A PROJECT

ON

“A STUDY ON PERFORMANCE APPRAISAL

OF MIDDLE LEVEL EMPLOYEES: AN

EMERGING HR CHALLENGE”

SUBMITTED TO THE

FACULTY OF MANAGEMENT & RESEARCH

INTEGRAL UNIVERSITY, LUCKNOW

IN PARTIAL FULFILMENT FOR THE

DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

SUBMITTED TO SUBMITTED BY

Ms. BUSHRA SIDDIQUI Mr. MANZOOR

AHMAD

Faculty Member M.B.A. (VI semester)

Integral University, Lucknow Roll No.:

ACKNOWLEDGEMENT

Every work constitutes great deal of assistance and guidance from the people

concerned and this particular project is of no exception.

A project of the nature is surely a result of tremendous support, guidance,

encouragement and help.

Wish to place on record my sincere gratitude to Prof. (Dr.) Zeeshan Amir and the

entire faculty of our department with special reference to my project guide, Ms.

Bushra Siddiqui. I thank them for their constructive help and encouragement

throughout the project. Without their support and guidance taking this would not have

been possible.

Also, wish to acknowledge enthusiastic encouragement and support extended to me

by my family members. At last, I would like to thank all the faculty of business

management to help me completing this project.

Im also thankful to my friends who provided me their constant support and assistance.

MANZOOR AHMAD

Roll No.: 0800129036

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EXECUTIVE SUMMARY

TOPIC

“A STUDY ON PERFORMANCE APPRAISAL OF MIDDLE LEVEL

EMPLOYEES" AN EMERGING HR CHALLENGE”

SCOPE OF THE STUDY

The scope of my study restricts itself to the analysis of performance appraisal system

because performance is a natural breathing is concerned with the human activity as

well as sociological of human being how individual perform is a matter interest of

top management. They want to know the efficiency of each employee in the

organization and they also want to know the effectiveness of each employee.

OBJECTIVES

The main aim research objective was to understand the relevance of wide variety of

methods and technique that can be explored towards performance of the

organizational goals. For this purpose I have following sub objectives:

1. This process is done for examine the status of employees.

2. To identify the conceptual knowledge of employees about performance

appraisal in their organization.

3. To measure the level of transparency in performance appraisal system of the

organization.

4. To relate performance and motivation among the employee of the

organization.

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TABLE OF CONTENT

ACKNOWLEDGMENT

EXECUTIVE SUMMARY

CHAPTER-1:

INTRODCUTION

CHAPTER-2:

COMPANY PROFILE

PERFORMANCE APPRAISAL IN MARUTI

CHAPTER-3:

RESEARCH METHODOLOGY

CHAPTER-4:

DATA ANALYSIS

CHAPTER-5:

FINDINGS

CONCLUSION

SUGGESTIONS

REFERENCES

ANNEXURE

QUETIONNAIRE

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CHAPTER-1

INTRODUCTION

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OVERVIEW OF PERFORMANCE APPRAISAL

Performance appraisals are a systematic way of evaluating the standard of an

employee’s performance.

Steps for developing a systematic performance appraisal

.1. Identify key performance criteria

Development of key performance criteria should be based on a comprehensive job

description and undertaken in consultation with employees.

2. Develop appraisal measures

In order to obtain accurate and valid performance appraisals, appraisal measures

should be tailored to the specific job or “job family” (i.e., groups of similar jobs). An

evaluation of factors in the work environment which help or hinder performance is

also recommended. This ensures that realistic expectations are set for employee’s

performance, and is also likely to increase the perceived fairness and acceptability of

performance appraisals.

3. Collect performance information from different sources

Traditionally, it has been the sole responsibility of managers / supervisors to assess

performance. However, other organisational members (e.g., clients, coworkers,

subordinates) can be a valuable source of information as they are likely to have

exposure to different aspects of an employee’s performance. Collecting information

from multiple sources can increase the accuracy of performance evaluation (i.e.,

reduce bias), and increase employee’s perceptions of fairness.

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4. Conduct an appraisal interview

The two central purposes of the appraisal interview are to:

1. Reflect on past performances to identify major achievements, areas for further

improvement, and barriers / facilitators to effective performance.

2. Identify goals and strategies for future work practice.

The appraisal interview should be a constructive, two-way exchange between the

supervisor and employee, with preparation for the interview done by both parties

beforehand.

5. Evaluate the appraisal process

The performance appraisal process should undergo regular review and improvement.

For example, focus groups or surveys could be conducted to gauge employee’s

perceptions of the appraisal process. A successful performance appraisal process

should demonstrate a change in both the ratings of employee’s performance and

aspects of the work environment that impact upon work performance.

Best Practice In Performance Appraisal

In essence, best practice in performance appraisals involves:

Integrating performance appraisal into a formal goal setting system

Basing appraisals on accurate and current job descriptions

Offering adequate support and assistance to employees to improve their

performance

(e.g., professional development opportunities).

Ensuring that appraisers have adequate knowledge and direct experience of the

employee’s performance

Conducting appraisals on a regular basis.

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Meaning and Definition of Performance Appraisal

Performance appraisal is a formal system that evaluates the quality of a employee’s

performance. An appraisal should not be viewed as an end in itself, but rather as an

important process within a broader performance management system that links:

• Organizational objectives

• Day-to-day performance

• Professional development

• Rewards and incentives

In simple terms, appraisal may be understood as the assessment of an individual’s

performance in a systematic way, the performance being measured against such factors as

job knowledge, quality, and quantity of output, initiative, leadership abilities, supervision,

dependability, co-operation, judgment, versatility, health, and the like. Assessment should

not be confined to past performance alone. Potentials of the employee for future

performance must also be assessed.

A formal definition of performance appraisal is:

“It is the systematic evaluation of the individual with respect to his or her

performance on the job and his or her potential for development.”

A more comprehensive definition is:

“Performance appraisal is a formal, structured system of measuring and evaluating an

employee’s job related behaviors and outcomes to discover how and why the

employee is presently performing on the job and how the employee can perform more

effectively in the future so that the employee, organization, and society all benefit.”

“Performance appraisal is the process of obtaining, analyzing and recognition

information about the relative worth of an employee.”

Performance appraisal is also known as performance management, performance

evaluation and performance review.

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Traditional Performance Appraisal

The history of performance appraisal is quite brief. Its roots in the early 20th century

can be traced to Taylor's pioneering Time and Motion studies. But this is not very

helpful, for the same may be said about almost everything in the field of modern

human resources management. During the First World War, appraisals concept was

adopted by US army which was in the form of merit rating. It was man-to-man rating

system for evaluation of military personnel. From the army this concept entered the

business field and was restricted to hourly-paid workers. During 1920s, relational

wage structures for hourly- paid workers were adopted in industrial units and each

worker was used to be rated in comparison to other for determining wages rates. This

system was called merit rating.

The process was firmly linked to material outcomes. If an employee's performance

was found to be less than ideal, a cut in pay would follow. On the other hand, if their

performance was better than the supervisor expected, a pay rise was in order. Little

consideration, if any, was given to the developmental possibilities of appraisal. If was

felt that a cut in pay, or a rise, should provide the only required impetus for an

employee to either improve or continue to perform well. Sometimes this basic system

succeeded in getting the results that were intended; but more often than not, it failed.

For example, early motivational researchers were aware that different people with

roughly equal work abilities could be paid the same amount of money and yet have

quite different levels of motivation and performance.

These observations were confirmed in empirical studies. Pay rates were important,

yes; but they were not the only element that had an impact on employee performance.

It was found that other issues, such as morale and self-esteem, could also have a

major influence.

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As a result, the traditional emphasis on reward outcomes was progressively rejected.

In the 1950s in the United States, the potential usefulness of appraisal as tool for

motivation and development was gradually recognized. The general model of

performance appraisal, as it is known today, began from that time.

Modern Performance Appraisal

Performance appraisal may be defined as a structured formal interaction between a

subordinate and supervisor, that usually takes the form of a periodic interview (annual

or semi-annual), in which the work performance of the subordinate is examined and

discussed, with a view to identifying weaknesses and strengths as well as

opportunities for improvement and skills development.

In many organizations - but not all - appraisal results are used, either directly or

indirectly, to help determine reward outcomes. That is, the appraisal results are used

to identify the better performing employees who should get the majority of available

merit pay increases, bonuses, and promotion.

By the same token, appraisal results are used to identify the poorer performers who

may require some form of counseling, or in extreme cases, demotion, dismissal or

decreases in pay. (Organizations need to be aware of laws in their country that might

restrict their capacity to dismiss employees or decrease pay.)

Whether this is an appropriate use of performance appraisal - the assignment and

justification of rewards and penalties - is a very uncertain and contentious matter.

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A FRAMEWORK OF PERFORMANCE APPRAISAL

1. Develop clear job description.

2. Select an appropriate people with an appropriate selection process.

3. Provide effective orientation, education and training.

4. Provide ongoing coaching and feedback.

5. Conduct quarterly performance development discussion.

6. Design effective compensation system.

7. Provide promotion and career development opportunities.

Objective of Performance Appraisal

Salary Increase

Performance appraisal plays a role in making decision about salary increase.

Normally salary increase of an employee depends upon on how he is performing

his job. There is continuous evaluation of his performance either formally or

informally. This may disclose how well an employee is performing and how much

he should be compensated by way of salary increases.

Promotion

Performance appraisal plays significant role where promotion is based on merit

and seniority. Performance appraisal discloses how an employee is working in his

present job and what are his strong and weak points. In the light of these, it can be

decided whether he can be promoted to the next higher position.

