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CHAPTER-IINTRODUCTION

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INTRODUCTION

There are number of forces that make HR the greatest support system in the

Organization. Employees play a great role in the success of any organization. So measuring

the performance of employees is really a task of great concern and also recruiting the right

person for the right job contributes to the success of the organization.

This Project Report has been completed in partial fulfillment of management

program, Master of Business Administration (MBA) in the company “Hindustan

Aeronautics Limited”. The topic of my project was “A study on Performance Appraisal

in Hindustan Aeronautics Limited”. This topic comes under Performance Management

System of Hindustan Aeronautics Limited.

Hindustan Aeronautics Limited (HAL) indisputably is an Asian aerospace giant,

with 16 production units and nine research and design centres spread across seven locations

in India. It has its headquarters in Bangalore. HAL is mainly involved in designs,

manufactures, repairs, and over-hauls aircrafts, helicopters, aero-engines, avionics,

instruments, and accessories. The company also designs, manufactures, and maintains

aerospace defence equipment. In addition, it develops software for aerospace application and

provides design consultancy services. The company also conducts research and development

programs for the military and civil aviation sectors. Since its inception, 1964, it has

pioneering efforts in strategic Human Resource Development (HRD) goal of the company.

The performance appraisal system emphasizes on the value adding services

rather on daily routine activities. Giving slow performers necessary training and high

performer’s growth opportunity has been a continuous procedure all these years. The other

HRD Plan also includes time-to-time OD Interventions to address specific requirement of the

Company.

Once the employee has been selected, trained and motivated, he is then

appraised for his performance. Performance Appraisal is the step where the Management

finds out how effective it has been at hiring and placing employees. If any problems are

identified, steps are taken to communicate with the employee and remedy them.

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Performance Appraisal is the process of assessing the performance and progress

of an employee or of a group of employees on a given job and his potential for the future

development. According to “EDWIN B FLIPO” Performance appraisal is the systematic,

periodic and impartial rating of an employee’s excellence in the matters pertaining to his

present job and his potential for a better job”. Performance appraisal focus on the

performance and future potential of the employee. Its aim is not simply to decide salary

increment but to develop a rational basis for personal decisions. Merit rating measures, what

the person is (traits) where as performance appraisal measures what the person does

(performance).

1.1 Statement of the problem

Managing human resources in today’s dynamic environment is becoming more

and more complex as well as important. All organization faces the problem of directing the

energies of their staff to the task of achieving business goals and objectives. In doing so,

organization need to devise means to influence and channel the behaviors’ of their employees

so as to optimize their contributions. Recognition of people as a valuable resource in the

organization has lead to increased trends in employee maintained job security. Performance

Appraisals constitute one of the major management tools employed in this process. In this

report, the performance appraisal process carried out in Hindustan Aeronautics Limited is

studied and evaluated.

1.2 Significance of the study

Once an employee is selected in an organization he is trained and motivated to

perform job. Then performance of the employee is assessed and evaluated through the system

called “Performance Appraisal”. Performance Appraisal is the most significant and

indispensable tool in the organization, which helps the management in taking decisions

related to promotions, retentions and proper compensation to the employees. It also suggests

the management to have the cases of employees who need any training, counseling and

mentoring. In view of significance of performance appraisal, the study was undertaken on the

proposed topic, “a study on performance appraisal at Hindustan Aeronautics Limited”.

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1.3 Review of literature

Performance Appraisals are essential for the effective management and

evaluation of staff. Appraisals help develop individuals, improve organizational performance,

and feed into business planning. Formal performance appraisals are generally conducted

annually for all staff in the organization. Each staff member is appraised by his or her line

manager. Directors are appraised by the CEO, who is appraised by the chairman or company

owners, depending on the size and structure of the organization.

The amount of research regarding the topic “Performance Appraisal” is so

vast. The topic is literally not new; it is as old as the formation of the organizations. Before

the early 1980’s, majority of theoretical studies emphasized on revamping the rating system

within the organization. The actions were a great thing to reduce the chaotic of employee’s

performance appraisal (Feldman, 1981). With the passage of the time the methods and rating

system among the employees got enhanced and received an immense appreciation and

attention of the managers.

According to Laurie J Mullins, The process of management involves a

continuous judgement on the behaviour and performance of staff. One way in which to

review the performance and potential of staff is through a system of performance appraisal. It

is important that members of the organization know exactly what is expected of them, and the

yardsticks by which their performance and results will be measured. A formalized and

systematic appraisal scheme will enable a regular assessment of the individual’s performance,

highlight potential, and identify training and development needs. Most importantly, an

effective appraisal scheme can improve the future performance of staff. The appraisal scheme

can also form the basis of a review of financial rewards and planned career progression.

Performance appraisal is therefore a crucial activity of the management of human resources.

A comprehensive appraisal system can provide the basis for key managerial decisions such as

those relating to allocation of duties and responsibilities, pay, empowerment and levels of

supervision, promotions, training and development needs, and terminations.

According to ACAS, the identification of individual training needs will best

be supported by a performance appraisal system which focuses on future development needs.

The system should be used by managers and workers to:

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Create career plans which encompass not only training proposals but also areas of

work experience, job goals and personal development.

Consider career tracks which may be as much about lateral moves designed to

expand learning and competence as upward promotion.

1.3.1 Benefits of Appraisal

The underlying objective of performance appraisal is to improve the

performance of individuals leading to improvement in the performance of the organization as

a whole. An effective appraisal scheme, therefore, offers a number of potential benefits to

both the individual and the organization.

It can identify an individual’s strengths and areas of development and indicate

how such strengths may best be utilized.

It can help to reveal problems which may be restricting progress and causing

inefficient work practices.

It can develop a greater degree of consistency through regular feedback on

performance and discussion about potential. This encourages better performance

from staff.

It can provide information for human resource planning, to assist succession

planning, to determine suitability for promotion and for particular types of

employment and training.

It can improve communications by giving staff the opportunity to talk about their

ideas and expectations, and how well they are progressing.

1.3.2 Principles and Ethics of Performance Appraisal

Laurie suggests that performance appraisal has its roots in three well substantiated

psychological principles. People work, learn, and achieve more when they are given:

a) adequate feedback as to how they are performing, in other words knowledge of

results;

b) clear attainable goals; and

c) involvement in the setting of tasks and goals

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These principles underpinning effective performance appraisal have wider relevance than

simply improvements in individual performance. They are also concerned with the

development of a participative organizational culture by contributing to the broader goals of

creating satisfying, effective jobs, encouraging the involvement of people in the organization,

and the development of people.

Laurie goes on to suggest that a performance system operated in an

organizational context must, if it is to have any credibility, be based on clear ethical

principles. These are particularly important to an involved culture where individual

development, trust and openness are fundamental values. These principles would apply to

both appraiser and appraisee:

appraise on the basis of representative information

appraise on the basis of sufficient information

appraise on the basis of relevant information

make an honest appraisal

keep written and oral appraisals consistent

The design and implementation of a successful appraisal system requires attention to the

following:

Traditionally most appraisal schemes have been applied to staff in managerial,

supervisory or administrative positions. There is, however, no reason why appraisal

should not be applied to manual workers – especially skilled workers and those

involved in technical duties. The increasing adoption of flexible working practices

and harmonisation of conditions of employment, together with attempts to overcome

the attitude of ‘them and us’, has prompted the extension of appraisal to cover all

members of staff.

The traditional practice is for appraisal to be carried out by the immediate manager or

supervisor – as the person who allocates work and has the closest knowledge of the

individual’s duties and performance. There is, however, an argument in favour of

appraisal at a higher level. This would extend the lines of communication and

feedback. This may also help to demonstrate ‘fair play’ and to overcome problems of

different managers/supervisors applying different standards of appraisal. A third

approach is for the immediate manager/supervisor to conduct the appraisal and write

the report. Senior management are then asked to comment, to monitor the system, to

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review the consistency of reporting and to countersign as confirmation of approval.

Appraisal can also be undertaken by a member of the HR department, or by

assessment centres. The removal of middle levels of management, flatter structures

and greater empowerment of self-managed teams also has possible implications for

who should undertake the appraisal process.

With the majority of schemes, staffs receive an annual appraisal; and for many

organisations this may be sufficient. However, the frequency of appraisal should be

related to the nature of the organisation, the purpose and objectives of the scheme, and

the characteristics of the staff employed. For some organisations, for example, those

operating in a dynamic, changing environment, more frequent appraisals may be

called for. More frequent appraisals may also be appropriate for new members of

staff, those recently promoted or appointed to a new position or for those whose past

performance has not been up to the required standard.

There is an argument which suggests that open reporting restricts managers from

giving a completely honest and frank appraisal. However, the more staff sees of their

appraisal report – that is the more ‘open’ the system – the more they are likely to

accept the process of appraisal. Staffs are better able to check the consistency of the

appraisal report with verbal feedback from the manager. With an open system of

reporting, staff should be given the opportunity to sign the completed form and to add

any comments on their perception of the accuracy of the assessment.

1.4 Objectives of the study

To study and identify the performance appraisal practice of the company.

To find out the perception of employees about performance appraisal.

To make suitable recommendations to the company, after identifying the

weakness in performance appraisal.

To understand performance based promotions.

To find out the whether the Performance Appraisal system is able to gauge the

real performance of employees.

To know the connection between Performance Appraisal and goal

achievement.

To understand the effectiveness of Performance Appraisal system on

identifying the training needs.

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To find out the effect of Performance Appraisal on HR function such as

selection, training and transfer.

1.5 Methodological design of the study

1.5.1 Research Design

A research design is a type of blueprint prepared on various types of blueprints

available for the collection, measurement and analysis of data. A research design calls for

developing the most efficient plan of gathering the needed information. The design of a

research study is based on the purpose of the study. A research design is the specification of

methods and procedures for acquiring the information needed. It is the overall pattern or

framework of the project that stipulates what information is to be collected from which

source and by what procedures.

