INTERNSHIP REPORT On Performance Appraisal System at HDFC Bank
Submitted in partial fulfillment of Bachalor Degree in Business Administration
Ms. Neha Walia
Amity Global Business School, Chandigarh
I would like to convey my heartiest gratitude to several people, for their support and guidance which helped me complete my Summer Internship. First and foremost I would like to thank HDFC Branch for giving me an opportunity to do my internship in their esteemed organization. My special appreciation extends to Mr.-------------------for their constant encouragement through out this period. I would also like to thank our Programme Co-ordinator, Ms. Neha Walia for her guidance and unflinching support through out the phases of my internship. My special thanks to my classmates and dear friends, for their support through out my internship. With their help I could complete my work efficiently and effectively. Last but not the least, my endless appreciation goes to my family who has stood by my side and given me moral support whenever I was low and boosted my will power. Tejinderpal Singh
SL.No 1 EXECUTIVE SUMMARY 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 INTRODUCTION HDFC PROFILE STUDY DESIGN SAMPLE DESIGN LIMITATION INTRODUCTION TO PERFORMANCE APPRAISAL NEED FOR PERFORMANCE APPRAISAL ACHIEVING ORGANIZATIONAL GOAL CHARACTERISTIC OF GOOD PERFORMANCE APPRAISAL EVALUATION TECHNIQUE METHOD OF PERFORMANCE APPRAISAL FACTOR INFLUENCING PERFORMANCE OF AN EMPLOYEE ADVANTAGES SAMPLING DATA ANALYSIS AND INTERPRETATION FINDING SUGGESTION QUESTIONNAIRE BIBILOGRAPHY Page. No
This internship report consists of the overall experience of online working as a part of HDFC Standard Life Insurance Co, Ltd. This experience helped me understand the basic functioning of the organization where I was inducted. My Internship program - Project Title: Performance Appraisal System of HDFC. The best learning experience was that I started from the very basics of getting to that position and not from the position itself. This helped me get useful insight and understanding of online marketing, the benefits to the members as well as the HDFC. Training sessions were held to give me insights about How to create markets and write comments on other member’s markets and to encourage and appreciate them for their nice efforts and creative markets. I also learnt how to work online for such a nice which enhanced my knowledge, writing skills and communication.
The process of Human Resource Development (HRD) helps the employee’s to acquire and develop technical, managerial and behavioral knowledge, skills & abilities and the values , beliefs &attitudes necessary to perform present and future roles. The process of Performance Appraisal helps the employees and management to know the level of employees Performance compared to the standard or predetermined level. Performance Appraisal is important to understand and improve the employee’s performance through HRD. In fact, Performance Appraisal is the basis of HRD. It was viewed that Performance Appraisal was useful decide employee’s promotion or transfer, salary determination. But the recent developments in HRD indicate that Performance Appraisal is the basis for employee development. Performance Appraisal indicates the level of desired performance level and actual performance and the gape between these two. This gap should be bridged through training, counseling and motivation etc. In every organization, the process of HRD helps the employee’s to acquire and development technical, managerial and behavioral knowledge, skill, and abilities, belief and attitudes necessary exists to achieve goals; the degree of success obtained by the individual employee in achieving individuals goals directly determines the organizational effectiveness. The assessment of the degree of success of an individual employee is an important part of HRM that leads to the Performance Appraisal. In American business, the Performance Appraisal is done to determine wage increase, promotion, transfer, regarding the emphasis for the feedback to the employee’s and assessing the need for their training is very less or we can say it’s little. In contrast, Indian companies use Performance Appraisal for training and development, providing feedback to the employee’s and personal research. They also use it in determining wages and transfers as they do it in the American companies. The purpose of Performance Appraisal to make a distinction between performer and non performer on the job. The aim of the project is to focus on the Performance Appraisal system undergone in HDFC Standard Life Insurance Co Ltd (HDFC SLIC).
This project aim to study the need for Performance Appraisal; how it helps the employees of the Organization to improve their abilities so as to meet both the personal and organizational present and future requirements. Whether the organization is reaching its standards by Performance Appraisal resulting in increase in quality and productivity of the employees observed. The overriding purpose of Performance Appraisal is to help HDFC Standard Life Insurance Company Limited employees to improve and thus to improve organizational effectiveness. Performance Appraisal therefore institutional needs as well as staff member needs, abilities, motivation and expectancies.
2. HDFC PROFILE:
Housing Development Finance Corporation Ltd. (HDFC), India’s premier housing finance institution has assisted more than 3.3 million families own a home, since in inception in 1977 across 2400 cities and town through its network over 250 offices. It has international offices in Dubai, London and Singapore service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRI’s and PIO’s to own a home back in India. As of December 2008, the total asset size has crossed more than Rs. 95,000 cores including mortgage loan assets of more than Rs. 83,800 cores. The corporation has a deposit base of Rs. 17,551 cores, earning the trust of more than 9, 00,000 depositors. Customer Service and satisfaction has been the mainstay of the organization. HDFC has set benchmarks for the Indian housing finance industry. Recognition for the servi9ce to the sector has come from several national and international entities including the World Bank that has lauded HDFC as a model housing finance company for the developing countries. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, and Bangladesh in the setting up of housing g finance companies. HDFC Bank was incorporated in August 1994, and currently has a nationwide network of 1412 Branches and 325’s ATM’s in 528 Indian towns and cities. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI)to set up a bank in the private sector, as part of the RBI’s liberalization of the Indian Banking industry in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC’s Bank Limited’, with its registered office in Mumbai, India. HDFC Bank commenced operation as a Scheduled Commercial Bank in January 1995.
AWARDS AND ACCOLADES:
Awarded the Economic Times Corporate Citizen award in 2004.
Presented ‘Dream Home’ award for the biggest housing finance
provider in 2004.