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Training and Development

Performance appraisal tries to identify the strengths and weakness of an employee

on his present job. This information can be used for devising training and

development programmes appropriate for overcoming weaknesses of employees.

Feedback

Performance appraisal provides feedback to employees about their performance.

A person works better when he knows how he is working. This works in two

ways, firstly, the person gets feedback about his performance. Secondly, when the

person gets feedback about his performance, he can relate his work to the

organizational objectives.

Pressure on Employees

Performance appraisal puts a sort of pressure on employees for better

performance. If the employees are conscious that they are being appraised in

respect of certain factors and their future largely depends on such appraisal.

Communication

1. To provide feedback to employees so that they come to know where they

stand and can improve their job performance.

2. To clearly establish goals i.e. what is expected of the employee in terms

of performance and future work assignments.

3. To provide coaching, counseling, career planning and motivation to

employees.

4. To develop positive superior subordinate relations and thereby reduce

grievance.

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Career development objectives

1. To assess the strong and weak points in the working of the employees and finding

remedies for weak points through training.

2. To determine career potential.

3. To plan career goals.

Others

1) Identifying systemic factors that are barriers to, or facilitators of, effective

performance.

2) To confirm the services of probationary employees upon their completing

the Probationary period satisfactorily.

3) To improve communication. Performance appraisal provides a format for

dialogue between the superior and the subordinate, and improves

understanding of personal goals and concerns. This can also have the

effect of increasing the trust between the rater and the rate.

4) To determine whether HR programmers such as selection, training, and

transfer

have been effective or not.

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HOW TO CONDUCT A PERFORMANCE APPRAISAL PROCESS

The following five-step approach to conducting a systematic performance appraisal is

recommended:

1. Identify key performance criteria

2. Develop appraisal measures

3. Collect performance information from different sources

4. Conduct an appraisal interview

5. Evaluate the appraisal process.

STEP 1: IDENTIFY KEY PERFORMANCE CRITERIA

Perhaps one of the most challenging aspects of setting up a performance appraisal is

deciding what to assess. In essence, four key dimensions of performance should be

considered in a performance appraisal.

KEY DIMENSIONS OF PERFORMANCE

Competencies Knowledge, skills, and abilities relevant to performance

Behaviours Specific actions conducted and / or tasks performed

Results / outcomes Outputs, quantifiable results, measurable outcomes and

achievements, objectives attained

Organisational

citizenship behaviours

Actions that are over and above usual job responsibilities

To ensure that the performance criteria are relevant to work practice and acceptable to

appraisers and employees:

i) Base the performance criteria on an up-to-date job description

ii) Develop criteria in consultation with appraisers and employees.

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i) Base the performance criteria on an up-to-date job description:

Clear and explicit links between performance appraisal and a job description

will ensure the relevance of the appraisal. If a detailed job description is not

available or is out-of-date, it is strongly recommended that an accurate job

description be developed prior to conducting a performance appraisal.

ii) Develop criteria in consultation with appraisers and employee:

Linking performance appraisals with job descriptions can help to focus the

appraisal process on the key competencies, behaviours and outcomes associated

with a particular role or position. It can also be useful to consult with employees

to:

Ensure that key aspects of a role / position are represented in the job

description, for example:

Conduct assessments

Plan interventions

Manage cases

Liaise with and refer to other providers

Keep up-to-date service records and case notes

Write reports

Develop a clear understanding of the relative importance of various

competencies, Behaviours and outcomes

Identify how these key competencies, behaviours and outcomes can be

fairly and accurately assessed.

Employees are more likely to accept and be satisfied with the appraisal system if they

participate in the development of appraisal criteria and measures, and in the process of

conducting appraisals.

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Strategies for facilitating employee’s participation include:

Engagement in formal meetings or informal discussions with

supervisors to seek input and / or feedback on appraisal measures and

criteria

Representation on groups / committees involved in the design and

implementation of performance appraisals

Inclusion of self appraisals in the appraisal process

Providing opportunities for employees to contribute to the performance

appraisal of coworkers and managers / supervisors.

STEP 2: DEVELOP APPRAISAL MEASURES

Once clear and specific performance criteria have been developed, the next step is to

decide how to assess employee’s performance. It is recommended that a structured

and systematic approach is taken to assessing performance. Problems that arise when

an unstructured “blank sheet” approach is used include:

Increased chance of appraiser errors (i.e., reduced accuracy)

Knowledge, skills and abilities most critical to job performance may be

overlooked(i.e., feedback may have limited impact on performance

effectiveness)

Reduced consistency between appraisers (i.e., evaluations may reflect

differences between appraisers rather than actual differences in a

employee’s performance)

Perceptions of “subjectivity” in evaluations, which may in turn, reduce

employee’s satisfaction with, and acceptance of appraisals.

There are three important considerations in the design of appraisal measures:

i) Generic versus individually tailored measures

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ii) Objective versus subjective assessments

iii) Assessing the impact of the work environment on performance.

i) Generic versus individually tailored measures

Many workplaces use a generic rating form for all employees irrespective of their role

or position within the organisation. Although this approach can save time and

minimise cost, the accuracy and relevance of appraisals may be significantly

diminished. The “one size fits all” approach of generic measures may overlook

important performance criteria that are relevant to particular jobs, and may also

include criteria that are irrelevant to others.

Where time and other resources permit, it is more appropriate to construct appraisal

formats tailored to specific jobs or “families” of jobs. If the development of job-

specific (i.e., individually tailored) appraisal formats is beyond the resource capacity

of the organisation, an alternative would be to develop two groups of criteria:

1) Core competencies that have applicability to the performance appraisal of all

employees

within the organisation

1) Additional competencies applicable only to some jobs and included in the

performance

appraisal if relevant.

ii) Objective versus subjective assessments

A basic distinction between different types of appraisal measures concerns the

use of objective or subjective criteria.

Objective assessments of work performance

Objective measures of job performance involve counts of various

work-related

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behaviours. Some common objective job performance measures

include

Absenteeism (number of days absent)

Accidents (number of accidents)

Incidents at work (number of incidents / assaults / altercations)

Lateness (days late)

Meeting deadlines.

Objective measures can be relatively quick and easy to obtain (given good

organisational record-keeping). However, it can be unwise to place too much

emphasis on these types of objective measures. An exclusive focus on results /

outcomes may mask factors that impact on employee’s performance that are

beyond their control (e.g., client workload).

Subjective assessments of work performance

Subjective measures rely on the judgment of an appraiser (self, coworkers, or

supervisor). Subjective assessments are commonly used in performance appraisals

and often involve the use of rating scales. Subjective assessments are more likely

to provide accurate performance appraisals when:

The behaviours and outcomes being assessed are stated in clear behavioural

terms

The employee understands the measures (e.g., rating scales) being used to

evaluate their performance, and agree that the measures are fair and accurate

(i.e., measures what it is supposed to)

Measurement is as brief as possible whilst addressing essential behaviours and

outcomes (frustration with long and unwieldy questionnaires may introduce

error in responses).

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iii) Assessing the impact of the work environment on performance

The goal of a performance appraisal is to support and improve employee’s

performance and effectiveness. Therefore, it makes sense for an appraisal to

include an assessment of factors in the work environment that help or hinder a

employee’s capacity to perform effectively. Explicit assessment of

environmental factors is also likely to increase the perceived fairness and

acceptability of performance appraisals.

For example, an employee’s capacity to provide effective treatment

interventions is influenced by factors such as:

Access to private, soundproofed, adequately sized rooms for

counselling

Availability of validated, user-friendly assessment tools

Availability of reliable and approachable management / administration.

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STEP 3: COLLECT PERFORMANCE INFORMATION FROM DIFFERENT SOURCES

Once the appraisal measures are developed, the next step involves collection of

accurate performance information. A common trap is to begin noting observations of

employees just before conducting appraisals. This is likely to give an inaccurate

picture of a employee’s performance. Ideally, employee’s performance should be

observed in a systematic way over time (e.g., in a diary). This method ensures the

accuracy of information about their performances.

Many employees in the organization operate with a relatively high degree of

autonomy. This combined with the heavy workload of most managers / supervisors,

may limit opportunities to conduct regular observation of employee’s performance. In

addition, perceptions of ongoing monitoring may foster a sense of surveillance which

can damage staff morale. A more suitable approach may be to keep critical incident

reports that note specific examples of both excellent and unsatisfactory performances.

Supervisors can also encourage employees to keep track of their own performance

records such as emails or letters that commend them on their achievements.

Traditionally, it has been the sole responsibility of managers / supervisors to assess

performance. However, other organisational members can be a valuable source of

information as they are likely to have exposure to different aspects of a employee’s

performance. This approach is known as 360-degree feedback. For instance,

coworkers can provide valuable information on teamwork skills, and subordinates can

provide useful information on leadership style.

There are many advantages to obtaining feedback on performance from sources other

than supervisors or managers. Key benefits include:

Accuracy and reduced bias (incorrect information from one source can

be corrected from another)

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Increased likelihood that employees will perceive the performance

appraisal system to be a fair and accurate reflection of their

performance (compared to relying on supervisor ratings alone).

If time and resources are limited, it is recommended that supervisor appraisals be

conducted in conjunction with self-assessment. Including self-assessments as part of

the appraisal process is likely to enhance employee’s commitment to, and satisfaction

with, the appraisal process. It also provides employees with an opportunity to identify

barriers and facilitators to effective performance in their work environment.

Five different sources of performance appraisal information are considered here:

i) Manager / supervisor appraisals

ii) Self appraisals

iii) Coworker appraisals

iv) Subordinate appraisals

v) Client appraisals.

i) Manager / supervisor appraisals:

Managers / supervisors play a central role in the appraisal process, and should

always be included as one of the main appraisers. In essence, managers and

supervisors have two roles in performance appraisal:

1. “Judge”: assessing performance

2. “Coach”: providing constructive feedback and identifying areas for

improvement.

