A study on Performance Appraisal System towards employees in APSFC

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1.1 INTRODUCTION

Performance management is an on-going, continuous process of communicating and clarifying

job responsibilities, priorities and performance expectations in order to ensure mutual

understanding between supervisor and employee. It is a philosophy which values and encourages

employee development through a style of management which provides frequent feedback and

fosters teamwork. It emphasizes communication and focuses on adding value to the organization

by promoting improved job performance and encouraging skill development. Performance

Management involves clarifying the job duties, defining performance standards, and

documenting, evaluating and discussing performance with each employee.

1.2 PURPOSE OF THE PERFORMANCE APPRAISAL

Performance appraisal aims at attaining the different purposes. They are:

• To create and maintain a satisfactory level of performance.

• To contribute to the employee growth and development through training, self and

management development programs.

• To help the superiors to have a proper understanding about their subordinates.

• To guide the job changes with the help to continuous ranking.

• To facilitate fair and equitable compensation based on performance.

• To facilitate for testing and validating selection tests, interview techniques through

comparing their scores with performance appraisal ranks.

• To provide information for making decisions regarding lay off, retrenchment etc.

• To ensure organizational effectiveness, through correcting employee for standard and

improved performance, and suggesting the change in employee behaviour.

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1.3 OBJECTIVES OF THE STUDY

The following are the objectives of the study

• To study the type of performance appraisal system at APSFC.

• To analyze opinion of employees about Performance Appraisal system.

• To offer suitable suggestion about Performance Appraisal.

• To find 360 degree appraisal system can implemented at APSFC

1.4 HYPOTHESIS

• The commitment to the performance appraisal system in public organizations in India is

very low. Low commitment and lack of accountability are the major reasons for the low

institutionalization of the performance appraisal processes in government organizations.

Performance appraisal in Government Organizations is not directly linked to rewards, training

or promotions due to which the approach towards the whole process remains unprofessional.

There is a lack of the appropriate atmosphere and professional approach towards the

performance appraisal system and the objective of the whole exercise is defeated.

• The most common method of Performance appraisal that is used in most of the

government organizations is confidential report (popularly known as CR) written by the

superior of the employees.

The following are the major discrepancies found in the performance appraisal processes being

followed at the government organizations. Most of the indicators used for measuring the

performance of the employees are not quantifiable in nature, making it difficult to measure the

performance.

• Due to the lack of accountability and job security, most government employees have a

laissez-faire attitude towards their work.

• Most of the objectives in government organizations are unchallenging, unrealistic and not

timely reviewed and updated.

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• It is difficult to measure the average performance of the government employees.

• There is often a lot of bias and subjectivity involved in the ratings given by the superiors.

• Lack of complete information on appraisal forms due to expertise and relevant training;

often, the appraisals are not conducted on a regular basis.

In government organizations, team appraisal is often not possible.

• Other HR decisions like rewards, training or promotions are not directly linked to the

results of the performance appraisal process.

1.5 SCOPE OF RESEARCH

A sample of 30 respondents were selected at random from different department Personnel

Department, Vigilance Department, Marketing Department, Finance Department, , Project

Departments and Training and Development Department, of employees from the executives were

sort for their opinions on the existing appraisal system.

1.6 RESERCH METHODOLOGY:

1.6.1 SOURCES OF INFORMATION:

The study is based on both primary and secondary data.

Primary Data: The primary data was collected from the employees of the organization that

mainly relate to the opinions of respondents regarding various aspects of performance appraisal.

Secondary Data: The sources of secondary data pertaining to the study have been collected

from Annual Reports of the organization, books and website.

Sample Size:

The sample size of the research is 30 associates.

Survey: For the purpose of collecting primary data from employees, questionnaires have been

designed and administered to the respondents. The questionnaires have been designed and

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administered to the respondents. Out of total 30 employees were taken as sample random basis

from all the departments.

1.6.2 TOOLS & TECHNIQUES OF ANALYSIS:

Percentage Analysis: Research technique used for data analysis is percentage analysis. Simple

mathematical and statistical tools were used to analyse the data collected. Pie charts are used to

explain the results.

Questionnaire: The questionnaire was personally administrated with respondent in APSFC it

took nearly 30 minutes for each respondent to fill the questionnaire. The responses was given by

the respondents were tabulated and a score sheet is prepared.

1.7 LIMITATIONS

The study is how ever subjected to certain limitation.

• The time is a major limitation. The whole study was conducted within a period

of 2 months.

• The study does not cover the entire executive fraternity and the officials at the

rank of Directors and Chairman and Managing Director. The study confers itself only

to executives ranking from Assistant Managers to General Managers.

• Study is quality perspective has only been qualitative the information gathered

in this regard is mostly through information discussion.

• Only the existing system has been studied and no attempt has been made to

identify and complete new and dynamic performance system due to this constraints.

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1.8 THEORETICAL FRAMEWORK OF PERFORMANCE APPRAISAL

1.8.1 PERFORMANCE APPRAISAL SYSTEM – A THEORETICAL FRAMEWORK:

Performance appraisal is the process of obtaining, analysing and recording information about the

relative worth of an employee. The focus of the performance appraisal is measuring and

improving the actual performance of the employee and also the future potential of the employee.

Its aim is to measure what an employee does.

It is a powerful tool to calibrate, refine and reward the performance of the employee. It

helps to analyse 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.

DEFINITION:

According to A.B.FLIPO PAS means “A prominent personality in the field of Human resources,

"performance appraisal is the systematic, periodic and an impartial rating of an employee’s

excellence in the matters pertaining to his present job and his potential for a better job”.

Performance appraisal is a systematic way of reviewing and assessing the performance of an

employee during a given period of time and planning for his future.

1.8.2 OBJECTIVES OF PERFORMANCE APPRAISAL:

To review the performance of the employees over a given period of time.

To judge the gap between the actual and the desired performance.

To help the management in exercising organizational control.

Helps to strengthen the relationship and communication between superior – subordinates

and management – employees.

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To diagnose the strengths and weaknesses of the individuals so as to identify the training

and development needs of the future.

To provide feedback to the employees regarding their past performance.

Provide information to assist in the other personal decisions in the organization.

Provide clarity of the expectations and responsibilities of the functions to be performed

by the employees.

To judge the effectiveness of the other human resource functions of the organization such

as recruitment, selection, training and development.

To reduce the grievances of the employees.

1.8.3 MEASURING AN EMPLOYEE’S PERFORMANCE:

The most difficult part of the performance appraisal process is to accurately and objectively

measure the employee performance. Measuring the performance covers the evaluation of the

main tasks completed and the accomplishments of the employee in a given time period in

comparison with the goals set at the beginning of the period. Measuring also encompasses the

quality of the accomplishments, the compliance with the desired standards, the costs involved

and the time taken in achieving the results.

Measuring employee performance is the basis of the Performance appraisal processes and

performance management. Accurate and efficient performance measurement not only forms the

basis of an accurate performance review but also gives way to judging and measuring employee

potential.

For the purpose of measuring employee performance, different input forms can be used

for taking the feedback from the various sources like the superior, peers, customers, vendors and

the employee himself. All the perspectives thus received should be combined in the appropriate

manner and to get an overall, complete view of the employees’ performance. Observation can

also be exercised by the superior to obtain information. Some suggestions and tips for measuring

employee performance are:


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Clearly define and develop the employee plans of action (performance) with their role,

duties and responsibilities.

Organizational outcomes or the achievement of organizational goals should also be kept

in mind.

Focus on accomplishments and results rather than on activities.

Also take note of the skills, knowledge and competencies and behaviours of the

employees that help the organization to achieve its goals.

If possible, collect the feedback about the performance of the employees through multi-

point feedback and self-assessments.

Financial measures like the return on investment, the market share, the profit generated

by the performance of the team should also be considered.

For an organization to be an effective organization and to achieve its goals, it is very

important to monitor or measure its’ and its employee performance on a regular basis. Effective

monitoring and measuring also includes providing timely feedback and reviews to employees for

their work and performance according to the pre-determined goals and standards and solving the

problems faced. Timely recognition of the accomplishments also motivates the employees and

help to improve the performance.

Measuring the performance of the employees based only on one or some factors can

provide with inaccurate results and leave a bad impression on the employees as well as the

organization. For example: By measuring only the activities in employee’s performance, an

organization might rate most of its employees as outstanding, even when the organization as a

whole might have failed to meet its goals and objectives. Therefore, a balanced set of measures

(commonly known as balanced scorecard) should be used for measuring the performance of the

employee.

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1.8.4 PROCESS OF PERFORMANCE APPRAISAL

Establishing performance standards:

The first step in the process of performance appraisal is the setting up of the standards which will

be used to as the base to compare the actual performance of the employees. This step requires

setting the criteria to judge the performance of the employees as successful or unsuccessful and

the degrees of their contribution to the organizational goals and objectives. The standards set

should be clear, easily understandable and in measurable terms. In case the performance of the

employee cannot be measured, great care should be taken to describe the standards.

