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M. P. BIRLA INSTITUTE OF MANAGEMENT (ASSOCIATE BHARATIYA VIDYA BHAVAN) #43, Race Course Road, BANGALORE 560001 (2006)
M P Birla Institute Of Management
Effectiveness Of PAS
DECLARATION
I hereby declare that, this Dissertation is entitled EFFECTIVENESS OF PERFORMANCE APPRAISAL IN BAL PHARMA LTD is the result of project work undertaken by me under the guidance and supervision of Prof. Nandini Vaidyanathan, Professor, MPBIM, Bangalore, in partial fulfillment of the requirements for the award of Degree of Master of Business Administration. I further declare that this dissertation has not been submitted to any University/Institute for the award of any degree/diploma or any other similar title.
(SAROJA BHIMAYYA)
Effectiveness Of PAS
ACKNOWLEDGMENT
I would like to express my sincere gratitude to my research guide Prof. Nandini Vaidyanathan, Professor, M. P. Birla Institute of Management, Bangalore for her constant encouragement and guidance in the course of the research investigation. Further, I would also like to thank Prof. K V PRABHAKAR for his help in completing the project. I have gained a lot of knowledge through out the course of carrying out this project. And also, I would like to thank Maj. Kulwant Singh GM HR & Admin and Mrs. Mahalaxmi Asst. Manager HR (External Guide) in Bal Pharma Ltd for their support and guidance for successfully completing the project. I have gained a lot of knowledge through out the course. I would also like to sincerely thank my family and friends and my colleagues who have helped me in completing this project by providing me with the academic support.
SAROJA BHIMAYYA
Effectiveness Of PAS
Effectiveness Of PAS
CONTENT
Chapter Executive Summary 1 Introduction Background of the study Performance Appraisal and its importance Company Profile Performance Appraisal process in Bal Pharma Ltd. Review of literature Purpose of the review of literature Methodology of the review of literature Summary of Review of Literature Research methodology Problem Statement Objectives of the Research Type of Research Sampling Technique Sample size Instrumentation techniques Actual collection of data Interpretation and analysis Limitations of the research Data Analysis and Interpretation Major Findings of Research Recommendations Annexure Title Page No 2
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5 6 7 8
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List of Tables
Table No 1 Table Description Table showing employee service in the company Table showing the responses for purpose of PAS Table showing the rating officer for the PAS Table showing coverage of parameters in PAS Table showing coverage of parameters in PAS Table showing coverage of parameters in PAS Table showing coverage of parameters in PAS Table showing accurate evaluation of Performance Table showing preference of present rating system Table showing assistance of the performance parameters Table showing dependence of appraisal system Table showing scope of individual development in the organization Table showing opinion about the suggestions Table showing satisfaction of PAS Page No 38
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List of Graphs
Table No 1 Graph Description Graph showing employee service in the company 2 Graph showing the responses for purpose of PAS 3 4 Graph showing the rating officer for the PAS Graph showing coverage of parameters in PAS 5 Graph showing coverage of parameters in PAS 6 Graph showing coverage of parameters in PAS 7 Graph showing coverage of parameters in PAS 8 Graph showing accurate evaluation of Performance 9 Graph showing preference of present rating system 10 Graph showing assistance of the performance parameters 11 Graph showing dependence of appraisal system 12 Graph showing scope of individual development in the organization 13 14 Graph showing opinion about the suggestions Graph showing satisfaction of PAS Page No 38
40 41 42
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Effectiveness Of PAS
EXECUTIVE SUMMARY
The Indian Pharmaceutical Industry today is in the front rank of science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 12 to 18 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex compounds, almost every type of medicine is now made indigenously.
Bal pharma was incorporated on 19th May 1987 as a private limited company and it commenced commercial production from 1992. Bangalore based pharmaceutical
company engaged in manufacturing and R&D of pharmaceutical products Also quoted on BSE. Mr.Shailesh Siroya, heads the company by playing an active role as the Managing Director of the company and steering it to better levels of profitability, quality, and perfection..
Human Resource Management is a management function that helps managers to Recruit, Select, Train and Develop members for an organization. Performance appraisal may be understood as the assessment of an individuals performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility, health and the like.
The Performance Appraisal System needs to be very transparent and helpful both to the employees and to the organization. The need is to get a feedback from appraisers and appraisee, working in the organization, about the current state of the PAS. Only after analyzing the current state of PAS, the human resource managers can go to the next step of improvements in PAS. A survey is therefore required.
Effectiveness Of PAS
A study was undertaken to ascertain the views/opinions of the Raters and Ratees working in the company and to suggest appropriate modifications about the existing PAS.
Structured questionnaire was prepared and discussed personally with the respondents to get their responses. The sample size will be restricted to 50 executives chosen on random sampling method.