1.5.2 Research Design Used for the Study

Descriptive research design: It deals with describing the characteristics of a particular

individual, or a group. The design focuses on the following:

a) Formulating the objective of the study

b) Designing the methods of data collection

c) Selecting the sample

d) Collecting the data

e) Processing and analyzing the data

f) Reporting the findings

1.5.3 Sources of Data Collection

Collection of data is the most important stage in the research process. If any

mistake occurs in the collection of data, it will affect the entire study. Hence care was

exercised in the process of collection of data. The study is descriptive, empirical and

analytical in nature. It is descriptive with regard to the theoretical concepts and regarding the

analysis and interpretation of data collected. Data will be collected both from primary and

secondary.

Two types of data were collected.

1) Primary Data

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Primary data are collected with the help of structured and unstructured interview

conducted with the managerial executives and employees of HAL with the help

of questionnaire.

2) Secondary Data

These are the sources containing data collected and compiled for another

purpose. The secondary data consists of readily available data and statistical

statements and reports that the researcher may use for further studies and

reference. The secondary data was collected from the published sources like data

published in the internet, company records, journals reports, books and

company’s website.

1.6 Sampling Design

Sample design is a definite plan for obtaining sample from a given population.

It refers to the procedure, adopted by a researcher for selecting items for a sample. In this

project random sampling method is used. The respondents are the permanent employees of

HAL, Bangalore.

1.6.1 Sample Population

Sample population in the organization is 425.

1.6.2 Sample Size

In this study the sample size is 75 employees.

1.7 Tools Used for Analysis

The research was conducted by using contact instruments like questionnaire,

interview and observation. Questions were prepared accordingly in line with the scaling

method. Five point scales used here are strongly agree, agree, disagree, strongly disagree, not

applicable. Two point scales like yes or no questions and open ended questions are also used

here.

The data is analyzed through simple percentage method.  It is a useful method

of expressing the relative frequency of survey responses and other data. The percentage

frequency distributions are displayed as tables and bar graphs.

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1.8 Reference Period

The reference period is the time for which the data is to be collected and

analyzed. The period of the study was 8 weeks and the data from last 5 years were referred.

1.9 Limitations of the Study

Due to inadequate time, it is not possible to analyze all aspects relevant to the study.

Certain confidential information regarding study was not available and the analysis

and interpretation are subject to limitations.

The sample includes only a percentage of the total number of workers working in the

company.

The survey was only to the HR department of the company.

Most of the respondents seemed to be very busy with their jobs and they are not

interested in answering the questionnaire.

The bias on the parts of respondents cannot be ignored.

Accuracy of the study is purely based on the information as given by the respondents.

1.10 Chapterisation

The first chapter gives a general introduction about the study, statement of the

problem, scope of the study, objectives of the study, review of literature, research

methodology, sampling design, tools used for analysis, reference period, and

limitations of the study.

The second chapter deals with the theoretical frame work of the study.

The third chapter gives a clear picture about company profile of Hindustan

Aeronautics Limited, industry profile, organization structure, product profile,

department details and detailed description of the topic.

The forth chapter deals with data analysis and interpretation which includes tables,

graphs etc.

The fifth chapter carries summary of findings, suggestion and conclusion.

The sixth chapter contains bibliography and appendices.

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CHAPTER- IITHEORETICAL FRAMEWORK

OF THE STUDY

THEORETICAL FRAMEWORK OF THE STUDY

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The theoretical framework of the study is a structure that supports a theory of a

study work. It presents the theory which explains why the problem under the study exists.

Thus, the theoretical framework is a theory that serves as a basis for conducting research. The

main purpose is to help us to see clearly the variables that pertain to the study. It can provide

us with a general framework for data analysis and it is essential in preparing a study using

descriptive methods.

2.1 Performance Appraisal

A performance appraisal (PA), performance review, performance evaluation, or

employee appraisal is a method by which the job performance of an employee is evaluated.

Performance appraisals are a part of guiding and managing career development. It is the

process of obtaining, analyzing and recording information about the relative worth of an

employee to the organization. Performance appraisal is an analysis of an employee’s recent

successes and failures, personal strengths and weaknesses, and suitability for promotion or

further training. It is also the judgement of an employee’s performance in a job based on

considerations other than productivity alone.

2.2 Main FeaturesA performance appraisal is a systematic and periodic process that assesses an

individual employee’s job performance and productivity in relation to certain pre-established

criteria and organizational objectives. Other aspects of individual employees are considered

as well, such as organizational citizenship behavior, accomplishments, potential for future

improvement, strengths and weaknesses, etc. To collect PA data, there are three main

methods: objective production, personnel, and judgmental evaluation. Judgmental evaluations

are the most commonly used with a large variety of evaluation methods. Historically, PA has

been conducted annually (long-cycle appraisals), however many companies are moving

towards shorter cycles (every six months, every quarter), and some have been moving into

short-cycle (weekly, bi-weekly) PA. The interview could function as “providing feedback to

employees, counseling and developing employees, and conveying and discussing

compensation, job status, or disciplinary decisions”. PA is often included in performance

management systems. Performance management systems are employed “to manage and

align" all of an organization's resources in order to achieve highest possible

performance. How performance is managed in an organization determines to a large extent

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the success or failure of the organization. Therefore, improving PA for everyone should be

among the highest priorities of contemporary organizations.

Some applications of PA are compensation, performance improvement,

promotions, termination, test validation, and more. While there are many potential benefits of

PA, there are also some potential drawbacks. For example, PA can help facilitate

management-employee communication; however, PA may result in legal issues if not

executed appropriately as many employees tend to be unsatisfied with the PA process.

2.3 Application of Results

A central reason for the utilization of performance appraisals (PAs) is performance

improvement (“initially at the level of the individual employee, and ultimately at the

level of the organization”).

It acts as a basis for employment decisions (e.g. promotions, terminations, transfers),

as criteria in research (e.g. test validation),

To aid with communication (e.g. allowing employees to know how they are doing and

organizational expectations),

To establish personal objectives for training” programs, for transmission of objective

feedback for personal development, “as a means of documentation to aid in keeping

track of decisions and legal requirements” and in wage and salary administration. 

PAs can aid in the formulation of job criteria and selection of individuals “who are

best suited to perform the required organizational tasks”. 

A PA can be part of guiding and monitoring employee career development. PAs can

also be used to aid in work motivation through the use of reward systems.

2.4 Potential Benefits of Performance Appraisals

There are a number of potential benefits of organizational performance

management conducting formal performance appraisals (PAs). There has been a

general consensus in the belief that PAs lead to positive implications of

organizations. Furthermore, PAs can benefit an organization’s effectiveness. One way is PAs

can often lead to giving individual workers feedback about their job performance. From this

may spawn several potential benefits such as the individual workers becoming more

productive.

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Other potential benefits include:

Facilitation of communication: communication in organizations is considered an

essential function of worker motivation. It has been proposed that feedback from PAs

aid in minimizing employees’ perceptions of uncertainty. Fundamentally, feedback

and management-employee communication can serve as a guide in job performance.

Enhancement of employee focus through promoting trust: behaviors, thoughts,

and/or issues may distract employees from their work, and trust issues may be among

these distracting factors. Such factors that consume psychological energy can lower

job performance and cause workers to lose sight of organizational goals. Properly

constructed and utilized PAs have the ability to lower distracting factors and

encourage trust within the organization.

Goal setting and desired performance reinforcement: organizations find it efficient

to match individual worker’s goals and performance with organizational goals. PAs

provide room for discussion in the collaboration of these individual and organizational

goals. Collaboration can also be advantageous by resulting in employee acceptance

and satisfaction of appraisal results.

Performance improvement: well constructed PAs can be valuable tools for

communication with employees as pertaining to how their job performance stands

with organizational expectations. “At the organizational level, numerous studies have

reported positive relationships between human resource management (HRM)

practices" and performance improvement at both the individual and organizational

levels.

Determination of training needs: “Employee training and development are crucial

components in helping an organization achieve strategic initiatives”. It has been

argued that for PAs to truly be effective, post-appraisal opportunities for training and

development in problem areas, as determined by the appraisal, must be offered. PAs

can especially be instrumental for identifying training needs of new employees.

Finally, PAs can help in the establishment and supervision of employees’ career

goals.

2.5 Potential Complications of Performance Appraisals

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Despite all the potential advantages of formal performance appraisals (PAs),

there are also potential drawbacks. It has been noted that determining the relationship

between individual job performance and organizational performance can be a difficult

task. Generally, there are two overarching problems from which several complications

spawn. One of the problems with formal PAs is there can be detrimental effects to the

organizations involved if the appraisals are not used appropriately. The second problem with

formal PAs is they can be ineffective if the PA system does not correspond with

the organizational culture and system.

Complications stemming from these issues are:

Detrimental to quality improvement: it has been proposed that the use of PA

systems in organizations adversely affect organizations’ pursuits of quality

performance. It is believed by some scholars and practitioners that the use of PAs is

more than unnecessary if there is total quality management.

Negative perceptions: “Quite often, individuals have negative perceptions of PAs”.

Receiving and/or the anticipation of receiving a PA can be uncomfortable and

distressful and potentially cause “tension between supervisors and subordinates”. If

the person being appraised does not trust their employer, appraiser or believe that they

will benefit from the process it may become a "tick box" exercise. 

Errors: Performance appraisals should provide accurate and relevant ratings of an

employee’s performance as compared to pre-established criteria/goals (i.e.

organizational expectations). Nevertheless, supervisors will sometimes rate employees

more favorably than that of their true performance in order to please the employees

and avoid conflict. “Inflated ratings are a common malady associated with formal"

PA.

Legal issues: when PAs are not carried out appropriately, legal issues could result

that place the organization at risk. PAs are used in organizational disciplinary

programs as well as for promotional decisions within the organization. The improper

application and utilization of PAs can affect employees negatively and lead to legal

action against the organization.

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Performance goals: Performance goals and PA systems are often used in association.

Negative outcomes concerning the organizations can result when goals are overly

challenging or overemphasized to the extent of affecting ethics, legal requirements, or

quality. Moreover, challenging performance goals can impede on employees’ abilities

to acquire necessary knowledge and skills. Especially in the early stages of training, it

would be more beneficial to instruct employees on outcome goals than on

performance goals.

Derail merit pay or performance-based pay: Some researchers contend that the

deficit in merit pay and performance-based pay is linked to the fundamental issues

stemming from PA systems.

