or group from a number of appraisers which include supervisor, team member, pears customer. Demerits:-1.Not applicable for all type of organization 2.Time taken 3. Feedback affected by personal differences & biases. 3. HUMAN RESOURCE ACCOUNTING: - This method evaluate an employees performance from the monitory benefit the employee gives to organization. In this method the appraiser calculates the cost incurred by the company, cost like recruitment selection & training etc. 4. ASSESSMENT CENTER: - It is the method in which group of participants undertaken a series of job related exercise under observation, so that skill, knowledge, behavior, attitude productivity, potential is evaluated or assessed. It is used to take decision :(A)selection (B) recruitment (C) promotion (D) training

LIMITATIONS OF THE STUDY 1) The data collection period was in the beginning of the year, which means it was also the beginning of the Performance Appraisal Cycle. This means that the actual targetsetting and evaluation period which is planned for the beginning of the year respectively, was not witnessed during the field work. As a result, the past experience of working in the field and the records regarding the processes involved during that period were used in the study.

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2)

The two divisions of chosen for the study have good work procedures and are considered as better organizations compared to most government agencies. As a result, there is a possibility that choosing these two organizations might not clearly show the real picture of the public service. The main reason why these two divisions were chosen is due to the easy accessibility and the time constraint.

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PERFORMANCE & APPRAISAL ANALYSIS

APPRISAL FEEDBACK FEEDBACK DEFINED:

The term workplace feedback implies two things; (a) Job performance-whether x is capably performing specific tasks that have been assigned (b) Work-related behavior the way x performs his tasks, whether x speaks politely to customers and works cooperatively with other team members. The appraiser and the appraise need to follow certain things while giving and receiving feedback. These are discussed below.

(a) Adequate preparation: The appraisal process should be a continuous one. Informal session could be held every now and then to put the employee on track. Formal meetings could take place on a fortnightly, monthly or quarterly basis depending on the progress shown by the employee from time to time.

(b) Describe behavior: The rater should give detailed feedback to the employee. This involves questions such as

* * * *

What happened? Where and when did it occur? Who was involved? How did it affect others? (17)

( c ) Proper timing: Feedback should be well-timed. It should be given immediately after the event has taken place. For example the statement 3 weeks ago I passed you in the corridor; you didnt say hello does not serve the purpose as the recipient has no interest to reflect on the event unless the consequences are negative. Timing also means that the recipient of the feedback should be in a position to receive feedback and use it.

(d) Help both parties: To be effective, feedback should satisfy the needs of the rater and the rate. The rater may want to help, to influence and to establish a better relationship. To this end, he must move closer to the ratee, understand his problems and suggest remedial steps in a friendly tone. The rate on his part should listen to the feedback information given by the rater carefully. There is no use overreacting to feedback.

CONSEQUENCES OF PERFORMANCE APPRAISAL : Haberstroh (1965:1182) drew two broad conclusions from his review of performance measurement research: First, performance reporting is omnipresent and necessary so. Second, almost every individual instance of performance reporting has something wrong with it. Performance appraisal remains omnipresent and problematic even today. The following list consist a number of positive and negative consequences relevant to the performance appraisal in the context of Rourkela Steel Plant. Some positive results of performance appraisal: The person whose performance is appraised may develop an increased motivation to perform effectively. The self-esteem of the person being appraised may increase.

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The job of the person being appraised may be clarified and better defined. Valuable communication can take place among the individuals taking part (that also include communication between the subordinate and the superior). Rewards such as pay and promotion can be distributed on a fair and credible basis. Organizational goals can be made clearer, and they can be more readily accepted. Valuable appraisal information can allow the organization to do better manpower planning, test validation, and development of training programmers. Better and timely service provision, thus greater citizen satisfaction. Makes bureaucrats more accountable for their actions. So it is a change of attitude from the old notions of public administration.