The findings indicate that the executives in general, the raters and the ratees are very well aware of the appraisal system followed in the company. The knowledge about the appraisal system is also found to be satisfactory. But there exists a performance related communication gap between the appraiser and the appraisee. The responses of the raters show that they encounter problems with the standards of evaluation. It was also found that appraisees dont get timely feedback from their appraisers. Training/counseling was provided occasionally to the ratees to improve their performance.
A suitable recommendation needs to be provided in this front. Incorporating a suitable modification in the existing performance appraisal system can reduce the problems faced by the raters and ratees. The following recommendations are made:
The training interventions should be more frequent, there should be system for more frequent feed back on employee performance and appraisal process and Introduction of 360-degree appraisal system. .
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INTRODUCTION
Background of the Study
Human Resource Management is a management function that helps managers to Recruit, Select, Train and Develop members for an organization. HRM is concerned with the peoples dimension in organizations. HRM is a series of integrated decisions that form the employment relationship, their quality contributes to the ability of the organizations and the employees to achieve their objective. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organizational objectives. This is true, regardless of the type of organization whether government, business, education, health, recreation, or social organization. Thus, HRM refers to a set of programme; functions and activities designed and carried out in order to maximize both employees as well as organizational effectiveness.
Objectives of HRM
The primary objective of HRM is to ensure the availability of a competent and willing workforce to an organization. Beyond this, there are other objectives, too.
Specifically, HRM objectives are of four fold: 1. Societal 2. Functional 3. Organizational 4. Personal
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2. Organizational Objectives
Human resource planning Employee relations Selection Training and Development Appraisal Placement Assessment
3. Functional Objectives
4. Personal Objectives
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PERFORMANCE APPRAISAL
The History of Performance Appraisal
Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But that was not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War not more than 60 years ago.
Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world's second oldest profession!
There is, says Dulewicz (1989), "... a basic human tendency to make judgments about those one is working with, as well as about oneself." Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily.
The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate.
Performance appraisal systems began as a simple method of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified.
The process was firmly linked to material outcomes. If an employee's performance were found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. M P Birla Institute Of Management
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Little consideration, if any, was given to the developmental possibilities of appraisal. It was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well.
Objectives of performance Appraisal Data relating to performance assessment of employees are recorded, stored, and used for several purposes. The main purposes of employee assessment are:
To effect promotions based on competence and performance To confirm the services of probationary employees upon their completing the probationary period satisfactorily. To assess the training and developmental needs of employees. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed. To let the employees know where they stand in so far as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. To improve communication. Performance appraisal provides a format for dialogue between the Superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee. Finally, performance appraisal can be used to determine whether HR programmes such, as selection, training and transfers have been effective or not.
Modern Appraisal
Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. M P Birla Institute Of Management
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In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions.
By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter.
Basic Purposes
Effective performance appraisal systems contain two basic systems operating in conjunction: an evaluation system and a feedback system. The main aim of the evaluation system is to identify the performance gap (if any). This gap is the shortfall that occurs when performance does not meet the standard set by the organization as acceptable. The main aim of the feedback system is to inform the employee about the quality of his or her performance. (However, the information flow is not exclusively one way. The appraisers also receive feedback from the employee about job problems, etc.) One of the best ways to appreciate the purposes of performance appraisal is to look at it from the different viewpoints of the main stakeholders: the employee and the organization.
Employee Viewpoint: From the employee viewpoint, the purpose of performance appraisal is four-fold: 1. Tell me what you want me to do 2. Tell me how well I have done it 3. Help me improve my performance 4. Reward me for doing well. (From Cash, 1993)
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From the organization's viewpoint, one of the most important reasons for having a system of performance appraisal is to establish and uphold the principle of accountability. For decades it has been known to researchers that one of the chief causes of organizational failure is "non-alignment of responsibility and accountability." Nonalignment occurs where employees are given responsibilities and duties, but are not held accountable for the way in which those responsibilities and duties are performed. What typically happens is that several individuals or work units appear to have overlapping roles.
The overlap allows - indeed actively encourages - each individual or business unit to "pass the buck" to the others. Ultimately, in the severely non-aligned system, no one is accountable for anything. In this event, the principle of accountability breaks down completely. Organizational failure is the only possible outcome.
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Problems of rating
Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as rating errors. These errors occur in the raters observations, judgment, and information processing, and can seriously affect assessment results. The most common rating errors are Leniency or severity Central tendency Halo effect Rater effect Primacy and Recency effects Perceptual set Performance dimension behavior Spill over effect Status effect
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Training helps to improve the appraisal system by overcoming distortion that occurs due to the raters errors such as halo, leniency, central tendency and bias. Training of raters must help strengthen the factors that tend to improve accuracy of ratings and weaken those that lower the accuracy of the performance measurement.