Communicating the standards:

Once set, it is the responsibility of the management to communicate the standards to all the

employees of the organization.

The employees should be informed and the standards should be clearly explained to

them. This will help them to understand their roles and to know what exactly is expected from

them. The standards should also be communicated to the appraisers or the evaluators and if

required, the standards can also be modified at this stage itself according to the relevant feedback

from the employees or the evaluators.

Measuring the actual performance:

The most difficult part of the Performance appraisal process is measuring the actual performance

of the employees that is the work done by the employees during the specified period of time. It is

a continuous process which involves monitoring the performance throughout the year. This stage

requires the careful selection of the appropriate techniques of measurement, taking care that

personal bias does not affect the outcome of the process and providing assistance rather than

interfering in an employees work


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Comparing the actual with the desired performance:

The actual performance is compared with the desired or the standard performance. The

comparison tells the deviations in the performance of the employees from the standards set. The

result can show the actual performance being more than the desired performance or, the actual

performance being less than the desired performance depicting a negative deviation in the

organizational performance. It includes recalling, evaluating and analysis of data related to the

employees’ performance.

Discussing results:

The result of the appraisal is communicated and discussed with the employees on one-to-one

basis. The focus of this discussion is on communication and listening. The results, the problems

and the possible solutions are discussed with the aim of problem solving and reaching consensus.

The feedback should be given with a positive attitude as this can have an effect on the

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employees’ future performance. The purpose of the meeting should be to solve the problems

faced and motivate the employees to perform better.

Decision making:

The last step of the process is to take decisions which can be taken either to improve the

performance of the employees, take the required corrective actions, or the related HR decisions

like rewards, promotions, demotions, transfers etc.

1.8.5 METHODS OF PERFORMANCE APPRAISAL

The performance appraisal methods may be classified into three categories, as shown in Figure

below.

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Figure: Performance Appraisal Methods

1.8.5.1. Traditional Methods of Performance Appraisal:

Essay appraisal method:

This traditional form of appraisal, also known as "Free Form method" involves a description of

the performance of an employee by his superior. The description is an evaluation of the

performance of any individual based on the facts and often includes examples and evidences to

support the information. A major drawback of the method is the inseparability of the bias of the

evaluator.

Straight ranking method:

This is one of the oldest and simplest techniques of performance appraisal. In this method, the

appraiser ranks the employees from the best to the poorest on the basis of their overall

performance. It is quite useful for a comparative evaluation.

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Paired comparison:

A better technique of comparison than the straight ranking method, this method compares each

employee with all others in the group, one at a time. After all the comparisons on the basis of the

overall comparisons, the employees are given the final rankings.

Critical incidents methods:

In this method of Performance appraisal, the evaluator rates the employee on the basis of critical

events and how the employee behaved during those incidents. It includes both negative and

positive points. The drawback of this method is that the supervisor has to note down the critical

incidents and the employee behaviour as and when they occur.

Field review:

In this method, a senior member of the HR department or a training officer discusses and

interviews the supervisors to evaluate and rate their respective subordinates. A major drawback

of this method is that it is a very time consuming method. But this method helps to reduce the

superiors’ personal bias.

Checklist method:

The ratter is given a checklist of the descriptions of the behaviour of the employees on job. The

checklist contains a list of statements on the basis of which the ratter describes the on the job

performance of the employees

Graphic rating scale:

In this method, an employee’s quality and quantity of work is assessed in a graphic scale

indicating different degrees of a particular trait. The factors taken into consideration include both

the personal characteristics and characteristics related to the on the job performance of the


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employees. For example a trait like Job Knowledge may be judged on the range of average,

above average, outstanding or unsatisfactory.

Forced distribution:

To eliminate the element of bias from the ratter’s ratings, the evaluator is asked to distribute the

employees in some fixed categories of ratings like on a normal distribution curve. The ratter

chooses the appropriate fit for the categories on his own discretion.

1.8.5.2 Modern Methods of Performance Appraisal

Assessment centres:

An assessment centre typically involves the use of methods like social/informal events, tests and

exercises, assignments being given to a group of employees to assess their competencies to take

higher responsibilities in the future. Generally, employees are given an assignment similar to the

job they would be expected to perform if promoted. The trained evaluators observe and evaluate

employees as they perform the assigned jobs and are evaluated on job related characteristics.

The major competencies that are judged in assessment centres are interpersonal skills,

intellectual capability, planning and organizing capabilities, motivation, career orientation etc.

assessment canters are also an effective way to determine the training and development needs of

the targeted employees.

Behaviourally anchored rating scales:

Behaviourally Anchored Rating Scales (BARS) is a relatively new technique which combines

the graphic rating scale and critical incidents method. It consists of predetermined critical areas

of job performance or sets of behavioural statements describing important job performance

qualities as good or bad (for e.g. the qualities like inter personal relationships, adaptability and

reliability, job knowledge etc.). These statements are developed from critical incidents.

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In this method, an employee’s actual job behaviour is judged against the desired

behaviour by recording and comparing the behaviour with BARS. Developing and practicing

BARS requires expert knowledge.

Human resource accounting method:

Human resources are valuable assets for every organization. Human resource accounting method

tries to find the relative worth of these assets in the terms of money. In this method the

Performance appraisal of the employees is judged in terms of cost and contribution of the

employees. The cost of employees include all the expenses incurred on them like their

compensation, recruitment and selection costs, induction and training costs etc. whereas their

contribution includes the total value added (in monetary terms). The difference between the cost

and the contribution will be the performance of the employees. Ideally, the contribution of the

employees should be greater than the cost incurred on them.

360-Degree-Performance-Appraisals:

360 degree feedback, also known as 'multi-ratter feedback', is the most comprehensive appraisal

where the feedback about the employees’ performance comes from all the sources that come in

contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e. superior),

subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact

with the employee and can provide valuable insights and information or feedback regarding the

"on-the-job" performance of the employee.

360 degree appraisal has six integral components

Self

Superior’s

Subordinate’s

Peer

Customers and

Team members

Self-appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his

achievements, and judge his own performance. Superior’s appraisal forms the traditional part of


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the 360 degree performance appraisal where the employees’ responsibilities and actual

performance is rated by the superior.

Figure 1.4- 360 degree appraisal integral components

Subordinates appraisal gives a chance to judge the employee on the parameters like

communication and motivating abilities, superior’s ability to delegate the work, leadership

Qualities etc. Also known as internal customers, the correct feedback given by peers can help to

find employees’ abilities to work in a team, co-operation and sensitivity towards others.

Self-assessment is an indispensable part of 360 degree appraisals and therefore 360 degree

Performance appraisal have high employee involvement and also have the strongest impact on

behaviour and performance. It provides a "360-degree review" of the employees’ performance

and is considered to be one of the most credible performance appraisal methods.

360 degree performance appraisal is also a powerful developmental tool because when

conducted at regular intervals (say yearly) it helps to keep a track of the changes others’

perceptions about the employees. A 360 degree appraisal is generally found more suitable for the

managers as it helps to assess their leadership and managing styles. This technique is being

effectively used across the globe for performance appraisals. Some of the organizations

following it are Wipro, Infosys, and Reliance Industries etc.


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Management by Objectives:

The concept of ‘Management by Objectives’ (MBO) was first given by Peter Ducker in 1954. It

can be defined as a process whereby the employees and the superiors come together to identify

common goals, the employees set their goals to be achieved, the standards to be taken as the

criteria for measurement of their performance and contribution and deciding the course of action

to be followed.

The essence of MBO is participative goal setting, choosing course of actions and decision

making. An important part of the MBO is the measurement and the comparison of the

employee’s actual performance with the standards set. Ideally, when employees themselves have

been involved with the goal setting and the choosing the course of action to be followed by them,

they are more likely to fulfil their responsibilities.

Balanced score card:

To evaluate the organizational and employee performance in Performance appraisal management

processes, the conventional approach measures the performance only on a few parameters like

the action processes, results achieved or the financial measures etc. The Balanced scorecard – an

approach given by Kaplan and Norton provides a framework of various measures to ensure the

complete and balanced view of the performance of the employees. Balanced scorecard focuses

on the measures that drive performance.

The balanced scorecard provides a list of measures that balance the organizations internal and

process measures with results, achievements and financial measures.

To evaluate the organizational and employee performance in Performance appraisal

management processes, the conventional approach measures the performance only on a few

parameters like the action processes, results achieved or the financial measures etc.

The Balanced scorecard – an approach given by Kaplan and Norton provides a framework of

various measures to ensure the complete and balanced view of the performance of the

employees. Balanced scorecard focuses on the measures that drive performance.

The balanced scorecard provides a list of measures that balance the organizations internal and

process measures with results, achievements and financial measures.


