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PROJECT REPORT ON
“Analyzing Performance Appraisal System”
With Special Reference To
Maharashtra State Electricity Distribution Company
Limited (MSEDCL)
By
Vishal Shivasharan
SUBMITTED IN PARTIAL FULFILLMENT OF THE DEGREE
OF MASTERS OF BUSINESS ADMINISTRATION
UNIVERSITY OF PUNE
THROUGH
Pad. Dr. D. Y. Patil Institute of MCA, MBA
Akurdi, PUNE – 44
2011-2012
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ACKNOWLEDGEMENT
“Vital to every operation is co-operation”. We really agree to this
wonderful quotation put forth by Mr. Frank Tyger. This project was
successful due to the co-operation extended by people who have truly
contributed towards it. We gratefully acknowledge Prof. Sapma Ramani
who’s deep sharing and synergy has moved us many levels beyond our own
thinking. We want to thank the management of various companies who
gave us the permission to conduct research. We would also like to thank all
the employees and HR executives who empowered us with valuable
information. And finally to those whose lives and writings has come the
wisdom of the ages. We have tried to learn from your legacy”.
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ABSTRACT
Appraisal is a continuous process and done annually as a formal exercise
before completion of the financial year. Appraisal has tremendous
motivational impact on people through meaningful feedback and is a
powerful tool for recognition. This project explains performance appraisal
system and tries to find out how efficiently Performance Appraisal is
conducted. And if performance appraisal doesn’t meet its objective then,
what are the factors causing failure.
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Serial No.
Name Of Chapter Page No.
Introduction
Company Profile
Review of Literature
Research Methodology
Data Presentation, Analysis andInterpretation
Conclusion
INTRODUCTION
Understanding performance management
What is Performance?
How is Performance managed?
Need of Performance Appraisal
Statement of Problem
Objective of Study
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INTRODUCTION
In the business world investment is made in machinery, equipment and services. Quite
naturally time and money is spent ensuring that they provide what their suppliers claim. In
other words the performance is constantly appraised against the results expected.
When it comes to one of the most expensive resources companies invest in, namely people,
the job appraising performance against results is often carried out with the same objectivity.
Each individual has a role to play and management has to ensure that the individual’s
objectives translate into overall corporate objectives of the company. Performance
Management includes the performance appraisal process which in turn helps identifying the
training needs and provides a direction for career and succession planning.
1.1 Understanding Performance Management
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PERFORMANCE MANAGEMENTPERFORMANCE MANAGEMENT
DETERMINE INDIVIDUAL OBJECTIVES LINKED TO CORPORATE GOALS
DETERMINE INDIVIDUAL OBJECTIVES LINKED TO CORPORATE GOALS
PERFORMANCE APPRAISALPERFORMANCE APPRAISAL
ENSURE RESPONSIBILITY AND ACCOUNTABILITY ENSURE RESPONSIBILITY AND ACCOUNTABILITY
PERFORMANCE LINKED INCREMENTS/ INCENTIVES/ REWARDS
PERFORMANCE LINKED INCREMENTS/ INCENTIVES/ REWARDS
CORPORATE GOALSCORPORATE GOALS
1.2 What is Performance?
Performance is synonymous with behaviour; it is what people actually do. Performance
includes those actions that are relevant to the organizational growth and can be measured in
terms of each individual’s proficiency (level of contribution). Effectiveness Performance
refers to the evaluation of results of performance that is beyond the influence or control of the
individual.
1.3 How is Performance managed?
Good performance by the employees creates a culture of excellence, which benefits the
organization in the long run. The activity includes evaluation of jobs and people both,
managing gender bias, career planning, and devising methods of employee satisfaction etc.
the efforts are to make to generate the individual’s aspirations with the objectives of the
organization. Organization has to clear the way of career advancements for talented and
hardworking people. Fear of any kind from the minds of the employees should be removed so
that they give best to their organization. Allow free flow of information. Communication
network should be designed in such a way no one should be allowed to become a hurdle. This
enables the managers to take correct decisions and that too quickly.
1.4 Need of Performance Appraisal?
Today’s working climate demands a great deal of commitment and effort from employees,
who in turn naturally expect a great deal more from their employers. Performance appraisal
is designed to maximize effectiveness by bringing participation to more individual level in
that it provides a forum for consultation about standards of work, potential, aspirations and
concerns. It is an opportunity for employees to have significantly greater influence upon the
quality of their working lives. In these times of emphasis on “quality”, there is a natural
equation: better quality goods and services from employees who enjoy better quality “goods
and services” from their employers.
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Performance appraisal must be seen as an intrinsic part of a manager’s responsibility and not
an unwelcome and time-consuming addition to them. It is about improving performance and
ultimate effectiveness.
Performance appraisal is a systematic means of ensuring that managers and their staff meet
regularly to discuss post and present performance issues and to agree what future is
appropriate on both sides.
This meeting should be based on clear and mutual understanding of the job in question and
the standards and outcomes, which are a part of it. In normal circumstances, employees
should be appraised by their immediate managers on one to one basis. Often the distinction
between performance and appraising is not made. Assessment concerns itself only with the
past and the present. The staff is being appraised when they are encouraged to look ahead to
improve effectiveness, utilize strengths, redress weaknesses and examine how potentials and
aspirations should match up.
It should also be understood that pushing a previously prepared report across and desk
cursorily inviting comments, and expecting it to be neatly signed by the employee is not
appraisal - this is merely a form filling exercise which achieves little in terms of giving staff
any positive guidance and motivation.