Performing both roles simultaneously can be difficult. Employees may be

reluctant to admit areas for improvement if performance assessment is linked

with desired outcomes such as pay, promotion or opportunities to work in

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desired areas. One solution is to separate the judge and coach roles by

conducting separate appraisal meetings.

ii) Self-appraisals:

The process of evaluating one’s own performance can help to increase

employee’s commitment to the appraisal process, perceptions of appraisal

fairness, and satisfaction with the appraisal process. Self-appraisal can also be

useful for identifying areas for development. Not surprisingly, self-appraisals

are usually biased towards leniency. Strategies to increase the accuracy of self

appraisals include:

a) Using clear definitions of performance criteria linked to specific,

observable behaviours

b) Informing employees that their ratings will be checked and compared

to other sources of appraisal (i.e., for accuracy)

c) Ensuring employees receive regular feedback on their performance.

It is recommended that self appraisals are used for professional development

purposes, rather than for making administrative decisions (i.e., pay increases,

promotion).

iii) Coworker appraisals:

Coworkers can provide valuable feedback on performance, particularly where

teamwork occurs. Coworkers are often aware of different aspects of a

employee’s performance that managers /supervisors may not have the

opportunity to observe. In addition, as there is usually more than one coworker

who rates a worker’s performance, their evaluations tend to be more reliable.

Coworker evaluations, however, may be biased towards those individuals most

well liked in an organisation (i.e., friendship bias). Furthermore, coworker

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appraisals may have a negative impact on teamwork and cooperation if

employees are competing with one another for organizational incentives and

rewards. It is recommended that coworker appraisals are used for professional

development rather than administrative decisions.

iv) Subordinate appraisals:

Subordinates are a valuable source of information regarding particular aspects

of a supervisor or leader’s performance such as communication, team building

or delegation. Subordinates can provide feedback to help managers / supervisors

develop their skills in these areas. The focus should be on aspects of managerial

performance that subordinates are able to comment upon. This source of

appraisal may only be appropriate in larger organisations where there are

sufficient subordinates to allow anonymity.

v) Client appraisals:

Clients may also offer a different perspective on a employee’s performance,

particularly for jobs that require a high degree of interaction with people. For

example, client appraisals can be a valuable source of feedback regarding the

quality of service provision (e.g., the quality of interaction, degree of empathy,

level of support, degree of professionalism).

Organisations often have performance contracts that specify goals and deliverables

for client outcomes. Whilst it is important that organisational goals and deliverables

are reflected in the appraisal criteria for individuals and teams, it is recommended that

particular care be taken if incorporating client outcomes.

Relying on client outcomes as an indicator of performance can have undesirable

effects due to the complex and sensitive nature of work. A range of factors may

influence client outcomes, many of which are outside the control of an individual

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employee. It is rare for a successful (or otherwise) outcome to be the sole result of

one person’s efforts. This makes client outcomes a poor reflection of the quality of

treatment provided by the employee. For example, “good” employee performance

will not always bring about client improvements, and client relapses may not be due

to “poor” employee performance.

In addition to considering client outcomes, it may also be beneficial to focus on

employee’s skills and abilities in providing services per se (i.e., independent of client

outcomes).

Strategies to support appraisers and enhance appraisal accuracy

Rating another person’s performance is not an easy task, particularly with complex

jobs or performance criteria. Strategies to support appraisers and increase the

likelihood of accurate assessments include:

Providing practical training in rating techniques, which includes

opportunities to practice appraising performance and providing

feedback

Limiting the assessment to performance criteria that an appraiser has

observed /experienced in regard to the employee

Providing structured assessment tools with clear explanations

regarding the criteria to be assessed, and performance standard.

STEP 4: CONDUCT AN APPRAISAL INTERVIEW

The next step in a performance appraisal is to conduct the appraisal interview. The

two central purposes of the appraisal interview are to:

Reflect on past performance to identify major achievements, areas that

require further development, and barriers / facilitators to effective

performance

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Identify goals and strategies for future work practice.

As discussed below, supervisors and managers can use a range of strategies to ensure

that the appraisal interview is positive, constructive and of greatest benefit for

employee’s effectiveness.

Before the interview

Help employees to become familiar and comfortable with talking about

their performance by engaging in regular, informal communication on

work progress, potential obstacles and issues, possible solutions and

assistance

Encourage employees to prepare – employees should be encouraged to

review their own performance before the interview

Do your own preparation – plan ahead. Draft a list of the issues that

you want to address with the employee (i.e., strengths and weaknesses

of performance, strategies to improve performance). Give specific

examples of the employee’s performances that you want to highlight.

During the interview

Encourage employee participation – start by inviting the employee to

share their views about their performance

Begin with positive feedback to put the employee at ease

Make it a two-way discussion

Set goals mutually – ensure employees participate in determining

specific, challenging but attainable goals for future work performance

Ensure that there is a clear agreement on performance objectives and

the evaluation criteria for the next year

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Keep written records of the appraisal interview on which both parties

have “signed off”.

After the interview

Coach employees regularly – provide frequent feedback to help

employees improve their performance

Assess progress towards goals frequently – periodic reviewing of

progress towards goals helps keep behaviour on track and enhances

commitment to effective performance.

Relate rewards to performance – by linking appraisal results to

employment decisions such as promotions and salaries, employees are

more likely to prepare for, participate in, and be satisfied with the

appraisal system.

STEP 5: EVALUATE THE APPRAISAL PROCESS

As with any organisational system, the performance appraisal process should undergo

regular review and improvement. For example, the process of performance appraisal

could be evaluated by conducting focus groups or surveys with employees to gauge

their satisfaction with the appraisal process (and suggestions for improvements). It

may also be useful to monitor the types of issues raised by supervisors and employees

over time. A successful performance appraisal process should demonstrate a change

in both the ratings of employee’s performance (i.e., ideally performance ratings

should improve, or at least remain at a satisfactorily stable level over time) and the

work environment (i.e., evidence that significant barriers to work practice are being

addressed by the organisation).

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METHODS OF PERFORMANCE APPRAISAL

A) Past-oriented methods

1) Rating Scales:

The rating scale method offers a high degree of structure for appraisals. Each

employee trait or characteristic is rated on a bipolar scale that usually has several

points ranging from “poor” to “excellent” (or some similar arrangement).

The traits assessed on these scales include employee attributes such as cooperation,

communications ability, initiative, punctuality and technical (work skills)

competence. The nature and scope of the traits selected for inclusion is limited only

by the imagination of the scale’s designer, or by the organization’s need to know. The

one major provision in selecting traits is that they should be in some way relevant to

the appraisee’s job.

  Advantages

The greatest advantage of rating scales is that they are structured and standardised.

This allows ratings to be easily compared and contrasted - even for entire workforces.

Each employee is subjected to the same basic appraisal process and rating criteria,

with the same range of responses. This encourages equality in treatment for all

appraisees and imposes standard measures of performance across all parts of the

organization.

Rating scale methods are easy to use and understand. The concept of the rating scale

makes obvious sense; both appraisers and appraisees have an intuitive appreciation

for the simple and efficient logic of the bipolar scale. The result is widespread

acceptance and popularity for this approach.

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 Disadvantages

Trait Relevance

Are the selected rating-scale traits clearly relevant to the jobs of all the appraisees? It

is inevitable that with a standardised and fixed system of appraisal that certain traits

will have a greater relevance in some jobs than in others.

For example, the trait “initiative” might not be very important in a job that is tightly

defined and rigidly structured. In such cases, a low appraisal rating for initiative may

not mean that an employee lacks initiative. Rather, it may reflect that fact that an

employee has few opportunities to use and display that particular trait. The relevance

of rating scales is therefore said to be context-sensitive. Job and workplace

circumstances must be taken into account.

Systemic Disadvantage

Rating scales, and the traits they purport to measure, generally attempt to encapsulate

all the relevant indicators of employee performance. There is an assumption that all

the true and best indicators of performance are included, and all false and irrelevant

indicators are excluded.

This is an assumption very difficult to prove in practice. It is possible that an

employee’s performance may depend on factors that have not been included in the

selected traits. Such employees may end up with ratings that do not truly or fairly

reflect their effort or value to the organization. Employees in this class are

systemically disadvantaged by the rating scale method.

Perceptual Errors

This includes various well-known problems of selective perception (such as the horns

and halos effect) as well as problems of perceived meaning.Selective perception is the

human tendency to make private and highly subjective assessments of what a person

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is “really like”, and then seek evidence to support that view (while ignoring or

downplaying evidence that might contradict it).

This is a common and normal psychological phenomenon. All human beings are

affected by it. In other words, we see in others what we want to see in them.

An example is the supervisor who believes that an employee is inherently good (halo

effect) and so ignores evidence that might suggest otherwise. Instead of correcting the

slackening employee, the supervisor covers for them and may even offer excuses for

their declining performance.

On the other hand, a supervisor may have formed the impression that an employee is

bad (horns effect). The supervisor becomes unreasonably harsh in their assessment of

the employee, and always ready to criticize and undermine them.

The horns and halo effect is rarely seen in its extreme and obvious forms. But in its

more subtle manifestations, it can be a significant threat to the effectiveness and

credibility of performance appraisal.

Perceived Meaning

Problems of perceived meaning occur when appraisers do not share the same opinion

about the meaning of the selected traits and the language used on the rating scales.

For example, to one appraiser, an employee may demonstrate the trait of initiative by

reporting work problems to a supervisor. To another appraiser, this might suggest an

excessive dependence on supervisory assistance - and thus a lack of initiative.As well,

the language and terms used to construct a scale - such as “Performance exceeds

expectations” or “Below average skill” - may mean different things to different

appraisers.