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The two basic features of the balanced scorecard are:

A balanced set of measures based on. the four perspectives of balanced scorecard

Linking the measures to Employee Performance

The four Perspectives recommended by Kaplan and Norton for the managers to collect

information are:

a) The financial measures – The financial measures include the results like profits,

increase in the market share, return on investments and other economic measures as a

result of the actions taken.

b) The customers’ measures - These measures help to get on customer satisfaction, the

customer’s perspective about the organization, customer loyalty, acquiring new

customers. The data can be collected from the frequency and number of customer

complaints, the time taken to deliver the products and services, improvement in quality

etc.

c) The internal business measures – These are the measures related to the

organization’s internal processes which help to achieve the customer satisfaction. It

includes the infrastructure, the long term and short term goals and objectives,

organizational processes and procedures, systems and the human resources.

d) The innovation and learning perspective - The innovation and learning measures

cover the organization’s ability to learn, innovate and improve. They can be judged by

employee skills matrix, key competencies, value added and the revenue per employee.

Graphic rating scale:

Perhaps the most commonly used method of performance evaluation is the graphic rating scale.

Of course, it is also one of the oldest methods of evaluation in use. Under this method, a printed

form, as shown below, is used to evaluate the performance of an employee. A variety of traits

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may be used in these types of rating devices, the most common being the quantity and quality of

work.

Table: Typical Graphic Rating Scale

Employee Name................... Job title.................

Department......................... Rate...............

Data..................................

Quantity of work:

Volume of work

under normal

working conditions

Unsatisfactory Fair Satisfactory Good Outstanding

Quality of work:

Neatness,

thoroughness and

accuracy of work

Knowledge of job

A clear understanding

of the factors

connected with the

job

Attitude: Exhibits

enthusiasm and

cooperativeness on

the job

Dependability:

Conscientious,

thorough, reliable,

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accurate, with respect

to attendance, reliefs,

lunch breaks, etc.

Cooperation:

Willingness and

ability to work with

others to produce

desired goals.

From the graphic rating scales, excerpts can be obtained about the performance standards of

employees. For instance, if the employee has serious gaps in technical-professional knowledge

(knows only rudimentary phases of job); lacks the knowledge to bring about an increase in

productivity; is reluctant to make decisions on his own (on even when he makes decisions they

are unreliable and substandard); declines to accept responsibility; fails to plan ahead effectively;

wastes and misuses resources; etc., then it can safely be inferred that the standards of the

performance of the employee are dismal and disappointing.

The rating scale is the most common method of evaluation of an employee’s performance today.

One positive point in favour of the rating scale is that it is easy to understand, easy to use and

permits a statistical tabulation of scores of employees. When ratings are objective in nature they

can be effectively used as evaluators. The graphic rating scale may however suffer from a long

standing disadvantage, i.e., it may be arbitrary and the rating may be subjective. Another pitfall

is that each characteristic is equally important in evaluation of the employee’s performance and

so on.

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2.1 INTRODUCTION

A Central Industrial Finance corporation was set up under the industrial Finance corporations

Act, 1948 in order to provide medium and long term credit to industrial undertakings which fall

outside normal activities of commercial banks. The State governments expressed their desire that

similar corporations be set up in states to supplement the work of the Industrial financial

corporation. State governments also expressed that the State corporations be established under a

special statue in order to make it possible to incorporate in the constitutions necessary provisions

in regard to majority control by the government, guaranteed by the State government in regard to

the payment principal. In order to implement the views Expressed by the State governments the

State Financial Corporation bill was introduced in the Parliament.

2.2 STATEMENT OF OBJECTS AND REASONS

In order to provide medium and long term credit to industrial undertaking, which fall outside the

normal activities of commercial banks, a central industrial finance corporation was set up under

the industrial Finance Corporations act, 1948. The state governments wished that similar

corporations should be set up in their states to supplement the work of industrial financial

corporation. The intention is that the State corporations will confine to financing medium and

small scale industrial and will , as far as possible consider only such access which are outside

the preview of industrial fiancé corporation .

The main features of the State financial Corporations Act 1951:

I . The bill provides that the state government may, by notification in the official gazette,

establish a financial corporation for the state.

I I . The share capital shall be fixed by the State government but shall not exceed Rs/-

2c r o r es . Th e issue of the shares to the public will be limited to 25 per cent of the

share capital and the rest will be held by the State Governments, The Reserve Bank,

Scheduled Banks, Insurance Companies, Investment Trusts, Co- operative banks and

other financial institutions.

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III. Shares of the corporation will be guaranteed by the State government as to the re –

payment of principal and the payment of a minimum dividend to be prescribed in

consultation with the central government.

IV. The corporation will be authorized to issue bonds and debentures for amounts which

together with the contingent liabilities of the corporations shall not exceed five – times

the amount of the paid – up share capital and the reserve fund of the corporations. These

bonds and debentures will be guaranteed as to payment of the principal and payment of

interest at such rate as may be fixed by the State government.

V. The corporation may accept deposits from the public repayable after not less than five

years, subject to the maximum not exceeding the paid up capital.

VI. The corporation will be managed by a board consisting of a majority of Directors

nominated by the State governments, The Reserve banks and the industrial Finance

Corporation of India.

V I I . The corporation will be authorized to make long term loans to industrial concerns witch

are repayable within a period not exceeding 25 years. The Corporation will be further

authorized to underwrite the issue of stocks, shares, bonds or debentures by industrial

concerns, subject to the provision that the corporation will be required to dispose of and

shares etc. Acquired by it in fulfillment its underwriting liability within a period of 7

years.

VIII. Until a reserve fund is created equal to the paid – up share capital of the Corporation and

until the State Governments has been repaid all amounts paid by them, if any, in

fulfillment of the guarantee liability, the rate of dividend shall not exceed the rate

guaranteed by the state government. Under no circumstances shall the dividend exceed 5

percent p.a. and surplus profits will be re – payable to the State governments.

IX. The corporation will have special privileges in the matter of enforcement of its claims

against borrowers.

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2.3 FINANCIAL RESOURCES OF THE SFC’S

The SFC’s mobilize their financial resources from the following sources

1. Their own Share capital

2. Income from investment and repayment of loans

3. Sale of bonds

4. Loans from the IDBI ( To some extent )

5. Borrowings from the Reserve Bank of India

6. Deposits from the Public

7. Loans from State Governments.

In the act Financial corporations are Financial corporations established under section 3 and

includes a Joint Financial Corporation established under section 3 A of the Sate financial

Corporations Act of 1951.

The act applies to all

i. “ Industrial Concern “ means any concern engaged or to be engaged in

a) The manufacturing, preservation or processing of goods.

b) The mining or development of mines

c) The hotel industry

d) The transport of passengers or goods by road or by water or by air ( or ropeway or lift )

e) The generation or distribution of electricity or any other form of power ,

f) The maintenance, repair, testing or servicing of machinery of any description or vehicles

or vessels or motor boats or trailers or tractors.

g) Assembling , repairing or packaging and article with the aid of machinery or power

h) The setting up or development of an industrial area industrial estate

i) Fishing or providing shore facilities for fishing or maintenance thereof

j) Providing weight bridge facilities

k) Providing engineering, technical, financial, management, marketing or other services or

facilities for industry.

l) Providing medical, health or other allied services.

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m) Providing software or hardware services relating to information technology

,telecommunication or electronics including satellite linkage

n) Setting up or development of tourism related facilities including amusement parks ,

conventions centers , restaurants travel and transport , tourist services agencies and

guidance counseling services to tourists

o) Construction

p) Development , maintenance and construction of roads

q) Providing commercial complex facilities and community centers including conference

halls

r) Floriculture

s) Tissue culture, fish culture , poultry farming , breeding and hatcheries

t) Service industry, such as altering. ornamentation , polishing , finishing ,oiling , washing ,

cleaning or otherwise treating or adapting and article or substance with a view to its use ,

sale transport , delivery or disposal .

u) Research and development of any concept , technology , design process or product ,

whether in relation to any of the matters aforesaid including any activities approved by

the Small Industries Bank State Financial Corporations also include industries which

specialize in “ processing goods “which includes any art or process for producing ,

preparing or making an article by subjecting any material to manual , mechanical ,

chemical , electrical or any other like operation .

2.4 BROAD FUNCTIONS OF STATE FINANCIAL CORPORATIONS

P ro j ec t adv i so r y an d F i n an ce

AS a catalyst in small scale industrial growth the SFC’s provide the following services:

a) Investment appraisal

Project conceptualization and related services, including guidance in relation to selection

of projects, preparation of feasibility studies, capital structuring, techno – economic

feasibility, financial engineering, project management design etc.

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Credit Syndication including assistance in legal documentation etc.

Documentation of various project documents

Placement of debt – equity including design of the structure of instruments, placement of

instruments with financial institutions, bank etc.