2.6 Improving Performance AppraisalsAlthough performance appraisals can be so easily biased, there are certain steps

that can be taken to improve the evaluations and reduce the margin of errors through the

following:

Training: Creating an awareness and acceptance in the people conducting the

appraisals that within a group of workers, they will find a wide range in difference of

skills and abilities.

Providing Feedback to Raters: Trained raters provide managers who evaluated their

subordinates with feedback, including information on ratings from other managers.

This reduces leniency errors.

Subordinate Participation: By allowing employee participation in the evaluation

process, there is employee-supervisor reciprocity in the discussion for any

discrepancies between self ratings and supervisor ratings, thus, increasing job

satisfaction and motivation.

2.7 Who conducts them?

Human Resource Management and Performance Management

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Human resource management (HRM) conducts performance management.

Performance management systems consist of the activities and/or processes embraced by an

organization in anticipation of improving employee performance, and therefore,

organizational performance. Consequently, performance management is conducted at the

organizational level and the individual level. At the organizational level, performance

management oversees organizational performance and compares present performance with

organizational performance goals. The achievement of these organizational performance

goals depends on the performance of the individual organizational members. Therefore,

measuring individual employee performance can prove to be a valuable performance

management process for the purposes of HRM and for the organization. Many researchers

would argue that “performance appraisal is one of the most important processes in Human

Resource Management”.

The performance management process begins with leadership within the

organization creating a performance management policy. Primarily, management governs

performance by influencing employee performance input (e.g. training programs) and by

providing feedback via output (i.e. performance assessment and appraisal). “The ultimate

objective of a performance management process is to align individual performance with

organizational performance”. A very common and central process of performance

management systems is performance appraisal (PA). The PA process should be able to

inform employees about the “organization's goals, priorities, and expectations and how well

they are contributing to them”.

2.8 When are they conducted?

Performance appraisals (PAs) are conducted at least annually, and annual

employee performance reviews appear to be the standard in most American

organizations. However, “it has been acknowledged that appraisals conducted more

frequently (more than once a year) may have positive implications for both the organization

and employee.” It is suggested that regular performance feedback provided to employees may

quell any unexpected and/or surprising feedback to year-end discussions. In a recent research

study concerning the timeliness of PAs, “one of the respondents even suggested that the

performance review should be done formally and more frequently, perhaps once a month, and

recorded twice a year.”

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Other researchers propose that the purpose of PAs and the frequency of their

feedback are contingent upon the nature of the job and characteristics of the employee. For

example, employees of routine jobs where performance maintenance is the goal would

benefit sufficiently from annual PA feedback. On the other hand, employees of more

discretionary and non-routine jobs, where goal-setting is appropriate and there is room for

development, would benefit from more frequent PA feedback.

2.9 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 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. 

Fig 2.1

Process of Performance Appraisal

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Establishing performance standards

Communicating standards and expectations

Measuring the actual performance

Comparing with standards

Discussing results(Providing feedback)

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2.10 Objectives of Performance Appraisal

To measure and improve the performance of employees and increase their future

potential and value to the company.

To provide a feedback to employees regarding their performance and related status.

Performance appraisal makes it easier for the organization to make good decisions

about making sure that the most important positions are filled by the most capable

individuals.

Performance appraisal helps make sure that the most talented individuals are retained

and to identify poor performers who affects the productivity of the organization.

A good performance appraisal points out areas where individuals need to improve

their performance.

Performance appraisal helps motivate people to deliver superior performance in

several ways.

The performance appraisal process is commonly used to make sure that every member

of the organization sets and achieves effective goals.

Performance appraisal forces managers to confront those whose performance is not

meeting the company’s expectations.

Performance appraisal provides the mechanism to make sure that those who do better

work receive more pay.

It identifies the areas where coaching is necessary and encourages managers to take an

active coaching role.

It determines Individual Training and Development Needs.

A performance appraisal procedure allows the organization to communicate

performance expectations to every member of the team and assess exactly how well

each person is doing.

It serves as a basis for influencing working habits of the employees.

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2.11 Techniques/Methods of Performance Appraisal

Numerous methods have been devised to measure the quantity and quality of performance

appraisals. Each of the methods is effective for some purposes for some organizations only.

None should be dismissed or accepted as appropriate except as they relate to the particular

needs of the organization or an employee.

Broadly all methods of appraisals can be divided into two different categories.

Past Oriented Methods

Future Oriented Methods

2.11.1 Past Oriented Methods

1. Rating Scales: Rating scales consists of several numerical scales representing job related

performance criterions such as dependability, initiative, output, attendance, attitude etc.

Each scales ranges from excellent to poor. The total numerical scores are computed and

final conclusions are derived. Advantages – Adaptability, easy to use, low cost, every

type of job can be evaluated, large number of employees covered, no formal training

required. Disadvantages – Rater’s biases

2. Checklist: Under this method, checklist of statements of traits of employee in the form

of Yes or No based questions is prepared. Here the rater only does the reporting or

checking and HR department does the actual evaluation. Advantages – economy, ease of

administration, limited training required, standardization. Disadvantages – Raters biases,

use of improper weighs by HR, does not allow rater to give relative ratings

3. Forced Choice Method: The series of statements arranged in the blocks of two or more

are given and the rater indicates which statement is true or false. The rater is forced to

make a choice. HR department does actual assessment. Advantages – Absence of

personal biases because of forced choice. Disadvantages – Statements may be wrongly

framed.

4. Forced Distribution Method: here employees are clustered around a high point on a

rating scale. Rater is compelled to distribute the employees on all points on the scale. It is

assumed that the performance is conformed to normal distribution. Advantages –

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Eliminates Disadvantages – Assumption of normal distribution, unrealistic, errors of

central tendency.

5. Critical Incidents Method: The approach is focused on certain critical behaviors of

employee that makes all the difference in the performance. Supervisors as and when they

occur record such incidents. Advantages – Evaluations are based on actual job behaviors,

ratings are supported by descriptions, feedback is easy, reduces recency biases, chances

of subordinate improvement are high. Disadvantages – Negative incidents can be

prioritized, forgetting incidents, overly close supervision; feedback may be too much and

may appear to be punishment.

6. Behaviorally Anchored Rating Scales: statements of effective and ineffective

behaviors determine the points. They are said to be behaviorally anchored. The rater is

supposed to say, which behavior describes the employee performance. Advantages –

helps overcome rating errors. Disadvantages – Suffers from distortions inherent in most

rating techniques.

7. Field Review Method: This is an appraisal done by someone outside employees’ own

department usually from corporate or HR department. Advantages – Useful for

managerial level promotions, when comparable information is needed, Disadvantages –

Outsider is generally not familiar with employees work environment, Observation of

actual behaviors not possible.

8. Performance Tests & Observations: This is based on the test of knowledge or skills.

The tests may be written or an actual presentation of skills. Tests must be reliable and

validated to be useful. Advantage – Tests may be apt to measure potential more than

actual performance. Disadvantages – Tests may suffer if costs of test development or

administration are high.

9. Confidential Records: Mostly used by government departments, however its application

in industry is not ruled out. Here the report is given in the form of Annual Confidentiality

Report (ACR) and may record ratings with respect to following items; attendance, self

expression, team work, leadership, initiative, technical ability, reasoning ability,

originality and resourcefulness etc. The system is highly secretive and confidential.

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Feedback to the assessee is given only in case of an adverse entry. Disadvantage is that it

is highly subjective and ratings can be manipulated because the evaluations are linked to

HR actions like promotions etc.

10. Essay Method: In this method the rater writes down the employee description in detail

within a number of broad categories like, overall impression of performance,

promoteability of employee, existing capabilities and qualifications of performing jobs,

strengths and weaknesses and training needs of the employee. Advantage – It is

extremely useful in filing information gaps about the employees that often occur in a

better-structured checklist. Disadvantages – It its highly dependent upon the writing

skills of rater and most of them are not good writers. They may get confused success

depends on the memory power of raters.

11. Cost Accounting Method: Here performance is evaluated from the monetary returns

yields to his or her organization. Cost to keep employee, and benefit the organization

derives is ascertained. Hence it is more dependent upon cost and benefit analysis.

12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are

collection of different methods that compare performance with that of other co-workers.

The usual techniques used may be ranking methods and paired comparison method.

Ranking Methods: Superior ranks his worker based on merit, from

best to worst. However how best and why best are not elaborated in

this method. It is easy to administer and explanation.

Paired Comparison Methods: In this method each employee is rated

with another employee in the form of pairs. The number of

comparisons may be calculated with the help of a formula as under.

N x (N-1) / 2

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2.11.2 Future Oriented Methods

1.    Management by Objectives: It means management by objectives and the performance

is rated against the achievement of objectives stated by the management. MBO process

goes as under.

Establish goals and desired outcomes for each subordinate

Setting performance standards

Comparison of actual goals with goals attained by the employee

Establish new goals and new strategies for goals not achieved in previous year.

Advantage – It is more useful for managerial positions.

Disadvantages – Not applicable to all jobs, allocation of merit pay may result in setting

short-term goals rather than important and long-term goals etc.

2.    Psychological Appraisals: These appraisals are more directed to assess employees’

potential for future performance rather than the past one. It is done in the form of in-

depth interviews, psychological tests, and discussion with supervisors and review of

other evaluations. It is more focused on employees emotional, intellectual, and

motivational and other personal characteristics affecting his performance. This approach

is slow and costly and may be useful for bright young members who may have

considerable potential. However quality of these appraisals largely depends upon the

skills of psychologists who perform the evaluation.

3.    Assessment Centers: This technique was first developed in USA and UK in 1943. An

assessment center is a central location where managers may come together to have their

participation in job related exercises evaluated by trained observers. It is more focused

on observation of behaviors across a series of select exercises or work samples.

Assessees are requested to participate in in-basket exercises, work groups, computer

simulations, role playing and other similar activities which require same attributes for

successful performance in actual job. The characteristics assessed in assessment center

can be assertiveness, persuasive ability, communicating ability, planning and

organizational ability, self confidence, resistance to stress, energy level, decision making,

sensitivity to feelings, administrative ability, creativity and mental alertness etc.

Disadvantages – Costs of employees traveling and lodging, psychologists, ratings

strongly influenced by assessee’s inter-personal skills. Solid performers may feel

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suffocated in simulated situations. Those who are not selected for this also may get

affected.