29

Rating Errors

The problem here is not so much errors in perception as errors in appraiser judgement

and motive. Unlike perceptual errors, these errors may be (at times) deliberate. The

most common rating error is central tendency.

Busy appraisers, or those wary of confrontations and repercussions, may be tempted

to dole out too many passive, middle-of-the-road ratings (e.g., “satisfactory” or

“adequate”), regardless of the actual performance of a subordinate. Thus the spread of

ratings tends to clump excessively around the middle of the scale.

This problem is worsened in organizations where the appraisal process does not enjoy

strong management support, or where the appraisers do not feel confident with the

task of appraisal.

2) Check-list Method:

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. The rater concerned has to tick

appropriate answers relevant to the appraisees. When the check-list is completed, it is

sent to HR department for further processing. Various questions in the check list may

have either equal weightage or more weightage may be given to those questions which

are more important. The HR department then calculates the total scores which show the

appraisal result of an employee.

• Advantages – economy, ease of administration, limited training required,

standardization.

• Disadvantages – Rater’s biases, use of improper weights by HR Dept, does not

allow rater to give relative ratings.

30

3. Force Choice Method:

A 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 not be correctly framed.

4. Force Distribution Method:

One of the problems faced in large organizations is relative assessment tendencies of

raters. Some are too lenient and others too severe. This method overcomes that

problem. It forces every one to do a comparative rating of all the employees on a

predetermined distribution pattern of good to bad. Say 10% employees in Excellent

Grade, 20% in Good Grade, 40% in Average Grade, 20% in Below Average Grade

and 10% in Unsatisfied grade. The real problem of this method occurs in

organizations where there is a tendency to pack certain key departments with all good

employees and some other departments with discards and laggards. Relatively good

employees of key departments get poor rating and relatively poor employees of

laggards’ departments get good rating.

5. Critical Incident Method:

In this method, only critical incidents and behavior associated with these incidents are

taken for evaluation. This method involves three steps. A test of noteworthy on the

job behavior is prepared. A group of experts then assigns scale values to them

depending on the degree of desirability for the job. Finally, a checklist of incidents

which define good and bad employees is prepared.

• Advantages ---This method is very useful for discovering potential of employees

who can be useful in critical situation.

31

• Disadvantages --- a) Negative incidents are, generally, more noticeable than

positive ones.

b) The recording of incidents is a core to the superior and may

be put off and easily forgotten.

c) Overly close supervision may result.

6. Essay Method:

In the essay method approach, the appraiser prepares a written statement about the

employee being appraised. The statement usually concentrates on describing specific

strengths and weaknesses in job performance. It also suggests courses of action to

remedy the identified problem areas. The statement may be written and edited by the

appraiser alone, or it be composed in collaboration with the appraisee.

  Advantages 

The essay method is far less structured and confining than the rating scale method. It

permits the appraiser to examine almost any relevant issue or attribute of

performance. This contrasts sharply with methods where the appraisal criteria are

rigidly defined.

Appraisers may place whatever degree of emphasis on issues or attributes that they

feel appropriate. Thus the process is open-ended and very flexible. The appraiser is

not locked into an appraisal system the limits expression or assumes that employee

traits can be neatly dissected and scaled.

Disadvantages 

Essay methods are time-consuming and difficult to administer. Appraisers often find

the essay technique more demanding than methods such as rating scales.

32

The techniques greatest advantage - freedom of expression - is also its greatest

handicap. The varying writing skills of appraisers can upset and distort the whole

process. The process is subjective and, in consequence, it is difficult to compare and

contrast the results of individuals or to draw any broad conclusions about

organizational needs.

7) Grading:

In this method, certain categories of abilities of performance are defined well in

advance and person are put in particular category depending on their traits and

characteristics. Such categories may be definitional like outstanding, good, average,

poor, very poor or may be in terms of letter like A, B, C, D etc with A indicating the

best and D indicating the worst. This method, however, suffers from one basic

limitation that the rater may rate most of the employees at higher grades.

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 only measure potential and not attitude. Actual performance is

more a function of attitude of person than potential.

• Disadvantages – Some times costs of test development or administration are high.

9) Confidential Reports:

Though popular with government departments, its application in industry is not ruled

out. Here the report is given in the form of Annual Confidentiality Report (ACR). The

system is highly secretive and confidential. Feedback to the assessee is given only in

case of an adverse entry. Disadvantage is that it is highly prone to biases and recency

effect and ratings can be manipulated because the evaluations are linked to future

rewards like promotions, good postings, etc.

33

10) 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 Method:

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.

Paired Comparison Method:

In this method each employee is paired with every other employee in the same cadre and

then comparative rating done in pairs so formed.

The number of comparisons may be calculated with the help of a formula – N x (N-1) / 2.

The method is too tedious for large departments and often such exact details are not

available with rater.

B) Future-Oriented Methods

1) MBO (management by objective) :

The use of management objectives was first widely advocated in the 1950s by the

noted management theorist Peter Drucker. MBO (management by objectives)

methods of performance appraisal are results-oriented. That is, they seek to measure

employee performance by examining the extent to which predetermined work

objectives have been met. Usually the objectives are established jointly by the

supervisor and subordinate.

Once an objective is agreed, the employee is usually expected to self-audit; that is, to

identify the skills needed to achieve the objective. Typically they do not rely on others

to locate and specify their strengths and weaknesses. They are expected to monitor

their own development and progress.

34

Advantages

The MBO approach overcomes some of the problems that arise as a result of

assuming that the employee traits needed for job success can be reliably identified and

measured. Instead of assuming traits, the MBO method concentrates on actual

outcomes. If the employee meets or exceeds the set objectives, then he or she has

demonstrated an acceptable level of job performance. Employees are judged

according to real outcomes, and not on their potential for success, or on someone’s

subjective opinion of their abilities.

The guiding principle of the MBO approach is that direct results can be observed,

whereas the traits and attributes of employees (which may or may not contribute to

performance) must be guessed at or inferred. The MBO method recognizes the fact

that it is difficult to neatly dissect all the complex and varied elements that go to make

up employee performance. MBO advocates claim that the performance of employees

cannot be broken up into so many constituent parts - as one might take apart an engine

to study it. But put all the parts together and the performance may be directly

observed and measured.

 Disadvantages

MBO methods of performance appraisal can give employees a satisfying sense of

autonomy and achievement. But on the downside, they can lead to unrealistic

expectations about what can and cannot be reasonably accomplished. Supervisors and

subordinates must have very good “reality checking” skills to use MBO appraisal

methods. They will need these skills during the initial stage of objective setting, and

for the purposes of self-auditing and self-monitoring. Unfortunately, research studies

have shown repeatedly that human beings tend to lack the skills needed to do their

own “reality checking”. Nor are these skills easily conveyed by training.

35

Reality itself is an intensely personal experience, prone to all forms of perceptual bias.

One of the strengths of the MBO method is the clarity of purpose that flows from a set

of well-articulated objectives. But this can be a source of weakness also. It has

become very apparent that the modern organization must be flexible to survive.

Objectives, by their very nature, tend to impose a certain rigidity. Of course, the

obvious answer is to make the objectives more fluid and yielding. But the penalty for

fluidity is loss of clarity. Variable objectives may cause employee confusion. It is also

possible that fluid objectives may be distorted to disguise or justify failures in

performance.

2) Assessment Center Method:

This technique was first developed in USA and UK in 1943. An assessment centre 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

behaviours across a series of select exercises or work samples. Assesses 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.

• Advantages – Well-conducted assessment centre 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 Centres. The

tests also make sure that the wrong people are not hired or promoted. Finally, it

clearly defines the criteria for selection and promotion.

• Disadvantages – Concentrates on future performance potential. No assessment of

past performance. Costs of employees travelling and lodging, psychologists. Ratings

36

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

suffocated in simulated situations.

3) 360o Appraisal:

It is a technique in which performance data/feedback/rating is collected from all

sections of people employee interacts in the course of his job like immediate

supervisors, team members, customers, peers, subordinates and self with different

weightage to each group of raters. This technique has been found to be extremely

useful and effective. It is especially useful to measure inter-personal skills, customer

satisfaction and team building skills.

One of the biggest advantages of this system is that assesssees cannot afford to

neglect any constituency and has to show all-round performance. However, on the

negative side, receiving feedback from multiple sources can be intimidating,

threatening, expensive and time consuming.

4) 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.

37

CHAPTER-2

COMPANY PROFILE

38

COMPANY PROFILE

Maruti Udyog Limited (MUL) was established in February 1981, though the actual

production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car

which at the time was the only modern car available in India, its only competitors- the

Hindustan Ambassador and Premier Padmini were both around 25 years out of date at

that point. Through 2004, Maruti Suzuki has produced over 5 Million vehicles. Maruti

Suzukis are sold in India and various several other countries, depending upon export

orders. Models similar to Maruti Suzukis (but not manufactured by Maruti Udyog) are

sold by Suzuki Motor Corporation and manufactured in Pakistan and other South

Asian countries.[citation needed]

The company exports more than 50,000 cars annually and has an extremely large

domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004,

was the India's largest selling compact car ever since it was launched in 1983. More

than a million units of this car have been sold worldwide so far. Currently, Maruti

Suzuki Alto tops the sales charts but Maruti Suzuki's Swift has taken over this titles

by 19000 models in April 2012.The company imports diesel engines for all maruti

Suzuki cars from the fiat motors the great Italian company.The German car company

Volkswagen has a 19.9% non-controlling shareholding in Suzuki Motor Corporation.

