Escolar Documentos
Profissional Documentos
Cultura Documentos
On
Submitted to
Mr. T. P. Singh
Project Supervisor
By
Vaidehi Singh
Roll No 0708170115
MBA IV Semester
To
U P TECHNICAL UNIVERSITY
Vaidehi Singh
MBA IV SEMESTER
JANUARY 2009
The author hereby grants I.F.T.M permission to reproduce and to distribute publicly, paper and electronic
copies of the project in whole or part.
ACKNOWLEDGEMENT
This project has been made possible through the direct and indirect co-operation of
various people for whom I wish to express my appreciation and gratitude. In the
preparation of this project report I have received help and encouragement from different
sources.
I express my sincere gratitude to Dr. Manjula Jain (Professor and Head of the dept. of
Management Studies); I convey my regards to my Project Guide Mr. T. P. Singh for his
I am also very thankful to all the faculty members of I.F.T.M. for providing me with their
I once again thanks to all those who extended their support and co-operation in bringing
VAIDEHI SINGH
PREFACE
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
work performance, appraisal really dates from the time of the Second World War - not
In many organizations - but not all - appraisal results are used, either directly or directly,
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
The purpose of this study has been to determine whether the performance appraisal was
used for employee development and whether the appraisal was emphasized as an
important part of the performance appraisal process in steel industry. Also whether the
Our study suggested that the performance appraisal has helped in increasing the
profitability of industry. Certain loop holes has been determined and suggestions were
made.
Chapter no. Title Page no.
Acknowledgment III
Preface IV
List of Table VI
1. Introduction 6
27
3. Objective
29
4. Research Methodology 31
5. Literature Review 34
7. Conclusions 64
9. Limitations 71
Bibliography 74
INTRODUCTION
Almost every organization in one way or another goes through a periodic ritual,
called many things. The formal performance appraisal has been called a tool of
allocation. Uses for performance appraisal have included equal employment opportunity
Performance appraisal has also been called an audit function of an organization regarding
a subordinate and supervisor, that usually takes the form of a periodic interview (annual
Almost every organization in one way or another goes through a periodic ritual,
called many things. The formal performance appraisal has been called a tool of
allocation.
And since people differ in their abilities and aptitudes. These differences are natural to a
great extent and cannot be eliminated even by giving the same basic education and
training to them. There will be some differences in the quality and quantity of work done
by different employees even on the same job. Thus, there is a great need to have suitable
a fair determination of the worth of an employee can take place only by appraising
numerous factors some of which are highly subjective, as for instant, attendance, while
others are highly subjective, as for instant, attitude and personality. The objective factor
can be assessed accurately on the basis of records maintained by the Human resource or
personnel Department, but there is no device to measure the subjective factor precisely.
Notwithstanding this, appraisal of these factors must be done to achieve the full
some other person trained in the techniques of merit rating. It employs various rating
qualities or deficiencies and the requirements of their respective jobs. To quote dale
concerned with not only the contribution of the members who form part of the
organization, but aims at spotting the potential also. The satisfactory performance is only
a part of the system as a whole and the management needs more information than mere
performance ratings of the subordinates. There are no two opinions about the necessity of
performance appraisal, which can meet requirements of the management to achieve the
organizational goals.
respect to his performance on the job and his potential for development. Performance
appraisal is concerned with determining the differences among the employees working in
the organization. Generally, the individual’s immediate superior in the organization and
whose performance is reviewed in turn by his superior does the evaluation. Thus,
employees in the work group, in terms of personal qualities or deficiencies and the
improving the performance of the human capital and by developing the capabilities of
teams and individuals within that organization (Armstrong and Baron, 2000). The process
of performance management therefore focuses not only with ‘WHAT’ is produced but,
also ‘HOW’ it is produced. It seeks to ensure that what has been produced is in line with
the organization’s needs and these products have been produced in line with the
These include performance appraisal system and coaching. Performance appraisal system
can be described as a fairly old system of measuring employees’ performance that has
been in use in many organizations. However, Performance appraisal has not brought in
the amount of positive results that was expected of it. Armstrong and Mulis (1994:86)
quoted one manager describing performance appraisal as “a dishonest annual ritual”. The
question that arises then is: “If Managers (the custodians of the system) do not have
confidence in their own system, what more employees (who happen to be victims of the
system)?”
The meaning of the word “appraisal” is “to fix a price or value for
process in which one values the employee contribution and worth to the organization.
objectives that need to be met on an agreed time period. The objectives that
are used in the Performance appraisal stem from the main organizational
goals.
The performance appraisal system has to be transparent and the employee
should be taken into full confidence. In many cases employees themselves are given a
solving by the organization and the employee. However the organization must also take
care of future potential and not get bogged down by current performance.
also have a peer group performance appraisal where colleagues rate the performance.
The HR person must also ensure that line managers are properly trained for
carrying out the appraisal including interviewing techniques and on how to give
feedback. The managers must also be trained to look at the cases objectively outside of
process of obtaining, analyzing and recording information about the relative worth of an
employee. The focus of the performance appraisal is measuring and improving the
actual performance of the employee and also the future potential of the employee. Its aim
employee’s excellence in the matters pertaining to his present job and his potential for a
better job." Performance appraisal is a systematic way of reviewing and assessing the
performance of an employee during a given period of time and planning for his future.
employee. It helps to analyze his achievements and evaluate his contribution towards the
Organizations exists to achieve goals. Goals are only met when individual
employees efforts matches with policy of the organization and thus bringing out success
and effectiveness. The assessment of how unsuccessful employees have been at meeting
their individual goals therefore becomes a critical part of HRM and here comes
effective way for managers to clarify performance goals and standards to enhance future
Is an organizational necessity.
heart of personnel management and reflects the management's interest in the progress of
the employees.