Timing of Evaluation
How often should an employee be assessed? The general trend is to evaluate once in three months, or six months, or once in a year. 70% of the organizations conduct performance appraisal once a year, according to a survey conducted in 1997 by Arthur M P Birla Institute Of Management
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Anderson. Newly hired employees are rated more frequently than the older ones. Frequent assessment is better than phased evaluation. Feedback in the latter is delayed and the advantage of timely remedial measures by the employee is lost. Frequent evaluation gives constant feedback to the ratee, thus enabling him/her to improve performance if there is any deficiency. The performance of trainees and probationers should be evaluated at the end of respective programmes.
Methods of Appraisals
The last to be addressed in the process of designing an appraisal Programme is to determine method(s) of evaluation. Numerous methods have been devised to measure the quantity and quality of employees job performance. Each of the methods discussed could be effective for some purposes, for some organizations. None should be dismissed or accepted as appropriate except as they relate to particular type of employees. Broadly all approaches can be classified into: Past-oriented methods Future-oriented methods Each group has several techniques. Some of them are explained in the following section. Behavioral Anchored Rating Scales The term used to describe a performance rating that focuses on specific behaviors or sets as indicators of effective or ineffective performance, rather than on broadly stated adjectives such as "average, above average, or below average". Other variations are: Behavioral observation scales Behavioral expectations scales Numerically anchored rating scales
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The term used to define a set of adjectives or descriptive statements. If the rater believes the employee possessed a trait listed, the rater checks the item; if not, the rater leaves the item blank. Rating score from the checklist equals the number of checks.
Critical Incident Technique The term used to describe a method of performance appraisal that makes lists of statements of very effective and very ineffective behavior for employees. The lists are combined into categories, which vary with the job. Once the categories are developed and statements of effective and ineffective behavior provided, the evaluator prepares a log for each employee. During the evaluation period, the evaluator records examples of critical behaviors in each of the categories, and the log is used to evaluate the employee year end.
Forced Choice Method This appraisal method has been developed to prevent evaluators from rating employees to high. Using this method, the evaluator has to select from a set of descriptive statements, statements that apply to the employee. The statements are weighted and summed to at, effectiveness index.
Forced Distribution The term used to describe an appraisal system similar to grading on a curve. The evaluators are asked to rate employees in some fixed distribution of categories. One way to do this is to type the name of each employee on a card and ask the evaluators to sort the cards into piles corresponding to rating.
Graphic Rating Scale The term used to define the oldest and most widely used performance appraisal method. The evaluators are given a graph and asked to rate the employees on each of the characteristics. The number of characteristics can vary from one to one hundred. The rating can be a matrix of boxes for the evaluator to check off or a bar graph where the evaluator checks off a location relative to the evaluators rating. M P Birla Institute Of Management
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This appraisal method asks the evaluator to describe strengths and weaknesses of an employee's behavior. Some companies still use this method exclusively, whereas in others, the method has been combined with the graphic rating scale.
Management by Objectives The management by objectives performance appraisal method has the supervisor and employee get together to set objectives in quantifiable terms. The appraisal method is worked to eliminate communication problems by the establishment of regular meetings, emphasizing results, and by being an ongoing process where new objectives have been established and old objectives are modified as necessary in light of changed conditions.
Paired Comparison The term used to describe an appraisal method for ranking employees. First, the names of the employees to be evaluated are placed on separate sheets in a pre-determined order, so that each person is compared with all other employees to be evaluated. The evaluator then checks the person he or she feels has been the better of the two on the criterion for each comparison. Typically the criterion is the employees over all ability to do the present job.
Ranking The term ranking has been used to describe an alternative method of performance appraisal where the supervisor has been asked to order his or her employees in terms of performance from highest to lowest.
Weighted Checklist The term used to describe a performance appraisal method where supervisors or personnel specialists familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behavior on jobs.
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Performance Interview is another step in the appraisal process. Once the Appraisal has been made of employees, the raters should discuss and review the performance with the ratees, so that they will receive feedback about where they stand in the eyes of the superiors. Feedback is necessary to effect improvement in performance, especially when it is adequate. Specifically Performance Interview has three goals To change behavior of employees whose performance does not meet organizational requirements or their own personal goals. To maintain the behavior of employees who perform in an acceptable manner, a To recognize superior performance behavior so that they will be continued.
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Performance management is different from the single appraisal because it: Begins with planning at the beginning of the year to clarify job expectations and accountabilities between employee and manager Eliminates current employee concerns that expectations are vague or not articulated Turns the appraisal document and appraisal meeting into the year-end feedback summary, the last of many meetings on performance.
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COMPANY PROFILE
Bal pharma was incorporated on 19th May 1987 as a private limited company and it commenced commercial production from 1992. Mr.Shailesh Siroya, playing an active role as the Managing Director of the company and steering it to better levels of profitability, quality, and perfection, heads the company.