HDFC Ranked as India’s Third Best Managed Company by Finance
HDEC won the Best award for “Investment Management in India” at
the Euro money 2006 Real Estate Awards.
“Best Home Loan Provider” title at the ZEE Pinnacle Awards 2006.
“Best Strategy”, at the 4Ps Business, Marketing &Advertising Power
Awards 2006. Dun & Bradstreet –American Express Corporate Award 2006. Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments January, 2008. Received 2008 CIO Bold 100 and CIO Security Awards.
Received PCQuest Best IT Implementation Award May, 2008.
Unit Linked Savings Plan Tops Mint Best TV Ads Survey March, 2008.
HDFC Group Companies:
Other Companies: • HDFC Property Ventures Ltd • HDFC Developers Ltd. • GRUH Finance Ltd. • HDFC Ventures Trustee Company Ltd. • HDFC Trustee Company Ltd • HDFC Investments Ltd • HDFC Holdings Ltd • Credit Information Bureau (India) Ltd • HDFC Securities
HDFC Bank is a dynamic bank; with a youthful and enthusiastic team determine to accomplish the vision of becoming a world-class Indian bank. Our business philosophy is based on four core values – Customer Focus, Operational Excellence, Product Leadership and People. We believe that the ultimate identity and success of our bank will reside in the exceptional quality of our people and their extraordinary efforts. For this reason, we are committed to hiring, developing, motivating, and retaining the best people in the industry.
Mission and Business Strategy:
Our mission is to be a “World-Class Indian Bank,” benchmarking ourselves against international standards and be practices in terms of product offerings, technology, service level, risk management and audit and compliance. The objective is to build sound customer franchises across distinct business so as to be a preferred provide of banking service for target retail and wholesale customer segment, and to achieve a healthy growth in probability, consistent with the Bank’s risk appetite. We are committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Our business strategy emphasizes the following:
Focus on high earnings growth with low volatility.
Maintain our current standards for asset quality through disciplined credit risk management. Continue to develop products and service that reduces our cost of founds. Develop innovative product and services that attract our targeted customers and address inefficiencies in the Indian financial sector. Leverage our technology platform and open scaleable systems to deliver more products to more customers and to control operating costs.
E Corporate Governance:
HDFC Bank recognizes the importance of good corporate governance, which is generally accepted as a key factor in attaining fairness for all stake holders and achieving organizational efficiency. This corporate Governance Policy, therefore, is established to provide a direction and framework for managing and monitoring the bank in accordance with the principle of goods corporate governance.
Stan dard Life –UK;
Standard Life Insurance Company is one of the most trusted Insurance
Companies worldwide based at Edinburgh, Scotland (UK). Founded in 1825, Currently over 7 million Customers worldwide, operation in all the important markets of the world like Austria, Canada, China, Germany, Spain, Hong Kong, Ireland and India through its network.
Standard Life listed on 10th July 2006, the biggest float on the London
Stock Exchange in the last five years. Standard Life Insurance Co. is the largest mutual insurance company in Europe.
Providing range of saving, pension, and protection and investment
As at December 2006, Standard Life Financial Strength has total
Assets under management UK £ 125 billion (more than Rs. 10, 46, 979 or INR 10, 469, 791,000,000 cores.)
Standard Life Group Companies:
Standard Life Investment manages assets for the group as well as third parties, and has a record of strong investment performance. Standard Life Healthcare is one of the largest private medical insurance providers in the UK.
Standard Life Bank offers a range of mortgages and savings products,
and had mortgage book of £ 10.6 billion as at 31st December 2005.
INR 819.69 billion or 81, 969 cores.
HDFC Standard Life Insurance Co. Ltd:
HDFC Standard Life Insurance Company Limited is a joint venture between HDFC Ltd, a Leading Finance Company in India & Standard Life Assurance, the largest mutual Insurance Company in Europe. The financial expertise of HDFC Group, combined with the Insurance expertise of Standard Life is committed to offer better financial solution to the customers. Our study of Performance Appraisal in the HDFC Standard Life Insurance Company Limited is the major stack in the HDFC LTD.
Joint venture: Stake Holding Pattern
HDFC Standard Life Insurance Company Limited is one of India’s leading insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India’s leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd, holds 72.43% and Standard Life (Mauritius Holding) 26.00% of equity in the joint venture, while the rest in held by others. HDFC Standard Life believes that stabling a strong and ethical foundation is an essential prerequisite for long term sustainable growth. To ensure this we have concentrated our focus on expansion of branch network, organizing an efficient well trained sales force, and setting up appropriate system and process with optimum use of technology. As all these areas from the basic infrastructure for establishing the highest possible customer service standards.
Vision of HDFC Standard Life Insurance Co. Ltd…
The most successful and admired life insurance company which mean that we are the trusted company, the easiest to deal wit, offer the best value for money, and set the standard in the industry. In short, “The most obvious choice for all”
Finical Expertise As a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage your long term investments safety and efficiently. Range of Solutions We have s range of individual and group solutions, which can be easily customized to specific needs. Our group solutions have been desired to offer you complete flexibility combined with a low charging structure. Track record so far Our gross premium income for the year ending March 31, 2009 stood at Rs. 5,564.69 cores. The company has covered over 10, 00,000 lives as on March 31, 2009. Our core values are drilled down to all levels of employees, as these are inviolable. We continue to promote high integrity in business practices and shun short cuts and unethical practices, as we wish to be perceived as an institution with high moral standing. Since our inception in 2000, when Indian insurance space was opened for private participation, we have consistently focused on setting benchmarks in all aspect on insurance business. Being the first private player to be registered with the IRDA and the first to issue a policy on December 12, 2000, our differentiators are:
Values of HDFC Standard Life Insurance Co. Ltd….