There are mainly two purposes for which performance appraisal is used by an
organization:
(1) To improve the work performance of employees by helping them realize and use their
(2) To provide information to employees for use in making work related decisions,
transfers and reassignments, demotions and termination’s are action based at least in
part on performance.
2) Appraisals provide feedback to employees and thereby serve as vehicle for personal
• Reassurance that they are contributing and doing the right thing
• Awareness of the impact on the desired results
3) Once the development needs of employees are identified appraisals can help establish
objectives for training programmes. Thus evaluations provide a basis for changing
knowledge, abilities, and other characteristics to consider in hiring, and they also
company’s values, philosophy and strategy. It also needs to be balanced with the desire
Currently most of the companies are using one of the following Performance Appraisal
Methods:
1). 360 Degree Appraisal Method
Under the 360 Degree appraisal method the employee is rated from all angles i.e., by
the superiors, subordinates, peers, suppliers, distributors, customers and clients. Under
the Management by Objective method the employee goals are set mutually by the
employee's and the management. And the employees are rated based on the
accomplishment of these goals. Under the Rating Scale method each employee trait or
characteristic is rated on a scale that usually has several points ranging from "poor" to
"excellent" (or some similar arrangement).The traits assessed on these scales include
technical competence, etc. The selected traits should be in some way relevant to the
appraisee's job.
The 360 degree appraisal involves rating of an employee or manager by everyone above,
alongside and below him. Corporates are using this tool to find out truths about their
gathering data on a person’s skills, abilities and behaviors from a variety of sources –the
manager, peers, subordinates and even customers and clients”. Thus, appraisal of an
employee is done by his superior, his peers, his subordinates and clients or outsiders with
whom he interacts in the course of his job performance. In 360-degree appraisal, besides
appraising the performance of the assesses, his other attributes such as talents, behavior,
Besides the employee himself, superior, subordinates and peers play an important role in
the appraisal. Structured questionnaires are used to collect responses about the employee
from his superiors, peers and subordinates. Several parameters relating to performance
and behavior are used in the questionnaires. Each manager is assessed by a minimum of
fifteen colleagues, at least two of them being his bosses, four of them peer, and six of
them subordinates. Even the important customers or clients of the firm may also be
requested to give their assessment of the concerned employee. The responses are
presented collectively to the assesses in the form of charts and graphs. Comments and
interpretations are presented later. Counseling sessions are arranged with the employee to
(ii) The gap between self assessment and the views of one’s colleagues of peer group
in reduced.
(iii) It facilitates empowerment of subordinates who get a say in the appraisal of their
bosses.
(v) Facts about organizational culture and ambience are brought to light by the
multiple appraisals.
(i) The 360 degree appraisal system ignores performance in terms of goals.
(ii) The candidate being appraised may not accept negative feedback from the
(iv) Linking rewards to findings under 360 degree appraisal can prove to be unfair.
(v) The subordinates and peers might not be fully competent in appraisal.
followed:
(i) Involve people. Ask them who should serve as raters, and give them an
opportunity to review and interpret the results. This will strengthen their
(ii) Ensure that relevant data are being collected. Focus on behaviors and
outcomes that raters are capable of observing and are competent to evaluate.
(iii) Ensure that no single rater can dramatically affect the outcome. Use a
large enough sample or eliminate the highest and lowest scores to ensure that no
(iv)Train raters in what and how to observe. The better people understand what
they look for and how to record”critical incidents” (specific things the person said
and did that can be used as examples to support their ratings, and better the
(v) Ask raters to support their evaluations. Whenever possible, raters should
discuss their observations and evaluations with other raters. These discussions
should trigger thoughts and combat selective memory. Raters should also be
required to provide a rationale for their rating to other raters. This would prevent
(vi)Move slowly and start small. Any organization considering using 360 º
purpose only and then gradually to make it a part of appraisal system. Even then,
the focus should be on the goal-setting portion of the appraisal. People need to get
comfortable with the idea of multisource feedback as a development tool before
A lot of organizations seem to be hurrying to integrate 360º feedback into the human
resource management system. Multisource feedback really does have the potential to
enhance human resource management system. However, 360º feedback won’t fix a
(vii) Develop a culture that supports open feedback. Not surprisingly, 360º
than authoritarian, where giving and receiving feedback are the norm and are seen
supervisor does the appraisal) is not working due to lack of straight talk and
organization.