The Bal Pharma Ltd. based in Bangalore, India - a nature and future Friendly City has been awarded the coveted ISO 9001 certificate by ANSI-RAB & KPMG, USA. Bal Pharma has three manufacturing units (Bal I- Formulations, Bal II - Bulk Drugs & Intermediates, Miaami - III Fluids & Ophthalmic Solutions), two units based in Bangalore and one in Pune, all units are equipped with ultramodern state-of the- art technology. All units conform to the GMP standards as laid down by WHO. Bal Pharmas unit III has Form Fill and Seal (FFS) technology for small & large volume parenteral at Miaami Pharma & Chemicals in Pune making them one of the only four companies in India with FFS technology for Small Volume Parenteral. The bulk drug unit specializes in high value niche products. They are the only manufacturer of Gliclazide by developing their unique Process Technology. The European directorate of Quality Management has awarded Certificate of Suitability for GLICLAZIDE Bulk Drug. At Bal Pharma, stringent quality assurance procedure for their entire product range has made them synonymous with quality in total. This is reflected in their commitment in meeting the challenges of the international and national market for formulations, bulk drug and intermediates.
Their exports of formulations include South East Asian and African countries. They have already registered 150 of their formulations in these countries and are considering a few more. They have also forayed into marketing of HERBAL MADICINES.
From a modest turnover of 35 million (US $ 0.83 million) in 1994, Bal Pharma has surpassed a turnover of Rs. 450 million (US $ 9.23 million) in 2001-2002 and is today poised for an accelerated growth to reach Rs. 1,000 million (US $ 24 million) M P Birla Institute Of Management
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Bal Pharma continues to strive to be the most progressive healthcare company dedicated to promote human health and improve quality of life through high quality need based formulations. The company has also successfully participated in global tenders
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VISION: We with an ambitious growth plan consider change as the key factor for development. We believe change incorporates new ideas and perception, which helps in growth and development of the company. We believe in scaling in new heights. We keep in pace with the growing change, changing trends and always plan need based formulations to maintain peoples health and manage suffering millions.
GOAL: We in a time span of 3 years want to reach RS 300crore turnover and by the year 2010 would want to have the world as our market. OBJECTIVE: to ensure that every product that we manufacture must be safe, effective of the highest quality and should be delivered too our customers on time.
Bal Pharma believes in achieving customers satisfaction as customers are considered as the The Supreme Sovereign. The following are the methods adopted to maintain customer satisfaction:
Following Good manufacturing Process as lay down by the WHO. Upgraded technology and use of best resources. Well-trained personnel. Stringent in-hose specifications for products. Complying with registered required and continually incorporates the effectiveness of the quality management systems. Promoting continuous improvement in all fields of activity M P Birla Institute Of Management
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Performance is essentially what an employee does or does not do. Bal Pharma assesses the performance of its employees on the following criteria:
The existing Performance Appraisal System is of two types, in which they will see how the individuals rate themselves. Then head of the department will appraise the employees and on the basis of the score they will decide about the rewards, promotions, what skills they need, etc.
Self Appraisals: Getting employees to conduct a self-appraisal can be a useful evaluation technique if the goal of evaluation is to further self-development. When employees evaluate themselves, defensive behavior is less likely to occur and self-improvement is thus more likely. M P Birla Institute Of Management When self-appraisals are used to
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determine areas of needed improvement, they can help users set personal goals for the future. The risk is that the employee will be too lenient or too critical of his or her performance.
Rating Scales: Perhaps the oldest and most widely used form of performance appraisal is the rating scale, which requires the rater to provide a subjective evaluation of an individuals performance along a scale from low to high. The evaluation is based solely on the opinions of the rater, and in many cases the criteria are not directly related to job performance.
Appraisal approaches must identify performance-related standards, measure those criteria, and then give feedback to employees and the HR department. If
performance standards or measures are not job-related, the evaluation can lead to inaccurate or biased results, harming the managers relationship with their employees and violating equal employment opportunity rulings. Without
feedback, improvement in human behavior is not likely and the department will not have accurate records in its HR information system on which to base decisions ranging from job design to compensation.
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The format comprises of five major parts as under in Employer appraisal form: TO BE FILLED PART CONTENTS BY
Part-A
- Appraiser
Part-B
Evaluation Criteria
- Appraiser
Part-C
- Appraiser
Part-D
- Appraiser
Part-E
- Appraiser
Part-A:
In
the
first
part
of
the
Appraisal
form
bio-data
of
the
Part-B: In the second part the evaluation has been done by the Appraisee, the evaluation criteria is of five skills set, which contains again the different performance standards. For that appraiser has to rank on the basis of his observation.
Part-C: In this part of the appraisal form appraiser has to write the strengths of the appraisee.
Part-D: This part of appraisal form the appraisee has to mention the training needs which ever required for the appraisee for the better performance on the job.
Part-E: This is the last part of the appraisal form where the net weight of the appraisal system has to be written from both the side i.e. appraisee and appraiser. M P Birla Institute Of Management
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REVIEW OF LITERATURE
According to this article more than half of all employees believe that performance reviews have not been useful in helping them to improve their job performance. Employees have become cynical about the performance management process.