Integrity Innovation Customer Centric People care Team work Joy and simplicity
HDFC standard life is a strong financially secure business supported by two strong and secure promoters – HDFC Ltd and Standard Life. HDFC Ltd’s excellent brand strength emerges from its unrelenting focus on corporate governance, high standards of ethics and clarity of vision. Standard Life is a strong, financially secure business and a market leader in the UK Life & Pensions sector.
Preferred and trusted brand:
Our brand has managed to set a new standard in the Indian life insurance communication space. We were the first private life insurer to break the ice using the idea of “Sar Utha Ke Jiyo”. Today, we are one the few brands that customer recognize, like and prefer to do business. Moreover, our brand thought, “Sar Utha Ke Jiyo”, is the most recalled campaign in its category.
We follow a conservative investment management philosophy to ensure that our customer’s money is looked after well. The investment policies and actions are regularity monitored by a formal investment committee comprising non- executive directors and the Principal Offers & Executive Director. As a life insurance company we understand that customer have invested their savings with us for the long term with specific objectives in mind. Thus, our investment focus is based on the primary objective of protecting and generating good, consistent, and stable investment returns to match the investor’s long term objective and return expectations, irrespective of the market condition.
Need based selling approach:
Despite the criticality of the life insurance sales in the industry have been characterized by over by reliance on tax benefits and limited advice-based selling. Our eight-step structured sales process “Disha” however, helps customers understand their latent needs at the first instance itself without focusing on product features or tax benefits. Need- based selling process, “Disha” the first of its kinds in the industry, looks at the whole financial picture. Customers see a plan not piecemeal product selling.
Risk control frame work:
HDFC Standard Life has fully implemented a risk control framework to ensure that all types of risks (not just financial) are identified and measured. These are regularly reported to the board and this ensures that the company management and board members are fully aware of any risks and the actions taken to ensure they are mitigated.
Focus on training:
Training is an integral part of our business strategy. Almost all employees have undergone training to enhance their technical skill or the softer behavioral skill to be able to delver the service standards that our company has for itself. Besides the mandatory training that financial consultants have to undergo period to being licensed, we have developed and implemented various training modules covering various including product knowledge, selling skills, and objective handling skills, professional and so on.
Focus long term value:
HDFC Standard Life does not focus in the business of ramping up the top line only, but to create maximization of stake holder’s value. Today, we are extremely satisfied with the base that we that we have created for long term success of this company.
We are one the few companies whose product details, pricing; clauses are clearly communicated to help customer take the right decision.
Strict compliance with regulations:
We have initiated and implemented many new processes, some of which were found useful by the IRDA and later made mandatory for the entire industry. The agent who successfully completed this training only, was authorized by the company to sell ULIPs. This has been made compulsory by IRDA for all insurance companies under the new Unit Linked Guidelines.
Diversified product portfolio:
HDFC Standard Life’s wide and diversified product portfolio help individuals meet their various need, be it: Protection: Need for a sound income protection in case of your unfortunate demise
Investment: Need to ensure long term real growth of your money
Savings: Save for the milestones and protect your savings too
Pension: Need to save for a Self Respectable and comfortable life at Retirement Stage
Health: Cover for health related exigencies
Awards and Accolades:
“Best New Insurer” Award from Outlook money – 2003.
“Most Respected Private Insurance Company” Award from Business World – 2004.
“Best New Insurer” Award from Outlook Money – 2006.
HDFC Standard Life Selected as ‘4Ps Power Brand 2006’, for being of the India’s Top 25 Most Innovative Companies’.
: Brief Profile of the Board of Directors:
Mr. Deepak S.Parekh is the Chairman of the Company. He is the Executive Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole –time director of HDFC Limited in 1985 and was appointed as its Extenuative Chairman in 1993.He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Charted Accountants (England & Wales). Sir Alexander M.Crombie joined the Board of Directors of the Company in April 2002. He has been with Standard Life Group for 34 years holding various senior management positions. He was appointed as the Group Chief Executive of the Standard Life Group in March 2004. Mr. Keki M. Mistry joined the Board of Directors of the Company in December, 2000. He is currently the Managing Director of HDFC Limited.
He joined HDFC Limited in 1981 and became an Executive Director in 1993. He was appointed as its Management Director in November, 2000. Ms. Marcia D. Campbell is currently the Group Operations Director in the Standard Life Group and is responsible for group operations. Asia Pacific Development, Strategy & Planning, Corporate Responsibility and Shared Services Centre. Ms. Campbell joined the Board of Director in November 2005. Ms. Renu S. Karnad is Executive director of HDFC Limited, is a graduate in law and holds a Master’s degree in economics from Delhi University. She has been employed with HDFC Limited since 1978 and was appointed as the Executive Director in 2000. She is responsible for overseeing all aspects of lending operations of HDFC Limited. Mr. Gautam R. Divan is a practicing charted Accountant and is a Fellow the Institute of Charted Accountants of India. Mr. Divan was the Former Chairman and managing committee member of medsnell group international association of independent accounting firms and has authored several papers of professional interest. Mr. Divan has wide experience in auditing and taxation planning of individuals and limited companies and also has substantial experience in structuring overseas investment to and from India. Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards on Strategy and Change Management. Mr. Pant, until 2002 was a Partner & Vice – President at Bain & Company, Inc., Boston, where he led the worldwide Utility Practice. He was also Director, Corporate Business Development at General Electric head quarters in Fairfield, USA. Mr. Pant has an MBA from the Wharton School and BE (Honors) from Birla Institute of Technology and Sciences. Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of India Limited. Mr. Ravi Narain was a member of the core team to set- up the Securities & Exchange Board of India (SEBI) and is also associated with various committees of SEBI and the Reserve Bank of India (RBI). Mr. Gerald E. Grimstone was appointed Chairman in May 2007, having been Deputy Chairman since March 2006. He became a director of the standard life assurance company in July 2003. He is also Chairman of
Candover Investment plc and was appointed as one of the UK’s Business Ambassadors by the Prime Minister in January 2009. Gerry held senior positions within the Department of the Health and Social Security and HM Treasury until 1986. He then spent 13 years with Schroders in London, Hong Kong and New York, and was Vice Chairman of Schroders’ worldwide investment banking activities from 1998 to 1999. He is the Director to Sir Alexander Crombie. Mr. Paresh Parasnis is the principal officer and executive director of the company November 14, 2008. A fellow of the institute of Charted Accountant of India, he has been associated with the HDFC Group since 1984. During his 16 – year’s tenure at HDFC Limited, he was responsible for driving and spearheading several key initiatives. As one of the founding members of HDFC Standard life, Mr. Parasnis has been responsible for setting up branches, performance management system, overseeing new business new business claims settlement, customer interactions ect.