Advantages – well-conducted assessment center can achieve better forecasts of future

performance and progress than other methods of appraisals. Also reliability, content

validity and predictive ability are said to be high in assessment centers. The tests also

make sure that the wrong people are not hired or promoted. Finally it clearly defines the

criteria for selection and promotion.

4.    360-Degree Feedback: It is a technique which is systematic collection of performance

data on an individual group, derived from a number of stakeholders like immediate

supervisors, team members, customers, peers and self. In fact anyone who has useful

information on how an employee does a job may be one of the appraisers. This technique

is highly useful in terms of broader perspective, greater self-development and multi-

source feedback is useful. 360-degree appraisals are useful to measure inter-personal

skills, customer satisfaction and team building skills. However on the negative side,

receiving feedback from multiple sources can be intimidating, threatening etc. Multiple

raters may be less adept at providing balanced and objective feedback.

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CHAPTER-IIIPROFILE OF

HINDUSTAN AERONAUTICS LIMITED

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3.1 Profile of Indian Aerospace Industry

3.1.1 IntroductionThe Indian aerospace industry, both military and civil, stands uniquely poised

today, on the threshold of catapulting itself into the global arena. Due to the overwhelming

support and involvement of the government in the demand and supply of defense and civil

aerospace products, the industry has set itself on the firm path towards a transformational

change. The process of transformation has begun and there are encouraging signs of the

aerospace industry emerging as a major factor in our increasing self-reliance as well as the

export-oriented sector, with the potential and capacity to provide world-class opportunities

for established firms in the global market. At the same time, the domestic capability is being

significantly enhanced, through extensive tie-ups, joint ventures and technology transfers.

Fundamental strength in the Indian Industry already exists, in the form of a large number of

Small and Medium sized Enterprises (SMEs), which in the past have been suppliers at the

sub-component and component level, for aerospace DPSUs, HAL, DRDO, ISRO etc. These

companies are gradually transforming themselves into major players in this sector,

modernizing with cutting edge technologies to become suppliers for global aerospace

companies vying to outsource products and components from India.

The Indian manufacturing sector is internationally competitive with

international quality standards, efficiency and manufacturing facilities. India is fast

developing into a manufacturing hub for world corporations wanting to leverage the sector’s

proven skills in product design, reconfiguration and customization with creativity, assured

quality and value addition. India, also keen to strengthen its own aerospace industry and has

asked major weapon exporting countries to transfer technology to India. 

In most industrial countries, the aerospace industry is a cooperation of public

and private industries. For example, several countries have a civilian space program funded

by the government through tax collection, such as NASA in the United

States, ESA in Europe, the Canadian Space Agency in Canada, Indian Space Research

Organization in India,  JAXA in Japan,  RKA in Russia,  China National Space

Administration in China, SUPARCO in Pakistan, Iranian Space Agency in Iran, and Korea

Aerospace Research Institute (KARI) in South Korea.

Along with these public space programs, many companies produce technical

tools and components such as spaceships and satellites. Some known companies involved in

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space programs include Boeing,  EADS, Lockheed Martin, MacDonald

Dettwiler and Northrop Grumman. These companies are also involved in other areas of

aerospace such as the construction of aircraft.

3.1.2 History

Modern aerospace began with Sir George Cayley in 1799. Cayley proposed an

aircraft with a "fixed wing and a horizontal and vertical tail," defining characteristics of the

modern airplane.

The 19th century saw the creation of the Aeronautical Society of Great

Britain (1866), the American Rocketry Society, and the Institute of Aeronautical Sciences, all

of which made aeronautics a more serious scientific discipline. Airmen like Otto Lilienthal,

who introduced cambered airfoils in 1891, used gliders to analyze aerodynamic forces

The Wright brothers were interested in Lilienthal's work and read several of his

publications. They also found inspiration in Octave Chanute, an airman and the author of

Progress in Flying Machines (1894). It was the preliminary work of Cayley, Lilienthal,

Chanute, and other early aerospace engineers that brought about the first powered sustained

flight at Kitty Hawk, North Carolina on December 17, 1903, by the Wright brothers. War and

science fiction inspired great minds like Konstantin Tsiolkovsky and Werner von Braun to

achieve flight beyond the atmosphere.

3.1.3 Manufacturing

Aerospace manufacturing is a high technology industry that produces "aircraft,

guided missiles, space vehicles, aircraft engines, propulsion units, and related parts". Most of

the industry is geared toward governmental work. For each Original Equipment

Manufacturer (OEM), the US government has assigned a CAGE code. These codes help to

identify each manufacturer, repair facilities, and other critical aftermarket vendors in the

aerospace industry.

In the United States, the Department of Defense and the National Aeronautics

and Space Administration (NASA) are the two largest consumers of aerospace technology

and products. Others include the very large airline industry. The aerospace industry employed

472,000 wage and salary workers in 2006. Most of those jobs were in Washington State and

in California, with Missouri and Texas also important. The leading aerospace manufacturers

in the U.S. are Boeing, United Technologies Corporation, and Lockheed Martin.

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In the European Union, aerospace companies such as EADS, BAE

Systems, Thales, Dassault, Saab AB and Finmeccanica account for a large share of the global

aerospace industry and research effort, with the European Space Agency as one of the largest

consumers of aerospace technology and products.

In India, Bangalore is a major center of the aerospace industry, where Hindustan

Aeronautics Limited, the National Aerospace Laboratories and the Indian Space Research

Organization are headquartered. The Indian Space Research Organization (ISRO) launched

India's first Moon orbiter, Chandrayaan-1, in October 2008.

India is poised to become a large commercial and defense aircraft market. With

rising passenger traffic and increasing military and defense expenditures, the demand for

aircrafts is expected to increase. Boeing expects a demand of between 900 to 1,000

commercial aircraft worth USD100 billion approximately in the next 20 years. This also

suggests that a significant portion of business opportunity could accrue to India, due to the

associated offsets.

There are several factors driving growth in manufacturing in India’s aerospace

industry. These include both macro and micro factors - strong economic growth that has

resulted in rapidly growing domestic aircraft demand, the liberalization of civil aviation

policies, offset requirements, a strong domestic manufacturing base, cost advantages, a well-

educated talent pool, the ability to leverage IT competitiveness and a liberal Special

Economic Zones law that provides attractive fiscal benefits for developers and manufacturers.

The challenges include access to technology, funding, poor availability and high cost of raw

material and certification processes.

3.1.4 Indian Aerospace Industries

Among domestic aerospace companies in India, the leader by far is Hindustan

Aeronautics Limited (H.A.L, and not pronounced Hal in India) headquartered in Bangalore.

Ranking 36th worldwide on the Defense News 100 in 2012, H.A.L had 2012 sales of Rs

14,204 crores or roughly $2.8 billion. It collaborates with American, French, Indian, Israeli,

Russian and UK agencies in design, fabrication and supply of civilian and military aircraft.

The company also has factories in Hyderabad, Kanpur, Koraput, Korwa, Lucknow and Nasik

besides Bangalore. H.A.L. is owned 100% by India’s Ministry of Defence via its Department

of Defence Production.

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Other domestic aerospace companies in India include Bharat Electronics Ltd

and Electronic Corporation of India Ltd also owned by the Government of India. Both offer

products to aerospace, security and other markets. A special joint venture between Russia and

India is Brahmos, 50.5 percent owned by India’s Defense Research and Development

Organization and 49.5 percent by Russia’s NPO Mashinostroyenia. Brahmos designs and

manufactures supersonic cruise missiles.

Domestic aerospace companies in India that are privately owned include Samtel

which makes avionics, Taneja Aerospace which offers machining and assembly, Tata

Manufacturing Solutions Ltd which makes some floor beams for the Boeing 787 Dreamliner.

Many engineering services companies in India offer design services for the global and

domestic aerospace Industry.

Foreign aerospace companies in India must have 74 percent domestic ownership

if operating in the defense sector. Companies from the West such as Airbus, BAE Systems,

Bell Helicopter, Boeing, Dassault, Embraer, GE Aviation, Honeywell Aerospace, Israel

Aerospace Industries, Lockheed Martin, Rockwell Collins, Rolls Royce, Sukhoi Aviation

Holding Company have been successful in India largely via foreign sales or via joint

manufacturing with HAL.

Organizations such as the National Aeronautics Labs, the Gas Turbine Research

Institute, the Wind Tunnel at IIT Kanpur are not aerospace companies in India but do provide

services to the industry. Amritt’s aerospace and defense industry experts understand how best

American and Canadian executives should communicate effectively with aerospace

companies in India and with Indian customers.

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3.2 Company Profile

Hindustan Aeronautics Limited (HAL)

3.2.1 Introduction

Hindustan Aeronautics Limited (HAL) came into existence on 1st October

1964. The Company was formed by the merger of Hindustan Aircraft Limited with

Aeronautics India Limited and Aircraft Manufacturing Depot, Kanpur.

The Company traces its roots to the pioneering efforts of an industrialist with

extraordinary vision, the late Seth Walchand Hirachand, who set up Hindustan Aircraft

Limited at Bangalore in association with the erstwhile princely State of Mysore in December

1940. The Government of India became a shareholder in March 1941 and took over the

Management in 1942.

Headquartered in Bangalore, Hindustan Aeronautics Limited (HAL) is mainly

involved in manufacturing aircraft, aerospace, navigation and communication equipment. It

has the distinction of building the first military aircraft constructed in South Asia and is

currently involved in the design, fabrication and assembly of aircraft, jet engines, helicopters

and their components and spares.

HAL's facilities are located throughout India including Nasik, Korwa, Kanpur,

Koraput, Lucknow and Hyderabad. The Company’s business is presently organised into five

complexes headed by a Managing Director/Director.

Bangalore Complex - Production, Repair & Overhaul of Fixed Wing Aircraft/Engine

(Indian & Western origin)

MiG Complex – Production, Repair & Overhaul of Fixed Wing Aircraft/Engine

(Russian origin)

Helicopter Complex – Design, Production, Repair & Overhaul of Helicopters

Accessories Complex - Production, Repair & Overhaul of Accessories and Avionics

Design Complex – Design & Development of Fixed Wing Aircraft.