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The management can Reinforce Positive Behaviors: "Reinforcing positive behavior will increase the probability of that behavior." Uncouple Employee Development and Compensation Discussions: Salary reviews should occur separately on an annual basis. Make Certain that the Performance Standards are Clear and Achievable: Performance measures must be made crystal clear. Use quantitative rather than qualitative measures whenever possible. Make Sure the Performance Measures are Relevant: Each performance measure should be relevant to each particular employee. Provide Team and Customer Feedback: Performance feedback from team members and customers is often much more useful than supervisory feedback.
In summary, most employees find their performance reviews useless, but there are many steps that management can take to make them much more meaningful.
Title: How to Improve the Effectiveness of Performance Management and Appraisal by Overcoming the Root Cause of the Problem
Author: Julie Freeman Website referred: www.hrmguide.com This article explores why existing formal and informal approaches to Employee Performance Management and Appraisal (EPMA) tend to work well enough in theory, but fail to meet expectations in practice.
Organizations encourage, even urge, their managers to talk informally with their employees about their performance on an ongoing basis. However, this rarely happens. Moreover, even when managers do talk to their employees, the communication often falls short of having the desired effect on their morale, motivation, and productivity. Despite our best efforts to date, managers still report that they are uncomfortable giving feedback M P Birla Institute Of Management
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and discussing performance with their employees, especially if poor performance is a factor. It identifies the root cause of the problems associated with giving and discussing. Performance related information in formal and informal settings and presents a solution to overcome them. Various suggestions for how the solution can be applied to meet differing individual or corporate needs are also outlined.
Only about 10 per cent of the managerial population has a natural ability to discuss performance with their employees in an effective way. According to the author, the root cause of the problem does not appear to lie in a lack of ability within the managerial population to honestly and accurately assess and evaluate an employees performance and potential. Actually most managers can do this very well. The root cause of the problem is that, to a greater or lesser extent, the vast majority of managers cannot actually translate what they know about that performance into useful information and then communicate it to the employee in an effective and practical way regardless of the method they are asked to use. The proposed solution for such a problem according to the author does not lie in trying to improve the technical elements of any given approach.
The PAF (Performance Analysis and Feedback) technique discussed in this article provides a breakthrough in helping managers to deal with difficult situations like this. It works because it shows managers a simple and logical way that they can analyze and validate both the positive and negative aspects of their subjective fuzzy mental impressions.
PAF is particularly effective for communicating "negative" information (the "hard stuff") without the kind of stress and anxiety that managers ordinarily expect to experience in such situations, and in a way that has the desired effect on employee behavior, outputs, motivation and morale. However, it is equally effective for conveying positive conclusions and opinions because it does so in a way that has the effect of building the employee's self -esteem, confidence, and desire to do well, while negative conclusions can be conveyed in a way that gets the hoped-for results.
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This technique works because firstly, regardless of whether the feedback is positive or negative, the PAF Technique forces managers to analyze their conclusions in a very specific, positive, future-focused way. Specificity is a golden rule of feedback of course, but this approach goes ones step further because conclusions, once formed, are rarely examined and communicated in this way.
Secondly, for negative feedback, the way that a problem is brought up and presented makes it easier on the manager to say and easier on employees to hear, understand, and accept, which decreases the potential for conflict and hurt feelings. Thirdly, the specificity of the desired performance combined with the discussion about solution options dramatically increases the probability that the process will achieve the hoped-for results.
In summary, the big problem of improving performance-related communication between managers and employees can be solved by simple solution. All it takes is the will to implement it.
7 out of 10 employees say there is no relationship between their job performance and their pay. Employees want to feel that their good work is appreciated and appropriately compensated. Problems discovered from this article are: Employees believe that their performance is above average they therefore, believe that he or she should be paid above average. Employees feel that they are not adequately paid compared to those performing similar work in other organizations. Employees often perceive that there are poor performers in their organization who are earning as much if not more than they earn. M P Birla Institute Of Management
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Supervisors don't have the know-how or guts to differentiate between poor, average, and above average performers.
Tying pay to performance is very important to employees. This is particularly true in unionized organizations where the union has negotiated contracts that require their employer to tie pay increases to years of service rather than performance.
The management can link pay to performance in the following manner: Make the organizations Pay-for-Performance Philosophy Clear to Employees. Use Bonuses Rather than Pay Increases. Rate Supervisors on how well they Rate their Subordinates. Train Supervisors how to talk about Pay. Use Objective Performance Measures. Weed out Ineffective Performers.
In summary, employees typically want to be paid commensurate with the quality of their job performance. Doing so requires a carefully constructed pay program, a commitment from supervisors, and well-orchestrated communications to employees about their pay.