Assist in organizational structural changes like :

1) Analysis of operational performance

2) Study of existing organizational structure

3) Study of the existing statures and rules and regulations

4) Market analysis with respect to products

5) Review of domestic and international scenario

6) Valuation of fixed assets and inventory

7) Advising on formation of new entity

8) Preparation of relevant agreements / legal documents.

Industry Research / Information Services

A dedicated research team looking at both macros – level issues as well as sector –

specific, industry research. The expertise of the professional research team and a large

diversified data base enables SFC to provide erudite research reports to the corporate

world.

Legal Advisory Services

A full – fledged legal cell, comprising of experienced professional with expertise in

handling cases of diverse nature, offer legal help services. The services rendered by this

unit comprise investigations and preparations of title reports, besides advisory services in

respect of matters under dispute where an independent consultant view is required.

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2.5 SPECIFIC FUNCTIONS OF SFC’S

The SFC’s Provide the following types of assistance to industrial units in their respective states:

The SFC’s while giving loans to industrial units see to it that loans are secured by a

PLEDGE, MORTAGAGE, HYPOTHECATION of movable and immovable property

or other tangible assets or guarantee by the state government or scheduled commercial

bank , they also accept personal pledge by the entrepreneur . SFC’s do not give loans on

the basis of second mortgage.

Grant loans or advances to industrial concern repayable within a period not exceeding 20

years.

Providing guarantee for loans raised by industrial units from commercial banks and state

cooperative banks.

Providing guarantee for deferred payments in cases where industrial units have purchased

capital goods on a deferred payment basis.

To underwrite the issue of shares, bonds and debentures of industrial concerns.

To subscribe to shares, bonds and debentures of industrial concerns.

Guarantee loans raised by industrial concerns which are repayable within a period not

exceeding 20 years and which are floated in the public market

SFC’s grant loans to industrial units for the purchase of fixed capital assets like land,

machinery. In some exceptional cases, some SFC’s also provide loans for working-

capital requirements in combination with loans for fixed capital.

SFC’s provide loans in foreign currency for the import of machinery and technical know

– how, under the IDA (International development association) and World Bank tie up.

SFC’s however are prohibited from subscribing directly to the shares or stock of any

company having limited liability except for underwriting purposes and granting any loans

or advance on the security of its own shares .

Reason behind introducing investment for small scale industries:

State financial corporations have not been able to become popular due to poor implementation

and poor investments that they have undertaken.as they invest in small scale industries the

26

returns will be lower as gestation period for small scale industries is very long. Losses are bound

occur but as a business and financial organization the government and the state must find ways

of minimizing their losses and earning a moderate profit which can be recycled back to promote

SFC’s . Business decisions must be taken with a purely business perspective in mind and

political, emotional factors should not play the major factors while making business decisions.

As only then can there and will there a difference between what is viable and what is not.

SFC’s - Contributory to development of small scale industries in the Indian economy:

There are at present 18State financial Corporations and almost every state has a financial

corporation of its own.

During 2011-2012 SFC’s had sanctioned loans aggregating to 2800 crores and disbursed Rs

1368.82 crores. Their assistance in the form of loans has declined subsequently due to the

existence of a large amount of Non – Performing assets.

Over 70 per cent of the total assistance sanctioned and disbursed by all SFC’s is provided to

small scale industries. Attempts are now being made to strengthen the role of SFC’s as regional

development banks.

The SFC’s sanctioned seed capital assistance under the seed capital schemes introduced and

operated by IDBI.

This assistance is available to promoters of small business units. Since June 1989, SFC’s have

also been implementing special schemes of seed capital assistance to women entrepreneurs.

Assistance is extended in the form of loan or grant or a combination of both to voluntary

agencies working for women in decentralized industries.

27

2.6 PROBLEMS OF STATE FINANCIAL CORPORATION’S

1. No Independent Organization

All SFCs are dependent upon the state government rules and regulations. SFCI Act 1951 is

showed just in books. But SFCs’ problem is that these institutions all decision are dependent on

political environment of state. Due to this, loan is not available on the time for right person.

2. Corruption

Like other government office in India, we can also find the evil of corruption in state financial

corporation. Hoarding of wealth and money, SFCs’ officer aim has become to earn by good or

bad way. That is the main problem that these institutions have no transparency like banks.

3. Effect of World Bank and WTO Policies

All most all SFCs in India are tie up with World Bank and WTO agreement. Due to this, these

institutions’ decisions are affected with World Bank and WTO policies. World Bank can easily

give pressure for accepting his policies. It may also affect Indian small scale industry adversely.

4. Low Return from Investment in Small scale Industry

It is said that state financial corporation has given 70 per cent loan to small scale industry. So,

its return on investment is very low on loan to SSI.

5. Long Gestation Period

SFCs have also one problem, which we can say in the form of long gestation period. Small scale

businessmen do not repay their loan on the time and large number of loan has been converted

into bad debt. So, SFCs are suffering losses from many years.

28

2.7 PROSPECTS OF STATE FINANCIAL CORPORATIONS

1. Special Help to Women Entrepreneurs

Many state financial corporations like Delhi SFC have state new scheme for helping women who

want to open their new business in India. This is good prospect of State financial corporation for

development of women.

2. Highest loan provider for small scale industry

It is also achievement of SFCs that these institutions have provided more than Rs. 6300 crore to

small scale industry in 2010.

3. Industrial research

Since establishing SFCI in 1951, SFCs are working for the last 62 years in India. So, these

financial institutions have huge industrial information and these institutions are also busy for

collecting industrial information. A new businessman can start their industrial research by

contacting these institutions if he wants to open a new business.

29

3.1. INTRODUCTION TO APSFC

Andhra Pradesh State Financial Corporation [APSFC] is a term lending Institution

established in 1956 for promoting small and medium scale industries in Andhra Pradesh under

the provisions of the State Financial Corporation Act, 1951. The Corporation came into existence

on 01-11-1956 by merger of Andhra State Financial Corporation and Hyderabad State Financial

Corporation. The corporation has launched many entrepreneur-friendly schemes to provide term

loans, working capital loans, and special and seed capital assistance to suit the needs of various

categories of entrepreneurs. The Corporation has completed five decades of tiny, small and

medium scale sector units and contributing to the balanced regional development of the state.

APSFC’s plan is its own streak of “entrepreneurship” to innovate and to experiment.

Encouraging entrepreneurship was its genetic disposition. Perceiving opportunities and helping

entrepreneurs is to seize them was second nature. Playing the role of coach, mentor and catalyst

with the consummate ease and grace, it has guided many first generation entrepreneurs to

achieve success in their first forays APSFC believes that “when preparation meets opportunities,

success flows”. This is the key to fostering good entrepreneurship APSFC had an uncanny knack

of picking up and honouring entrepreneurs with promise by giving “Parisharmik Vijetha

Awards”. Their performance confirmed our faith and trust in their abilities APSFC swells with

pride when its entrepreneurs, who start small grow fast and become big & emerge as global

players who are doing India proud and many more upcoming corporate.

3.2. BASIC INFORMATION

Company Name : Andhra Pradesh State Financial Corporation [APSFC]

Business Type : Financial services

Product/Service (We Sell) : Term Lon’s

Address : Andhra Pradesh State Financial Corporation 5-9-194, PB No: 165 Chirag Ali

Lane, Hyderabad

30

3.3. ORGANIZATIONAL STRUCTURE

a) Chairman

b) Managing Director

c) Executive Director

d) Chief General Managers

e) General Managers

f) Assistant General Managers

g) Senior Managers

h) Managers

i) Deputy Managers

j) Assistant Managers

3.4. PRODUCTS (FUND BASED ACTIVITIES)

Andhra Pradesh State Financial Corporation (APSFC) extends financial assistance for setting up

industrial units in small &medium scale, service enterprises in the state of Andhra Pradesh. The

Corporation extends finance basically through two products the Term loans and the Working

Capital term Loans.

Term loan:

The Corporation extends financial assistance up to Rs 500 Lakhs per project

normally for acquiring fixed assets viz., Land, Building and Machinery through Term Loan. In

extremely deserving cases the corporation extends financial assistance up to Rs2000 lakhs. The

Corporation is having an understanding (MOU) with SIDBI and five Leading Nationalized

Commercial Banks and for bigger projects it extends need based finance through consortium

finance with MOU Banks and Institutions. The loan period normally ranges from 5 to 8 years.

Working capital term loan:

The Corporation extends financial assistance up to a maximum of Rs 500 lakhs

for working capital through this product for existing units with good working results. The loan

period normally ranges from 1 to 5 years. The Corporation in consortium with Lending

Commercial Banks, with which it having a MOU, extends higher working capital loans to

deserving units.