HDFC Trustee Company Ltd.
GRUH Finance Ltd.
HDFC Property Ventures Ltd.
HDFC Developers Ltd.
HDFC Investments Ltd.
HDFC Holding Ltd.
Credit Information Bureau (India) Ltd.
Objective of the study
1. To study the performance appraisal system in HDFC Standard Life insurance Co Ltd. 2. To asses the degree of awareness among employers and employees on performance appraisal in HDFC Standard Life Insurance Co Ltd. 3. To know the satisfactory level and the comfortable level between the Employees and superiors. 4. To asses whether the appraisal is done without any bias the employees.
To know and identify merits and demerits of performance appraisal in HDFC Standard Life Insurance Co Ltd.
Methodology of the study
Methodology is said to be the procedure or way in which the project work has been done. In the project work, the methodology adopted is data collection and sample plan. Source of data: The data for the study has been collected from various primary and secondary sources. Primary data: Primary data is collected of facts on the subject of the study by the researcher. It can be collected through questionnaires.
It is formalized set of question, with are logically and systematically arranged to collect the information useful for the proposed study. The questionnaire in this study is structured containing a limited number of questions which are easy and to understand. The layout of their questionnaire is farmed in such a way that confusing and rerecording error are minimized. The Questionnaire is mainly desired to measure the effectiveness of performance appraisal system for executive in SCR.
Secondary data reface to the use of information already collected and published or unpublished. The sources are books, journals, reports etc.
1. Population: The population for the present study consists of all the employees of HDFC Standard Life Co Ltd working at Somajiguda Branch-V.
Sample size: The size of the sample for the present study is confined to 50 employees belonging to personnel. Administration, marketing department of HDFC Standard Life Insurance Co Ltd. Somajiguda Branch-V. The size is confined due to time and availability.
3. Sample Technique: The sample for the present study is selected using simple random technique.
The study is limited to HDFC Standard Life Insurance Co Ltd. Somajiguda Branch-V
Study is limited to selected group from the main stream of the organization.
Sample size is limited to 50 respondents, Problems with confidential information.
The responses would have also been affected by the amount of work and working conditions.
Study includes both collections of data from primary as well as secondary sources.
There is a high chance of sampling error.
INTRODUCTION TO PERFORMANCE APPRAISAL SYSTEM
Performance Appraisal has been around of hundreds of years, as it is only human nature to evaluate fellow colleagues. Effective appraisal system should address clarity, openness, fairness; recognize productivity through reward; & be cognizant to appraisal leadership qualities. “Performance Appraisal is the process of evaluating the performance & qualification of the employees in terms of the requirements of the job for which he is employed, for the purpose of administration including
placement, selections for promotions, providing financial rewards & other action which required differential treatment among the group as distinguished from actions affecting all member equally.” BY HEYEL “Performance Appraisal determines who shall receive merit increase, counsel’s employees their improvement; determines training needs; determines promo ability; identifies those who should be transferred more over, it improves employee job performance; encourage employees to express their views or to seek clarification on duties; broadens thei9r capacity & potential; promotes a more effective utilization of manpower and improves placement ; facilitates selection, reward & increase the analytical abilities of supervisors.” BY RONALD BENJAMIN
Key to assessing an employee’s performance is the setting of objectives. A key element of the performance appraisal process should be reviewing how well the employee has performed in relation to objective that has been previously set for them. For objectives to be useful, it’s often said they should be SMART. Specific. Measurable.
Achievable (Occasionally agreed between the line manager & employee). Result oriented. Time framed (with asset date for competition).
NEED FOR PERFORMANCE APPRAISAL:
To effect promotion based on competence and performance. To assess the training &development needs of the employees. To bridge the gap between the existing performance & desired
performance. To help each employee to understand his own strengths &weakness. They can be mechanism of increasing communication between the employee &his.
Supervising officer so that each employee gets to know the difficulties
of his subordinates and attempt to solve them. It provides legally defensible reasons for making promotion, transfer, and reward and discharge decisions. They can be instruments to provide an opportunity for employees for self reflection And goal setting so that individually planned and monitored development takes place. They can assist in a variety of personnel decisions by generating data about each employee periodically. Develop inter personal relationship. To help in salary increment. To prevent grievance & in-disciplinary activities. Provide information about the performance ranks.
ACHIEVING ORGANIZATION GOALS
The achievement of an organization’s goals rests with its people. The more talented the people and the better they are managed and coordinated toward those goals the greater the chance of success. Performance appraisal is all about providing a way to do this.
The appraisal process starts with a manager and employee setting goals for the year together. The most effective goals are measurable and have easy to understand performance standards.
CHARACTERISTICS OF GOOD APPRAISAL SYSTEM:
Increase motivation to perform effectively. Increase staff self-esteem. Gain new insights into staff and supervisor. Better clarity &define job function &responsibility. Develop valuable communication among appraisal participants.