Traditionally, organizational performance is measured by focusing on internal or process performance, looking at factors such as the number of fulltime equivalents (FTE) allotted, the number of programs controlled by the agency, or the size of the budget for the fiscal year. In contrast, private sector businesses usually focus on the financial measures of their bottom line: return on- investment, market share, and earnings-per-share. Alone, neither of these approaches provides the full perspective of an organization's performance that a manager needs to manage effectively. But by balancing internal and process M P Birla Institute Of Management
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measures with results and financial measures, managers will have a more complete picture and will know where to make improvements.
Our literature survey indicates that the there is no stock type of mathematical formula for performance appraisal. It differs from company to company. The research on companyspecific performance appraisal is inadequate. This has prompted us to take up this research investigation.
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Research Methodology
Problem Statement:
A critical study of the effectiveness of the performance appraisal system and suggest Ways for improvement.
Type of Research:
Our research investigation is analytical. The respondents have been contacted through questionnaires blended with focus group interviews and responses with regard to the current performance appraisal system of the company have been analyzed.
Sampling Technique:
Though the study is confined to only one unit situated in Bangalore, a complete survey of all the employees is not possible, because of their busy schedule. The respondents belonging to the Executive level have been chosen.
Sample size:
A sample size of 50 employees has been selected on the basis of Random Sampling method.
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Instrumentation techniques:
Primary data: Thrust has been on collection of primary data. Structured questionnaire has been used and discussed personally with the respondents to get their responses.
Secondary data: Books, journals, websites etc., have been consulted for obtaining related information, and also for crosschecking of primary data.
Limitations of the research Study is limited to the Bangalore unit of Bal Pharma Ltd only.
The sample size is limited to only 50 employees Analysis of primary data is done on the assumption that the answers given by the respondents are true and correct. Time and Resource constraints. M P Birla Institute Of Management
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TABLE 1: Table showing the response number of years of service rendered in Bal Pharma Ltd.
No. Of respondents 20 8 10 12 50
Percentage 40 16 20 24 100
Chart 1
24% 00 to 01 40% 01 to 03 03 to 05 20% 16%
Source: Field Investigation
05 and Above
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Observation: The above table shows that 40% of them have 1 year of experience, 16% of them have 3 years of experience, 20% of them are within 5 years and 20% of them are above 5 years experienced.
Inference: This shows that many of the employees are new to the company. Because 50% of them are having only one year of experience in the organization
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Q2. According to you in Bal Pharma Ltd, Performance Appraisal system is used
TABLE 2: Table showing the response to the purpose of PAS in Bal Pharma Ltd
Options To measure performance To Identify Skills To Promote individual To recognize & Reward TOTAL
No. Of respondents 25 12 5 8 50
Percentage 50 25 12 5 100
16%
Chart 2
To measure performance To Identify Skills To Promote individual To recognize & Reward
10% 50%
24%
Source: Field Investigation
Observation: The above table shows that 50 % of the respondent says performance appraisal system is used to measure the performance, 25 % to identify skills, 12% to promote individual, 5% to recognize and reward
Inference: This shows that Bal Pharma uses PAS usually to measure the performance of the employee on the job.
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Q3. Who is the rating officer of your performance in the appraisal system?
TABLE 3: Table showing the rating officer for the PAS in Bal Pharma Ltd.
No. Of respondents 5 0 0 45 50
Percentage 10 0 0 90 100
10%
chart 3
0% Supervisor Manager Line manager
90%
Source: Field Investigation
Observation: The above table shows that 90 % of the respondents say their rating officer is head of their department and 10% of them said supervisor.
Inference: This shows that head of the department is their rating officer in the company.
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Q4. Does the present Performance Appraisal System takes into account these following parameters?
TABLE 4: Table showing the job being performed by them is covered in PAS in Bal Pharma Ltd. Options Covered Partially Covered Not covered TOTAL No. Of respondents 28 12 10 50 Percentage 56 24 20 100
20% Chart 4
Covered Partially Covered Not covered
56% 24%
Observation: The above table shows 56% of them said its covered, 20% not covered and 24% said partially covered.
Inference: This shows that usually they cover the job being performed by them on the job.
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TABLE 5: Table showing the job knowledge of employee is covered in PAS in Bal Pharma Ltd.
No. Of respondents 27 13 10 50
Percentage 54 26 20 100
20% Chart 5
Covered
54% 26%
Observation: The above table shows 54% of them said its covered, 20% not covered and 26% said partially covered.
Inference: This shows that usually they cover the job knowledge of the employee on the job.
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TABLE 6: Table showing the Efficiency of work done is covered in PAS in Bal Pharma Ltd.
No. Of respondents 22 18 10 50
Percentage 44 36 20 100
36%
Source: Field Investigation
Observation: The above table shows 44% of them said its covered, 20% not covered and 36% said partially covered.
Inference: This shows that fairly they cover the efficiency of work done on the job.
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TABLE 7: Table showing the communication skills are covered in PAS in Bal Pharma Ltd.
No. Of respondents 21 19 10 50
Percentage 42 38 20 100
38%
Source: Field Investigation
Observation: The above table shows 42% of them said its covered, 20% not covered and 38% said partially covered.