THE APPRAISAL OF PERFORMANCE SHOULD BE GEARED TO:
Improving the ability of the jobholder;
Identifying obstacles which are restricting performance
Agreeing a plan of action, that will lead to improved performance.
It is widely accepted that the most important factor in organization effectiveness is the
effectiveness of the individuals who make up the organization. If every individual in the
organization becomes more effective, then the organization itself will become more effective.
The task of reviewing situations and improving individual performance must therefore be a
key task for all managers.
For appraisal to be effective, which means producing results for the company, each manager
has to develop and apply the skills of appraisal
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These are: -
Setting standards on the performance required, which will contribute to the
achievement of specific objectives
Monitoring performance in a cost –effective manner, to ensure that previously agreed
performance standards are actually being achieved on an ongoing basis
Analyzing any differences between the actual performance and the required
performance to establish the real cause of a shortfall rather than assume the fault to be
in the jot holder.
Interviewing having a discussion with the jobholder to verify the true cause of a
shortfall, a developing a plan of action, which will provide the performance, required
Appraisal can then become a way of life, not concerned simply with the regulation of rewards
and the identification of potential, but concerned with improving the performance of the
company. The benefits of appraisal in these terms are immediate and accrue to the appraising
manager, the subordinate manager/employee, and to the company as a whole
1.5 Statement of the Problem
Performance appraisal is a process of assessing, summarizing and developing the work
performance of an employee. In order to be effective and constructive, the performance
manager should make every effort to obtain as much objective information about the
employee's performance as possible. Low performance can push the organization back in
today’s tough competition scenario. The project is aimed at analyzing the performance
appraisal in companies.
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1.6 Objective of the Study
The various objectives of our research are as follows
To examine why an appraisal system is important.
To find the expectation of appraisee
To determine the satisfaction level of the appraisee
To reveal the various loopholes in the appraisal system if any
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COMPANY PROFILE
Company Introduction
Vision/Mission of the Organization
Major Achievements of Organization
Ongoing Projects
Structure of the Organization
HRM Dept in Organization
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2.1 Company Introduction
Maharashtra State Electricity Distribution Company Limited (MSEDCL) came into existence
on June 6, 2005 after unbundling the erstwhile Maharashtra State Electricity Board into four
companies. MSEDCL is also known as Mahavitaran or Mahadiscom. Mahadiscom is one of
the largest public sector company engaged in the business of electricity distribution with
annual turnover of Rs. 21,278 Cores. It serves 156.96 Lakh consumers in Maharashtra State
with a committed pool of over 75000 employees.
2.2 Mission statement
1. We, as professional company, rededicate ourselves to serve all our customers by
extending reliable and quality power supply at reasonable and competitive tariffs so as
to boost agricultural, industrial and overall economic development of Maharashtra.
2. We commit to Honesty, Integrity and Transparency in actions to achieve higher
standards of Consumers Satisfaction.
3. We aim at achieving technological excellence and financial turnaround for the overall
benefit of the customers.
4. We will strive hard for system improvement and stress upon preventive maintenance.
5. We will ruthlessly curb the theft of electricity.
6. We will encourage and support energy saving activities and Demand Side
Management thereby optimizing the use of electricity.
7. We will fulfill our commitment to society by improving quality of life.
2.3 Major Achievements of Organization
Mahavitaran for the first time registered a profit of Rs. 117 crore during the year
2007-08.
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The distribution loss in the system has been reduced by 3.16% in FY 2005-06 and
2.09% in FY 2006-07. It was reduced by whopping 5.41% in FY 07-08. The present
loss level of MSEDCL is 24.09%.
The collection efficiency has improved to the level of 98% in FY 2007-08 from 89%
three years back.
Six dedicated police stations have been established in Maharashtra to handle power
theft cases only.
A special power theft drive was launched from April- 2007. During FY 2007-08
about 90,000 cases of power thefts amounting to Rs. 55.41 Crore have been detected.
This is more than the thefts detected during FY 2006-07. More than 9000 FIRs have
been registered against the power theft accused. Presently this drive is implemented
consecutively for 15 days every alternate month. During April to September 2008 it
resulted in 36383 cases and recovery of Rs. 25 crore as penalties and FIRs against
3559 persons.
A special programme for regularization of unauthorized Ag Load extension (Krishi
Swabhiman Yojana 2007) was launched from 1st September 2007 to October 31,
2007. More than 3 Lakh HP load was regularized & Rs. 26.46 Crore collected. The
scheme contributed to increase in connected load, reduction in distribution losses and
increase in revenue.
Bhiwandi Circle with 44 % distribution losses and 68 % collection efficiency has
been franchised out to M/S Torrent Power on 26.01.2007 for ten years. The
experiment has been quite encouraging. It has reduced losses to 22.77%, improved
collection efficiency to 77.00% & earned Rs.4.27 Crorer profit per month for
Mahadiscom.
USAID/MOP, GOI aided Distribution, Reforms, Upgrade and Management (DRUM)
project work at Aurangabad Urban I Division (Rs. 161 Crores) has been started where
best practices in distribution will be introduced to showcase.
For customer satisfaction 24X7 hour operating 15 Call Centers have been
commissioned for redressing “no power” complaints of consumers.
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50 Customer Facilitation Centers have been commissioned at sub-division level for
redressing billing complaints of customers. The basic idea is to introduce single
window clearance for customers at sub-division level.
Infrastructure distribution planning reports (DPRs) for 119 divisions are in-
principally approved by MERC. The cost of these DPRs is Rs.8918/- Crore out of
which financial tie up for 97 projects of Rs. 7192/- crore has been made available.
The work is in progress.
For load management, Single Phasing Scheme has already been completed due to
which 12011 villages in the state have been benefited . These villages get 10 hours of
single phase and 7 hours of 3 phase supply.