[citation needed]

Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti"

is commonly used to refer to this compact car model. Its manufacturing facilities are

located at two facilities Gurgaon and Manesar south of Delhi. Maruti Suzuki’s

Gurgaon facility has an installed capacity of 900,000 units per annum. The Manesar

facilities, launched in February 2007 comprise a vehicle assembly plant with a

capacity of 550,000 units per year and a Diesel Engine plant with an annual capacity

39

of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a

combined capability to produce over 14,50,000 units annually. More than half the cars

sold in India are Maruti Suzuki cars. The company is a subsidiary of Suzuki Motor

Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned by

public and financial institutions. It is listed on the Bombay Stock Exchange and

National Stock Exchange of India.[citation needed]

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In

all, over six million Maruti Suzuki cars are on Indian roads since the first car was

rolled out on 14 December 1983. Maruti Suzuki offers 15 models, Maruti 800, Alto,

Maruti Alto 800, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Eeco,

Gypsy, Grand Vitara, Kizashi and the newly launched Ertiga. Swift, Swift DZire, A-

star and SX4 are manufactured in Manesar, Grand Vitara and Kizashi are imported

from Japan as completely built units(CBU), remaining all models are manufactured in

Maruti Suzuki's Gurgaon Plant.[citation needed] The company is believed to be

moving towards introduction of a new version of Maruti 800 by November 2012,

which will be more fuel efficient, though slightly costlier than Alto and existing

Maruti 80 Suzuki Motor Corporation, the parent company, is a global leader in mini

and compact cars for three decades. Suzuki’s technical superiority lies in its ability to

pack power and performance into a compact, lightweight engine that is clean and fuel

efficient. Nearly 75,000 people are employed directly by Maruti Suzuki and its

partners. It has been rated first in customer satisfaction among all car makers in India

from 1999 to 2009 by J D Power Asia Pacific. Maruti Suzuki will be introducing new

800cc model by Diwali in 2012.The model is supposed to be fuel efficient.

40

JOINT VENTURE RELATED ISSUES

Relationship between the Government of India, under the United Front (India)

coalition and Suzuki Motor Corporation over the joint venture was a point of heated

debate in the Indian media till Suzuki Motor Corporation gained the controlling stake.

This highly profitable joint venture that had a near monopolistic trade in the Indian

automobile market and the nature of the partnership built up till then was the

underlying reason for most issues. The success of the joint venture led Suzuki to

increase its equity from 26% to 40% in 1987, and further to 50% in 1992. In 1982

both the venture partners had entered into an agreement to nominate their candidate

for the post of Managing Director and every Managing Director will have a tenure of

five years.

R.C. Bhargava was the initial managing director of the company since the inception

of the joint venture. Till today he is regarded as instrumental for the success of Maruti

Suzuki. Joining in 1982 he held several key positions in the company before heading

the company as Managing Director. Currently he is on the Board of Directors. After

completing his five-year tenure, Mr. Bhargava later assumed the office of Part-Time

Chairman. The Government nominated Mr. S.S.L.N. Bhaskarudu as the Managing

Director on 27 August 1997. Mr. Bhaskarudu had joined Maruti Suzuki in 1983 after

spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited

as General Manager. In 1987 he was promoted as Chief General Manager. In 1988 he

was named Director, Productions and Projects. The next year (1989) he was named

Director of Materials[clarification needed] and in 1993 he became Joint Managing

Director.

Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board

with the reason of it being called on a short notice. Later Suzuki Motor Corporation

41

went on record to state that Bhaskarudu was "incompetent" and wanted someone else.

However, the Ministry of Industries, Government of India refuted the charges. Media

stated from the Maruti Suzuki sources that Bhaskarudu was interested to indigenise

most of components for the models including gear boxes especially for Maruti 800.

Suzuki also felt that Bhaskarudu was a proxy for the Government and would not let it

increase its stake in the venture.[15] If Maruti Suzuki would have been able to

indigenise gear boxes then Maruti Suzuki would have been able to manufacture all the

models without the technical assistance from Suzuki. Till today the issue of

localization of gear boxes is highlighted in the press.

INDUSTRIAL RELATIONS

Since its founding in 1983, Maruti Udyog Limited experienced few problems with its

labour force. The Indian labour it hired readily accepted Japanese work culture and

the modern manufacturing process. In 1997, there was a change in ownership, and

Maruti became predominantly government controlled. Shortly thereafter, conflict

between the United Front Government and Suzuki started. Labour unrest started under

management of Indian central government. In 2000, a major industrial relations issue

began and employees of Maruti went on an indefinite strike, demanding among other

things, major revisions to their wages, incentives and pensions.

Employees used slowdown in October 2000, to press a revision to their incentive-

linked pay. In parallel, after elections and a new central government led by NDA

alliance, India pursued a disinvestments policy. Along with many other government

owned companies, the new administration proposed to sell part of its stake in Maruti

Suzuki in a public offering.

42

The worker's union opposed this sell-off plan on the grounds that the company will

lose a major business advantage of being subsidised by the Government, and the

union has better protection while the company remains in control of the government.

The standoff between the union and the management continued through 2001. The

management refused union demands citing increased competition and lower margins.

The central government prevailed and privatized Maruti in 2002. Suzuki became the

majority owner of Maruti Udyog Limited.

MANESAR VIOLENCE JULY 2012

On 18 July 2012, Maruti's Manesar plant was hit by violence as workers at one of its

auto factories attacked supervisors and started a fire that killed a company official and

injured 100 managers, including two Japanese expatriates. The violent mob also

injured nine policemen. The company's General Manager of Human Resources had

both arms and legs broken by his attackers, unable to leave the building that was set

ablaze, and was charred to death. The incident is the worst-ever for Suzuki since the

company began operations in India in 1983.

Since April 2012, the Manesar union had demanded a three-fold increase in basic

salary, a monthly conveyance allowance of 10,000, a laundry allowance of 3,000, a

gift with every new car launch, and a house for every worker who wants one or

cheaper home loans for those who want to build their own houses.

Initial reports claimed wage dispute and a union spokesman alleged the incident may

be caste-related. According to the Maruti Suzuki Workers Union a supervisor had

abused and made discriminatory comments to a low-caste worker.These claims were

denied by the company and the police. The supervisor alleged was found to belong to

a tribal heritage and outside of Hindu caste system; further, the numerous workers

involved in violence were not affiliated with caste either. Maruti said the unrest

43

began, not over wage discussions, but after the workers' union demanded the

reinstatement of a worker who had been suspended for beating a supervisor.

The workers claim harsh working conditions and extensive hiring of low-paid

contract workers which are paid about $126 a month, about half the minimum wage

of permanent employees. Maruti employees currently earn allowances in addition to

their base wage. Company executives denied harsh conditions and claim they hired

entry-level workers on contracts and made them permanent as they gained experience.

It was also claimed that bouncers were deployed by the company.

India Today claimed that its interviews of witnesses present at the plant confirm the

dispute was over the suspended worker. The management insisted that they must wait

for completion of inquiry underway before they can take any action on the employee

suspended for beating up his supervisor. The management was then told, "You will be

beaten up after we get a signal." Thereafter, the workers broke up into groups, went

on to set the shop floor as well as all offices afire.

They searched for management officials and proceeded with a barbaric beating of the

officials at the site with iron rods.

The police, in its First Information Report (FIR), claimed on 21 July that Manesar

violence may be the result of a planned violence by a section of workers and union

leaders. The report claimed the worker's action was recorded on close circuit cameras

installed within the company premises. The workers took several managers and high

ranked management officials hostage.

The responsible Special Investigative Team official claimed, "some union leaders

may be aware of the facts, so they burnt down the main servers and more than 700

computers." The recorded CCTV footage has been used to determine the sequence of

44

events and people involved. Per the FIR, police have arrested 91 people and are

searching for 55 additional accused.

Maruti Suzuki in its statement on the unrest, announced that all work at the Manesar

plant has been suspended indefinitely. A Suzuki spokesman said Manesar violence

won't affect the auto maker's business plans for India.

The shut down of Manesar plant is leading to a loss of about Rs 75 crore per day. On

July 21, 2012, citing safety concerns, the company announced a lockout under The

Industrial Disputes Act, 1947 pending results of an inquiry the company has requested

of the Haryana government into the causes of the disorder.

Under the provisions of The Industrial Disputes Act for wages, the report claimed,

employees are expected to be paid for the duration of the lockout On July 26, 2012,

Maruti announced employees would not be paid for the period of lock-out in

accordance with Indian labour laws. The company further announced that it will stop

using contract workers by March 2013.

The report claimed the salary difference between contract workers and permanent

workers has been much smaller than initial media reports - the contract worker at

Maruti received about 11,500 per month, while a permanent worker received about

12,500 a month at start, which increased in three years to 21,000-22,000 per month.

In a separate report, a contractor who was providing contract employees to Maruti

claimed the company gave its contract employees the best wage, allowances and

benefits package in the region.

Shinzo Nakanishi, managing director and chief executive of Maruti Suzuki India, said

this kind of violence has never happened in Suzuki Motor Corp's entire global

operations spread across Hungary, Indonesia, Spain, Pakistan, Thailand, Malaysia,

China and the Philippines.

45

Mr. Nakanishi went to each victim apologising for the miseries inflicted on them by

fellow workers, and in press interview requested the central and Haryana state

governments to help stop such ghastly violence by legislating decisive rules to restore

corporate confidence amid emergence of this new 'militant workforce' in Indian

factories. He announced, "we are going to de-recognise Maruti Suzuki Workers’

Union and dismiss all workers named in connection with the incident.

We will not compromise at all in such instances of barbaric, unprovoked violence."