Inference: This shows that usually they cover communication skills of the employee to measure the performance on the job.
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Q5. Do you agree that present appraisal system is accurately evaluating your performance? TABLE 8: Table showing how much accurately PAS evaluate the performance of the employee
No. Of respondents 20 6 16 8 50
Percentage 40 12 32 16 100
16%
Chart 8
40%
0% to 25% 26% to 50% 51 to 75% 76% to 100%
32% 12%
Source: Field Investigation
Observation: The above table shows 40% of them responded to 0%-25%, 12% of them is to26%-%50%, 32% of them is to 51%-75% and 16% of them is to 76%-100%.
Inference: This shows that the PAS is not accurately evaluating the performance of the employee on the job in the organization.
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TABLE 9: Table showing preference to the rating system used by them in PAS
No. Of respondents 5 12 26 7 50
Percentage 10 24 52 14 100
14%
10%
Chart 9
24%
Very Good Good Average Poor
52%
Source: Field Investigation
Observation: The above table shows 52% of them responded to average, 24% of them to good, 14% of them is to poor and 10% of them is to very good.
Inference: This shows that the employees fairly satisfied with rating system followed by the organization.
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Q7. How has the Appraisal System assisted in increasing following parameters?
TABLE 10: Table showing preference to the rating system used by them in PAS
Performance
Efficiency
Skill
Knowledge
Options Excellent
No 4
% 8
No. 5
% 10
No 5
% 10
No 5
% 10
8 25 8 5 50
16 50 16 10 100
7 23 10 5 50
14 46 20 10 100
9 21 10 5 50
18 42 21 10 100
9 21 10 5 50
18 42 21 10 100
Chart 10
50 40 Excellent 30 20 10 4 0 1 2 3 4 5 6 7 8 88 8 25 1616 5 7 23 21 21 18 21 21 18 Very Good Good Average 50 46 42 42
20
14 10 10 5
9 1010 5
9 10 10
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Observation: The above table shows three parameters, A. Performance: 50% of them have responded for good, 16% to the very good, 16% to average, 10% to poor and 8% to excellent. B. Efficiency: 46% of them responded to good, 20% to average, 14% to very good and 10 to each poor and excellent. C. Skills: 42% of them have responded to good, 21%to average, 18% to very good and 10% to each poor and excellent. D. Knowledge: 42% of them have responded to good, 21%to average, 18% to very good and 10% to each poor and excellent.
Inference: This shows that the PAS has fairly insisted them to increase their performance of the job, efficiency of the work done, Skills which has to be improved and the knowledge of the job.
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Q8. Do you feel that Performance Appraisal system totally depends on the Appraiser?
No. Of respondents 23 12 15 50
Percentage 46 24 30 100
30% 46%
Chart 11
Yes No To Some Extent
24%
Observation: The above table shows 46% of them responded to yes, 24% of them to no, 24% of them responded to some extent.
Inference: This shows that the appraisal system is mostly depends on appraiser only.
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Q9. According to you in this organization is there scope for individual development to ensure new knowledge & skills
TABLE 12: Table showing the scope of individual development, in ensuring the new knowledge and skills.
No. Of respondents 25 10 15 50
Percentage 50 20 30 100
30% Chart 12
Yes No
50%
To Some Extent
20%
Source: Field Investigation
Observation: The above table shows 50% of them said yes, 20% of them said no and 30% of them said to some extent it is true.
Inference: This shows that the appraisal system mostly encourages for individual development in terms of job knowledge and skills. M P Birla Institute Of Management
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Q10. Does the Suggestions in the appraisal system, which are given by you are positively looked into by seniors?
No. Of respondents 23 12 15 50
Percentage 46 24 30 100
30%
Chart 13
46%
Yes
No
To Some Extent
24%
Source: Field Investigation
Observation: The above table shows 46% of them said yes, 24% of them said no and 30% of them said to some extent it is true.
Inference: This shows that the suggestions given by the appraisee are taken into positive way and encourages them to give suggestions also in the process of performance appraisal system M P Birla Institute Of Management
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TABLE 14: Table showing satisfaction of the performance appraisal system in Bal Pharma Ltd.
No. Of respondents 0 18 20 12 50
Percentage 0 36 40 24 100
Chart 14
36% Very Good Good Average Poor
40%
Observation: The above table shows 40% of them said average, 36% of them said good, 24% of them said poor and 0% to very good.
Inference: This shows that the employees in Bal Pharma Ltd are fairly satisfied with the present appraisal system. M P Birla Institute Of Management
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According to the survey, performance appraisal system is used for the measure of performance of the employee on the job.
From the responses collected from the survey, the rating officer for their appraisal is their head of the department.
According to the respondents, the job being performed by them, knowledge of the job, and efficiency of work done and communication skills have been included in the performance appraisal system.