Adopting the slogan "Asia's Premier Aerospace Complex," India's aerospace

and defence major, Hindustan Aeronautics Limited (HAL), continues to take large strides in

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the sector with every passing year. In size HAL is indisputably an Asian aerospace giant,

with 16 production units and nine research and design centres spread across seven locations

in India.

Today, HAL has 16 Production Units and 9 Research and Design Centres in 7

locations in India. The Company has an impressive product track record - 12 types of aircraft

manufactured with in-house R & D and 14 types produced under license. HAL has

manufactured 3550 aircraft (which includes 11 types designed indigenously), 3600engines

and overhauled over 8150 aircraft and 27300 engines.

HAL's supplies / services are mainly to Indian Defence Services, Coast Guards

and Border Security Forces. Transport Aircraft and Helicopters have also been supplied to

Airlines as well as State Governments of India. The Company has also achieved a foothold in

export in more than 30 countries, having demonstrated its quality and price competitiveness.

HAL has been successful in numerous R & D programs developed for both

Defence and Civil Aviation sectors. HAL has made substantial progress in its projects:

• Dhruv, which is Advanced Light Helicopter (ALH)

• Tejas- Light Combat Aircraft (LCA)

• Intermediate Jet Trainer (IJT)

• Various military and civil upgrades.

HAL has played a significant role for India's space programs by participating

in the manufacture of structures for Satellite Launch Vehicles like

• PSLV (Polar Satellite Launch Vehicle)

• GSLV (Geo Stationary Launch Vehicle)

• IRS (Indian Remote Satellite)

• INSAT (Indian National Satellite)

Table 3.1

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Joint Ventures of HAL

HAL has won several International & National Awards for achievements in

R&D, Technology, Managerial Performance, Exports, Energy Conservation, Quality and

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Name of Joint Venture Company Product Profile

BAe HAL Software Ltd., BangaloreSoftware Solutions & Services todefence & aerospace industries

Snecma HAL Aerospace Pvt. Ltd. ,Bangalore

Manufacture of Precison Aero Engine components

HALBIT Avionics Pvt. Ltd. Bangalore Design & Development of Simulators

Indo Russian Aviation Ltd. Nasik Product Support for Russian Aircraft

HAL Edgewood Technologies Pvt.Ltd., Bangalore

Manufacture of Miniature Electronicmodules & avionic systems

HATSOFF Helicopter Training Pvt.Ltd.

Simulator based Training

International Aerospace ManufacturingPvt. Ltd.

Manufacture of shrouds for Civil AeroEngines (Rolls Royce)

Multirole Transport Aircraft Ltd.(MTAL)

Design, Development & Manufactureof Multirole Transport Aircraft

InfoTech HAL ltd.Design Work packages for Aeroengines

Samtel HAL Display Systems Airborne Multi Function Displays

Tata HAL Technologies Ltd.,Bangalore

Design Work Packages for Airframestructures

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Fulfilment of Social Responsibilities. HAL was awarded the “INTERNATIONAL GOLD

MEDAL AWARD” for Corporate Achievement in Quality and Efficiency at the International

Summit (Global Rating Leaders 2003), London, UK by M/s Global Rating, UK in

conjunction with the International information and management centre (IIMC).

HAL was presented the International - “ ARCH OF EUROPE ” Award in Gold

Category in recognition for its commitment to Quality, Leadership, Technology and

Innovation At the National level, HAL won the "GOLD TROPHY" for excellence in Public

Sector Management, instituted by the Standing Conference of Public Enterprises (SCOPE).

3.2.2 Products

Aircraft of Russian origin

Aircraft of western origin

Helicopters

Communication/Navigation Equipment

Advanced communication equipment

Accessories for Aircraft, Helicopters and Aero engines

Aerospace equipment

Aero engines of Russian origin

Aero engines of western origin

3.2.3 Vision of the company

To make HAL a dynamic, vibrant, value-based learning organisation with human resources

exceptionally skilled, highly motivated and committed to meet the current and future

challenges. This will be driven by core values of the Company fully embedded in the culture

of the organisation.

3.2.4 Mission of the company

To enable all those working for HAL to give their best to ensure their all-round growth as

well as that of the organization.

3.2.5 Objectives

• To ensure availability of Total Quality People to meet the Organizational Goals and

Objectives.

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• To have a continuous improvement in Knowledge, Skill and Competence

(Managerial, Behavioural and Technical)

• To promote a Culture of Achievement and Excellence with emphasis on Integrity,

Credibility and Quality

• To maintain a motivated workforce through empowerment of Individual and Team-

building

• To enhance Organizational Learning

• To play a pivotal role directly and significantly to enhance Productivity, Profitability

and improve the Quality of Work Life

3.2.6 Strategy

• To be in total alignment with Corporate Strategy

• To maintain Human Resource at optimum level to meet the objectives and goals of the

Company

• Be competent in Mapping, Analysis and Up gradation of Knowledge and Skills

including Training, Re-training, Multi-skilling etc

• Cultivate Leadership with Shared Vision at various levels in the Organization

• Focus on Development of Core Competence in High-Tech areas

• Build Cross-functional Teams

• Create awareness of Mission, Values and Organizational Goals throughout the

Company

• Introduce / Implement personnel policies based on performance that would ensure

growth, Rewards, Recognition, Motivation

3.2.7 Focus of Human Resource Policy

• Competence Building

• Commitment

• Motivation

• Employee Relations

In the backdrop of the above, the focus of Human Resource Development initiatives at HAL

emphasizes the following:

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I) Man Power Planning

• Out sourcing of low tech and medium tech jobs.

• Fresh induction only in critical / highly specialised areas based on requirements due to

increase in work load. In the Workmen Cadre, induction will be restricted to Direct

Workmen only.

• Improving the existing qualification profile by focusing on induction of professionally

qualified personnel and diploma holders.

Hence focus of recruitment is to recruit people with a combination of knowledge, skill,

experience and attitude in line with the organisational requirement through appropriate

manpower plan both short term (contract appointments) and long term recruitment

programme.

II) Training and Development

Training is one of the most important tools for developing human resource. Hence,

identification of training competency profile in terms of Vision, Mission of the Company is

the strategic point of the training and development strategy of the Company. The following

objectives have been set in this regard:-

• To provide training to all employees at regular intervals in a plan period of 5 years.

• Training to become an integral component of individual professional evolution by:

o updating knowledge to avoid obsolescence

o enhancing professional creativity

o enabling employees to shoulder higher responsibility

o creating a business trend and strategic thinking to take up new business

challenges

The goals of training will be to progressively achieve 7 days training per employee per year

with a budget of 2% of annual Wage Bill.

Keeping in view the organisational requirement and goals and objectives of training, the

following have been identified as the key focus areas of training:

• Technology

• Tooling

• Quality

• Information Technology

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Further, to facilitate the development of soft skills (change of mind-set, managerial

development etc.) training would be imparted on a continuous basis. Tie-ups with Centres of

Excellence like IITs, NDC, FIAS France etc. for imparting training would be given prime

importance.

III) Performance Appraisal:

Appraising people for meeting the Company's goal would be the prime focus of performance

management. The new Performance Appraisal System based on work planning and

commitment (mutually agreed tasks) , self-review and performance analysis, performance

review and feedback would ensure that the focus would be on value adding activities rather

than on routine activities which bear no relationship with the Organisation's goals and

objectives.

Identification of low performers and resultant corrective action throughout the Company

would be given priority. Similarly, faster career growth opportunity would be provided to

high performers.

IV) Reward System

The focus of the reward system in the Company is to promote team work and cultivate a

sense of achievement and excellence in the Organisation. This is in addition to the existing

scheme of reward for an individual who innovatively and creatively makes exemplary

contributions in the key thrust areas of the Company that would lead to its achieving overall

excellence. Coupled with the above, schemes like "Inter Divisional Competition" and "Profit

Sharing Scheme" have been institutionalised in the Company for team reward.

V) Scheme for Learning and Certification for Executives

A "Learning Organisation" is essential for survival in the present era of Liberalisation,

Privatisation and Globalisation. Therefore, "Knowledge" is the only core competence of

Organisations for coping with changes.

In line with the above philosophy, among other initiatives like institutionalizing Learning

Centres in Divisions etc., HAL has also introduced the scheme for Learning and Certification

for executives as a starting point for building individual knowledge. The scheme inter-alia

provides an opportunity for the Junior and Middle Management Cadre Executives to broaden

their perspective by not only learning about all functions and procedures in their respective

disciplines but also in related areas and overall knowledge about the Organization and its

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environment. It is proposed to expand the coverage of this scheme further, if required, by

linking the scheme to some kind of reward mechanism.

Lastly, the HRD Plan will also include time-to-time OD Interventions to address specific

requirement of the Company.

3.2.8 Performance Appraisal in HAL

Some of the salient features of the performance appraisal system are as under:-

a. Two tier system (Initiating Authority(IA) & Reviewing Authority (RA))

b. Quarterly task setting and evaluation on a quarterly basis.

c. Traits based on the responsibilities associated with each level.

d. Self- appraisal by the officers at all levels.

e. Qualitative assessment, management review categorisation & identification of training

and developmental needs, both by IA & RA.

Level Grades

Level- I I & II

Level- II III & IV

Level- III V & VI

Level- IV VII & VIII

Level- V IX & X

The performance appraisal system was amended in 2000-01 year. The

assessment of performance for the year 2000-01 was based on the evaluation for the

remaining three quarters viz. quarters ending 30th September 2000, 31st December 2000 and

31st march 2001. Required exercise of task setting for the 2nd quarter of the year (1st July to

30th September 2000) was done immediately between each appraisee and the concerned

initiating authority. For this purpose, copies of the quarterly task setting and assessment

sheets were used till such time the formats got printed. Divisions/ officers had taken all

necessary steps to implement the revised procedure for the performance appraisal

immediately.

3.2.8.1 Performance Appraisal Format

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The revised performance appraisal system from 2000 consists of five formats,

one for each level of officers. The format comprises of nine major parts from Part-A to Part-I.