Gaothan Feeder Separation Scheme for 16231 villages has been planned and is under
implementation. The work of separate agriculture feeder for 4300 villages have been
completed at the end of September 2008. Balance work is in progress and will be
completed by March 2009. In this scheme separate 11/22 KV feeders are being laid
for Gaothan for assuring evening time supply for lighting in villages. The work is
carried out on turnkey basis.
MSEDCL has called for long term power purchase bids for 2000 MW under case I,
stage I, under which 1320 MW from M/s Adani’s Project at Gondia (Maharashtra )
and 680 MW from M/S Lanco’s Chattisgarh project will be made available from
2012 onwards. In addition, a competitive bidding process for 2000 MW under stage
II of case I and 1600 MW under case II as per Central Govt. directives is under
progress. Recently a PPA for 250 MW from NTPC’s Vindhyachal stage IV has also
been signed.
All time payment machines for bill payment (24X7 hours) have been installed in
major metros.
A novel scheme of photo meter reading of all domestic & commercial consumers has
been introduced. 1,01,41,575 consumers have been covered as on September-08.
AMR for over 8500 substation feeders has been planned on BOOT basis.
To reduce AT&C loss, APDRP Scheme has been introduced for 30 cities where work
is in progress.
Work in progress for Distribution SCADA for 12 cities.
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Project reports at the estimated cost of Rs. 716/- Corer have been submitted to REC
for Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) covering 5554 villages in 34
districts. The main aim of the scheme is to provide supply to BPL families. Scheme
for 4 districts is sanctioned by REC/GOI, where work is in progress
There are in all 256,793 Distribution Transformer Centers (DTCs) in operation. In a
project estimated to cost Rs. 82 crore, 134,591 DTCs have already been metered and
another 15000 DTCs will be metered during 2008-09. It has been decided to read all
these DTC meters by the Photo Meter Reading method. This will complete the
exercise of energy accounting at distribution transformer level.
Consumer indexing for 13 million customers is completed.
In order to provide better consumer services outsourcing of meter reading, billing and
collection for energy bill has been introduced.
Independent 11 Zonal Consumer Grievance Redressal Forums established for
redressing consumer complaints.
Energy bills of all metered consumers are available on website along with previous 12
months consumption data.
Employees are being deputed for All India level training programs (over 2000
engineers deputed under DRUM Training Programme).
Aurangabad DRUM training center for Technicians has been recognized by USAID
for linemen level (technicians) training (all India) center.
Centralized MIS system is being setup from subdivision to corporate office level for
better information flow.
Revenue collection has gone up from Rs. 1100 to Rs. 1800 Crores per month.
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2.4 Ongoing Projects
Gaothan Feeder Separation Scheme
1)To provide un-
interrupted power supply particularly to Rural/Semi urban consumers and thereby reducing the feeling of discrimination and discontent compared to urban consumers.2) Flattening of load curve in a judicial way.Therefore reducing the cost on Power purchase and reducing the penalty for unscheduled interchanges.
3) Better energy accounting for Ag consumption. 4) Reduction of T&D losses. 5) System strengthening by improving the infrastructure.
Gaothan Feeder Separation Scheme Phase-I
Program : No. of feeders - 1504 Nos 11KV Line . - 23011 Kms Total DTC’s - 9785 Nos No. of villages covered - 7437 Nos Load Management - 1976 MW
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Programme of Commissioning : March 2009.
Based at District : Nanded, Beed, Osmanabad, Latur, Nasik, Dhule, Jalgaon, Ahmednagar, Solapur, Kolhapur, Satara, Sangli, Pune, Aurangabad, Jalna, Parbhani, Amravati, Akola, Yavatmal,
Buldhana.
Estimated Cost : Rs.943 Crores
Finance : Loan Sanctioned from REC for Rs 714.55 Crores.
Progress as on 30th April 2009: No. of Feeder commissioned:1318 Nos 11KV line Charged: 19457 Kms DTCs Commissioned: 7238 Nos No. of villages benefited: 5185 Nos Load Management: 1592 MW
Gaothan Feeder Separation Scheme Phase II. To provide un-interrupted power
supply particularly to Rural / Semi urban consumers and thereby reducing the feeling of discrimination and discontent compared to urban consumers.
2) Flattening of load curve in a judicial way. Therefore reducing the cost on Power purchase and reducing the penalty for unscheduled interchanges.
3) Better energy accounting for Ag consumption. 4) Reduction of T&D losses. 5) System strengthening by improving the infrastructure.
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Program : No. of feeders - 1067 Nos 11KV Line - 27063 Kms Total DTC’s -13722 Nos No. of villages covered - 8491 Nos No. of wadies covered - 2020 Nos Load Management - 1646 MW
Programme of Commissioning : June - 2009.
Based at District : Nasik, Dhule, Jalgaon, Ahmednagar, Wardha, Bhandara, Chandrapur, Gadchiroli, Gondia, Nagpur, Solapur, Kolhapur, Satara, Sangli,, Pune Rural, Aurangabad, Jalna & Parbhani, Amravati, Akola, Buldhana, Yavatmal
Estimated Cost : Rs. 1446.07 Crores
Finance : Loan sanctioned from REC for Rs 1301.48 Crores.
Progress as on 30th April 2009: No. of Feeder commissioned:165 Nos 11KV line Charged: 1857 Kms DTCs Commissioned: 732 Nos No. of villages benefited: 545 Nos Load Management: 119 MW
2.5 HRM Dept in Organization
In Maharashtra State Electricity Distribution Company the Human Resource Department role
are vital and various rules and regulation were adopted out of them there are following three
important service regulation will be applicable in HR Dept.