31

3.5. LEAD POSITION:

With an improved performance in FY 2012 the corporation has turned a new leaf in its history, in

the process scripted yet another success story and has continued its brilliant march. As a result

Corporation is likely to retain its NUMERO UNO position amongst its peers in the country for

the 11th

year in a row.

HIGHLIGHTS OF PERFORMANCE DURING 2011-2012:

The sanctions stood at Rs 1368.82 crore as against Rs 1386.38 c recorded in FY 2011.

The disbursements increased to Rs 936.89 c from Rs 904.64 c in FY 2011, registered

growth of 3.56 per cent.

The principle collections have gone up to Rs636.14 c from Rest 614.48 c in previous

year.

The interest climbed to Rest 330.33 c from Rs 289.90c during FY 2011, growth of 14.74

per cent.

The operating profit registered a Y-o-Y growth of 11.81 per cent and stood at Rs 112.12

c.

3.6. OBJECTIVES

To industrialize the state through balanced regional development and dispersal of

industries.

To support promotion and development of small and medium scale industries and

service sector units by extending need based credit to them.

Nurtures entrepreneurship and encourages first generation entrepreneurs.

To act as a catalyst for generation of employment.

32

3.7. MILESTONE ACHIEVEMENTS OF APSFC

So far sanctioned 8,695 crore for 90,100 units in Andhra Pradesh as on 31/03/2011.

Disbursed 6,022 crores to 69,973 units - 70 percent to Tiny/SSI sector as on 31/03/2011.

Recovered Rs 6,695 crores including interest since inception till 31/03/2011.

Established unblemished repayment track record since inception.

Has consistent record of earning operating profit throughout its history.

Created total investment of around 18,511 crores.

Generated direct and indirect employment to about 10.69 lakh persons.

Channeled a significant share of assistance of around 70 percent to tiny and small scale

industries.

Industrialized backward areas by extending 50 percent of its assistance to industries

coming up in notified backward areas.

Enjoying 60 percent of the market share in term lending in promoting First Generation

Entrepreneurs in Andhra Pradesh.

3.8. FUNCTIONS & DUTIES

The APSFC subject to the provisions of SFC’S Act 1951may carry on and transact any of the

following kinds of business viz.

1. Guaranteeing, on such terms and conditions as may be agreed upon –

i. Loans raised by industrial concerns which are repayable within a period not

exceeding twenty years, and are floated in the public market;

ii. Loans raised by industrial concerns from scheduled banks or State co-operative

banks or other financial institutions;

Guaranteeing, on such terms and conditions as may be agreed upon, deferred

payments due from any industrial concern in connection with its purchase of

capital goods within India;

33

Underwriting of the issue of stock, shares, bonds or debentures by industrial

concerns;

Transferring for consideration any instruments relating to loans and advances

granted by its to industrial concerns;

Acting as agent of the Central Government or the State Government or the

Development Bank or the Small Industries Bank or the IFCI Limited formed and

registered under the Companies Act, 1956, or any other financial institution

notified in this behalf by the Central Government in respect of any matter

connected with, or arising out of, the grant of loans or advances any matter

connected with, or arising out of, the grant of loans or advances to an industrial

concern, or subscription to debentures of an industrial concern or relating to the

business of the Development Bank, Small Industries bank, IFCI Limited or

financial institution;

Subscribing to, or purchasing of, the stock, shares, bonds or debentures of an

industrial concern or any other concern;

Retaining as part of its assets any stock, shares, bonds or debentures which it may

acquire by subscription or in fulfillment of its underwriting liabilities and

disposing of the stock, shares, bonds or debentures so acquired;

Granting loans or advances to, or subscribing to debentures of, an industrial

concern, repayable within a period not exceeding twenty years from the date on

which they are granted or subscribed

Accepting or discounting promissory notes and bills of exchange made, drawn,

accepted or endorsed by industrial concerns or by any person selling capital goods

manufactured by one industrial concern to another industrial concern;

Undertaking research and surveys for evaluating or dealing with marketing or

investments or undertaking and carrying on techno-economic studies or other

activities in connection with the development of any industry;

Providing technical and administrative assistance to any industrial concern or any

person for the promotion, management or expansion of any industry.

Planning and assisting in the promotion and development of industries.

Providing consultancy and merchant banking services.

34

Acting as trustee for the holders of debentures or other securities.

Leasing, sub-leasing or giving on hire purchase of industrial plant, equipment,

machinery or any other asset factor

Providing export related credit and services

Undertaking money market relative activities

Setting up of mutual funds and undertaking assets management activity;

Promoting, forming or conducting or assisting in the promotion, formation, or

conduct of companies, subsidiaries, societies, trusts or such other associations of

persons as it may deem fit;

Opening or confirming or endorsing letters of credit and negotiating or collecting

bills and other documents drawn there under;

Doing such other business as the Small Industries Bank may authorize, and or

generally the doing of such acts and things as may be incidental to or

consequential upon, the exercise of its powers or the discharge of its duties under

this Act.

2. The Financial Corporation may receive, in consideration of any of the services mentioned

in sub-s. (1), such commission, brokerage, interest, remuneration or fees as may be

agreed up on.

3.9. LOOKING AHEAD

Moving away from the conventional approach of lending, the Corporation will

concentrate on building relationship based service to its customers, in order to meet their rising

expectations and provide quick and qualitative service to them.

During the year 2010-11, the Corporation will focus on improving quality and volume

growth of its loan assets, while keeping customer satisfaction as its utmost priority. The

Corporation plans to capture the business from several industries coming up in various SEZs,

industrial parks and new sea ports in the state. Besides, the Corporation, being aware of the

hectic industrial activities in the border districts of neighbouring states, will focus on the credit

needs of the industries coming up there. The carbon financing through CDM projects, another

35

emerging areas, promises new opportunities for accretion of new customers. Against this back

drop, the Corporation has set higher business targets for the year 2011-12.

3.10 BOARD OF DIRECTORS

Chairman : Sri T.S.Appa Rao, IAS

Managing Director : Sri T.Satyanarayana Rao, IAS

Director : Smt.Bhama Krishnamurthy

Director : Sri S.Mallikarjun

Director : Sri Amitabha Guha

3.11 HR MANAGEMENT

The Corporation reviews human resource policy every year and makes suitable

improvements/modifications as per changing requirements. Further, the Corporation has put in

place a well-structured incentive scheme and promotional policy to motivate the employees.

With a view to reward the employees, during the year, the Corporation has considered

promotions to eighty four officers/employees.

The Corporation is endowed with a blend of professionals from various disciplines consisting of

Engineers, Chartered Accountants, Cost Accountants, Legal and Management professionals. As

on 31.03.2012, the total staff strength stood at 466 (including sub-staff).

The Corporation, with a view to hone the skills, sponsored fifty two officers for twenty one

external training programmes in the institutes of national repute. The Corporation sponsored

eight senior officers to international summits/ forums like India-Japan Global Partnership

Summit and employee Benefit Conference-2011.

The Corporation also conducted nine in-house training programmes for its employees, wherein

one hundred and fifty one employees have participated. The Corporation continued to provide a

platform to aspiring MBA graduates enabling them to gain practical inputs drawn from empirical

knowledge of the senior employees. In FY 2012 thirty two MBA students have completed their

project work in diverse subjects’ viz., Project finance, Risk Management, Funds Management,

ALM etc.

36

3.13. PERFORMANCE APPRAISAL AT APSFC

When to appraise:

Performance appraisal across all levels at APSFC is conducted twice in a year. The Human

resource department sends the appraisal forms to the concerned departments after duly fitting in

the staff details.

Who Should Appraise:

The immediate superior of the employee not below the Assistant Manager cadre shall be the

Reporting Officer. In case the employee is directly working under the supervision of any officer

higher.

Procedure:

The Human Resource department prepares appraisal forms for each and every category of

employee and at the start of the appraisal period; it sends these forms to the concerned

departments after filling in the necessary details of the employee to be appraised which is called

‘background information’.

The staff should have worked at least for a period of 6 months to be appraised by an officer. In

case the appraise reports to more than one reporting officer in an appraisal year, on transfer,

promotion etc. The personnel department would forward the appraisal forms to Reporting

officers concerned for the period, the appraise reports to them.

The assessment an employee is primarily governed under a 2 – tier system that is assessment by

the Reporting Officer as well as by the Reviewing officer, where the assessment is subject to

concurrence of the Consenting Authority, which will be final.

The assessment done on the basis of certain attributes / factors which help in defining the job

requirements of a particulars job. Usually a 4- point scale or a 10 – point scale for each factor is

used for rating. Once the reporting officer gives his rating and comments if any, the same shall

be put to the reviewing officer who after careful scrutiny of the appraisal will pass his remarks.

37

After the reviewing officer’s comments are given and duly signed by him. He can advise the

reporting officer to discuss the appraisal with the employee or, in certain cases, may decide to

discuss the appraisal with the employee himself but in the presence of the Reporting officer.