Encourage increase self –understanding among staff as well as insight
into the kind of development activities that are of value. Distribute rewards on a fair & credible basis. Clarify organizational goals so they can be more readily accepted. Improve institutional/departmental manpower planning, test validation,& development of training programs.
The six steps in performing evaluations
1. Establish performance standards for each position and criteria
for evaluation In setting objectives to be followed by the employee to be evaluated, the following Principles are to be met (SMART objectives). Specific. Measurable. Achievable (occasionally agreed between the line manager &employee. Result orientate in a company. Times framed (with a set date for competition).
EASTABLISH PERFORMANCE EVALUATION POLICIES ON WHEN TO RATE, OFTEN TO RATE & WHO SHOULD RATE. When to rate: Usually, all employee are rated on/ near the sane date in a Company. How often rate:
In many companies there is one evaluation in a year. However, more &more organization shifts to evaluation: this is convenient especially in fast moving organization, because a more frequent of the objectives is possible. Who should rate: These are several possibilities, such as
Rating by a committee of several superiors. Rating by the employees peers (co-workers). Rating by the employees subordinates. Self- evaluation, but the most evaluation is the appraisal by the superior. Sometimes a combination of the above mentioned possibilities is also used.
2. Have raters gather data o employee performance:
The raters collect information by observation, analysis of data & records & discussion with the employee. The data that they gather are influenced by the criteria for evaluation & by the technique used for evaluation.
METHODS OF PERFORMANCE APPRAISAL:
There are two types’ traditional methods and modern methods.
Individual evaluation methods:
Individual evaluation methods are those techniques when the standards of performance are defined individually, without references to other person(s).
GRAPHIC RATING SCALE:
Is the oldest & still most used method of evaluation? In case the case the rater is presented with A set of traits & is asked to rate the employee on each them. There are certain advantages in using methods
Advantages: 1. It is easy to understand, use & permits a statistical tabulation of scores 2. The scores indicate the worth of every individual. 3 it’s the most common evaluation tools in use today. Disadvantage:
It’s arbitrary & rating is generally subjective.
2. It assumes that each characteristic is equally important for all jobs 3. The person who is making the judgments is freed from direct “quantitative “terms in marketing his decision of merit on any quality 4. The person whom is making the judgment can makes as fine discrimination of merit as he chooses.
Forced choice: Is technique when rater must choose from a set of
descriptive statement about an employee. The method was developed to
substitute graphic rating scales, as graphic rating scales permits to evaluate all the employees high.
In which the rater is asked to describe the strong & week aspects of the employee’s behavior by a supervisor. Usually, this method is used in combination with other methods. Advantages: Explanation will give specific information about the employee and can revel more about the supervisor. Disadvantages: 1. Contains subjective evaluation. 2. Rater’s bias is easily introduced.
Critical incident method:
Technique is a method according to which the rater maintains a log of behavioral incidents that represent either effective for each employee being rated the basis of this method is the principle that there are certain significant set in each employees behavior &performance which makes all the difference between success &failure on all jobs. Feedback is provided about the incidence during performance review session. The advantage of this method is that the results are less subjective, but this method needs more time to use than the other techniques. This method has significant limitations too. Negative incidents are generally more noticeable than positive ones, the recording of the incident is the chore of the supervisors &may be put off &easily forgotten the feedback may be too much at one time &appear as a punishment etc.
Checklists &weighted checklists:
A check list is a set of objectives of descriptive statements. If the rather believers that the employee possesses a trait listed, the rater checks the item; if not, the rater leaves it blank. A rating score from the checklist equals the number of checks. The method was further developed by giving weights (from excellent to poor) to several objectives.
The case when the superior is asked to rank the subordinates based on some overall criterion. Advantages: ● Easy to use. ● The relative position of each man is tested in terms of his numerical ranks. Paired Comparison Method: It’s used in case where there are several subordinates to be ranked. Each employee is paired with every person to be compared with. The rater chooses as the better performing subordinate. The number of times that a person is chooses as the better employee is tallied, & results are indexed based on this number. Advantages: ● It results are tabulated and a rank is assigned to each individual to he/she show stands in relation to others. Disadvantages: ● When number of group is large, number of judgments becomes excessively large. Forced distribution method:
It’s the method similar to grading on a curve. This rater is asked to rate the employees in some fixed distribution of categories, such as 10% in low, 20% in low average, 40% in average, 20%in above average,10%in high. Advantages: ● Attempts to correct raters tendency to give consistency high or low ratings. ● Rater cannot introduce bias or halo effect. ● Overall objectively of the increases.
Behaviorally anchored rating scales (BARS):
This method was developed by smith & Kendall. The BARS approach relies on the use of critical incidents to serve as anchor statements on a scale. A BARS rating form usually contains 6 to 10 specifically defined performance dimensions, each with 5 to 6 critical incident anchors (both positive & negative). Employee prefer the using of this method instead of others, as it seems that they become more committed, less tense & more satisfied than in case using other methods. Behavioral Observation Scales, developed by Latham &Associates. Like BARS, the BOS use the critical incident technique to identify a series of behaviors that cover he domain of the job. The major difference is that the rater should give under BOS how often the rate has been observed engaged in the specific behaviors identified in BOS.
In this individual from departments are brought to spend two or three days working on an individual or group observers rank the performance of each and every participant in order of merit. Since assessment center are basically meant for evaluating the potential of candidates to be considered for promotion, training or development, they offer an excellent means for conducting evaluation processes in an objective way all assesses get equal
opportunity to show their talents and capabilities and secure promotion based on merit.