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1) MSEDCL Employees Service Regulations 2005.
2) Classification and Recruitment Regulations 2005.
3) MSEDCL Employees Seniority Regulations 2005.
1) MSEDCL Employees Service Regulations 2005.
In exercise of the power conferred by Government of Maharashtra Vide Notification No.
1005/CR/9061(2)/Energy -5 dt.04.06.05 Rule No.6 (9), (10) & Reform – 1005/CR-
9061(4)/Energy -5 at. 28.06.5 Rule 1(3) under section 131,133 and 134 of the
Electricity Act,2003 (36 of 2003) Maharashtra State Electricity Distribution Company
Ltd. adopts the erstwhile MSEB Employees’ Service Regulations 1963, mutatis
mutandis as follows:-
* These Regulations called “The Maharashtra State Electricity Distribution Company Ltd.
Employees’ Service Regulations, 2005 shall replace the Maharashtra State Electricity Board
Employee’s Service Regulations 1963 by which the employees of the Maharashtra State
Electricity Distribution Company Ltd. (hereafter referred to in these Regulations as
“Company”) were hitherto governed .These Regulations came into effect from 06.06.2005 in
the Maharashtra state.
The above Regulation following chapters are there.
CHAPTER - I : GENERAL
CHAPTER - II : Definitions and interpretations.
CHAPTER - III :- General Conditions of Service.
CHAPTER - IV :- PAY ( Drawing of salary etc.)
CHAPTER - V :- LEAVE.
CHAPTER - VI :- TRAVELLLING ALLOWENCES.
CHAPTER - VII :- CONDUCT, DESCIPLONE AND PAAEAL
REGULATIONS.
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CHAPTER - VIII :- Regulation relating to work -charged staff & casual
workers.
CHAPTER- IX :- MISCELLANEOUS.
2) Classification and Recruitment Regulations 2005.
In exercise of the power conferred by Government of Maharashtra Vide Notification No.
1005/CR/9061(2)/Energy -5 dt.04.06.05 Rule No.6 (9), (10) & Reform –
1005/CR-9061(4)/Engergy -5 dt. 28.06.5 Rule 1(3) under section 131,133 and 134 of the
Electricity Act,2003 (36 of 2003) Mahrashtra State Electricity Distribution Company Ltd.
adopts the erstwhile MSEB Classicificaion & Recruitment Regulations 1961,to regulate
classification and recruitment ot posts in various categories in its service.
In above regulation the following schedule are there.
A - I : Technical (Dist) cadre.
A – 2 : Non Tech. Cadre.
1) General Administration Department (HR)
2) Account & Finance .
3) Legal Department.
4) Industrial Relations.
A- 3 : Information Technology.
A- 4 : Store Cadre.
A- 5 : Security & Vigilance Cadre.
A- 6 : Public Relations Cadre.
A – 7 : Selection Posts and Non-Selection Posts.
3) MSEDCL Employees Seniority Regulations 2005.
In exercise of the power conferred by Government of Maharashtra Vide Notification No.
1005/CR/9061(2)/Energy -5 dt.04.06.05 Rule No.6 (9), (10) & Reform –
1005/CR-9061(4)/Energy -5 dt. 28.06.5 Rule 1(3) under section 131,133 and 134 of the
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Electricity Act,2003 (36 of 2003) Mahrashtra State Electricity Distribution Company Ltd.
adopts the erstwhile MSEB Employees’ Seniority Regulations 1961, to regulate the seniority
of the employees in its service .
Seniority shall be based on the length of continuous service in the particular category.
For the purposes of fixing seniority, length of shall be counted from the date of the order of
appointment or of promotion and not the date of joining the post.
2.6 Structure of Organization
The organization structure of MSEDCL is very wide through Maharashtra and
deeply rooted so as to serve the clients and to fulfill the set targets by the management. If
we go through the organizational chart of MSEDCL, we can understand the structure,
components and way of administration. For the benefit of study, one has to see the
organizational chart with meticulous thinking.
2.7 Man power
Pay Group Tech
Section
GAD
( HR)Section
Account
Section
Informaion
Technology
Section
Vigilance
Department
Pay GR-I 21 01 02 02 0
Pay GR-II 173 05 09 05 01
Pay GR-III 164 51 165 0 03
Pay GR-IV 923 48 01 01 0
Total 1281 105 177 08 04
Operators Dy.Operators Assistant Operator Junior Operator
Pay Gr- III 35 67 95
APPRENTICS 50
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M.S.E.D.C.L ORGANISATION STRUCTURE
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M.D.
EX.DIR (PROJECT)
EX.DIR (FINANCE)
EX.DIR (HR) EX.DIR (COMM)
AURANGABAD
BHANDOOP
KOLHAPUR LATUR
CGM (P)
GENERAL MANAGER (P)
NANDED BARAMATI
SUPRITENDING ENGINEER CIRCLE OFFICE SOLAPUR
ASSITANT MANAGER (P)
MANAGER (P)
EX.DIR (OPERATION)
CHIEF ENGINEER
AMRAVATI
KOKAN
NAGPUR NASHIK PUNE
KALYAN
REVIEW OF LITERATURE
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Introduction:
Appraising the performance of individuals, groups and organisations is a common
practice of all societies. While in some instance these appraisal processes are structures and
formally sanctioned, in other instances they are an informal and integral part of daily
activities. Thus, teachers evaluate the behavior of their children, and all of us, consciously or
unconsciously evaluate our own actions from time to time. In social interactions, performance
is conducted in a systematic and planned manner to achieve widespread popularity in recent
years.