(viii) Clear and agreed on performance measures and behaviors. When 360º
feedback is used for development only, the organization may be able to settle the
list of behaviors and skills that have reasonable face validity and general support:
“coaching” or “team building”, for instance. However, when the feedback is being
used to determine performance ratings, the result and behavior for which people
(ix)The users must support the system and be willing to invest the time required
intensive appraisal process even more demanding. It means more data to collect
are always important, two aspects of sound 360º feedback procedure are
particularly relevant when the data are used for appraisal purpose: the validity and
reliability of the practices for which people will be measured and the
(i) Appraisal by Superior/ Boss. This is the most important element of the 360
superior to ensure that employee sets goals not only in the area of business
performance but also in the areas that are vital to the organization. These are
called corporate thrust areas and may include relationship management, safety
and quality development. If the working style of the employee is a concern area
and needs improvement for enhancing effectiveness then goal may be set for
perspective. Firstly, superior must communicate to the employee in a clear way what
the organization plans for the employee. Secondly, if the employee has unrealistic
aspirations, then also it is superior’s responsibility to share with the employee the
realistic picture given his/ her strengths, development areas, experience, qualifications,
and the organization’s ability to provide growth. This is how the superior’s appraisal
(ii) Appraisal by the Peer Group. The peers play an important role in the life of an
employee in the organization. The can also provide a deep insight into the
personality make up, attitude and style of working of the employee. For better
results, it is essential to select the right peers for the purpose of appraisal. They
must include peers both from within the department as well as from the other
department. The concept of internal customers comes handy here. Three to five
In order to achieve the purpose of 360º appraisal, the peer group appraisal must strive to
get the feedback on (a) employee’s working style, (b) sensitivity towards others, (c)
spirit of co-operation and collaboration, and (d) ability to work as a team member.
is a clear expression from the organization that it encourages openness and that
that an employee’s subordinates do play a vital role in his appraisal. Thus, the
(b) guiding and training of subordinate, (c) motivation of subordinates, (d) team
building, etc.
Upward appraisal provides an opportunity to the subordinates to give feedback to their
superior on the kind of things they would like him/ her to continue doing (status quo),
things they would like him/ her to stop doing (areas for corrective action), things they
would like him/ her to start doing (areas for new initiatives).
(iv)Self Appraisal. Any program of 360º appraisal would not be complete without
appraisal facilitates the employee to identify his/ her strengths and weaknesses
system, employees use the self appraisal very effectively and organizations also
find that employees often are their own strongest critics and display very high
to express his career moves for the future. However, this is only for gathering
information and that under the given organizational constraints, it may not be
First Phase of Performance appraisals began in the early sixties were prepared in the
form of Annual Confidential Reports (ACR0, also known as Employee Service Records
(ESR) in some organizations. Negative remarks in the ACT or ESR were considered
damaging for career growth. It was thus important to keep the boss in good humor so that
the ACR or ESR did not get spoiled. The ESR was largely trait based and the traits used
The ACR and it was this strict confidentiality that was supposed to serve as the
motivating force for them. This may be considered as Phase 1 of the performance
In the Second Phase that spanned late sixties and early seventies, the main change was in
communication of adverse remarks to the employees. It was felt that unless this system of
communicating to the employees in writing any quality or trait on which they got a rating
of 33 per cent or less. Even though the communication was sent to the employer by the
took it very seriously because it required office played a key role in moderating the
assessment, and he normally had all the powers to overrule the ratings of the reporting
In the Third Phase of appraisals, the employee was given a scope to state his own
accomplishments in the confidential report form. The term annual confidential report was
replaced during this period by Performance Appraisal. The appraisal process began at the
end of the year with a statement by the appraise about his significant accomplishments
during that year. Some organizations later turned this “opportunity given to the appraisee
misnomer as there was no scope for the appraisee to appraise himself. A few
organizations subsequently developed this part of the appraisal by adding other questions
about difficulties faced, plans for improvement next year etc. Everything else remained
the same. The formats became a little more elaborate and in few cases, the appraisal
included the details of the actual work done, largest achieved etc. The confidentiality,
however, was maintained as before. In most cases, there was no communication to the
appraisee about the performance assessment. In a few of them, a column of training needs
was introduced. The appraisals continued to be control oriented and not developmental.
It was really in the he Fourth Phase that the system of performance appraisals underwent
a quantum leap. This phase began in the mid-seventies and in a way was initiated in India
by Larsen & Turbo Limited, followed by the State Bank of India , Bharat Earth Movers
and few other organizations. This phase witnessed a shift from control to development,
The movement towards open and development oriented appraisal systems was initiated
participative (dialogic and interactive), open and developmental. It required the employee
and his reporting officer to plan the performance (the term key performance areas or
KPAs was introduced) or the appraisee in the beginning of the year, review it after six
months with the boss, analyze the factors affecting performance, discuss developmental
needs, have performance counseling and share the ratings with the appraisee. The system
seventies and early eighties, most organizations wee fascinated by this open and
development oriented system. Some of them even started new HRD departments by
appointing HRD managers having the skills to design, monitor and implement the
system. While a few organizations switched over to this system, it took about 10 years of
experience to fully understand its intricacies and dynamics. The change process was slow
largely because the employees were not used to the openness introduced by the new
system, the HRD managers did not have enough skill base to monitor it, and the top
management lacked patience and perspective about its potential advantages. Several
organizations could not get out of the mindset created by earlier confidential report
system. They continued to use it for promotions, which were considered as the most
started setting down and feeling comfortable with the open appraisal systems.
Phase Fifth has started only in last three years with organizations showing some maturity
movement towards development in spirit and form. This is symbolized by the substitution
rewards and controls to culture building and development and the new phase also
indicates a shift towards appraisal by multiple sources rather than by only the reporting
officer.