Table 3.2

Performance Appraisal Format

PART CONTENTSTO BE

FILLED BY

COVER PAGE Bio-data of the Appraisee Appraisee

PART-AQuarterly Task Setting and

Assessment

Appraisee &

IA

PART-B

Self Appraisal

Comments on Self Appraisal & Integrity

IA & RA

PART-C Assessment of Traits IA & RA

PART-D Qualitative Assessment of the Appraisee (Pen Picture)

IA & RA

PART-E General Assessment & Management Review Categorisation

IA & RA

PART-F Training and Development Needs IA & RA

PART-G

Evaluation by Performance Review Board

Remarks of Higher Authorities

PRB

GM / MD /

FD / CH

PART-H Illustrative list of areas for Training -

PART-I Check List HRD Cell

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PART-A : Quarterly Task Setting and Assessment

The revised Performance Appraisal System envisages setting up Quarterly

Tasks between the Appraisee and the Initiating Authority. The set tasks would be recorded on

the Quarterly Task Setting and Assessment Sheets .At the time of setting the tasks, the IA

may consult the RA also.

Table 3.3

Quarterly Task Setting Period

Quarter Period

I 1st April to 30th June

II 1st July to 30th September

III 1st October to 31st December

IV 1st January to 31st March

The Task Setting for each Quarter would be done, jointly by the Appraisee and

IA, by the 7th of the first month of each Quarter. The maximum marks of 100 would be

distributed among all the tasks, based on their relative weight age or importance. Separate

task setting and assessment sheets are to be used for each and the same would be signed both

by the Appraisee and the IA. The task setting sheets would be prepared in duplicate and one

copy will be with the Appraisee and the other with the IA. The tasks set should be as far as

possible be quantitative or measurable, either in terms of quantity or time limits. The IA

would evaluate the performance of the appraisee, by 7 th of the 1st month of the subsequent

quarter, after joint discussion with the appraisee, against the set tasks and will award marks

for each task, keeping in view the maximum marks decided for each task at the beginning of

the quarter. Completed task setting and assessment sheet of each quarter would be retained by

the IA with him and the same would be attached by him with the Annual / probationary

Performance Appraisal Review at the end of the assessment year / period.

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PART-B: Self Appraisal

All officers should assess themselves in Part-B of the appraisal format. Self-Appraisal is

aimed at providing officers an opportunity to assess their performance against mutually

agreed tasks. Self-Appraisal should be brief and to the point. Comments on the Self-

Appraisal by the IA & RA are to be made in the space provided. Self-Appraisal by officers

should also be taken into account by the IA and RA, while making the assessment in PART-

C of the format.

Table 3.4

Levels of Initiating / Reviewing Authorities for various grades

Levels of the IA and RA for officers in various grades would be as follows:

Grade of the Appraisee Initiating Authority Reviewing Authority

I / II Minimum grade III or AboveMinimum grade V or

above

III / IV Minimum grade V or aboveMinimum grade VI or

above

V / VI Minimum grade VII or aboveMinimum grade VIII or

above

VII / VIII Minimum grade XI or aboveMinimum grade X or

above

IX / XManaging Director(MD) /

Functional Director(FD)Chairman(CH)

PART-C: Assessment of Traits

The skills required to be possessed by an officer vary as he moves from one

level to the next. Keeping this aspect in view, separate set of traits against which officers are

to be assessed have been devised. Assessments of the traits have to be made part C.1 of the

format, indicating marks scored for each trait, out of maximum marks allotted for each trait,

both by the IA and the RA.

For the first trait (performance), marks awarded by the IA will be the equivalent

% of the average marks for the year awarded by him in part-A. For example, if the average

marks awarded by the IA in part-A for a year is 70 out of 100, marks against performance in

part C.1 for an officer in grade I/II will be 56(i.e. 80 % of 70). In case the marks awarded by

41

CORPORATE OFFICE

the RA vary from that awarded by the IA, the RA will indicate justifications for such

variation in part-C.1.1 of the format. For the remaining traits, the IA & RA have to award

marks individually out of the maximum marks indicated against each trait.

Scale of Gradation:

Table 3.5

Scale of Gradation

TOTAL MARKS 100-90 89-80 79-50 BELOW 50

Performance Rating Exceptional Above Average Average Below

Average

PART-D: Qualitative Assessment of the Appraisee

Both the IA & RA have to give a brief description of the Appraisee at part-D of

the format, as Pen Picture. The Pen Picture should be written carefully highlighting all

aspects of the personality of the Appraisee. By reading the Pen Picture, one should be in a

position to get a clear picture about the Appraisee, his effectiveness and his personal

qualities. The IA & RA should use this part of the Appraisal report to narrate about the traits

of the Appraisee that are not covered under specific traits under part C.1

PART-E: General Assessment & Management Review Categorisation

The IA & RA have to indicate the strengths and areas requiring improvements

in respect of the Appraisee, with reference to his performance, at part-E of the format. This

will enable Performance Review Board to get a balanced picture about the Appraisee and

would also facilitate positive HRD intervention.

Both the IA & RA have to indicate the “Management Review Categorisation” of

the Appraisee, which forms the potential assessment area of the performance appraisal

system, as follows:

Category – A: An officer who has high degree of potential for advancement.

Category – B: An officer who has potential for limited advancement.

Category – C: An officer who has no potential for advancement.

While indicating the Management Review Categorisation, the IA & RA should take into

account the educational qualifications of the Appraisee, variety and richness of experience,

job knowledge, effectiveness, personal qualities and his performance on various assignments.

This assessment should also be made for officers on probation.

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CORPORATE OFFICE

PART-F: Training / Development Needs

Both the IA and RA should indicate specific areas to which the Appraisee

should be job rotated as well as training to be given to prepare him for future advancements.

An illustrative list of areas for Training and Development is at Part-H of the PAR format.

PART-G: Evaluation by Performance Review Board

Performance Review Board will be constituted at the Divisional / Complex /

Corporate level for determining the final marks / Performance Rating of the Appraisee, taking

into consideration the assessment made by the IA & RA. The PRB will consult the IA & RA,

where ever necessary, if they are not members of the PRB.

Table 3.6

Indication of Chairman and Members of the PRB

LEVEL GRADE CHAIRMAN OF PRB MEMBERS OF PRB

I I / II Senior most AGM / DGM in the Division

Other AGMs / DGMs / HODs in the Division & HRD Representative

II III / I GM / Divisional HeadAGMs / DGMs / HODs in the Division & HRD Representative

III V / VI MD / FDGMs of the Divisions &

HRD Representative

IV VII / VIII CH MDs / FDs

V IX & X CH MDs / FDs

In respect of Complex offices, MDs will be Chairman of the PRB for officers in

Grades I to IV also. In respect of officers in Grades I to VI of Corporate office, Director

(Corporate Planning & Marketing), Director (Finance), Director (Personnel) and General

Manager (P&A) will be the members of the PRB. The senior most Director will be the

Chairman of the PRB.

The Marks and Performance Rating awarded by the PRB would be final.

Remarks by Higher Authorities

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CORPORATE OFFICE

GMs / MDs / FDs / CH would indicate their general remarks in Part-G of the

format.

3.2.8.2 Performance Appraisal of Officers on Probation

Two Performance Appraisal are to be submitted, one at the end of the sixth

month and the other at the end of the eleventh month of the probationary period of Officer.

Formats to be used and system to be followed for filling up the formats would be the same as

in respect of Annual Reports. Probationary Performance Appraisal Reports would not be put

up to the performance review Board. Marks / Performance Rating awarded by the RA would

be final in respect of these reports. These reports would, however, be put to the higher

authorities for their remarks at Part – G. The RA should ensure that the 6 th and 11th monthly

reports are submitted to the HRD Cell within 7 days of the completion of the 6 th and eleventh

monthly period. The Sixth / eleventh monthly Performance Appraisals would be the basis for

confirmation of officers appointed / promoted. The report should therefore indicate the

suitability or otherwise of the officer for confirmation by the competent authority, in the

eleventh monthly report.

3.2.8.3 Feedback System

All officers who have scored final marks of below 50 and rated as below

average would be intimated in writing about the same, through the concerned division / office

as follows:

Table 3.7

Feedback for different grade of officers

Officers in Grade To be intimated by

VII and Above Corporate Office

V / VI Complex Office

I to IV Division / Office

This communication would be signed by the Head of the P & A Department at Corporate

Office / Complex Office / Division / Office.

In addition to the above oral feedback by the Appraisers, to the Appraisee, on his

performance, should be an ongoing process. It is necessary to encourage progress and correct

mistakes. The Appraisee should be encouraged and the areas requiring immediate attention

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CORPORATE OFFICE

for improving his performance should be highlighted. The IA should inform the Appraisee in

writing as and when the need arises.

Further to the feedback / communication mentioned above, the HRD cell should ensure

communication of the Areas / Traits for improvement, if any, to the Appraisee, after the

Report is completed by all concerned. Such communication would be issued as follows:

i. For officers up to and including IV

The HRD cells of the respective divisions / offices would identify the cases where

feedback is required and would ensure that necessary communications are issued to

the officers, through the IA/RA

ii. For officers in Grades V & VI

The HRD cell of the complex office will identify the cases where feedback is required

to be given and would communicate the same to the officers concerned through the

concerned division / office

iii. For officers in Grade VII & Above

Corporate office will identify the cases where feedback is required to be given and

would communicate the same to the officers concerned, through the concerned

division / office with a copy to the Complex Office.

3.2.8.4 Appraisals on Officers in Vigilance Department

Performance Appraisal on officers in Vigilance Department will be raised as

indicated below:

Executive Director (Vigilance). Corporate Office, will be the IA in respect of

Heads of Vigilance Departments in the Divisions

Executive Director (Vigilance) will also be the RA in respect of Heads of

Vigilance Department in the Divisions / offices up to and including Grade III. Chairman will

be the RA in respect of Heads of Vigilance Department in Grade IV & above

In respect of officers of vigilance department who are working under the Heads

of Vigilance in each Division / Office. Executive Director (Vigilance) would be the RA. In

respect of such officers in Grade IV and above, Chairman would endorse his views in Part-G

of the format.

After the reports are filled in, Executive Director (Vigilance) would also

complete the column of evaluation by Performance Review Board at Part G of the Report.