He also announced Maruti plans to continue manufacturing in Manesar, that Gujarat

was an expansion opportunity and not an alternative to Manesar.

Labour disputes are endemic in the auto industry of India and have affected other

manufacturers. India has strict labour laws, but their application is widely sidestepped

by hiring low-wage contract workers. Manesar violence adds to India's recent

incidents of labour disputes turning to violence.

Analysts claim recent incidents like Manesar violence suggest a need for urgent

reform of archaic Indian labour laws, the rigid rules on hiring and layoffs, which harm

the formal sector and discourage investment in India.

Government mandated procedures for labour dispute resolution are currently very

slow, with tens of thousands of cases pending for years. The government of India is

being asked to recognise that incidents such as Manesar violence indicate a structural

sickness which must be solved nationally.

The company dismissed 500 workers accused of causing the violence and re-opened

the plant on August 21, saying it would produce 150 vehicles on the first day, less

than 10% of its capacity. Analysts said that the shutdown was costing the company 1

billion rupees ($18 million) a day and costing the company market share.

46

The previous week company officials had announced that Maruti would scrap the

practice of hiring contract workers and that the workers currently on temporary

contracts would be made permanent. It would begin the process of hiring new workers

on a permanent basis.

MARUTI PRODUCTS

1. 800 (Launched 1983)

2. Omni (Launched 1984)

3. Gypsy (launched 1985)

4. WagonR (Launched 1999)

5. Alto (Launched 2000)

6. Swift (Launched 2005)

7. Estilo (Launched 2007)

8. SX4 (Launched 2007)

9. Swift DZire (Launched 2008)

10.A-star (Launched 2008)

11.Ritz (Launched 2009)

12.Eeco (Launched 2010)

13.Alto K10 (Launched 2010)

14.Maruti Ertiga(Launched 2012), seven seater MPV R3 designed and developed

in India, will compete with Toyota Innova, Mahindra Xylo, and Tata Sumo

Grande. In early 2012, Suzuki Ertiga will be exported first to Indonesia in

Completely Knock Down car.

15.Maruti XA Alpha based compact SUV to compete with the Ford EcoSport &

Renault Duster will be launched in the year 2014

47

16.Maruti Alto 800(Launched 2012), Maruti Alto 800 is finally out with a price

tag of Rs.2.44 lakh (ex-showroom New Delhi). Maruti has rolled out three

standard variants-Alto 800 Base, Alto 800 LX and Alto 800 LXi and three

CNG variants -Alto 800 CNG Base,Alto 800 CNG LX and Alto 800 CNG

LXi. The 0.8 litre of petrol engine is very fuel efficient and pushes the car to

produce high class mileage of 17 to 22 km per litre. The 45.7BHP of peak

power produced by the engine is also successful on road by delivering top-

notch performance.

IMPORTED

1. Grand Vitara (Launched 2007)

2. Kizashi (Launched 2011)

DISCONTINUED CAR MODELS

1. 1000 (1990–2000)

2. Zen (1993–2006)

3. Esteem (1994–2008)

4. Baleno (1999–2007)

5. Versa (2001–2010)

6. Grand Vitara XL7 (2003–2007)

MANUFACTURING FACILITIES

Maruti Suzuki has two manufacturing facilities in India. Both manufacturing facilities

have a combined production capacity of 14,50,000 vehicles annually. During a recent

meeting of the Gujarat chief minister with Suzuki Motor Corp chairman & CEO

Osamu Suzuki,the Chairman had said that the work on car manufacturing plant at

Mandal near Ahmedabad would be started soon. Maruti Suzuki to set up second plant

in Gujarat; acquires 600 acres

48

GURGAON MANUFACTURING FACILITY

The Gurgaon Manufacturing Facility has three fully integrated manufacturing plants

and is spread over 300 acres (1.2 km2). All three plants have an installed capacity of

350,000 vehicles annually but productivity improvements have enabled it to

manufacture 900,000 vehicles annually.

The Gurgaon facilities also manufacture 240,000 K-Series engines annually. The

entire facility is equipped with more than 150 robots, out of which 71 have been

developed in-house. The Gurgaon Facilities manufactures

the 800, Alto, WagonR, Estilo, Omni, Gypsy, Ertiga and Eeco.

MANESAR MANUFACTURING FACILITY

The Manesar Manufacturing Plant was inaugurated in February 2007 and is spread

over 600 acres (2.4 km2). Initially it had a production capacity of 100,000 vehicles

annually but this was increased to 300,000 vehicles annually in October 2008. The

production capacity was further increased by 250,000 vehicles taking total production

capacity to 550,000 vehicles annually. The Manesar Plant produces the A-

star, Swift, Swift DZire, SX4 and Ritz.

GOVERNMENT NOTICE TO PAY RS 235 CRORE FOR MANESAR PLANT

LAND ALLOTMENT

On June 25, 2012, Haryana State Industries and Infrastructure Development

Corporation demanded Maruti Suzuki to pay an additional Rs 235 crore for enhanced

land acquisition for its Haryana plant expansion. The agency reminded Maruti that

failure to pay the amount would lead to further proceedings and vacating the

enhanced land acquisition.

SALES AND SERVICE NETWORK

49

As of 31 March 2011 Maruti Suzuki has 933 dealerships across 666 towns and cities

in all states and union territories of India. It has 2,946 service stations (inclusive of

dealer workshops and Maruti Authorised Service Stations) in 1,395 towns and cities

throughout India.[ It has 30 Express Service Stations on 30 National Highways across

1,314 cities in India.

Service is a major revenue generator of the company. Most of the service stations are

managed on franchise basis, where Maruti Suzuki trains the local staff. Other

automobile companies have not been able to match this benchmark set by Maruti

Suzuki. The Express Service stations help many stranded vehicles on the highways by

sending across their repair man to the vehicle.

MARUTI INSURANCE

Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the

help of the National Insurance Company, Bajaj Allianz, New India Assurance and

Royal Sundaram. The service was set up the company with the inception of two

subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and Maruti Insurance

Brokers Pvt. Limited

This service started as a benefit or value addition to customers and was able to ramp

up easily. By December 2005 they were able to sell more than two million insurance

policies since its inception.

MARUTI FINANCE

To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in

January 2002. Prior to the start of this service Maruti Suzuki had started two joint

ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE

Countrywide respectively to assist its client in securing loan. Maruti Suzuki tied up

with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard

50

Chartered Bank, and Sundaram to start this venture including its strategic partners in

car finance.

Again the company entered into a strategic partnership with SBI in March 2003 Since

March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-

Maruti Finance is currently available in 166 cities across India.

"Maruti Finance marks the coming together of the biggest players in the car finance

business. They are the benchmarks in quality and efficiency. Combined with Maruti

volumes and networked dealerships, this will enable Maruti Finance to offer superior

service and competitive rates in the marketplace". — Jagdish Khattar, Managing

director of Maruti Udyog Limited in a press conference announcing the launch of

Maruti Finance on 7 January 2002

Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance India and

Maruti Udyog Limited its primary business stated by the company is "hire-purchase

financing of Maruti Suzuki vehicles". Citi Finance India Limited is a wholly owned

subsidiary of Citibank Overseas Investment Corporation, Delaware, which in turn is a

100% wholly owned subsidiary of Citibank N.A. Citi Finance India Limited holds

74% of the stake and Maruti Suzuki holds the remaining 26%. GE Capital, HDFC and

Maruti Suzuki came together in 1995 to form Maruti Countrywide. Maruti claims that

its finance program offers most competitive interest rates to its customers, which are

lower by 0.25% to 0.5% from the market rates.

MARUTI TRUEVALUE

Maruti True service offered by Maruti Suzuki to its customers. It is a market place for

used Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti Suzuki

vehicles with the help of this service in India. As of 31 March 2010 there are

341 Maruti True Value outlets.]

51

N2N FLEET MANAGEMENT

N2N is the short form of End to End Fleet Management and provides lease and fleet

management solution to corporates. Clients who have signed up of this service

include Gas Authority of India Ltd, DuPont, Reckitt Benckiser, Sona

Steering, Doordarshan, Singer India, National Stock Exchange and Transworld. This

fleet management service include end-to-end solutions across the vehicle's life, which

includes Leasing, Maintenance, Convenience services and Remarketing.

ACCESSORIES

Many of the auto component companies other than Maruti Suzuki started to offer

components and accessories that were compatible. This caused a serious threat and

loss of revenue to Maruti Suzuki. Maruti Suzuki started a new initiative under the

brand name Maruti Genuine Accessories to offer accessories like alloy wheels, body

cover, carpets, door visors, fog lamps, stereo systems, seat covers and other car care

products. These products are sold through dealer outlets and authorized service

stations throughout India.[

MARUTI DRIVING SCHOOL

As part of its corporate social responsibility Maruti Suzuki launched the Maruti

Driving School in Delhi. Later the services were extended to other cities of India as

well. These schools are modelled on international standards, where learners go

through classroom and practical sessions. Many international practices like road

behaviour and attitudes are also taught in these schools. Before driving actual vehicles

participants are trained on simulators. "We are very concerned about mounting deaths

on Indian roads. These can be brought down if government, industry and the

voluntary sector work together in an integrated manner. But we felt that Maruti should

52

first do something in this regard and hence this initiative of Maruti Driving Schools."

— Jagdish Khattar, at the launch ceremony of Maruti Driving School, Bangalore

ISSUES AND PROBLEMS

On 24 February 2010, Maruti Suzuki India announced recalling of 100,000 A-Star

hatchbacks to fix a fuel leakage problem. the company will replace the gaskets for all

100,000 A-Star cars.