Some negative results of performance appraisal :

The self-esteem of the person being appraised and the person doing the appraisal may be damaged. Large amount of time may be wasted. The relationship among the individuals involved may be permanently worsened thereby creating organizational conflicts. Performance motivation may be lowered for many reasons, including the feeling that poor performance measurement means no rewards for performance (i.e. biased evaluation including favoritism towards some employees). Money may be wasted on forms, training, and a host of support services.

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MOTIVATION AND REWARD:

Motivation is probably one of the major factors that influence the institutionalization of appraisal system. How motivated the employee is, how satisfied, how committed and how loyal the employee is to the organization directs to higher performance. However, motivation is determined mostly by the type of reward the individual receives. It could be argued that motivation and reward are organizational variables rather than cultural variables. This is true to some extent that culture influences motivation and determines what values the individual places on different kinds of rewards. The hypothesis used for this variable is summarized in the following figure.

Relationship between culture, reward, motivation and performance

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As the hypothesis suggest, motivation (intrinsic and extrinsic) is derived from reward (intrinsic and extrinsic). Motivation in turn results in greater satisfaction, commitment and loyalty to the organization (for the purpose of this research, commitment will be dealt as an organizational variable, mainly because of its greater relevance to organization). Greater satisfaction, commitment and loyalty mean that the individual will stay in the organization longer and will share the values and norms of the organization thereby striving to improve the performance of the organization. Higher organizational performance is achieved through higher individual performance. Therefore, as the above Figure has outlined, rewards leads to motivation which leads to satisfaction, commitment and loyalty which in turn means higher performance. This variable is focused on how some of the cultural attributes influence the motivational factors which can influence the performance of the individual (it will be assumed that the successful institutionalization of the performance appraisal system will lead to higher individual performance). * Communication skills: The ability to convey messages, views and instructions orally and in writing in terms of accuracy, effectiveness, clarity and courteousness. Reliability and respectability: Honesty, trustworthiness, accountability and dedication (such as willingness to work extra hours). Leadership: The ability to supervise, manage and mobilize resources to implement the tasks of the organization. The ability in thinking and reasoning and having exemplary personal qualities. Networking: The ability to foster relationships and cooperation within and outside the organization. Discipline: The ability and willingness to follow rules and regulations. Personality: Courteousness and personal grooming. Creativity: The ability to generate new ideas, introduce innovation and resourcefulness.

* * *

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The Performance Appraisal Process

The following figure shows the process that was followed during the implementation phase.

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Observations and Problems

An analysis was undertaken of the first appraisal system and the main observations are summarized below.

There were no differences in the reward system of granting annual salary increments between high performers and those who barely reached the 60-point mark in the PA forms. Over the three years since the introduction of the PA system, almost all employees had received an annual salary increment. Administrative problems associated in the implementation process itself, such as mistakes in the increment forms received by the PSD, reflecting inadequate training of employees in ministries and departments in filling out PA forms. Mistakes evident in the increment requests sent to PSD from the ministries and departments pointed out to poor record keeping on the part of the respective ministries and departments. The sheer logistics of centrally managing the system of providing annual increments to government employees based on the PA system proved unworkable due to the time, effort and resources on the part of the PSD.

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TERMINATION OF THE APPRAISAL SYSTEM:

The cabinet was presented with a review report of the appraisal system. All The ministers agreed that the whole system had generated much dissatisfaction among employees and had failed to achieve its initially set objectives. As such the decision was made to terminate the appraisal system and the granting of salary increment. In this regard the decision was also made to review the appraisal system and strengthen the record keeping in the respective ministries and departments.