Meaning:
Performance appraisal is a method of evaluating the behavior of employees in the
work spot, normally including both the quantitative aspects of job performance.1
Performance here refers to the degree of accomplishment of the tasks that make up an
individual’s job. It indicates how well an individual is fulfilling the job demands. Often the
term is confused with effort, but performance is always measured in terms of results and not
efforts. A student, for example, may exert a great deal of effort while preparing for the
examination but may manage to get a poor grade. In this case the effort expended is high but
performance is low. In order to find out whether an employee is worthy of continued
employment or not, and if so, whether he should receive a bonus, a pay rise or promotion, his
performance needs to be evaluated from time to time.2 When properly conducted
performance appraisal not only let the employee know how well he is performing but should
also influence the employee’s future level of effort, activities, results and task direction.3
Under performance appraisal we evaluate not only the performance of a worker but also his
potentials for development. For some of the important features of performance appraisal may
be captured thus.
Need for Performance Appraisal
Performance appraisal is need in order to:
1) Provide information about the performance ranks basing on which decision regarding salary
fixation, confirmation, promotion, transfer and demotion are taken.
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2) Provide feedback information about the level of achievement and behavior of subordinate.
This information helps to review the performance of the subordinate, rectifying performance
deficiencies and to set new standards of work, if necessary.
3) Provide information which helps to counsel the subordinate.
4) Provide information to diagnose deficiency in employee regarding skill, knowledge,
determine training and developmental needs and to prescribe the means for employee growth
provides information for correcting placement.
5) To prevent grievances and in disciplinary activities.
Purpose
Performance appraisal aims to attaining the different purposes. They are:-
1) To create and maintain a satisfactory level of performance.
2) To contribute to the employee growth and development through training, self and
management development programmers.
3) To help the superiors to have a proper understanding about their subordinates.
4) To guide the job changes with the help to continuous ranking.
5) To facilitate fair and equitable compensation based on performance.
6) To facilitate for testing and validating selection tests, interview techniques through
comparing their scores with performance appraisal ranks.
7) To provide information for making decisions regarding lay off, retrenchment etc.
8) To ensure organizational effectiveness through correcting employee for standard and
improved performance, and suggesting the change in employee behavior.
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Content of Performance Appraisal:
Every organization has to decide upon the content to be appraised before the
programmed is approved. Generally content to be appraised is determined on the basis of job
analysis. Content to be appraised may be in the form of contribution to organizational
objectives (measure) like production, cost saving, return on capital, etc. other measures are
based on:
1) Behavior which measure observable physical actions, movements.
2) Objectives which measure job related results like amount of deposits mobilized.
3) Traits which are measured in terms of personal characteristics observable in employee’s job
activities. Content to be appraised may vary with the purpose of appraisal and type and level
of employees.
Who Will Appraise?
360 °Performance Appraisal
The appraiser may be any person who has through knowledge about the job content,
contents to be appraised, standards of contents, and who observes the employee while
performing a job. The appraiser should be capable of determining what is more important and
what is relatively less important. He should prepare reports and make judgments without bias.
Typical appraisers are: supervisors, peers, subordinates, employees themselves, users of
service and consultants. Performance appraisal by all these parties is called “360 Performance
appraisals.”
Supervisors:
Supervisors include superiors of the employee, other superiors having knowledge
about the work of the employee and department head or a manager. General practice is that
immediate superiors appraise the performance which in turn is reviewed by the departmental
head/manager. This because supervisors are responsible for managing their subordinates and
they have the opportunity to observe, direct and control the subordinate continuously.
Moreover, they are accountable for the successful performance of their subordinates.
Sometimes other supervisors, who have close contact with employee work also appraise with
a view to provide additional information.
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On the negative side, immediate supervisors , any emphasis certain aspects of
employee performance to the neglect of others. Also, managers, have been known to
manipulate evaluations to justify their decisions on pay increases and promotions. However,
the immediate supervisors will continue to evaluate employee performance till a better
alternatives is available. Organizations, no doubt, will seek alternatives because of the
weaknesses mentioned above and a desire to broaden the perspective of the appraisal.
Peers:
Peers appraisal may be reliable if the work group is stable over a reasonably long
period of time and performs tasks that require interaction. However, little research has been
conducted to determine how peers establish standards for evaluating others or the overall
effect of peer appraisal on the group’s attitude. Whatever research was done on is topic was
mostly done on military personnel at the management level( officers or officers candidates )
rather that on employees in business organizations . more often than not in business
organizations if employees were to be evaluated by their peers, the whole exercise may
degenerate into a popularity contest, paving the way for the improvement of work
relationship.
Subordinates:
The concept of having supervisors rated by subordinates is being used in most
organizations today, especially in developed countries. Such a novel method can be useful in
other organizationally settings too provided the relationships between superiors and
subordinates are cordial. Subordinates’ rating in such cases can be quite useful in identifying
competent superiors . the rating of leaders by combat soldiers is an example. However, the
fear of reprisal often compels a subordinate to be dishonest in his ratings. Though useful in
universities and research institutions, this approach may not gain acceptance in traditional
organizations where subordinates practically do not enjoy much discretion.
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Self Appraisal:
If individuals understand the objectives they are expected to achieve and the standards
by which they are to be evaluated, they are to a great extent in the best position to appraise
their own performance. Also, since employee development means self development,
employees who appraise their own performance may become highly motivated.
Performance Evaluation To Performance Analysis And Development:
Performance appraisal was formerly used for the purpose of evaluating the employee
performance and controlling the performance against the set standards. This technique was
used to control the employee ignoring the human aspect. But, with the emergence of human
resource concept, organisations are using this technique to analyses employee performance
and to further improve or develop it. Thus, this technique is now used as an enabling and
motivating to improve the performance.