SCOPE AND IMPORTANCE OF THE STUDY
organization;
To find out what tools it implies for bridging the communication gap between
To study it’s role in creating a positive and healthy climate in the industry; and
To understand it’s decision making power regarding employees.
OBJECTIVE OF THE STUDY
particular industry.
3. On the basis of what industry increase salary and provide training to its
4. To understand more and more about role of employee and become clear about
his functions.
5. To understand employee’s own strengths and weaknesses with respect to his role
and functions.
The formidable problem that follows the task of defining the research problem is the
preparation the design of the research project, popularly known as the “research design”.
Decisions regarding what, where, when, how much, by what means concerning an
arrangement of conditions for collection and analysis data in a manner that aims to
combine relevance to the research purpose with economy in procedure.” In fact, the
constitutes the blueprint for the collection, measurement and analysis of data. As such the
design includes outline of what the researcher will do from writing the hypothesis and its
The study comprises critical analysis of various functions, methods and scope of
employees in steel industry. It also focus on the impact of performance appraisal system
on industrial relations and help in finding out various tools for bridging the
Data comprising the impact of performance appraisal system on steel industry is required
for the study. Therefore, journal articles and news article from leading business
Since data is secondary therefore most of the review was done with help of internet,
Data is analyzed on the basis of journal, newspaper articles and the core knowledge
gained on performance appraisal system from few books and steel industry. A complete
review has been done on role of performance appraisal system on steel industry and its
impact in gaining competitive advantages. Therefore, for this purpose role of
performance appraisal has been studied in few companies prevailing in the steel industry.
manager should make every effort to obtain as much objective information about the
employee's performance as possible. Low performance can push the organization back in
today’s tough competition scenario. The project is aimed at analyzing the performance
appraisal and it’s role in steel industry. Therefore, to start with this critical analysis it is
Steel is crucial to the development of any modern economy and is considered to be the
backbone of human civilisation. The level of per capita consumption of steel is treated as
an important index of the level of socioeconomic development and living standards of the
having strong forward and backward linkages in terms of material flows and income
generation. Steel industry was in the vanguard in the liberalisation of the industrial Sector
and has made rapid strides since then. The new Greenfield plants represent the latest in
technology. Output has increased, the industry has moved up in the value chain and
exports have risen consequent to a greater integration with the global economy. The new
plants have also brought about a greater regional dispersion easing the domestic supply
position notably in the western region. At the same time, the domestic steel industry faces
new challenges. Some of these relate to the trade barriers in developed markets and
certain structural problems of the domestic industry notably due to the high cost of
Commission of new projects. The domestic demand too has not improved to significant
levels. The litmus test of the steel industry will be to surmount these difficulties and
The countries like China, Japan, India and South Korea are in the top of the above in steel
production in Asian countries. China accounts for one third of total production i.e. 419m
ton, Japan accounts for 9% i.e. 118 m ton, India accounts for 53m ton and South Korea is
accounted for 49m ton, which all totally becomes more than 50% of global production.
Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth.
(mtpa)
China 272.5
Japan 112.7
United States 98.9
Russia 65.6
South Korea 47.5
Germany 46.4
Brazil 32.9
India 32.6
Italy 28.8
Steel has been the key material with which the world has reached to a developed position.
All the engineering machines, mechanical tools and most importantly building and
construction structures like bars, rods, channels, wires, angles etc are made of steel for its
feature being hard and adaptable. Earlier when the alloy of steel was not discovered, iron
was used for the said purposes but iron is usually prone to rust and is not so strong. Steel
is a highly wanted alloy over the world. All the countries need steel for the infrastructural
development and overall growth. Steel has a variety of grades i.e. above 2000 but is
mainly categorized in divisions – steel flat and steel long, depending on the shape of steel
manufactured. Steel flat includes steel products in flat, plate, sheet or strip shapes. The
plate shaped steel products are usually 10 to 200 mm and thin rolled strip products are of
1 to 10 mm in dimension. Steel flat is mostly used in construction, shipbuilding, pipes
and boiler applications. Steel long Category includes steel products in long, bar or rod
shape like reinforced rods made of sponge iron. The steel long products are required to
produce concrete, blocks, bars, tools, gears and engineering products. After
Indian steel industry. In Financial Year 1991, the six major plants, of which five were in
the public sector, produced 10 million tons. The rest of India steel production, 4.7 million
tons, came from 180 small plants, almost all of which were in the private sector. India's
Steel production more than doubled during the 1980s but still did not meet the demand in
the mid-1990s, the government was seeking private-sector investment in new steel plants.