THE NEW APPRAISAL SYSTEM (2002 to date)

The former system of evaluating the performance of government employees focused mainly on the employees behavior and their attitude. The main disadvantage of such a system was that the attitude of the supervisor towards the employee has a great influence in the completion of the Performance Appraisal Forms. Hence the degree to which the targets set by the organization were being achieved could not be fully evaluated using that system. As a result even though a system of evaluating the performance of government employees remained in existence, there remains the possibility that the targets set out by the organization were not fully attained. Furthermore, a considerable increase in the level of performance of employees was also not being achieved. Hence it was concluded that an evaluation system which is based on the assessment of the work assigned and completed by the employees would be more effective in evaluating the performance of the employees at the organizational level, rather than basing the evaluation on the assessment of the employees attitudes and behavior. As a result, the new system of evaluating the government employees aims in achieving the targets set by the organization, and providing the required training and education programmers for the employee for successful achievement of the set targets. (24)

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In short this new system mainly focuses on allocating and assigning work targets to the employee before the start of the year, evaluating the degree up to which those targets were achieved by the end of the year and identifying the areas where the employee requires further training and education for the successful completion of his or her job.

A BRIEF OVERVIEW OF THE APPRAISAL SYSTEM:

The three main elements of the current appraisal system are:

1.

Planning the work that needs to be completed by the organization for that particular year. Evaluating the performance of the employees. Provide training and education programmers for those employees who require them.

2. 3.

As the employees working in different ranks and positions would have different amounts and types of responsibilities and since the training and education required by such employee will vary accordingly with their profession, all employees had been divided into three job categories. They are:

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30

1.

Professional and Managerial category: It includes all employees above the rank of Senior Administrative Officer. Support Group 1: It includes Administrative Officers and those below that rank who are involved in either administrative jobs or those employed in jobs that require some kind of technical skill for the completion of their job. Support Group 2: It includes employees who do not require trained skills for the completion of their jobs. (E.g. Messengers, Laborers, Cleaners, etc)

2.

3.

Although the above mentioned three categories have pre-set appraisal forms, the system allows for each organization to develop tailor-made appraisal forms for positions which require special skills and are technical in nature. Such jobs include doctors, nurses, paramedics, teachers, police officers and other such professional jobs that require special criteria to assess the jobs.

All types of appraisal forms used for evaluating the performance of government employees are divided into two main categories. They are:

1. Allocating and assigning the work for the year. 2. Evaluating and assessing employees performance.

The work to be completed by each employee shall be determined with reference to his/her job description, the Annual Plan and the Strategic Plan of the organization.

At the end of the year when assessing the performance of the employee, the areas that will be evaluated are as follows: (26)

31

1.

The extent to which the targets were achieved (performance).

2.

Job knowledge and skills (skills).

3.

Characteristics expected from the employee (qualities).

4.

The extent to which the employee maintains good work relationship for the best interest of the organization (work relations).

All of the above areas will be allocated marks in consideration to the extent to which the targets set at the beginning of the year has been achieved Employees in different job categories receive different percentage points for the above mentioned areas. The differentiation in marks allocation for different job categories is shown in the figures below

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The justification for the variation in percentage allocation for different categories of employees is that, professional and managerial employees will have greater responsibilities and a considerable time of their work has to be spent on networking and communicating with other stakeholders. Furthermore, to achieve this, these employees need greater information, knowledge and skills to fulfill their tasks. On the other hand, Support Group 2 employees have very specific tasks that they need to complete and will require other skills to a lesser extent.

The appraisal process under the current appraisal system is summarized in the following figure.

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CONCLUSION

The main objective laid out at the start of this study has been to explore the degree of institutionalization and how different factors influence the extent of institutionalization of the Performance Appraisal System. In the attempt to achieve this objective, data were collected from different sources including interviews, documents and observations. After providing the description on the two unit of analysis (MDO and PSD), an analysis was carried out on how the independent variables had influenced the dependent variable selected for this study.

This chapter is the concluding chapter for this study. The chapter has been organized to provide the main conclusions of the study in a concise manner.

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BIBLIOGRAPHY

1.

Human Resource Management-Fort.Margherita

2.

Human Resource Management- VSP Rao

3.

Human Resource Development- Beirne.John

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