Human Resource Accounting:
Human resource accounting deals with the cost of and contribution of human resources to the organization cost of the employees includes costs of manpower planning, recruitment, selection induction, placement, training development, ages and benefits etc. employee contribution is the money value of employee service, which can be measured by labor productivity or value added by human resources.
Which evaluation technique to be used?
An exact answer cannot be given. The major problem is not with the techniques but how they are used & by whom? The responsibility of the rater & the seriousness of the rater are much more critical than which method to choose. Have Raters Evaluated Employees Performance Management by Objectives (MBO): MBO is more than just an evaluation program & process it is viewed as a philosophy of managerial practices a method by which managers and subordinates plan, organize, control, communicate and debate. By setting objective through participation or by assignment from a superior, the subordinate is provided with a course to follow & a target to shoot for, while performing the job. Benefits of MBO: An MBO system provides the following benefits to the organizations 1) It establishes linkage between the performance of the individual & the organizations hence both more in the achievements of the same objective. 2) It becomes easy to implement because those who carry out the plans also participate in setting up these plans 3) The communication chain between & among employees & or units are clearly established facilitating information sharing. 4) It identifies performance deficiencies.
Discuss the evaluation with the employee:
The supervisor should hold an elevation interview with each subordinate in order to discuss his or her appraisal & to set objectives for the upcoming evaluation period. Experts advise that the employee development & salary action discussions shouldn’t occur in the same interview. There are three generally used approaches to these interview situations; tell & sell, tell, & listen & problem solving the using of which depends mainly of the experience level of the employee. The performance evaluation discussions should include a) b) c) d) Review of overall progress. Discussions of problems encountered Agreement about potential performance improvement possibilities. Discussion on how current performance is in line with long term career goals e) Specific action plans for the coming year. Make decisions & file the evaluation: Currently being a decision maker, the evaluator needs to be a really qualified person. Key Components of Performance Appraisals: The components of performance appraisal are;
Identification of key performance areas (KPA) & target setting
through periodic discussions between each employee & their bosses. Identification of qualities required for the present & future jobs. Self appraisals by appraise. Performance analysis to identify factors that have facilitated & factors that have hindered performance. Identification of training needs. Action planning & goal setting for future. Final assessment by the supervising officer for administrative purposes.
Key performance areas, self appraisal, performance analysis, performance analysis, performance rating & counseling are the most important components of a development oriented performance appraisal system.
Key performance areas:
KPA may be defined as the important or critical categories of function to be performed by a role incumbent, over a given period of time. These categories of functions should be so defined that the performance of any employee can be assessed meaningfully, for any given period of time. Identifying KPA’s and setting quantifiable targets where ever possible is only one way of planning once performance. KPA’s are broad categories of function to be performed by any employee in relation to his job. Normally, KPA’s can be obtain from job descriptions maintained by most organizations are very broad & sketchy. Even if they are supply to new incumbents of any job, they may not be able to get a complete picture. Hence it’s desirable to have Periodic exercise in identifying performance areas for each person in relation to his role.
Self – Appraisal:
Self –appraisal has an important role to play in employee development. The individual is not likely to learn & develop himself he is interested in his own learning & development and makes conscious efforts to develop. Such effort would include identifying possible direction of growth, experiencing growth through action, review & reflection to consciously monitor the growth. Self –appraisal is not meant to be ritualistic form filling exercise. It is a significant initial step for performance development. Self appraisal should start at end of the performance period just before performance review decision take place. Self- appraisal should start with the appraise taking up his KPA’s & objective for the period that was over & reflecting about his achievements.
Performance counseling can be defined as the help provided by a manager to his subordinates in analyzing their performance and other job behaviors in order to increase their job effectiveness. It focuses on the analysis of the performance on the job and identification of training needs for further improvement. It focuses on the entire performance during a particular period rather than on specific problem. Counseling is a dyadic process. It’s based on the relation between two persons, a manager who is providing help or who is counseling & an employee to whom such help is given or who is a counselee.
Objective of counseling:
Counseling aims at development of the counselee. It involves the following: Encouraging him to set goals for the future improvement. Helping him understand himself, his strengths & weakness. Helping him to develop various action plans for further improvement. Helping him to realize his potential as a manager. Helping him understand himself, his strengths & weaknesses. Helping him to review in a non threatening way, in order to help him in his problem, in achieving various objectives. The system of CR has two principal objectives & the reporting officer has a very clear perspective of these objectives. To assess truly the performance of the subordinates in his present job providing guidance & counseling to him to improve his performance. To assess his potential & to prepare him through appropriate feedback guidance for higher responsibilities
Success of the reporting system depends on the following principles:
Absolute objectivity of the assessor (s). Two way communication between the reporter & the reporting officer.
A true and objective assessment of the related performance & fitness to take up higher responsibilities. Subsequent follow –up action. Should be aimed at improving the performance of the employees. The superior officer has to give subordinate a clear understanding of the task to be performed & the subordinates required to the best of his capacity to the quantitative & qualitative achievements of the given tasks making optimum use of the resources available. Also, both the superior & his subordinate are aware of the ultimate goal of their organization, which can be achieved only through joint effort by both of them.
Factors influencing performance of an employee:
Intelligence. Integrity and dependability. Clarity of objectives. Contribution to team work. Public relation. Data management. Attitude. Initiative and original thinking. Creativity and accuracy. Quality of work and quality of output. Knowledge of job. Acceptance of responsibility. Development of subordinates. Risk-Taking. Delegating.
AVANTAGES OF PERFORMANCE APPRAISAL:
Performance appraisal system can be put to several uses converting the entire spectrum of human resource function in the organization. The uses which performance appraisal serves are: To take decision on termination. Diagnosing individual and organizational problem. To identify individuals with high potential. Systematic efforts to tone up performance results, corrective actions and appropriate feedback. Input for an array of professional decision such as placement, promotion, transfer, and reward.