Completed reports would be retained in the office of Executive Director (Vigilance),

corporate office.

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CORPORATE OFFICE

3.2.8.5 Appraisal on Officers of Systems Audit Department

Head of Systems Audit at corporate office will be the IA in respect of Head of

Systems Audit Cells in the Divisions. Head of Systems Audit at corporate office will also be

the RA in respect of Head of systems audit cell in the divisions who are in Grade I to III.

Director (Finance) will be the RA in respect of head of systems audit cell in the divisions in

grades IV and above

In respect of officers in systems audit who are working under the head of the

systems audit cell in the divisions, head of systems audit at corporate office would be the RA.

In respect of such officers in Grade IV and above, Director (Finance) would endorse his

views in Part G of the format.

After the reports are filled in, Head of Systems Audit at corporate office would

also complete the column of evaluation by performance Review Board at Part G of the report.

Completed reports would be sent back to the concerned division / office by the head of

systems audit at corporate office, for retention.

3.2.8.6 Appraisals on Heads of Finance and Personnel & Administration in the Complex

/ Division

In respect of Heads of Finance and Personnel & Administration in Grade VII

and above in the complex offices, Managing Director would be the IA and Chairman would

be the RA. In respect of such officers in Grade VI and below, concerned Managing Director

would be the IA and RA. In respect of Heads of Finance and Personnel & Administration in

the Divisions, Divisional Head would be the IA and concerned Managing Director would be

the RA. In all such cases, the concerned Functional Director at Corporate Office would

indicate his remarks at Part – G of the format.

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CORPORATE OFFICE

CHAPTER – IVANALYSIS & INTERPRETATION OF DATA

ANALYSIS & INTERPRETATION OF DATA

A Sample size of 75 was selected for analysis and interpretation. The data’s

from officers were collected through questionnaire.

1) Is there a Formal Appraisal system in HAL?

Table 4.1

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CORPORATE OFFICE

Awareness of the Performance Appraisal system

Responses No: of Respondents Percentage

Yes 75 100

No 0 0

Total 75 100

Fig 4.1

Awareness of the Performance Appraisal system

Interpretation

From fig 4.1 it is clear that all the employees in HAL are aware of the formal Performance

Appraisal system.

2) The Basic objective of Performance Appraisal (PA) is Performance Improvement.

Table 4.2

Objective of PA is Performance Improvement

Responses No: of Respondents Percentage

48

Yes No0

20

40

60

80

100

120

CORPORATE OFFICE

Strongly Agree 15 20

Agree 44 58.7

Disagree 12 16

Strongly Disagree 4 5.3

Not Applicable 0 0

Total 75 100

Fig 4.2

Objective of PA is Performance Improvement

Interpretation

Majority of the employees of HAL agree that the basic objective of Performance Appraisal is

Performance Improvement but a few of them disagree to the above statement due to several

reasons.

3) The current Performance Appraisal system functions fairly and equitably.

Table 4.3

Fairness and equitability of the current performance appraisal system

Responses No: of Respondents Percentage

49

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

70

CORPORATE OFFICE

Strongly Agree 4 5.3

Agree 29 38.7

Disagree 36 48

Strongly Disagree 6 8

Not Applicable 0 0

Total 75 100

Fig 4.3

Fairness and equitability of the current performance appraisal system

Interpretation

A high amount of employees disagree to the above statement. Certain officers are partial

while appraising the employees. But 40% of the employees feel that the current appraisal

system functions fairly and equitably.

4) The Performance Appraisal system adopted by HAL is able to gauge the real

performance of employees.

Table 4.4

The PA system is able to gauge the real performance of employees

50

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

CORPORATE OFFICE

Responses No: of Respondents Percentage

Strongly Agree 4 5.3

Agree 17 22.7

Disagree 47 62.7

Strongly Disagree 6 8

Not Applicable 1 1.3

Total 75 100

Fig 4.4

The PA system is able to gauge the real performance of employees

Interpretation

Majority of the employees are of the opinion that the performance appraisal system is not

able to measure the real performance of the employees.

5) Are you satisfied with the “Two tier system” adopted in the current Performance

Appraisal system?

Table 4.5

Satisfaction with the “Two tier system”

51

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

70

CORPORATE OFFICE

Responses No: of Respondents Percentage

Yes 71 94.7

No 4 5.3

Total 75 100

Fig 4.5

Satisfaction with the “Two tier system”

Interpretation

Almost all the employees are satisfied with the “Two tier system”. They are not much

concerned about this kind of system.

6) The “Two tier system” is able to show the areas in which a person needs

improvement.

Table 4.6

“Two tier system” is able to show the areas in which a person needs improvement

52

Yes No0

10

20

30

40

50

60

70

80

90

100

CORPORATE OFFICE

Fig 4.6“Two tier system” is able to show the areas in which a person needs improvement

Interpretation

Interpretation

The two tier system helps the employees in finding the areas in which a person needs

improvement.

7) The task setting is done jointly by the Appraisee and the IA on a mutually agreed

basis.

Table 4.7

Task setting is done jointly by the appraisee and the IA

53

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

70

80

Responses No: of Respondents Percentage

Strongly Agree 14 18.7

Agree 51 68

Disagree 5 6.7

Strongly Disagree 2 2.6

Not Applicable 3 4

Total 75 100

CORPORATE OFFICE

Responses No: of Respondents Percentage

Strongly Agree 22 29.3

Agree 48 64

Disagree 3 4

Strongly Disagree 2 2.7

Not Applicable 0 0

Total 75 100

Fig 4.7

Task setting is done jointly by the appraisee and the IA

Interpretation

Most of the employees agree that the quarterly task setting is done jointly by the appraisee

and the initiating authority, but around 30% of them disagree to the above statement due to

the bureaucratic nature of the higher authority.

8) The IA provides the appraisee with maximum marks, decided for each task,

according to their performance.

Table 4.8

IA provides maximum marks to the appraisee for each task

54

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

70

CORPORATE OFFICE

Responses No: of Respondents Percentage

Strongly Agree 11 14.7

Agree 15 20

Disagree 42 56

Strongly Disagree 7 9.3

Not Applicable 0 0

Total 75 100

Fig 4.8IA provides maximum marks to the appraisee for each task

Interpretation

The employees are not given maximum marks in accordance to their performance.

9) Does the self-appraisal system provide an opportunity to identify the areas of

improvement?

Table 4.9

Self-appraisal system provides an opportunity to identify the areas of improvement

Responses No: of Respondents Percentage

55

Strongly Agree Agree Disagree Strongly Disagree Not Applicable0

10

20

30

40

50

60

CORPORATE OFFICE

Strongly Agree 36 48

Agree 26 34.7

Disagree 8 10.7

Strongly Disagree 5 6.6

Not Applicable 0 0

Total 75 100

Table 4.9

Self-appraisal system provides an opportunity to identify the areas of improvement

56

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

CORPORATE OFFICE

Interpretation

Self-appraisal system aid the employees to identify their areas of improvement and results in

self motivation.

10) The self-appraisal system provides the appraisee an opportunity to identify areas of

strength.

Table 4.10

Self-appraisal system provides the appraisee an opportunity to identify areas of strength

Responses No: of Respondents Percentage

Strongly Agree 32 42.6

Agree 29 38.7

Disagree 8 10.7

Strongly Disagree 4 5.3

Not Applicable 2 2.7

Total 75 100

Fig 4.10

Self-appraisal system provides the appraisee an opportunity to identify areas of strength

57

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

5

10

15

20

25

30

35

40

45

CORPORATE OFFICE

Interpretation

Majority of the employees can easily identify their areas of strength through self-appraisal

system by assessing their own job performance.

11) The assessment of traits helps to identify the attribute which has the maximum

potential.

Table 4.11

Assessment of traits helps to identify the attribute which has the maximum potential

Fig

4.11

Assessment of traits helps to identify the attribute which has the maximum potential

58

Responses No: of Respondents Percentage

Strongly Agree 9 12

Agree 31 41.3

Disagree 29 38.7

Strongly Disagree 6 8

Not Applicable 0 0

Total 75 100

CORPORATE OFFICE

Interpretation

Almost an equal number of employees agree and disagree that assessment of traits helps to

identify the attribute which has the maximum potential. Disagreement is due to the

inclination of Initiating and Reviewing Authority (IA & RA) towards certain employees.

12) Potential Appraisal form a part of the Performance Appraisal system at HAL

Table 4.12

Potential Appraisal form a part of the Performance Appraisal system

Responses No: of Respondents Percentage

Strongly Agree 1 1.3

Agree 2 2.7

Disagree 21 28

Strongly Disagree 49 65.3

Not Applicable 2 2.7

Total 75 100

Fig 4.12

Potential Appraisal form a part of the Performance Appraisal system

59

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

5

10

15

20

25

30

35

40

45

CORPORATE OFFICE

Interpretation

From the above figure, it is clear that Potential Appraisal does not form a part of the current

Performance Appraisal system.

13) Which in your opinion is given more importance?

Table 4.13

Importance given to kind of work

Responses No: of Respondents Percentage

Quality of work 4 5.3

Quantity of work 58 77.4

Both 13 17.3

Total 75 100

Fig 4.13

Importance given to kind of work

60

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

70

CORPORATE OFFICE

Interpretation

Employees are of the opinion that Quantity of work is given more importance in HAL.

14) The Appraisal system provides an opportunity for each appraisee to communicate the

support he needs from his superiors to perform his job well.

Table 4.14

Opportunity for each appraisee to communicate the support he needs from his superiors

Responses No: of Respondents Percentage

Strongly Agree 12 16

Agree 15 20

Disagree 45 60

Strongly Disagree 3 4

Not Applicable 0 0

Total 75 100

Fig 4.14

Opportunity for each appraisee to communicate the support he needs from his superiors

61

Quality of work Quantity of work Both0

10

20

30

40

50

60

70

80

90

CORPORATE OFFICE

Interpretation

Appraisees are not given much opportunity to communicate with higher authority for the

support he needs, to perform his job well. But few of them are given this opportunity due to

the IA’s inclination towards certain employees.