The performance analysis and development helps the oraganisation to meet the
following challenges.
Create a culture of excellence that inspires every employee.
Match organisational objectives to individual aspirations.
Equip people with the skills necessary to perform their duties.
Clear growth paths for specially talented individuals.
Provide new challenges to rejuvenate plateauing careers.
Forge partnerships with people for managing their careers.
Empowers employees to take decisions without fear of failing.
Embed teamwork in all operational processes.
Allow the voices of workers closet to the customer to be heard.
Debureaucratise the structure for free flows of information.
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System of Performance Appraisal:
Performance appraisal is a seven-stege process.
At the first stage, performance standards are established based on job description and job
specification. The standards should be clear, objectives and incorporate all the factors.
The second stage is to inform this standard to all the employee including apprises.
The third stage is following the instruction given for appraisal measurement of employee
performance by the appraises through observation, interview, records and reports.
Fourth stage is finding out the influence of various internal and external factors on actual
performance. The influence of these factors may be either inducing or hindering the
employee performance. The measured performance may be adjusted according to the
influence of external and internal factors. The performance derived at this stage may be taken
a actual performance.
Fifth stage is comparing the actual performance with that of other employees and previous
performance of the employee and others. This gives an idea where the employee stands. If
performance of all the employees is ranked either too high or too low, there may be
something wrong with the standards and job analysis.
Sixth stage is comparing the actual performance with the standards and finding out
deviations. Deviations may be positive or negative. If employee’s performance is more than
the standards, it is positive deviation and vice versa is negative deviation.
Seventh stage is communicating, the actual performance of the employee and other employee
doing the same job and discuss with him about the reasons for positive or negative deviations
from the pre-set standards as the case may be.
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Essential Characteristics Of An Effective Appraisal System:
Performance appraisal system should be effective as a number of crucial decisions are
made on the basis of score or rating given by the appraiser, which in turn is heavily based on
the appraisal system. Appraisal system, to be effective, should possess the following essential
characteristics:
1. Reliability and Validity: Appraisal system should provide consists, reliable and valid
information and data, which can be used to defend the organization-even in legal challenges.
If two appraisers are equally qualifies and competent to appraise an employee with the help
of same appraisal technique satisfies the conditions of inter-rater reliability. Appraisals must
also satisfy the condition of validly be measuring what they are supposed to measure. For
example, if appraisal is made for potentials of an employee for promotion, it should supply
the information and data relating to potentialities of the employee to take up higher
responsibilities and carry on activities at higher level.
2. Job Relatedness: The appraisal techniques should measure the performance and provide
information in job related activities/areas.
3. Standardization: Appraisal forms, procedures, administration of techniques, rating etc.
should be standardized as appraisal decisions affect all employees of the group.
4. Practical Viability: The techniques should be practically viable to administer, possible to
implement and economical regarding cost aspect.
5. Legal sanction: It should have compliance with the legal provisions concerned of the
country.
6. Training and Appraisers: Because appraisal is important and something difficult, it
would be useful to provide training to appraises viz., some insights and ideas on rating,
documenting appraisals, and conducting appraisal interview. Familiarity with rating errors
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can improve rater errors can improves rater performance and this may inject the needed
confidence in appraisers to look into performance ratings more objectively.
7. Open Communications: Moist employees want to know how well they are performing
on the job. A good appraisal system provides the needed feedback on a continuing basis. The
appraisal interviews should permit both parties to learn about the gaps and prepare
themselves for further. To this end, managers should clearly explain their performance
expectations to their subordinates in advance of the appraisals period. Once this is known it
becomes easy for employees to learn about the yardsticks and, if possible, try to improve
their performance in future.
8. Employee Assess to Results: Employees should know the rules of the game. They
should receive adequate feedback on their performance. If performance appraisals are meant
for improving employee’s performance, then withholding appraisal results would not serve
any purpose. Employees simply could not perform better without having access to this
information. Permitting employees to review the results of their appraisal allows them to
detect any errors that may have been made. If they degrees with the evaluation, they can even
challenges the same through formal channels.
9. Due Process: It follows then that formal procedures should be developed to enable
employees who disagree with appraisal results (which are considered to be inaccurate or
unfair). They must have the means for pursuing their grievances and having them addressed
objectively.
Performance appraisal should be used primarily to develop employees as valuable
resource. Only then it would show promising results. When management uses it as a whip or
fails to understand its limitations, it fails. The key is not which from or which method is used.
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Use of Performance Appraisal:
1. The use of performance appraisal is that it enables the management to make effective
decision and/or correct or modify their earlier decisions relating to the following issues of
HRM.
a) Organizational planning based on potentialities of its human resources.
b) Human Resource Planning based on weakness, strengths and potentialities of human
resources.
c) Organizational effectiveness through performance improvement.
d) Fixation and refixation of salary, allowances, incentives and benefits.
e) Original placement or placement adjustment decisions.
f) Identifying training and development needs and toi evaluate effectiveness of training
and development programmers.
g) Career planning and development and movement of employees.
2. The another use of performance appraisal is that it helps to evaluate the existing plans,
information system, job analysis, internal and external environmental factors influencing
employee performance like relations with supervisors, working conditions, personal
problems of the worker like family, financial and health. This evaluation suggests and
results in improvement in plans, information system, job analysis, creating the conductive
work environment and controlling the controllable environmental variables.
3. It helps the employee to improve his performance and for his self-development.
4. Further it improves superior-subordinates relations through close interaction and proper
understanding.