million ton steel plant and three pig-iron plants totalling 600,000 tons capacity in West
Bengal, with Chinese technical assistance and financial investment. The commissioning
of Tata Iron & Steel Company's production unit at Jamshedpur, Bihar in 1911-12
heralded the beginning of modern steel industry in India. At the time of Independence in
1947 India's steel production was only 1.25 Mt of crude steel. Following independence
and the commencement of five year plans, the Government of India decided to set up four
integrated steel plants at Rourkela, Durgapur, Bhilai and Bokaro. The Bokaro plant
was commissioned in 1972. The most recent addition is a 3 Mt integrated steel plant with
over 40% of India's crude steel production. SAIL comprises of nine plants, including five
integrated and four special steel plants. Of these one was nationalized and two were
acquired; several were set up in collaboration with foreign companies. SAIL also owns
PUBLIC SECTOR
Steel Authority of India Limited (SAIL) is a company registered under the Indian
Companies Act, 1956 and is an enterprise of the Government of India. It has five
Bengal), Bokaro (Jharkhand) and Burnpur (West Bengal). SAIL has three special and
alloy steel plants viz. Alloy Steels Plant at Durgapur (West Bengal), Salem Steel Plant at
Salem (Tamilnadu) and Visvesvaraya Iron & Steel Plant at Bhadravati (Karnataka). In
a subsidiary of SAIL. SAIL has Research & Development Centre for Iron & Steel
(RDCIS), Centre for Engineering & Technology (CET), SAIL Safety Organisation (SSO)
and Management Training Institute (MTI) all located at Ranchi; Central Coal Supply
Management Division (EMD) and Growth Division (GD) at Kolkata. The Central
Marketing Organisation (CMO), with its head quarters at Kolkata, coordinates the
RINL, the corporate entity of Visakhapatnmam Steel Plant (VSP) is the first shore based
integrated steel plant located at Visakhapatnam in Andhra Pradesh. The plant was
commissioned in August 1992 with a capacity to produce 3 million tonne per annum
(mtpa) of liquid steel. The plant has been built to match international standards in design
and engineering with state-of- the- art technology incorporating extensive energy saving
and pollution control measures. Right from the year of its integrated operation, VSP
established its presence both in the domestic and international markets with its superior
quality of products. The company has been awarded all the three International
standards certificates, namely, ISO 9001:2000, ISO 14001: 1996 and OHSAS 18001:
1999. RINL was accorded the prestigious ‘Mini Ratna’ status by the Ministry of Steel,
Govt. of India in the year 2006 and the company is gearing up to complete the ambitious
expansion works to increase the capacity to 6.3 mtpa by 2009. RINL has prepared a road
HSCL was incorporated in June 1964 with the primary objective of creating in the Public
integrated Steel Plants. HSCL had done the construction work of Bokaro Steel Plant,
Vizag Steel Plant and Salem Steel Plant from the inception till commissioning and was
associated with the expansion and modernisation of Bhilai Steel Plant, Durgapur Steel
Plant, IISCO (Burnpur) and also Bhadravati Steel Plant. With the tapering of construction
activities in Steel Plants, the company intensified its activities in other sectors like Power,
Coal, Oil and Gas. Besides this, HSCL diversified in Infrastructure Sectors like
and Industrial and Township Complexes involving high degree of planning, coordination
and modern sophisticated techniques. The company has developed its expertise in the
areas of Piling, Soil investigation, Massive foundation work, High rise structures,
company has also specialised in carrying out Capital repairs and Rebuilding work
including hot repairs of Coke Ovens and Blast Furnaces and other allied areas of
4. MECON LTD.
contracting organization in the field of iron & steel, chemicals, refineries &
petrochemicals, power, roads & highways, railways, water management, ports &
harbours, gas & oil, pipelines, non ferrous, mining, general engineering, environmental
engineering and other related/ diversified areas with extensive overseas experience.
MECON, an ISO: 9001- 2000 accredited company, registered with World Bank (WB),
Asian Development Bank (ADB), European Bank for Reconstruction and Development
Development Organisation (UNIDO), has wide exposure and infrastructure for carrying
out engineering, consultancy and project management services for mega projects
encompassing architecture & town planning, civil works, structural works, electric, air
computerization etc. MECON has collaboration agreements with leading firms from the
USA, Germany, France, Italy, Russia, etc. in various fields. The authorized share capital
of the company is Rs. 10,400 lakh (previous year Rs. 4,100 lakh) against which the paid
up capital is Rs. 10,313.84 lakh (previous year Rs. 4,013.84 lakh). All the shares are held
PRIVATE SECTOR
The private sector of the Steel Industry is currently playing an important and dominant
role in production and growth of steel industry in the country. Private sector steel players
have contributed nearly 67% of total steel production of 38.08 million tonnes to the
country during the period April-December, 2007. The private sector units consist of both
major steel producers on one hand and relatively smaller and medium units such as
Sponge iron plants, Mini Blast Furnace units, Electric Arc Furnaces, Induction Furnaces,
Rerolling Mills, Cold-rolling Mills and Coating units on the other. They not only play an
important role in production of primary and secondary steel, but also contribute
Tata Steel has an integrated steel plant, with an annual crude steel making capacity of 5
million tonnes located at Jamshedpur, Jharkhand. Tata Steel has completed the first
six months of fiscal 2007-08 with impressive increase in its hot metal production. The hot
period of the previous year. The crude steel production during the period was 2.43
million tonnes which is marginally lower than the production of 2.45 million tonnes
last year. The saleable steel production was at a lower level during the period April
September, 2007 (2.34 million tonnes) compared to the corresponding period of last year
(2.36 million tonnes). Tata Steel is continuing with its programme of expansion of steel
making capacity by 1.8 million tonnes to reach a rated capacity of 6.8 million
commissioned by May 2008 against the original schedule of June 2008. The Company
has planned to take the capacity to 10 million tonnes by the fiscal year 2010. Tata Steel’s
the land acquisition process. Jharkhand Project is awaiting announcement of Relief &
Essar Steel Holdings Ltd. (ESHL) is a global producer of steel with a footprint covering
India, Canada, USA, the Middle East and Asia. It is a fully integrated flat carbon steel
capacity of 8 million tonnes per annum (MTPA). With its aggressive expansion plans in
India and other parts of Asia and North America, its capacity is likely to go up to 25