EXPORTS

Maruti Exports Limited is the subsidiary of Maruti Suzuki with its major focus on

exports and it does not operate in the domestic Indian market. The first commercial

consignment of 480 cars were sent to Hungary. By sending a consignment of 571 cars

to the same country Maruti Suzuki crossed the benchmark of 300,000 cars.

Since its inception export was one of the aspects government was keen to encourage.

[citation needed] Every political party expected Maruti Suzuki to earn foreign

currency. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Nepal, Sri

Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the

markets served by Maruti Exports.[citation needed]

AWARDS AND RECOGNITION

The Brand Trust Report published by Trust Research Advisory has ranked Maruti

Suzuki in the seventh position in 2011 and the sixth position in 2012 among the

brands researched in India.

Bluebytes News, a news research agency, rated Maruti Suzuki as India's Most

Reputed Car Company in their Reputation Benchmark Study conducted for the Auto

(Cars) Sector which launched in April 2012.

53

ORGANISATIONAL STRUCTURE

54

PERFORMANCE

APPRAISAL IN MARUTI

SUZUKI

55

PERFORMANCE APPRAISAL IN MARUTI SUZUKI

APPRAISAL

· New Appraisal System based on KRAs & Targets· Review of Targets done at

regular Intervals with special relevance to People Development an important KRA

practise.

REWARD

· Promotions based on Performance· Productivity & Profit-linked IncentiveSchemes·

Training including Long-term SMC Japan Trg

· Highest paid workforce in the Industry, if not the Country

CAREER DESIGN

• Performance & Potential based Appraisals• Fast Track Option for High-performers•

Promotions after Managers Vacancy based• Interviews for promotions above

Managers• Selection of Supervisors:– Performance / Attendance / Discipline record–

Written Test & Interview• Job Rotation - including Inter-functional

RETENTION & EMPLOYEE WELFARE· Employee Welfare

- Residential Colonies for Employees – Chakkarpur & Bhondsi- Hospitalisation

Reimbursement – on actuals without Ceiling- Vehicle Loans- Household Equipment

Loans- House Building Advance- Annual Advance· MUL PF Trust – for better Mgt.,

Service & speedy redress· Proposed MUL Pension Scheme

· Learning Opportunity - Benchmark in Auto Technology· Professional Value

addition through Training· Opportunity for foreign training at SMC, Japan· Job

Rotation & Job enrichment

56

EMPLOYEE ENGAGEMENT -ESOPs

• Maruti Udyog Ltd. Employees Mutual Benefit Fund Scheme• Managed by a 10-

member Trust• Fixed Equity of 0.26%• Lock-in period of 3 years• Transferable

Internally

SUGGESTION SCHEME & QUALITY CIRCLES

• For better quality and productivity. Through involvement of all employees and

teamwork. During the year 1999-2000 :-i) Suggestions Implemented - 52,054ii) Cost

Saving (in crores) - Rs. 131.69 Crores iii) Number of QC Groups - 510iv) QC

Meetings held - 7189• Target for SS & QC for 2000-01,Suggestions Implemented -

Prod. & VI - 1implmented/employee/month Other areas - 8.4

implemented/employee/month Cost Saving Rs. 165 crores (25%)increase for the

Company QC Meeting - 13 meetings/QC Gp./ Year Target • Company-wide QC

Groups (8-15 members per group)• Monthly QC Meetings on the First Wednesday

each Month• Company-wide QC Competitions - Best Team sent to SMC• MD’s lunch

with Best QC Team & Best Suggestion Winner

57

FUTURE CHALLENGES

- HR INITIATIVES

• REALIGNING ORGANISATION CULTURE BASED ONNEW VISION &

VALUES

• OBJECTIVE PERFORMANCE MANAGEMENT & DEVELOPMENT SYSTEM

• TRANSPARENT JOB ROTATION & JOB ENRICHMENT

• PERFORMANCE LINKED REWARD AND RECOGNITION SYSTEM

• CAREER PLANNING & PROMOTION POLICY

• REVISED RECRUITMENT POLICY

• COMPETENCY MAPPING

• STRONG FUCUS ON TRAINING INITIATIVES

- BUILD A LEARNNG ORGANISATION

- CONTINUOUS VALUE ADDITION TO PROFESSIONAL SKILL

- CUSTOMISED TRAINING

- TRAINING TO THE PERSONNEL OF BUSINESS PARTNERS

• INTERNAL COMMUNICATION

• UNION ALIGNMENT

• EMPLOYEE INVOLVMENT & PARTICIPATION

MUL to change gear on performance appraisal -- 100% link between pay,

productivity

RENEWING its efforts at cutting costs and improving productivity, Maruti Udyog

Ltd (MUL) has drawn up a new human resources policy, which for the first time,

entirely links performance to pay packets for all its executives and managers.

MUL has traditionally had a performance-based component of about 30 percent in its

compensation package for its executives. But now it has gone the whole hog and

58

decided that in addition to the hike in individual perquisites increments to even the

basi c salary will now depend on the employees' performance during the year.

The new performance appraisal and compensation system is likely to affect over

1,000 employees -- executives and senior and middle level managers .Company

officials said the changeover to a completely performance-based compensation

system has been under discussion amongst MUL's senior management and directors

for quite sometime now.

So, the new appraisal process has not come as a surprise for most of the employees

and has been accepted by them, the official said. ``Over the past week, the principle

underlying the new system has been communicated at length throughout the company

and feedback has been obtained,'' theofficial said.In the run-up to the new

remuneration system, the company has also developed a new performance

measurement and development method along with the noted consultant, Mr M.B.

Athreya.

The performance measurement process will complement the new remuneration s

ystem.MUL sources said rather than appraise employees through confidential reports,

the new performance measurement system involves an interactive process of goal

setting, review and counselling by managers throughout the year.

It incorporates qualitative aspects, along with quantitative targets.The employees are

being put through workshops to train them on the various aspects of the system

developed with Mr Athreya. The new system will take effect from this year.The new

system is expected to help enhance managerial performance and skills, while making

the organisation more capable of assessing its costs and returns.

The move is also indicative of the company's renewed stress on increasing per

employee productivity.MUL, which has been beleaguered by low margins and a

59

falling bottom line,has also been forced to take a hard look at its costs this year. For

the first time, MUL has slipped into the red and recorded a loss during the year 2000-

01.

MUL has also drawn up a voluntary retirement scheme (VRS) forits employees. The

VRS programme received in-principle approval from the board last month. While the

VRS proposal is yet to be formally notified and offered to the company's employees,

it is expected to apply equally to all the staff members, including the shop floor

workers, company sources said.

60

MARUTI ADOPTS `360 DEGREE' APPRAISAL SYSTEM

Maruti has introduced a unique 360-degree feedback system, starting with its senior

leadership. The new system has been co-developed with Ernst & Young and has been

put in place recently.

Under the 360-degree feedback system, the employee is rated not just by his

superiors, but also by his peers and subordinates."We are starting the 360-degree

feedback process with employees in the top management such as chief general

managers and general managers, whose performance will now be assessed based on

feedback from their peers and junior management employees within the same

department.

Till last year,their performance was being appraised only by the Directors and the

Managing Director," says Maruti's Chief General Manager (HR), Mr

S.Y.Siddiqui.Ernst & Young, in consultation with Maruti, has listed a set of

leadership competencies that are expected in a general manager.

Based on that, it has prepared a questionnaire to which peers and subordinates can

respond online.Although acknowledged as an effective tool for leadership

development in the West, Indian companies have been shy of introducing such a

feedback system for fear of disturbing traditional hierarchical structures.

HR consultants feel that the critical issues in implementing such a system include

assuring respondents that their feedback will remain confidential and convincing the

person receiving the feedback that this is a development tool and not an appraisal tool.

Maruti has handled this by getting E&Y and other consultants to make detailed

presentations to the senior management personnel before the process got under way.

The company has a committee of general managers, called Human Resource Inter

Divisional Committee(HRIDC), which is consulted on all major HR issues.The

61

initiative has been unveiled with an e-mail by Maruti's Managing Director, Mr

Jagdish Khattar, asking people to support the online questionnaire process.

The 360-degree feedback system will also include a self-appraisal by the general

manager. At the end of the process,he can compare his self-appraisal with the

assessment of his subordinates and peers.

One of the benefits that Maruti is hoping to get out of the 360-degreefeedback process

is the sense of empowerment and importance felt by subordinates, when they are

asked to offer their feedback about their superiors. Maruti currently has over 4,000

employees on its rolls.

62

CHAPTER-3

RESEARCH

METHODOLOGY

63

RESEARCH METHODOLOGY

Methodology means a simple set of methods or procedures, they relate to a particular

discipline or field of inquiry.

There are mainly three types of research methodology:-

a) Exploratory Research or Formulative Research

b) Descriptive Research

c) Casual Research

Exploratory Research

The objective of exploratory research is to gather preliminary information that will

help define problems and suggest hypotheses. Exploratory research provides insights

into and comprehension of an issue or situation. It should draw definitive conclusions

only with extreme caution. Exploratory research is a type of research conducted

because a problem has not been clearly defined. Exploratory research helps determine

the best research design, data collection method and selection of subjects.

Exploratory research is used when problems are in a preliminary stage.

Exploratory research is used when the topic or issue is new and when data is

difficult to collect. Exploratory research is flexible and can address research

questions of all types (what, why, how). Exploratory research is often used to

generate formal hypotheses.

Descriptive Research

The objective of descriptive research is to describe things, such as the market

potential for a product or the demographics and attitudes of consumers who buy the

product. Descriptive research, also known as statistical research, describes data and

64

characteristics about the population or phenomenon being studied. Descriptive

research answers the questions who, what, where, when and how...