5. Performance Improvement: Performance feedback allows the employee, manager, and
personnel specialists to intervene with appropriate actions to improve performance.
6. Compensation Adjustments
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7. Performs Evaluations help decisions makers determine who should receive pay raises. Many
firms grant part or all of their pay increases and bonuses based upon merit, which is
determined mostly through performance appraisals.
8. Placement decisions: Promotions, transfers, and demotions are usually based on past or
anticipated performance. Often promotions are a reward for past performance.
9. Training and Development Needs: Poor performance may indicate the need for retraining.
Likewise , good performance may indicate untapped potential that should be developed
10. Career Planning and Development: Performance feedback guides career decisions about
specific career paths one should investigate.
11. Staffing Process Deficiencies: Good or bad performance implies strengths or weakness in
the personnel department’s staffing procedures.
12. Informational Inaccuracies: Poor performance may indicate errors in job analysis
information, human resources plans, or other parts of the personnel management information
system. Reliance or inaccurate information may have led to inappropriate hiring, training, or
counseling decisions.
13. Job Design Errors: Poor performance may be symptoms of ill-conceived job designs.
Appraisals help diagnose these errors.
14. Equal Employment Opportunity: Accurate performance appraisals that actually measure job-
related performance ensure that internal placement decisions are not discriminatory.
15. External Challenges” Sometimes performance is influenced by factors outside the work
environment, such as family, financial, health, or other personal matters. If uncovered
through appraisals, the human resource department may be able to provide assistance.
16. Feedback to Human Resources: Good/Bad performance throughout the organization
indicates how well the human resource function is performing.
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Problems of Performance Appraisal:
The major problem in performance appraisal is-
1. Rating Biases:
The problem with subjective measures (is that rating which is not verifiable by others)
has the opportunity for bias. The rater biases include hale effect, the error of central tendency,
the leniency and stretchiness biases, personal prejudice, and the regency effect.
a) Halo Effect: It is the tendency of the raters to defend excessively on the rating of one trait or
behavioral consideration in rating all other or behavioral considerations. One way of
minimizing the halo effect is appraising all the job and person he is rating or least interest in
his job.
b) The Leniency and Strictness: The leniency bias crops when some raters have a tendency to be
liberal in their rating by assigning higher rates consistently. Such ratings do not serve any
purpose. Equally damaging one is assigning consistently low rates.
c) Personal Prejudice: If the rater dislikes any employee or any group, he may rate them at the
lower end, which may distort the rating purpose and affect the career of these employees.
d) The Regency Effect: The raters generally remembers the recent actions of the employees at
the time of rating and rate on the basis of these recent action- favorable or unfavorable –
rather than on the whole activities.
2) Failure of the superiors in conducting performance appraisal and post performance appraisal
interviews.
3) Most part of the appraisal is based on subjectivity.
4) Less reliability and validly of the performance appraisal techniques.
5) Negative rating effect interpersonal relations and industrial relations systems.
6) Influence of external environment factors and uncontrollable internal factors.
7) Feedback and post appraisal interview \may have a setback on production.
8) Management emphasis open punishment rather than development of an employee in
performance appraisal.
9) Some rating particularly about the potential appraisal is purely based on guess work.
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The other problems of performance appraisal reported by various studies are:
Relationships between appraisal rates and performance after promotions were not
significant.
Some superiors completed appraisal reports within a few minutes.
Absence of inter-rater reliability.
The situation was unpleasant in feedback interview.
Superiors lack that tact of offering the suggestions constructively to subordinates.
Supervisors were often confused due to too many objectives of performance appraisal.
However, some of these problems of performance appraisal can be averted by
appraising performance through computers.
Advantages of Performances Appraisal through Computers:
1) There will be an objective analysis of traits of both the superior and sub-ordinate.
2) There will be chance to subordinate to express his views even after performance appraisal.
3) An employee shall express his emotional needs and his value systems which is considered
taboo till today.
4) It overcomes the communication barrier.
5) It will remove the inherent weakness of the appraisal system i.e., subjective assessment of
vague and abstract performance targets, unclear guidelines for appraisal etc,
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RESEARCH METHODOLOGY
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Research Methodology :
Research methodology refers to the scientific procedure for the acquisition of
knowledge based on the empirical observations and logical reasoning scientific method
consist of systematic observation, classifications and interpretation of data. Research
methodology consists of procedure for obtaining the knowledge on imperial observation and
logical reasoning.
Method of research –
1. Case study method
2. Survey method.
3. Other method.
A case study refers to the studying a phenomenon through an intensive study of the
case. The survey research method is a technique of investigation by direct observation of the
phenomenon or by systematic gathering of data from population.
Other methods may include historical and experimental method. Following are the necessary
steps involved in research.
1. Statement of problem.
2. Setting up objectives.
3. Review of literature.
4. Formulation of hypothesis.
5. Preparation of research design.
6. Determining sample design.
7. Data collection.
8. Analysis and interpretation of data.
9. Report writing
Sampling design :-
It deals with the method of sampling and the size of sample. There are different
methods used for sampling like random sampling, judgment sampling, stratified random
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sampling, systematic sampling, and convenience sampling etc. For this project work is the
Random sampling method is used.
Sample size :-
This means number of respondents considering for collecting data. Size of sample
should not be too small which will be insufficient as well it should not be too large which
may create complication. The size of sample decided for these 50 unit respondents.
Data collection :-
The collection of data means a purposive gathering of the information .Relevant to the
subject for the units of population.
There are two types of data -
1] Primary data:-
If the researchers collect the data originally from the investigation, the data is called
as primary data. Primary data can be collected with the help of interview, questionnaire and
observation. In this questionnaire is used to collect the primary data.