MTPA by 2012. Its products find wide acceptance in highly discerning consumer sectors,
such as automotive, white goods, construction, engineering and shipbuilding. Essar Steel
Ltd., the Indian Company of Essar Steel Holdings Limited, is the largest steel producer in
western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to
increase this to 8.5 MTPA. The Indian operations also include an 8 MTPA beneficiation
plant at Bailadilla, Chattisgarh which has world’s largest slurry pipeline of 267 km to
transport beneficiated Iron Slurry to the pellet plant, and an 8 MTPA pellet complex at
Visakhapatnam. The Essar Steel Complex at Hazira in Gujarat, India, houses the world’s
largest gas-based single location sponge iron plant, with a capacity of 4.6 MTPA. The
complex also houses the steel plant and the 1.4 MTPA cold rolling complex. The steel
complex has a complete infrastructure setup, including a captive port, lime plant and
oxygen plant. Essar Steel produces highly customized valueadded products catering to a
variety of product segments and is India’s largest exporter of flat products, selling close
to half of its production to the highly demanding US and European markets, and to the
growing markets of South East Asia and the Middle East. The company’s products
API, TUV Rhine Land and Lloyd’s Register. Essar Steel is the first Indian steel company
to receive an ISO 9001 and ISO 14001 certification for environment management
practices. Essar Steel utilizes Hot Briquetted Iron-Direct Reduced Iron (HBIDRI)
technology supplied by Midrex Technology, USA along with four 150 tonnes DC electric
arc furnaces imported from Clecim, France. The Hazira unit of Essar Steel is equipped
with 5.5 million tonnes per annum (MTPA) hot briquetted iron plant, 4.6 MTPA electric
are furnace, 4.6 MTPA continuous caster, 3.6 MTPA hot strip mill and 1.4 MTPA Cold
Rolling Mill. During the year 2007-08, Essar was awarded costs ISO/TS
Jindal Steel & Power Limited is one of the fast growing major steel units in the country.
The Raigarh plant of JSPL has a present capacity of 1.37 million tonne per annum
(MTPA) sponge iron plant, 2.40 MTPA Steel Melting Shop (SMS), 1.0 MTPA plant
Mill, 2.30 sinter plant, 0.8 MTPA coke oven and a 330 Mega Watt captive power plant.
During the year 2006-07, the company produced 1.19 million tonnes of sponge iron, 0.8
million tonnes of various steel products, 0.57 million tones of hot metal and 0.21 million
tonnes of rolled products. The performance of JSPL during April-October 2007-08 was
0.68 million tonnes of sponge iron, 0.72 million tonnes of steel products
Therefore, it can rightly be concluded that the liberalization of industrial policy and other
initiatives taken by the Government have given a definite impetus for entry, participation
and growth of both private and public sector in the steel industry.
TRENDS IN PERFORMANCE APPRAISAL SYSTEM
Performance appraisal in its traditional from known as ACR-Annual Confidential Report
is often misused than used. Performance appraisal has now been recognized as a HRD
function. In the last decade many organizations have reviewed and changed their
1) There is a trend away from the composite appraisals with multiple objectives (e.g.
2) There is a move away from isolated appraisal system to the business linked one .
3) There is shift away from closed confidential type to open dialogue and discussions
based system.
supervisors.
7) There is a shift from standard systems to flexible and group specific ones.
research change.
Performance appraisal refers to the assessment of an employee’s actual performance,
behavior on jobs, and his or her potential for future performance. Appraisal has several
objectives but the main purposes are to assess training needs, to effect promotions, and to
Appraisal of performance proceeds in a set pattern. The steps involved are –defining
conducting performance interview, and using appraisal data for different HR activities.
However, performance appraisal system also serves to be the backbone of any industry in
the corporate world and since the project report focuses on the role played by
Method”
resource management, because it has a great effect on both the financial and program
appraisal method which is most efficient in their organizations. In this paper, we propose
a framework for the selection of appraisal methods and compare some performance
appraisal methods in order to facilitate the selection process for organizations. The value
of this framework is that, with use of it, organisations can evaluate their performance
appraisal method with respect to the key features of it before implementing any method
as well as expending extra costs. This framework is theoretical in nature, and is build
unusual topic in the field of career development. However, it is considered most relevant
in the current employment climate for graduates given the repeated emphasis on career
development at various stages of the employment process. There has been a growing
emphasis since the mid-1970s on employees' needs rather than just organizational needs,
and a recognition of the strategic value of employees being developed to their best
potential. Organizations have become increasingly aware that the effective development
of their employees' skills and knowledge has benefits for the whole organization. Career
each stage of this discussion of the design of a performance appraisal system. This issue
and development opportunities as organizations seek to attract the brightest and best
crucial factor in the setting of career goals and the perception of job satisfaction leading
Current research shows that HRM practices are important for enhanced corporate
performance but little has been reported on the effect of HRM practices and corporate
performance in the context of economic liberalization of India. This study tries to
understand the role of innovative HRM practices and specifically questions how HRM
to study the impact of innovative HRM practices on firm performance. The survey found
that the innovative recruitment and compensation practices have a positive significant
relationship with firm performance. It was observed that recruitment, the role of the HR
Indian firms in the context of India’s economic liberalization. The synergy between
innovative HRM practices was not significant in enhancing corporate performance during
practices using data from a sample of 36 homogeneous steel production lines owned by
innovative work practices, which include incentive pay, teams, jlexible job
of productivity than do lines with the more traditional approach, which includes
narrow job de$nitions, strict work rules, and hourly pay with close supervision. Our
results are consistent with recent theoretical models which stress the importance of
NEWSPAPER ARTICLES
NEW DELHI: The global economic slowdown has brought the best from state-owned
steel maker SAIL as the company has become the most profitable steel company globally
beating steel biggies such as Arcelor Mittal, Posco, Bao Steel, Nippon in the half yearly
profits.