Potential problems while conducting performance appraisal:
1. Opposition to evaluation- most employees are wary of
performance evaluation. The most common fear is that of rater subjectivity. 2. System design & operating problem- If the criteria of evaluation are poor, the technique used cumbersome, or the system is more from than substance, the design is blamed & the evaluation is worth nothing.
Rater problem- The rater problem such as:
Problem with standard of evaluation- Which arises due to
the perceptual difference in the meaning of the words use to evaluate employees?
The Halo Effect- It occurs when the rater assigns on several
dimensions of performed based on an overall, general impression of the rate.
Time or event error- Raters forget more about past behavior
Personal Bias Error- The tendency to rate the preferred
employees higher & those not preferred lower.
Employee’s problem with performance evaluation- The
most common problem is that employees may feel that the evaluations are unfair. In order to avoid this perception, it should be presented how difficult is the evaluation of employees. The self evaluation can be good method in achieving this aim.
Central tendency error- The tendency of the raters to assign
average ratings for all the dimensions.
Sampling: Sampling may be defined as the selection of some part of an aggregate or totality on the basis of which a judgment or inference about the aggregate or totality is made. In other words, it is the process of obtaining information about an entire population only a part of it. Sampling used in current survey: This method is called as chunk sampling. A chunk is a fraction of one population taken for investigation because of its convenient availability. A sample from obtained from readily available list, such as telephone directories or automobile registrations or credit card members is a convenience sample. These are some times called accidental samples because those entering in to the sample enter by accident, they just happen to be a right place and at the right time of data collection.
1. Are you aware about the organization performance appraisal system?
a) YES OPINION YES NO TOTAL
b) NO NO. OF RESPONDENTS 50 0 50 PERCENTAGE 100 0 100
From the above it is evident that 100% of the employees feel that performance appraisal is quit essential for any organization.
2. Do you think that performance appraisal is essential?
OPINION YES NO TOTAL
NO.OF RESPONDENTS 48 2 50
PERCENTAGE 96 4 100
From the above data it is evident that 96% of the respondents feel that performance appraisal is very essential in the organization, where as 45 employees feel it is not essential in organization.
3. Does appraisal system of your organization facilities career growth & learning? a) YES OPINION YES NO TOTAL b) NO NO.OF RESPONDENT 42 8 50 PERCENTAGE 84 16 100
From the above data it shows that 84% of employees feel that organization facilitate growth & learning due to performance appraisal, where as 16% of
employees feel that organization does not provides growth & learning of employees.
OPINION YES NO TOTAL
NO.OF RESPONDENTS 46 4 50
PERCENTAGE 92 8 100
4. Performance appraisal system really assesses the quality of an employee. Do you agree? a) YES b) NO
From the above data it is evident that 92% of the employees feel that the performance appraisal system really assesses the quality of an employee, where as 85 feel that it does not assesses the quality of an employee.
5. Periodicity of performance appraisal should be on a) Quarterly basis c) Annual basis b) Half-yearly basis
OPINION A B C TOTAL
NO.OF RESPONNDENTS 8 12 30 50
PERCENTAGE 16 24 60 100
A B C
From the above data it is evident that 60%of the employees feel that performance appraisal should be done on annual basis & 24% of the employees feel should be in done on half yearly basis 165 of the employees feel should be done in quarterly basis. 6. The present performance appraisal of your organization distinguishes the performers & non performers? a) Strongly agree c) Disagree OPINION b) Agree d) Strongly disagree NO.OF RESPONDENTS PERCENTAGE
A B C D TOTAL
5 37 8 0 50
10 74 16 0 100
A B C D
From the above data it is evident that 74% of the employees ‘agree’ that performance appraisal system of the organization distinguishes performs & non performers, where as 105 strongly agree and 16% disagree doesn’t distinguishes performers & non-performers.
7. The periodical performance appraisal of employee is required for maintaining efficiencu of individual 7 organization? a) YES OPINION YES b) NO NO.OF RESPONDENTS 48 PERCENTAGE 96
From the above it shows that 96% of the employees feel that periodic performance appraisal of the employee is required for maintaining efficiency of individual and organization and above 4% of the employees feel that it is not required to maintained.
8. Are you aware of the basis or attributes on which your performance is appraised? a) YES b) NO
OPINION YES NO TOTAL
NO.OF RESPONDENTS 41 9 50
PERCENTAGE 82 16 100
From them above data it shows that 82% of the employees are aware on which their performance is appraised but 16% of the respondents feel that they are not aware of the basis on which their performance is appraised.
9. Performance appraisal is based upon a) Seniority influence b) Performance d) Both a & b c) Recommendations & Trade Union
OPINION A B C D TOTAL
NO.OF RESPONDENTS 2 27 3 18 50
PERCENTAGE 4 54 6 36 100
A B C D
From the above data it shows that 54% of the employees feel that performance appraisal in railways is based upon performance 36% feel that it based on both performance and recommendation 7 trade union.
10. Performance appraisal is useful to the contributor to encourage people to perform better on their jobs? a) YES b) NO
OPINION YES NO TOTAL
NO.OF RESPONDENTS 46 4 50
PERCENTAGE 92 8 100
From the above data it shows that 92%of the employees feel that performance appraisal is contributor to encourage better job, but 8% of the employees feel that it is not a contributor for job.