The reporting officer after rating the employee on various attributes will give his remarks, which

are communicated, to the reviewing officer. Later these are discussed with the employee to know

his reaction. After the discussion with the employee, the reporting officers give his final remarks

and his suggestions for improvement of the employee performance. The reviewing officer for

further comments later scrutinizes these.

The complete appraisal report is then sent back to the personnel department in a confidential

cover. The personnel department will then check the appraisal report for irregularities and any

adverse entries against any of the employee made by the reporting officer will be communicated

to the employee in a covering letter asking him/her to improve and a copy of the small will be

placed in his / her personal life.

Objective of performance appraisal system:

• To appraise the individual’s performance on the work assigned to him and qualities

he is expected to show on the job in performing his tasks as expected by the organization

through his supervising officers and to assess the potential for higher responsibilities.

• The generate inputs for promotions, confirmations, placements, training and

personnel and developmental decisions in respect of the individual so appraised.

• To assess the professional, managerial, behaviour and other training and

development needs and provide information to the personnel/HRD department for the

development decisions.

Guide Lines for Appraisers:

• The employee should be appraised for his present position.

• Judgment should be based on the entire review period & not on isolated incidents.

• Snap judgments should be avoided.

38

• Each factor under considerations should be appraised independently without being

influenced by other factors.

• It is advisable that the individual being assessed should compare with other of the same

rank employed on more or less similar work.

• Over – rating as well as under – rating diminishes the value of the assessment.

• Reason for given rating of the attribute should be well substantiated.

3.14 ABOUT THE FORMS

3.14.1 CONTENT OF THE FORM

Background information of the employee to be filled in by the Personnel department

which contains

• Name

• Designation

• Date of joining

• Department

• Employee number

• Special assignment

• Qualification & Commendation

• Punishments & warnings awarded during the year (with reasons)

Attributes For Performance / Potential Assessment For Officers:

• Professional knowledge and application

• Capacity to achieve results

• Dependability

• Judgment and decision making

• Communication skills (written or oral)

• Leadership

• Planning and organizing ability

39

• Co-operation and team spirit

• Adaptability

• Personality

For Technical / Non-Technical Staff (common attributes):

Job knowledge : knowledge and understanding of job assigned

Quality of work: Thoroughness and accuracy of work done without

mistakes, neatness and present ability should be considered.

Quality of work: Amount of out vis-à-vis the time taken

Initiative: Self – staring ability, resourcefulness and the ability to inspire

confidence should be considered.

Conduct: Ability to get on with other fellow employees.

Regularity: Punctuality and regularity of attendance.

Leadership: Ability to get work done by subordinates giving them clear

guidance.

Cost consciousness: Ability of foresee the resource requirement for any

task and complete assignments with minimum waste.

For Technical Staff only:

• Safety consciousness: Habits and work practices in respect of personal safety and

safety of fellow employees.

• Care of tool and equipment: Manner in which tool and equipment handling is done

ensuring better tool life and less maintenance and damage.

For Non- Technical Staff only:

Dealing with others: Ability to appreciate others points of view and approach in dealing with

customer’s suppliers or any other outsiders in conformity with organizational requirements.

40

3.14.2 RATING OF ATTRIBUTES

The common factors and the ratings under which the appraisal are made are as follows:

Quantity of output:

Extent of target fulfillment and completion of assigned tasks.

Rating Reason:

15-13 Output of work exceptionally high and above expectations/ tasks assigned

despite high

15-13 Degree of difficulty of task.

12-10 Fulfilment of all tasks / targets despite constraints

9-7 Tasks assigned generally met with moderate efforts

6-4 Output below target / expectation despite lack of constraints Moderate

effort.

3-1 Output far below expectation Target / tasks not fulfilled Low effort

Quality of output:

General excellence of output, the extent of work free from errors.

RATING REASONS

15-13 Excellence quality of output accurate in work under all

conditions.

12-10 Does a through and accurate job

9-7 Generally produces work of acceptable quality

6-4 Work barely up to the mark

3-1 Works consistently below required standards.

41

Cost control:

Awareness of cost aspects in the job. Optimum utilization of available resources and

reduction of wastes.

RATING REASON

10-9 Always makes optimum utilization of resources

8-7 All assigned tasks completed within the specific cost parameters

6-5 Generally keeps within cost parameters and time schedules

4-3 Conscious of the need to effect economy and manager time

2-1 Wasteful in work Lacks desire to complete assignments in time.

Job knowledge and skills:

Knowledge pertaining to the area of work and related areas.

RATING REASON

10-9 Excellent ability to anticipate future work needs ahead of time

8-7 Good knowledge of the own jib and related areas

6-5 Knowledge adequate in own area

4-3 Knowledge inadequate in own and related areas.

2-1 Poor knowledge, no motivation to learn.

42

Discipline:

Adherence to company policies and rules

RATING REASON

10-9 Exemplary behaviour and conduct

8-7 Good behaviours and conduct

6-5 Discipline is generally good

4-3 Conduct and discipline within manageable limit

2-1 Low in discipline

Initiative:

Ability to be self-reliant and move forward on a task without outside direction.

RATING REASON

10-9 Totally self-reliant A self-starter

8-7 Good initiative

6-5 Generally shows good initiative

4-3 Needs guidance, instructions and follow-up

2-1 Always requires to be told

43

Communication:

Skills and desire to share available information with all concerned.

RATING REASON

10-9 Excellent clarity of thought and expression

8-7 Shares information with all concerned

6-5 Has moderate skill and desire to share information

4-3 Only believes in downward communication

2-1 Lacks both the skill and the will to communicate

Management of human resources:

Effective control and utilization of sub ordinates, ensuring discipline, integrating

employees into teams and motivating them for higher levels of performance.

RATING REASON

5 Excellent Control over and utilization of people

4 Good utilization of people

3 Plays basically a controlling functions

2 Has little control

1 Has no control over his / her people

44

Table 4.1: Employee’s opinion on the types of Performance Appraisal system existing in the

Organization.

Source: Survey Analysis

ANALYSIS

The above table indicates that 7 per cent of the respondents are using Confidential Appraisal, 27

per cent of the respondents are using Self Appraisal, 53 per cent of the respondents are using both

Confidential Appraisal &Self Appraisal in their organization, 13 per cent of the respondents are

not aware about which Appraisal system is being followed in the organization.

INTERPRETATION:

More than half of the respondents said that APSFC follows both Confidential and Self Appraisal.

S.No. Responses of Respondents No of

Respondents Percentage

1 Confidential 2 07

2 Self-Appraisal 8 27

3 Both 16 53

4 Not Aware 4 13

5 Total 30 100

7%

27%

53%

13%

Employee's opinion on the types of Performance Appraisal system

existing in the Organization

confidential self-appraisal Both not aware

45

Table 4.2: Employee’s opinion on need for performance appraisal in the organization.


ANALYSIS:

The above table reveals the opinion of respondents on the necessity of performance appraisal in

the organization. It shows that 70 per cent of the respondents strongly agreeing that Performance

Appraisal is necessary to be carried towards an employee In the Organization, and 30 per cent of

the respondents agreeing that Performance Appraisal is necessary to be carried towards an

employee In the Organization.

INTERPRETATION:

A large proportion of respondents agreed the necessity of performance appraisal in the

organization.



1 Strongly Agree 21 70

2 Agree Appraisal 9 30

3 Neither Agree nor disagree 16 53

4 Disagree 4 13

5 Total 30 100

70%

30%

0% 0%

Employee's opinion on need for performance appraisal in the

organization.

Strongly Agree Agree Neither Agree nor Disagree Disagree

46

Table 4.3: Employee opinion on the purposes of Performance Appraisal system in the

organization.


ANALYSIS:

The above table describes the respondent’s opinion on the purposes of Performance Appraisal

system in the organization. It shows 60 per cent of the respondents felt that the purpose of

Appraisal System is for “An insight into your strengths and weakness”, 7 per cent of the

respondents say Appraisal System is for “Guideline for training and plan”, 13 per cent feel

Appraisal System is for “Decision on layoff”, and 20 per cent of the respondents say Appraisal

System is for “Salary administration and Benefits”.



1 An insight into your strengths and weakness 18 60

2 Guideline for training and plan 02 7

3 Assistance in goal 00 00

4 Decision on layoff 04 13

5 Determination of promotion or transfer 06 20

6 Salary administration and Benefits 0 00

7 Total 30 100

60

7 0

13

20

0 Employee's opinion on the purposes of Performance Appraisal system in

the organization An insight into your strengths and weakness

Guideline for training and plan

Assistance in goal

Decision on layoff

Determination of promotion or transfer

Salary administration and Benefits

47

INTERPRETATION:

More than half of the respondents think “An insight into your strengths and weakness” is the

criteria for performance appraisal, in the organization.