15) Performance Appraisal helps in

Table 4.15

Performance Appraisal helps in

Responses No: of Respondents Percentage

Promotion 23 30.7

Career Planning 12 16

Goal Achievement 38 50.7

All of these 2 2.7

Total 75 100

Fig 4.15

Performance Appraisal helps in

62

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

70

CORPORATE OFFICE

Interpretation

From the analysis, majority of the employees says that performance appraisal helps them in

goal achievement (50%) and promotion (30%).

16) The appraisal system provides an opportunity for each appraisee to express his

developmental needs.

Table 4.16

Opportunity for appraisee to express his developmental needs

Responses No: of Respondents Percentage

Strongly Agree 5 6.7

Agree 11 14.7

Disagree 32 42.6

Strongly Disagree 27 36

Not Applicable 0 0

Total 75 100

Fig 4.16

63

Promotion Career Planning Goal Achievement All of these0

10

20

30

40

50

60

CORPORATE OFFICE

Opportunity for appraisee to express his developmental needs

Interpretation

High amount of employees disagree to the above statement. The appraisees rarely get an

opportunity to express their developmental needs.

17) Is there an open communication between each appraiser-appraisee through

Performance Review Discussion?

Table 4.17

Open communication through Performance Review Discussion

Responses No: of Respondents Percentage

Yes 9 12

No 66 88

Total 75 100

Fig 4.17

Open communication through Performance Review Discussion

64

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

5

10

15

20

25

30

35

40

45

CORPORATE OFFICE

Interpretation

An open communication is not encouraged much between appraiser and appraisee through

performance review discussion.

18) PRD encourages open discussion between Appraisee and your IA.

Table 4.18

PRD encourages open discussion between Appraisee and IA

Responses No: of Respondents Percentage

Strongly Agree 1 1.3

Agree 3 4

Disagree 51 68

Strongly Disagree 14 18.7

Not Applicable 6 8

Total 75 100

Fig 4.18

65

Yes No0

10

20

30

40

50

60

70

80

90

100

CORPORATE OFFICE

PRD encourages open discussion between Appraisee and IA

Strongly Agree Agree Disagree Strongly Disagree Not Applicable0

10

20

30

40

50

60

70

80

Interpretation

Majority of the officers in different grades disagree to the above statement. PRD do not

encourage an open discussion.

19) PRD happens with prior information and pre-determined time slot.

Table 4.19

PRD happens with prior information and pre-determined time slot

Responses No: of Respondents Percentage

Strongly Agree 48 64

Agree 12 16

Disagree 4 5.3

Strongly Disagree 6 8

Not Applicable 5 6.7

Total 75 100

Fig 4.19

PRD happens with prior information and pre-determined time slot

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CORPORATE OFFICE

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

70

Interpretation

The employees strongly agree that the Performance Review Discussion happens with prior

information and pre-determined time slot.

20) The current appraisal system helps the employees to identify the training needs.

Table 4.20

The Appraisal system helps to identify the training needs

Responses No: of Respondents Percentage

Strongly Agree 4 5.3

Agree 13 17.3

Disagree 21 28

Strongly Disagree 37 49.4

Not Applicable 0 0

Total 75 100

Table 4.20

The Appraisal system helps to identify the training needs

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CORPORATE OFFICE

Interpretation

From the fig 4.20 it is clear that, the current appraisal system is not so effective to identify the

training needs.

CHAPTER-V

68

Strongly Agree Agree Disagree Strongly Disagree

Not Applicable0

10

20

30

40

50

60

CORPORATE OFFICE

FINDINGS, SUGGESTIONS AND CONCLUSION

FINDINGS

1) HAL is one of the Asia’s largest aerospace companies.

2) HAL has a consistent record of growth in earnings and dividend payout.

3) The Company’s philosophy on Corporate Governance is based on the principles of

transparency, compliance of laws, procedures and adhering to the values and

business ethics.

4) Equipped with the latest facilities, the company is backed by high profile, highly

skilled manpower with an impressive track record of more than seven decades of

rich experience in all disciplines of aeronautics.

5) The Employee Relations scenario in the company has been peaceful, healthy and

cordial.

6) The company has recorded highest profit of 3,328.52 crore during the year 2011-12

compared to 2839.52 crore in the previous year.

7) HAL has a limited customer base.

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CORPORATE OFFICE

8) The Company has well developed internal control system.

9) HAL’s greatest strength is its design capability.

10) All the divisions of HAL are certified with ISO 9001-2000 QMS.

11) HAL depend on foreign countries to import the raw materials.

12) HAL has a formal Performance Appraisal System.

13) The Performance Appraisal system was lastly reviewed in 2000.

14) The employees are satisfied with the “two tier system” adopted in the company.

15) Employees are of the opinion that the basic objective of Performance Appraisal is

Performance Improvement.

16) Certain employees are of the opinion that the current appraisal system do not

function fairly and equitably.

17) The task setting is done jointly by te appraisee and the initiating authority.

18) Employees are not satisfied with the current Performance Appraisal system.

19) Potential Appraisal does not form a part of the Performance Appraisal system.

20) The appraisee is not given maximum marks in accordance with their performance.

21) Self-appraisal system aid the employees to identify their areas of improvement.

22) Self-appraisal system enables the employees to assess their own job performance.

23) In HAL quantity of work is given more importance than quality of work.

24) Majority of the employees says that Performance Appraisal helps them in goal

achievement and promotion.

25) The appraisal system does not provide an opportunity to express his/her

development needs.

26) The IA does not encourage an open communication with the appraisee.

27) The current appraisal system is not so effective to identify the training needs.

CONCLUSION

The project was done with a certain objective in mind and the main aim of the

same was to gather information regarding the company’s practices and procedures regarding

the “Performance Management System”. “Performance appraisal” in every organization is a

very important part as the success of any organization depends upon the hard work and full

contribution of the individuals and it also depends on good recruitment. Therefore, it is

concluded that in order to achieve higher targets and productivity a well planned appraisal

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CORPORATE OFFICE

system should be continuously prepared so that the employees working with the organization

could be updated from time to time.

A right process of performance appraisal for the right evaluation of the

performance of the employees is very important. The method of performance management

should be unbiased and transparent so that no mistake can take place at the time of goal

setting and setting of KRAs. KRAs are the important element of the Performance

Management System at Hindustan Aeronautics Limited. Performance of an employee is

measured on the basis of goals achieved by him. So it is very important to adopt an organized

Performance Management System.

SUGGESTIONS

1) The current Performance Appraisal system should be reviewed partly.

2) Potential Appraisal should form a part of the Performance Appraisal system.

3) The organization should build up open communication through Performance Review

Discussion which can enhance organizational effectiveness.

4) Both Quantity and Quality of work should be given equal importance.

5) Management can introduce suggestion scheme, inviting suggestions from employees.

6) Employees should be involved in decision making process.

7) The appraisal system should help the employees to identify the training needs.

8) An open communication should be established between the IA and the appraisee.

9) Proper training program should be implemented based on the appraisal system.

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BIBLIOGRAPHY

1. Kothari C.R, Research Methodology, 7th Reprint, 1994, Prentice Hall of India Private

Ltd., New Delhi.

2. C.R.Kothari, Research Methodology, 8th Edition, Wishva Prakashan, New Delhi,

2001.

3. C.B.Gupta Personal Management, III Edition, Sultan Chand & Sons Publications,

New Delhi, 2000.

4. Human Resource Management - William. P. Antony, Michele Kumar, Pamela.L,

Perreve, 4th Edition, 2002, Harcourt College Publishers.

5. Human Resource Management and Personal Management- Williams.BS, Keith Davis,

4th Edition 20044, McGraw Hill International.

6. Human Resource Management- Shashi K Gupta, Rosy Joshi, 3rd Edition 2009,

Kalyani Publishers.

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7. Management and Organizational Behaviour- Laurie J. Mullins, 7th Edition 2005,

Pitman Publishing.

8. HAL Annual Report 2011-12

WEBLIOGRAPHY

www.hal-india.com

www.citehr.com

APPENDIX

Sir/ Madam,

I, Anju Raj fourth semester MBA student of MACFAST, Tiruvalla, under MG University, as

part of the requirement of MBA programme I have to take up a project study about the topic

“A study on Performance Appraisal system at HAL”. A free and fair expression of your

opinion is needed for my project work. I assure that most secrecy will be maintained and the

data collected will be used solely for my research work.

Questionnaire

1) Name:

2) Age a) Less than 30 b) 30-40 c) 40-50 d) above 50

3) Gender

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a) Male b) Female

4) Qualification a) Below Graduation b) Graduation c) PG d) Diploma

5) Is there a formal appraisal system in HAL? a) Yes b) No

6) The basic objective of Performance Appraisal is Performance improvement. a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not

Applicable

7) The current Performance Appraisal system functions fairly and equitably. a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

8) The Performance Appraisal system adopted by HAL is able to gauge your real performance of employees.

a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

9) Are you satisfied with the ‘Two tier system’ adopted in the current Performance

Appraisal system? a) Yes b) No

10) The ‘Two tier system’ is able to show the areas in which a person needs improvement.

a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

11) The task setting is done jointly by the Appraisee and the Initiating Authority (IA) on a mutually agreed basis.

a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

12) The IA provides the appraisee with maximum marks decided for each task at the beginning of the quarter, according to their performance.

a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

13) Does the Self-Appraisal system provide an opportunity to identify the areas of improvement?

a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

14) The Self-Appraisal system provides the appraisee an opportunity to identify areas of strength. a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

15) The assessment of traits helps to identify the attribute which has the maximum potential.

a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

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16) Potential appraisal form a part of the Performance Appraisal system at HAL. a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

17) Which in your opinion is given more importance? a) Quality Of work b) Quantity of work c) Both

18) The Appraisal System provides an opportunity for each Appraisee to communicate the support he needs from his superiors to perform his job well.

a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

19) Performance Appraisal helps you in a) Promotion b) Career Planning c) Goal Achievement d) All of these

20) The appraisal system provides an opportunity for each appraisee to express his developmental needs.a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

21) Is there an open communication between each appraiser-appraisee through Performance Review Discussion (PRD)?

a) Yes b) No

22) PRD encourages open discussion between Appraisee and your IA.a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

23) The PRD happens with prior information and a pre-determined time slot.a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

24) The current appraisal system helps you to identify the training needs.a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable

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