2] Secondary data:-
If the researcher do not collect the data originally but uses data collected by others,
already published then its called secondary data. Secondary data is collect from the different
sources like books, journals, magazines, Confidential Reports (CR), websites etc. In this
project websites are the used for collecting secondary data.
Methods of data collection :-
Following are the methods for collecting primary data -
1] Interview method.
2] Questionnaire method.
For this study Questionnaire, method is used.
Questionnaire was framed to collect data, which is attached in annexure.
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DATA ANALYSIS AND
INTERPRETATION
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Table no. 1
Performance appraisal system helps employee for their future planning
Particular No of Employees In percentage
Helpful 38 76 %
Not Helpful 5 10 %
Cant Say 7 14 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 76% employee think that appraisal system is helpful for them.
While 10% employee say that appraisal system is not helpful for them. And 14% employee
are not sure that whether appraisal system is helpful for them or not.
Table no. 2
Satisfaction of employees with performance appraisal system
Particular No of Employees In percentage
Satisfied 41 82 %
Unsatisfied 5 10 %
Can’t say 4 8 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 82% employee think that they are satisfied with appraisal
system. While 10% employee say that they are not satisfied with appraisal system. And 8%
employee are not sure that whether they are happy with appraisal system or not.
Table no. 3
Awareness about performance rating
Particular No of Employees In percentage
Yes 46 92 %
No 4 8 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 92% employee are aware about performance rating system.
While 8% employee are not aware about performance rating system
Table No. 4
Credibility of appraiser’s affect the performance appraisal system
Particular No of Employees In percentage
Yes 43 86 %
No 7 14 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 86% employee think that credibility of appraiser’s affect the
performance appraisal system. While 14% employee say that credibility of appraiser’s not
affect the performance appraisal system.
Table No. 5
Standards followed for performance appraisal system
Particular No of Employees In percentage
Yes 45 90 %
No 5 10 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 90% employee think that standards are followed for
performance appraisal system. While 10% employee think that standards are not followed for
performance appraisal system
Table No. 6
Clear view of objectives to the employees
Particular No of Employees In percentage
Yes 41 82 %
No 9 18 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 82% employee think that they have clear view of objectives.
While 18% employee think that they have not clear view of objectives.
Table No. 7
Good communication between top-management plans & business goals to the staff below due
to appraisal system
Particular No of Employees In percentage
Yes 34 68 %
No 16 32 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 68% employee think that there is a good communication
between top-management plans & business goals to the staff below due to appraisal system.
While 32% employee think that there Is no good communication between top-management
plans & business goals to the staff below due to appraisal system.
Table No. 8
Comments and suggestion by employee to be taken into consideration during appraisal
Particular No of Employees In percentage
Yes 48 96 %
No 2 4 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 96% employee think that comments and suggestion by them to
be taken into consideration during appraisal. While 4% employee think that comments and
suggestion by them not to be taken into consideration during appraisal.
Table No. 9
Post appraisal interview of employee conducted
Particular No of Employees In percentage
Yes 0 0 %
No 50 100 %
Total 50 100 %
Interpretation:-
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From pie chart it is clearly understand that post appraisal interview of employees not
conducted.
Table No. 10
Action taken by employees about performance appraisal system result
Particular No of Employees In percentage
Yes 19 38 %
No 31 62 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 38% employee take action on basis of performance appraisal
system result. While 62% employee do not take action on basis of performance appraisal
system result.
Table No. 11
Performance appraisal system helps employee to understand your strength and weaknesses.
Particular No of Employees In percentage
Yes 26 52 %
No 24 48 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 52% employee think that performance appraisal system help
them to understand their strength and weaknesses. While 48% employee think that
performance appraisal system do not help them to understand their strength and weaknesses.
Table No. 12
Desire of employee about training facility by company after performance appraisal
Particular No of Employees In percentage
Yes 33 66 %
No 17 34 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 66% employee think that they want to get training by company
after performance appraisal. While 34% employee think that they don’t want training by
company after performance appraisal
Table No. 13
Employees thinking that they should be given an opportunity to rate their own performance
Particular No of Employees In percentage
Yes 44 88 %
No 6 12 %
Total 50 100 %
Interpretation:-
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From pie chart it is seen that 88% employees think that they should be given an opportunity
to rate their own performance. While 12% employees think that they should not be given an
opportunity to rate their own performance.
ANNEXURE
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1. Is the Performance Appraisal helping you to plan your work well?
a. Yesb. Noc. Can’t say
2. Satisfaction of employees with performance appraisal system
a. Satisfiedb. Unsatisfiedc. Can’t say
3. Are you aware about performance rating?a. Yesb. No
4. Credibility of appraiser’s affect the performance appraisal system?a. Yesb. No
5. Does the credibility of Appraiser affect the Performance Appraisal System?a. Yesb. No
6. Do you think that that standards are followed by the organization for performance
appraisal system?
a. Yesb. No
7. Do you think that there is a good communication between top-management plans & business goals to the staff below due to appraisal system?
a. Yesb. No
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8. Do you think that comments and suggestion by you to be taken into consideration
during appraisal?
a. Yesb. No
9. Does your post appraisal interview of employee conducted?a. Yesb. No
10. Do you take any action after performance appraisal system result?a. Yesb. No
11. Does performance appraisal system helps you to understand your strength and weaknesses?
a. Yesb. No
12. Do you want training facility by company after performance appraisal?
a. Yes
b. No
13. Do you think that you should be given an opportunity to rate their own performance?
a. Yes
b. No
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