Although the data description is factual, accurate and systematic, the research cannot

describe what caused a situation. Thus, Descriptive research cannot be used to create

a causal relationship, where one variable affects another.

In short descriptive research deals with everything that can be counted and studied.

But there are always restrictions to that. Your research must have an impact to the

lives of the people around you. For example, finding the most frequent disease that

affects the children of a town. The reader of the research will know what to do to

prevent that disease thus; more people will live a healthy life.

Descriptive research generally goes before explanatory research. Descriptive

research generally precedes explanatory research. For example, over time chemists

have described the elements through the periodic table. The periodic table’s

description of the elements allows people to think about the elements in helpful ways.

It allows for explanation and prediction when elements are combined.

Casual Research

Causal Research explores the effect of one thing on another and more specifically, the

effect of one variable on another.

The research is used to measure what impact a specific change will have on existing

norms and allows market researchers to predict hypothetical scenarios upon which a

company can base its business plan.

For example, if a clothing company currently sells blue denim jeans, causal research

can measure the impact of the company changing the product design to the colour

white.

65

Following the research, company bosses will be able to decide whether changing the

colour of the jeans to white would be profitable.

To summarize, causal research is a way of seeing how actions now will affect a

business in the future.

Causal Research 'The objective of causal Research is to test hypotheses about cause-

and-effect relationship.

RESEARCH STATEMENT

STUDY OF PERFORMANCE APPRAISAL SYSTEM IN BSNL

RESEARCH DESIGN:

Analytical Research

SAMPLE DESIGN:

Simple Random Sampling

SAMPLE UNIT:

Employee in MARUTI SUZUKI.

SAMPLE SIZE: 50

UNIVERSE OF STUDY:

LUCKNOW

DATA COLLECTION: Data Type: Primary

DATA COLLECTION INSTRUMENT : Questionnaire.

Proposed Analysis Technique: Graphs and Charts

66

CHAPTER-4

DATA ANALYSIS

67

DATA ANALYSIS

1. Do you think that there is a need of Performance Appraisal?

YES 97%

NO 3%

Interpretation: Most of the respondent feel need of performance appraisal.

68

2. Are you satisfied with the present appraisal system?

YES 71%

NO 29%

Interpretation: Most of the respondents are satisfied with current performance

appraisal system.

69

3. The frequency of Appraisal System should be six monthly?

YES 78%

NO 22%

Interpretation: Most of the respondents said that appraisal system should be six

monthly.

70

4. The gap of Appraisal System should be half-yearly?

YES 78%

NO 22%

Interpretation: Most of the respondents said that gap of appraisal system should be

half yearly.

71

5. Does performance appraisal helps in polishing skills and performance area?

YES 83%

NO 17%

Interpretation: Most of the respondents think that performance appraisal helps in

polishing skills and performance area.

72

6. Does personal bias creeps-in while appraising an employee?

YES 53%

NO 47%

Interpretation: Most of the respondents think that personal bias creeps-in while

appraising an employee.

73

7. If given a chance, would employees like to review the current appraisal

technique?

YES 91%

NO 9%

Interpretation: Most of the respondents would like to review the current appraisal

technique in case of getting a chance to review.

74

8. Does 360 degree appraisal is considered most appropriate in todays corporate?

YES 62%

NO 38%

Interpretation: Most of the respondents think that 360 degree appraisal is considered

most appropriate in today’s corporate.

75

9. Does performance appraisal leads to identification of hidden potential?

YES 76%

NO 24%

Interpretation: Most of the respondents think that performance appraisal leads to

identification of hidden potential.

76

10. Does Performance Appraisal directly effect your motivation?

YES 98%

NO 2%

Interpretation: Most of the respondents think that performance appraisal leads to

identification of hidden potential.

77

CHAPTER-5

78

FINDINGS

Performance appraisal is play great role for the growth and development of the

organization. In recently year performance appraisal is most important to the every

organization for the purpose of productivity and promotion policy.

Some specific findings:

Performance appraisal is very helpful to evaluate the employee’s performance.

Good job performance employees increase the productivity.

Highly satisfy employees perform very well.

Motivated employees also perform very well.

Performance appraisal develops the promotion policy, transfer policy or

demotion policy.

Performance appraisal to maintain the good relationship between top

management and subordinate.

Every organization, irrespective of its size, has an appraisal system for its

employees. This implies the performance appraisal has become an

indispensable activity in any organization.

Most of the companies have separate appraisal system for each level of

employees. These appraisal systems differ on the factors on which a person is

rated and the nature of duties handled by him.

Even when a same appraisal system exists in different organizations, the

probability of its success is not the same.

This can be attributed to the following factors: implementation problems,

organizational climate, and commitment from top management.

79

In most of the companies it is seen that the employees are not satisfied with

the way they are appraised or they haven’t been appraised properly. For this

matter, almost all the companies have interview and discussion.

The frequency of appraisal in all organisations is yearly. Where appraisal is

based on Key Result Areas, a mid-term review is also undertaken.

This data is then compiled and the final appraisal is conducted at the end of

the year.

In most of the cases the immediate supervisors is the appraiser but some times

it is also the HR department or the HOD.

All organizations have goal setting as part of appraisal. The performance is

evaluated against these targets.

On an average 85% of the employees in an organization are motivated by

performance appraisal.

Most of the companies use the data that is maintained for every employee to

compare the performance over a period of time.

Some companies also use this data for making decision regarding job rotation,

succession planning. Very few companies make use of this data for

retrenchment as proof of poor performance.

A good deal of respondents felt that appraisal is likely to be more successful

when it is linked with financial and semi-financial incentives like promotion,

bonus, and increments. This increases the commitment from the parties

concerned the appraisal and the appraise.

In most of the organizations training is provided for the appraisal system one

to two weeks before the appraisal and also when new or revised Performance

appraisal system is introduced.

80

SUGGESTIONS

Develop clear job description.

To select appropriate selection process.

To provide effectiveness orientation program, education and training.

To provide on-going coaching and feedback.

Conduct quarterly performance development discussion.

To provide promotion and career development opportunities.

To develop the skills, knowledge and ability through the training process.

To provide the job rotation and job enhancement to the employees.

To motivated the employees, which is very helpful to increase the

organizational productivity.

Performance appraisal should not be perceived just as a regular activity but its

importance should be recognized and communicated down the line to all the

employees.

There should be a review of job analysis, job design and work environment

based on the performance appraisal.

It should bring more clarity to the goal and vision of the organization.

It should provide more empowerment to the employees.

New methods of appraisal should be adopted so that both appraiser and the

appraise take interest in the appraisal process.

The employees who have excellent performance should be used as a mentor

for other employees which would motivate others to perform better.

81

Employees should be given feedback regarding their appraisal. This will help

them to improve on their weak areas.

Financial and non-financial incentives should be linked to the annual appraisal

system so that employees would be motivated to perform better.

New mechanisms should be evolved to educe the time factor involved in the

procedure of appraisal. Introducing online-appraisal can do this.

The frequency of training program for the appraiser should be increased and

these sessions should be made interactive.

The awareness sessions for the employees/appraises should be made more

interactive and the views and opinion of the appraisees regarding appraisal

should be given due consideration.

Assistance should be sought from specialists for framing a proper appraisal

system that suits the organization climate. Constant monitoring of the

appraisal system should be done through discussions, suggestions,

interactions.

Combining the different methods of appraisal can minimize the element of

biasness in an appraisal. Like the Rating method combined with assessment

center method would give an evidence of poor/unfavorable or outstanding

behaviour of the appraisee, if any.

Use of modern appraisal techniques like 360o appraisal, assessment centers

which are more effective.

More transparency should be brought about in the appraisal system.

The appraisal system should cover all employees in the organisation both

white collar and blue-collar jobs.

82

CONCLUSION

Essentials for a Successful Performance Appraisal System

Basing appraisals on accurate and current job descriptions

Ensuring that appraisers have adequate knowledge and direct

experience of the employee’s performance

Providing ratings via aggregated anonymous feedback when multiple

sources of information are used

Incorporating performance appraisals into a formal goal setting system

Offering adequate support and assistance to employees such as

professional development opportunities in order to improve their

performance

Conducting appraisals on a regular basis (at least two times a year)

rather than annually.

If resource constraints do not permit frequent formal appraisals, consider

conducting one formal appraisal annually, with a review of progress in the

mid-year and ongoing review in regular supervision meetings

83

REFERENCES

Human Resource And Personnel Management - K. Aswathappa

Human Resource Management - P. Subba Rao

Human Resource Management - S.K.Bhattacharya

WEBLIOGRAPHY

www.performanceappraisal.com

www.humanresource.com

www.managementanswers101.com

www.marutisuzuki.co.in

84

ANNEXURE

85

QUESTIONNAIRE

NAME: CONTACT

NUMBER:

AGE: GENDER:

1. Do you think that there is a need of Performance Appraisal?

YES ( )

NO ( )

2. Are you satisfied with the present appraisal system?

YES ( )

NO ( )

3. The frequency of Appraisal System should be six monthly ?

  YES ( )

NO ( )

4. The gap of Appraisal System should be half-yearly?

YES ( )

NO ( )

5. Does performance appraisal helps in polishing skills and performance area?

YES( )

NO( )

86

6. Does personal bias creeps-in while appraising an employee?

YES ( )

NO ( )

7. If given a chance, would employees like to review the current appraisal

technique?

YES ( )

NO ( )

8.360 degree appraisal is considered most appropriate in todays corporate

YES ( )

NO ( )

9. Does performance appraisal leads to identification of hidden potential?

YES ( )

NO ( )

10. Does Performance Appraisal directly effects your motivation ?

YES ( )

NO ( )

87