The company has reported net profit of $ 71 million in the January-June period of 2009
bucking the trend where most global steel companies have made losses. Only Korean
steel maker has come closer to match SAIL reporting a net profit of $ 565 million in the
“SAIL’s performance during the first half of 2009 has been best in the world steel
industry because of a series of steps that the company took in response to the economic
parameters, it lay thrust on value added products and cost efficiency. The efforts have
Being a zero debt company, SAIL has also been able to reduce its interest cost
substantially. It has also rationalised manpower reducing its workforce by 7,500 people in
2008-09 and another 6000-7000 people would reduce in 2009-10.
The performance of SAIL mirrors the improved showing given by other domestic steel
companies. Steel demand in the country has grown month-month in the current financial
year and is projected to grow by 10% for the full year. Even World Steel Association
(World steel) has forecast that while the global steel consumption this year is set to fall
by around 15% to 1,019 million tones, use of steel in India would grow by about 2%.
In terms of profit during the January-June period, POSCO is the only international
company coming closer to SAIL. ArcelorMittal has reported net loss of $1855 million
during the period while Nippon has reported a loss of $1043 million, Severstal a loss of
$944 million, US Steel loss of $831 million, Bao Steel a profit of $98 million.
Another Indian steel company, Tata Steel has emerged as the third most profitable
company during the period, reporting a profit of $458 million. The profitability is only
The comparison has been make using the average of dollar rates prevailing during the
“Europe and America may take another couple of years to recover fully after which we
may see a rise in demand there. Till that time only Indian and Chinese companies are
India’s steel imports jumped more than 70% to 1.4 mn tonnes last month against 8 lakh
tonne in the same month a year ago. The sharp rise in imports was due to low-priced
shipments coming from China, Thailand and Ukraine into India at $450-500 per tonne,
25% cheaper than the international price, then ruling at $600-700 per tonne. The steel
ministry’s Joint Planning Committee that collects data on iron and steel on a monthly
basis shows that steel imports dipped 10.7% to 5.25 million tonnes in April-October
against 5.88 million tonnes in the corresponding period a year ago. Availability of low-
priced imports from some countries resulted in huge imports in November. This
happened when domestic steel makers were cutting production due to lower demand.
Last month, the government imposed 5% import duty on steel products to protect
domestic industry against cheap imports. But steel producers feel the move is insufficient
to bring down imports as china as withdrawn export tax on some steel products to get rid
of surplus stock. The government has also initiated investigation into dumping
From China but steel firms feel it’s a lengthy process and will take at least 8-9 months to
compel
FINDINGS AND ANALYSIS
The main objective of this study is to analyse the role of performance appraisal and
system implementation in Steel Industry. Since the research is empirical in nature that’s
why following aspects of various organization structure and design of particular industry
Jindal brothers
Jindal Brothers is a young, dynamic organization and is going strong on the stock market.
operating and in order to keep it with the pace of the environment it believes in
2- Jindal Brothers has a matrix kind of a structure wherein it takes the form of
dilution of priorities became e people do not know who is responsible for what.
5- An organization is a network of authority, responsibility and relationships.
While on the job, performance reviews of every employee are done every quarter. The
reviews are done with a view to helping the individual excel at his/her workplace. In case
there are any training requirements, these are noted and acted upon in the coming quarter.
Also, the goals and objectives for the employee are re-visited for
The performance appraisal mechanism is carried out at Jindal Brothers for promotional
purposes.
These are done so as to motivate the employee and improve his performance level. The
method is as follows:
d) After measuring of the actual performance, the same is compared with the
standards set
f) And finally, if need arises corrective action is initiated. For this purpose the
by the departmental heads at all the Jindal Brothers. It is then measured as a tool
3. Paired Comparisons
It is based on the performance level of the employee generally classified on the basis of:
• Targets achieved
Thus we can observe that the appraisal system is not a biased one but based on
performance and productivity basis. All the respective heads of the employee together
with the senior persons at the center brainstorm and then give the promotion.
• Coworkers – 40%
• Subordinates - 20%
• Superior - 40%
Thus the feedback given by these members at Jindal Brothers is considered under a
holistic view and then the employee is given a performance appraisal. This evaluation
method involves 40% feedback from the coworkers which says that the employee should
not only maintain good rapport with the senior or junior but majorly with the coworkers
also.