Table 4.4: Employee’s opinion on considering their feedback before appraisal


ANALYSIS:

The above table shows the opinion of employee’s on taking the comments and suggestions before

the appraisal. It shows that 60 per cent of the respondents say that Employee’s comments and

suggestions are taken into consideration before the appraisal in the Organization, and 40 per cent

of the respondents say that Employee’s comments and suggestions are not taken into

consideration before the appraisal in the Organization.

INTERPRETATION:

More than half of the respondents saying that organization consider their comments and

suggestions before the appraisal.



1 Yes 18 60

2 No 12 40

3 Total 30 100

60

40

Employee’s opinion on considering their feedback before appraisal

Yes

No

48

Table 4.5: Employee’s opinion on the existence of Performance Appraisal system in the

Organization.


ANALYSIS:

The above table shows data of respondent’s opinion on “performance appraisal system will help

them in improving their effectiveness”. And the feedback shows that 50 per cent of the

respondents strongly agree that performance appraisal system will help the employees in

improving their effectiveness, 47 per cent of the respondents agree that performance appraisal

system will help them in improving their effectiveness employees, and 3per cent of the

respondents are neutral.

INTERPRETATION:

All the respondents agree with the statement “performance appraisal system will help them in

improving their effectiveness”.


Respondents per centage




4 Disagree 00 00

5 Total 30 100

50 47

3

0

Employee’s opinion on the existence of Performance Appraisal system in

the Organization

Strongly Agree

Agree

Neither Agree nor dsagree

Disagree

49

Table 4.6: Employee’s opinion on whether performance appraisal is beneficial to the

organization and individual development.


ANALYSIS:

The above table reveals that Employee’s opinion on performance appraisal is beneficiary in

organization development and in individual development. It shows that 33 per cent of the

respondents strongly agree that the performance Appraisal is beneficial for Organization

Development as well as for Individual Development, 57 per cent of the respondents agree that the

performance Appraisal is beneficial for Organization Development as well as for Individual

Development, and 10 per cent of the respondents are neutral.

INTERPRETATION:

About half of the respondents agreed that performance appraisal is beneficial in organization and

individual development.






4 Disagree 00 00

5 Total 30 100

33

57

10 0

Employee’s opinion on whether performance appraisal is beneficial to

the organization and individual development

Strongly Agree

Agree

Neither Agree nor dsagree

Disagree

50

Table 4.7: Employee opinion on periodic performance reviews for the work done


ANALYSIS:

The above table shows the data of employee opinion on periodic performance reviews for the

work done. It shows that 87per cent of the respondents say that there are periodic performance

reviews for the work done, and 13 per cent of the respondents say that there are no periodic

performance reviews for the work done.

INTERPRITATION:

More than half of the respondents said that they have periodic performance reviews for their work

done.

Responses of Respondents No of


Yes 26 87

No 04 13

Total 30 100

87

13

Employee opinion on periodic performance reviews for the work done

Yes

No

51

Table 4.8: Employee’s opinion on training sessions for fresher


ANALYSIS:

The above table describes the employee opinion on training session for fresher. Table shows that

7 per cent of the respondents think that training session for fresher is excellent, 73 per cent of the

respondents thought it is good, 10 per cent of the respondents thought its average, and 10 per cent

of the respondents thought it is poor.

INTERPRETATION:

More than half of the respondents think that APSFC is providing good training for fresher.

S.No. Responses of Respondents No of Respondents Percentage

1 Excellent 2 7

2 Good 22 73

3 Average 3 10

4 Poor 3 10

5 Total 30 100

7

73

10

10

Employee’s opinion on training sessions for fresher

Excellent

Good

Averaage

Poor

52

Table 4.9: Employee’s opinion on how well performance appraisal is helping them in

planning their work well


ANALYSIS:

The above table describes the employee’s opinion on how well performance appraisal is helping

them in planning their work well. The table shows that 10 per cent of the respondents strongly

agree that Performance Appraisal helps them to plan their work well, 50 per cent of the

respondents agree with the statement. 13 per cent of the respondents disagree with statement, and

27 per cent of the respondents strongly disagree with statement.

INTERPRITATION:

Most of the respondents think that performance appraisal is not helping them in planning their

work well.






4 Disagree 04 13

5 Strongly Disagree 08 27

6 Total 30 100

10 0

50 13

27

Employee’s opinion on how well performance appraisal is helping them in

planning their work well

Strongly Agree

Agree Appraisal

Neither Agree nor disagree

Disagree

Strongly Disagree

53

Table 4.10: Employee’s opinion on awareness of performance appraisal ratings


ANALYSIS:

The table shows the employee’s opinion on awareness of performance appraisal ratings. Table

shows that 70 per cent of respondents are aware of performance ratings by appraiser, and 30 per

cent of respondents are not aware.

INTERPRETATION:

Most of the respondents know about the ratings of performance appraisal.



1 Yes 21 70

2 No 09 30

3 Total 30 100

70

30

Employee’s opinion on awareness of performance appraisal ratings

Yes

No

54

Table 4.11: Employee’s feedback on period of their appraisal


ANALYSIS:

The table shows the data about the opinion of employee’s on period of appraisal. It shows that 3

per cent of respondents think performance appraisal is carried out quarterly, 90 per cent of

respondents think performance appraisal is carried out annually, and 7 per cent of respondents

think performance appraisal carried out at any time.

INTERPRETATION:

Most of the respondents think organization conducts appraisal once a year i.e. annually.


1 Monthly 00 00

2 Half Yearly 00 00

3 Quarterly 03 3

4 Annually 27 90

5 Anytime 2 7

6 Total 30 100

0 0

3

90

7

Employee’s feedback on period of their appraisal

Monthly

Half-yearly

quarterly

annually

any time

55

Table 4.12: Employee’s opinion on does the credibility of appraiser affect the performance

Appraisal System


ANALYSIS:

The above describes the employee opinion on does the credibility of appraiser affect the

performance Appraisal System. The table shows that 77 per cent of the respondents accepts that

the credibility of Appraiser affect the performance Appraisal System at greater extent, and 23 per

cent of the respondents accepts that the credibility of Appraiser affect the performance Appraisal

System at lesser extent.

INTERPRETATION:

Most of the respondents agree that the credibility of appraiser affect the performance appraisal.


1 Greater Extent 23 77

2 Lesser Extent 7 23

3 Nothing 00 00

4 Total 30 100

77

23

0

Employee’s opinion on does the credibility of appraiser affect the

performance Appraisal System

Greater Extent

Lesser Extent

Nothing

56

Table 4.13: Employee’s opinion on necessity of incentives for improving the performance of

employees


ANALYSIS:

The above table consists the date about Employee’s opinion on necessity of incentives for

improving the performance of employees. It shows that 40 per cent of the respondents strongly

agreed that incentives are necessary for improving the performance of employees, 43 per cent of

the respondents agreed that incentives are necessary for improving the performance of employees,

7 per cent of the respondents are neutral and 10 per cent of the respondents think that the

incentives are not necessary for improving the performance of employees.






4 Disagree 03 10


6 Total 30 100

40

43

7

10

Employee’s opinion on necessity of incentives for improving the

performance of employees

Strongly Agree

Agree

Neither Agree nor Disagree

Strongly Disagree

57

INTERPRETATION:

Most of respondents think that incentives are necessary for improving the performance of

employees.

Table 4.14: Employee’s opinion on necessity of introducing scheme other than that of

existing incentives being paid


ANALYSIS:

The table shows the data about the employee opinion on necessity of introducing scheme other

than that of existing incentives being paid. It shows that 10 per cent of the respondents strongly

agree that there is a necessity of introducing new incentive scheme, 26 per cent of the respondents

agree that there is a necessity of introducing new incentive scheme, 17 per cent of the respondents

are neutral, 40 per cent of the respondents think that there is no necessity for introducing new

incentive scheme, and 7 per cent of the respondents strongly disagree with the statement.






4 Disagree 12 40


6 Total 30 100

10

26

17

40

7

Employee’s opinion on necessity of introducing scheme other than that of

existing incentives being paid

Strongly Agree

Agree


Disagree

Strongly Disagree

58

INTERPRETATION:

Most of the respondents by compared to others said that there is a necessity of introducing

scheme other than that of existing incentives being paid.

Table 4.15: Employee’s opinion on getting feedback on their performance appraisal


ANALYSIS:

The table is about opinion of employee’s on getting feedback on their performance appraisal. It

shows that 40 per cent of the respondents think that they are getting performance feedback on

their performance appraisal and 60 per cent of the respondents think that they are not getting their

performance feedback.

INTERPRETATION:

Above half of the people said that they are not getting feedback on their performance appraisal.