11. The appraisal system is helping each employee to discover his/her potential & make their short comings? a) Agree b) Disagree c) Strongly Agree
c) Strongly Disagree
OPINION A B C D TOTAL
NO.OF RESPONDENTS 38 6 5 1 50
PERCENTAGE 76 12 10 2 100
A B C D
From the above data it shows that 76% of the employees feel that appraisal system discovers potential and make their short comings and 125 employees feel that it does not discover potential. 12. The present performance appraisal of your organization assesses individual behavior, discipline, integration, communication skill, leadership qualities & growth? a) Agree b) Disagree c) Strongly Agree
d) Strongly Disagree
OPINION A C C D TOTAL
NO.OF RESPONDENTS 39 5 4 2 50
PERCENTAGE 78 19 8 4 100
A B C D
From the above data it shows that 78% of the employees agrees with the above statement and 10% disagree.
13. How do you want tour performance to be communicated to you? a) d) Written Form No Need NO.OF RESPONDENTS PERCENTAGE b) Oral Form c) Open Communication
A B C D TOTAL
30 10 4 6 50
60 20 8 12 100
A B C D
From the above data it is evident that most of the employees feel that their performance should be communicated to them in a written form.
14. What kind of counseling should occur in an organization? a) Formal OIPINION YES NO b) Informal NO.OF RESPONDENTS 29 21 PERCENTAGE 58 42
From the above data it’s evident that 58% feel of the employees feel that counseling in an organization should be of formal kind and 42% of employees feel counseling should of informal kind.
15. According to you, Counseling is a a) c) Formality b) Identifies Strength & Weakness of the employee
To know the areas of need for development NO.OF RESPONDENTS 12 PERCENTAGE 24
B C TOTAL
10 28 50
20 56 100
A B C
From the above data it’s evident that 56% of the employees feel that counseling is used to know the areas of development and 245 feel that it is just a formality and 20% feel that it identifies the strength & weakness of the employees.
16. How often did you speak, or discuss about your performance with your superiors? a) d) Frequently Never NO.OF RESPONDENTS PERCENTAGE b) Sometimes c) Rarely
A B C D TOTAL
16 19 9 6 50
32 38 18 12 100
a b c d
From the above data it’s evident that 38% of the employees said that they sometimes and 32% frequently speak with their superiors about performance. 17. Training & development programs improve the quality of the employees? a) d) Agree b) Disagree c) Strongly agree
From the above data it’s evident that 50% of the employees are strongly agree and 50% agree that training & development the quality of the employees in the organization. 18. Has your performance increased as a result of performance ap[praisal system.? a) d) To a large extent Not at all b) Moderate extent c) Less extent
OPINION A B
NO.OF RESPONDENTS 16 32
PERCENTAGE 32 64
C D TOTAL
1 1 50
2 2 100
Large extent Moderate extent Less extent Not at all
From the above data it’s evident that 64% of the employees are feel that to moderate extent and 32% to large extent think that performance increased as a result of performance appraisal system.
FINDINGS AND SUGGESTION: Findings:
It has been found that most of the employees think that the
performance appraisal is essential and they think it is used as a tool to improve performance, to determine organization needs, and to basis for pay increase, promotions, and transfer. The appraisal system facilitates growth & learning of employees and it is used to distinguish performers.
The existing appraisal system helps the management to identify potentiality of employees as well as useful for maintaining efficiency of the individual & organization. Some employees that they do not know which basis their performance is appraised and most of the employees feel that it help them discover their potential and enables to know their short coming. Organization provides training & development programs to overcome the short comings identified in performance appraisal. The employees that their promotions match their contributions and new performance appraisal technique should be adopted in the organization and the short comings are informed to them. The performance appraisal supports to experiment with new ideas as basis for promotion.
The performance appraisal system should facilitate career growth &
learning of employees. The short coming of employees should be informed to them after performance appraisal. Promotion should be based on performance rather than seniority or any other factors. Performance appraisal should be appraised by granting awards/ merit certificate. New performance appraisal techniques such as 360 degree performance appraisal system should be used. The performance appraisal should not be assessed by biased mind and
personal grudge. Feedback should not be given to the employees more frequently.
On what basis performance appraisal should be informed to the employees. The extent of communication with the top & middle level management. The feedback to performance appraisal shouldn’t only be given to those employees who are rated ‘below average’ but also to all the employees as is would motivate the employees to perform even better. Gauge the potential for performance of each employee.
QUESTIONNAIRE FOR A STUDY PERFORMANCE APPRAISAL SYSTEM.
1. Are you aware about the organization Performance Appraisal? a) Yes b) No
2. Do you think that Performance Appraisal is essential? a) Yes b) No
3. Does Appraisal System of your organization facilities career Growth & Learning of employees? 4. Performance Appraisal System really assesses the quality of an employee. Do you agree? a) Yes b) No
5. Periodicity of Performance Appraisal should be on a) Quarterly c) Annual basis 6. The present Performance Appraisal of your organization distinguishes the performer & non performers? a) Strongly agree c) Disagree b) Agree d) Strongly disagree b) Half-yearly basis
7. The Periodical Performance Appraisal of employee is required for maintaining efficiency of individual & organization? a) Yes b) No
8. Performance Appraisal in Railways is based upon a) c) Seniority b) Performance d) Both a & b
Recommendation & Trade Union influence
9. The Performance Appraisal of your organization assesses Individual Behavior, Discipline, integration, Communication Skill, Leadership
Qualities & Growth? a) d) Agree Strongly Disagree b) Disagree c) Strongly Agree
10. Hope do you want your performance to be communicated to you? a) c) Written Form b) Oral From No Need
Open Communication d)
11. Does the organization provide training & development programs? a) Yes b) No
12. Training & Development programs improve the quality of the employees? a) Yes b) No
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International Book co; 1989.
Essential of HRM and Industrial Relations- P. Subba Rao.
HRM- C.B. Mamoria and S.V Gankar- Himalaya Publishing House. “CH. Paramananda”, Article on Performance Management.
“ABC Manager’s Primer”, “An Executive Guide”, Activity Based Cost Management”, by “Gary Cokins”.
Robert Bascal “Performance Management” to help Companies,