3. Paired Comparisons
The evaluator compares all possible pairs of subordinates on their overall ability to do the
centers. This is highly confidential and the information is sent in sealed envelopes and
opened only at the time of the final evaluation. There is no further discussion regarding
Basically there are two types of performance appraisal done on the basis of post of the
This system is for performance appraisal for executives of the level E-0 to E-4 . The
I. Appraisee write his view over the actual achievement for the Key performance
II. Comments on fulfillment of KPA / Task and Target are written by the
III. Special Jobs other than tasks given and normal routine work are written by
appraisee.
II. Comment over Strengths and weaknesses and areas for development are written
III. Appraisee can help the reporting officer by giving examples which shows his
C) Performance Assessment :
I. Rating between 1 to5 are given to the appraisee by the Reporting Officer
Potential Factors.
Cost control
Coordination
Discipline
Initiative
III. Final scores are calculated by multiplying rating and weightage .By adding
I. Both reporting and reviewing officers write their suggestions whether the
II. In some exceptional case Head of department give his comments on overall
E) Final Assessment
I. Total Factor Score by both Reporting and Reviewing officers is written and
average is calculated.
III. If Final Grade is C , indicate whether to promote or not to promote the appraisee.
VI.
I. Rating are given by both Reporting and Reviewing officers on the basis of
Multi-skill Utilization
Innovativeness
responsibility
III. Scores out of 100 are calculated by multiplying rating with weightage .
appraisee.
In the present performance appraisal system of SAIL we found the following loop
holes: If the appraisee has good terms with the reviewing officer and does not have a
smooth relationship with the reporting officer, in such case the reporting officer is
sometimes forced by the reviewing officer to give better score to the appraisee.
SURVEY FINDINGS
In this section, basic data for the number companies constituting steel in industry is
Frequency and frequency percent scores were computed for each company and thus it
Promotions were and known to most of the top and senior management while
middle and lower management were a bit not clear about it. This could be
attributed to the fact that senior and top management were more involved in
decision making and policy formulation than are the middle and lower
management.
At the lower levels of the organization, performance can be quantified, and the
managers are made accountable at the higher echelons the tasks are too complex
Most of the managers feel that the mechanism for potential appraisal is not
adequate.
The industry believed that self appraisal is the best for managers and above.
subordinates is essential.
The performance of the employees is not regularly monitor and the required
feedback is provided to the subordinates from time to time. The appraisals are
It would not be wrong to say that interpersonal relations and personal biases (i.e.
1. This industry proves that a major amount of work towards developing an effective
and efficient performance appraisal system has not been accomplished to the
fullest.
2. It seems that the industry is genuinely interested in improving the efficiency and
environment;
effect.
The appraisal system should be more sensitive and responsive to current competitive
environment. This is possible through making the industry :
• Cost effective
• Technology oriented
• Focused towards values and culture that would help unbottle hidden talent.
There should be some aspect in the PA forms, which deals with the effect of Internal
Influences, organizational influences and external influences on performance of
employee to make the PA system more sensitive to changes.
The work done towards modifying and developing performance appraisal systems, time
to time should be continued.
• Individual rewards should be declined with the PA system. The focus should shift
to team rewards. To recognize individual excellence, the team rewards. To recognize
individual excellence, the team should recommend rewards to tone up motivation
levels in the entire team.
However there is also a need for recognition and rewarding good work. Alternative
systems of rewarding with multiple reward/recognition mechanism are needed. But these
systems should be separated from other systems (like career planning).
Role of HRD
• HRD should develop relevant competencies and work through empowering the
line managers.
• “Role analysis” should find a place in Steel Industry. “Role directories should be
published with key functions for each role.
a person has done and how has he done. The nature of Performance appraisal and its
effectiveness depends a great deal on how human resources in the industry are viewed
and treated. People are to be treated as resources of the industry. Unlike the other
resources, the human resources have the capability of expanding to unlimited extents
should understand the nature and capabilities required to perform different functions as
organizational content.
These capabilities can be considered to fall under four categories. They are:-
The extents to which the various capabilities are required for the performance of the job
1. The economic indicators are all favorable for Growth, temporally slump is
ephemeral.
2. Indian steel industry exudes optimism , thus, more stress relieving packages
this respect the HR Dept should attempt to obtain the maximum agreement of
management.
5. The industry should try to avoid employee resistance, which is associated with
change worlds true change follows instance. This for all kinds of systems be it
Performance Appraisal.
The project report carries with it few limitations, on which the accuracy of the text
written will depend. This study is cross-sectional and data were collected over
two time periods but are still perceptive. Cross-sectional data might create problems with
respect to causality.
The first and foremost limitation is regarding the sources of information. The
information contained has been obtained from sources believed to be reliable and
Using several statistical tools derives the estimates. Hence the findings obviously
Same sets of data from different sources are different. Since not all the data are
available from a single source, an attempt has been made to standardize the data
project.
Many of the US studies have used multiple criteria for performance, although it is
not sure how well those would transfer to the Asian context. Not using multiple
Finally, this study did not find evidence of the configuration argument and did not test the
contingency argument, but could find evidence in the universalistic or the best practice
perspective. One way of explaining this might be that due to the turbulent and hyper-
high-involvement work systems. In other words, there may be some restriction in range
with regard to organizational environments that somehow undercut this study’s ability to
Ltd., 2005
WEBSITES
1. www.google.com
2. www.scribd.com
3. www.wikipedia.org
4. www.sailindia.co.in
5. www.performance-appraisal.com/intro.html
JOURNALS