1 Yes 12 40

2 No 18 60

3 Total 30 100

40

60

Employee’s opinion on getting feedback on their performance appraisal

Yes

No

59

Table 4.16: Employee’s opinion on feedback given by superior in helping them to achieve

their Organizational goals


ANALYSIS:

The table is about the opinion of employees on feedback given by their superior help them in

achieving Organizational goals. It shows that 73 per cent of the respondents said that the feedback

given by their superior is helping them in achieving Organizational goals and 27 per cent of the

respondents said that feedback given by superior is not helping them.

INTERPRETATION:

More than half of the respondents said that the feedback given by their superior helps them in

achieving Organizational goals.



1 Yes 22 73

2 No 08 27

3 Total 30 100

73

27

Employee’s opinion on feedback given by superior in helping them to

achieve their Organizational goals

Yes

No

60

Table 4.17: Employee’s opinion on Satisfaction levels of employee with the presentappraisal

system in the organization.


ANALYSIS:

The table consist the data of employee’s opinion on Satisfaction levels of employee with the

present appraisal system in the organization. It shows that 47 per cent of the respondents are

extremely satisfied with the appraisal system being used in the organization, 43 per cent of the

respondents are satisfied with the appraisal system being used in the organization, 3 per cent of

the respondents are neither satisfied nor dissatisfied with the appraisal system being used in the

organization, and 7 per cent of the respondents are dis satisfied with the appraisal system being

used in the organization.

INTERPRETATION:

Most of the people comparing with other respondents said satisfaction levels of employee with

the appraisal system being used in the organization.



1 Extremely satisfied 14 47

2 Satisfied 17 57

3 Neither satisfied nor dissatisfied 01 03

4 Dissatisfied 02 7

5 Total 30 100

47

43

3

7

Employee’s opinion on Satisfaction levels of employee with the present

appraisal system in the organization

Extreemly Satisfied

Satisfied

Neither Satisfied nor Dissatisfied

Dissatisfied

61

Table 4.18: Employee’s opinion on alternate appraisal system need to be followed in place of

the present system


ANALYSIS:

The table describes employee’s opinion on alternate appraisal system need to be followed in place

of the present system. The table shows that 6 per cent of the respondents strongly agree that other

appraisal system other than that is followed should be introduced, 47 per cent of the respondents

agree that any other appraisal system other than that is followed in your organization should be

introduced, 27 per cent of the respondents are neutral and 10 per cent of the respondents disagree.

INTERPRETATION:

Most of respondents by comparing with other respondent said any other appraisal system other

than that is followed in your organization should be introduced.






4 Disagree 08 27


6 Total 30 100

6

47

10

27

10

Employee’s opinion on alternate appraisal system need to be followed in

place of the present system

Strongly Agree

Agree


Disagree

Strongly Disagree

62

5.1 FINDINGS

1. More than half of the respondents said that APSFC follows both Confidential and Self

Appraisal. (53%)

2. A large proportion of respondents agreed about the necessity of performance appraisal in

the organization. (70%)

3. More than half of the respondents think “An insight into your strengths and weakness” is

the criteria of performance appraisal, in the organization. (60%)

4. More than half of the respondents felt that organization consider their comments and

suggestions before the appraisal. (60%)

5. Majority of the respondents agree with the statement “performance appraisal system will

help them in improving their effectiveness”. (97%)

6. About half of the respondents agreed that performance appraisal is beneficial in

organization and individual development. (90%)

7. Majority of the respondents said that they have periodic performance reviews for their

work done. (87%)

8. A huge number of respondents think that APSFC is providing good training for fresher.

(73%)

9. Half of the respondents think that performance appraisal is not helping them in planning

their work well. (50%)

10. Most of the respondents know about the ratings of performance appraisal. (70%)

11. Majority of the respondents know that the organization conducts appraisal once a year i.e.

annually. (90%)

12. About 70 per cent of the respondents agree that the credibility of appraiser affect the

performance appraisal. (77%)

13. Most of respondents think that incentives are necessary for improving the performance of

employees. (83%)

14. Most of the respondents felt that there is a necessity of introducing scheme other than that

of existing incentives being paid. (50%)

15. Above half of the people said that they are not getting feedback on their performance

appraisal. (60%)

63

16. More than half of the respondents said that the feedback given by their superior helps

them in achieving Organizational goals. (73%)

17. Majority of the people are satisfied with the appraisal system being used in the

organization. (90%)

18. Half of respondents felt that other appraisal system other than that is followed in the

organization should be introduced. (51%)

5.2 SUGGESTIONS:

1. It is suggested that concerned superior of any employee should give performance

feedback to them.

2. New incentives schemes other than that of existing incentives being paid should be

introduced.

3. Most of the employees have suggested that courses/training should meet their

expectations/need/preferences

4. Most of the employees have agreed that incentives are necessary for improving the

performance.

5. Employees should get involved in the performance appraisal process and self-evaluation

of employees should be there.

6. An appreciation for good performance and proper guidance for improvement is a must.

7. Peers, Subordinates, and customers should be included in Appraisal system

8. Regular feedback to employees is required that guides and encourages them in their

growth and career progression

9. Interview of the appraiser, and appraise, has to be done, in order to avoid any kind of bias

in the organization.

10. Key performance areas (KPAs) have to be considered, while appraising the employee

makes him more involved in his work.

11. It is advisable to have two appraisers for the appraising of employee.

12. The strengths and weaknesses of the appraises have to be communicated to them, and

proper counseling should be given

13. Factor to be included into the present criteria for performance evaluation:

64

Quality assignment of the work done

Disciplinary / Administrative lapses.

Extraordinary occurrences

Problem solving skills

Productivity of work-output

Attitude towards work

Behavior and health

Efficiency

Capability to take up higher responsibility

5.3 CONCLUSION

Performance Appraisal system is very important to assess training needs to effect promotions,

and to give pay increase. There are two methods in performance Appraisal system, those are

modern and tradition method.

Appraisal of performance proceeds in a set of pattern, the step involved are defining appraisal

objectives, establishing job expectations, designing the appraisal programmes conduction

performance interview, and using appraisal data for different HR activities.

With the above finding the APSFC can undergoes 360 degree Appraisal system with maximum

respondents of the employees are willing for the best appraisal system which can give them

better working environment in the environment, with better skill development, promotion, etc.

65

BIBLOGRAPHY

TEXT BOOKS:

T.V.Rao (1999), Appraising and Developing Managerial Performance, Excel

Books, New Delhi.

P.Subba Rao, Essentials of Human Resource Management, Himalaya Publishing

House.

V.S.P.Rao & T.S.Narayana Rao, Management, Premier Book Company.

JOURNALS:

Company Annual Report

Magazines

WEBSITES:

Google.com

Apsfc.com

66

QUESTIONNAIRE

A survey on performance Appraisal System at

ANDHRA PRADESH STATE FINANCE CORPORATION

1. What type of Appraisal System Organization follows?

a) Confidential-Appraisal

b) Self-Appraisal

c) Both

d) Other

2. Is Performance Appraisal necessary to be carried towards an employee in an

organization?

a) Strongly agree

b) Agree

c) Neither agree nor disagree

d) Disagree

e) Strongly disagree

3. Purpose of appraisal system

a) An insight into your strengths and weakness

b) Guideline for training and plan

c) Assistance in goal

d) Decision on layoff

e) Determination of promotion or transfer

f) Salary administration and Benefits

4. Are employee’s comments and suggestions taken into consideration before the appraisal?

a) Yes

b) No

67

5. Do you feel that performance appraisal system will help you in improving the

effectiveness of employees?

a) Strongly agree

b) Agree


d) Disagree


6. Do you think performance Appraisal is beneficial for Organization Development as well

as Individual Development?

a) Strongly agree

b) Agree


d) Disagree


7. Are there any periodic performance reviews for the work done?

a) Yes

b) No

8. How do you feel about the training session for fresher?

a) Excellent

b) Good

c) Average

d) Poor

9. The Performance Appraisal helping you to plan your work well?

a) Strongly agree

b) Agree


d) Disagree


68

10. Are you aware of performance ratings?

a) Yes

b) No

11. How often is Performance Appraisal carried out?

a) Monthly

b) Half Yearly

c) Quarterly

d) Annually

12. Does the credibility of Appraiser affect the performance Appraisal System?

a) Greater Extent

b) Lesser Extent

c) Nothing

13. Are incentives necessary for improving the performance of employees?

a) Strongly agree

b) Agree


d) Disagree


69

14. Is there any necessity of introducing scheme other than that of existing incentives being

paid?

a) Strongly agree

b) Agree


d) Disagree


15. Do you get a performance feedback on your performance appraisal?

a) Yes

b) No

16. Does the feedback given by superior help you in achieving Organizational goals?

a) Yes

b) No

17. Satisfaction levels of employee with the appraisal system being used in the organization

a) Yes

b) No

18. Do you feel that any other appraisal system other than that is followed in your

organization shall be introduced?

a) Yes

b) No

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A study on Performance Appraisal System towards employees in APSFC

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