According to the responses from the respondents the appraisal system used by the company does not evaluate the accurate performance of the employee on the job.
From the responses collected it can be inferred that the rating system used in the appraisal system are fairly satisfactory.
The present appraisal system encourages improving these parameters, performance of the job, knowledge of the job, skills and efficiency of the work done.
From the responses the appraisal system fairly depends on the appraiser.
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According to the responses in Bal Pharma Ltd there is a scope for the individual development after the performance appraisal system.
The suggestions given by the appraisee after the appraisal system are taken into positive. And also encourages them to give suggestions
From the responses collected it can be inferred that the performance appraisal system used in the organization does not evaluates the performance of the employee accurately, therefore the employees and executives are fairly satisfied with the present appraisal system.
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RECOMMENDATIONS
As employees feel that, job knowledge, communication skills & efficiency of the work done has effectively covered. How ever the employees feel that the training interventions should be more frequent.
Communication skills are indispensable in modern day organization, so employees should be encouraged to communicate their opinion about their expectation, problems & suggestions.
A free and fair feedback to be given to the appraisee so that he/she can give there best to the company and also allows self-development.
There should be a system for more frequent feed back on employee performance and appraisal process should be designed to cater for quarterly/ biannual performance appraisal
Some of the employees feel that appraisal process should be more transparent.
360 degree appraisal is a powerful developmental method and quite different to traditional manager-subordinate appraisals (which fulfill different purposes). Organisation may look into adopting this method bringing for more subjectively in the appraisal process.
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A guide for introducing 360-degree appraisals: The following chart highlights the mechanism of 360-Degree:
Choose/design a system (or system provider), i.e., research and investigate options (other local or same-sector companies using 360 already are a helpful reference point, or trade association HR group, or a specialist HR advisory body).
When decided on a system, pilot it with a few people to make sure it does what expected. (It's best to establish some simple parameters or KPA's by which one
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can make this assessment, rather than basing success on instinct or subjective views.)
When satisfied with the system, launch it via a seminar or workshop, preferably including role-plays and/or practical demonstration.
Support the implementation with ongoing training, (include an overview in your induction training as well), a written process guide/booklet, and also publish process and standards on intranet.
Ensure any 360-degree appraisal system is applied from top down, not bottom up, so everyone can see that the CEO is happy to undertake what he/she expects all the other staff to do. (As with anything else, if the CEO and board agree to undertake it first, the system will have much stronger take-up and credibility.)
I also recommend that the company can restructure its "performance appraisal system" into "performance management system". I believe that to achieve performance orientation, the company needs to focus on Performance Management System rather than Performance Appraisal System. While PMS addresses all relevant and interrelated issues of individual motivation and processes holistically, PAS is one of the many sub-processes involved in a good PMS.
To sum up, it is my belief and conviction that if the above-said recommendations are implemented, they would turbo charge the performance appraisal system/performance management system of the company.
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ANNEXURE
Books:
1. " Human Resource Management" By J R Gordon, Boston: Allyn & Bacon Publications 2002 2. "Human Resource Management" By Lawrence S Kleiman, Atomic Dog Publishing Company, 2005 3. "Human Resource Management" By John M Ivancevich, Tata McGraw Hill Publications 2005 4. "Human Resource Management" By Gary Dessler, Pearson Education Publications, 2006 5. "Human Resource Management" By Cynthia D Fisher, Lvle F Schoen Feldt and James B Shaw, Wiley Dream Tec Publications 2005 6. "Human Resource Management" By Noe, Hollenbeck, Gerhardt and Wright, McGraw Hill Publications 2004 7. "People Management" Edited by G Surya Prakash Rao, ICFAI Publications, 2002
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JOURNALS:
Business Standard (Strategist) Harvard Business Review Journal of HRM Review (ICFAI publications) Business Line (Catalyst) Executive excellence (Sage Publications) Human Capital
WEBSITES USED:
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Questionnaire
Employee Name : (Optional)
Department
Date of Joining
Qualification
Designation
To measure Performance
To Identify Skills
To Promote Individual
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Supervisor
Manager
Line Manager
4. Does the present Performance Appraisal System taken into account these following parameters?
Covered
Partially Covered
Not Covered
B. Job Knowledge
Covered
Partially covered
Not Covered
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Covered
Partially covered
Not Covered
D. Communication skills
Covered
Partially covered
Not Covered
5. Do you agree that present appraisal system is accurately evaluating your performance?
0% - 25%
26% - 50%
51% - 75%
76% - 100%
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Very Good
Good
Average
Poor
5 Parameters
Performance
Efficiency
Skills
Knowledge
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8. Do you feel that Performance Appraisal system is totally depends on the Appraiser?
Yes
No
To Some Extent
9. According to you in this organization is there scope for individual development to ensure new knowledge & skills
Yes
No
To Some Extent
10. Does the Suggestions in the appraisal system, which are given by you are positively looked into by seniors?
Yes
No
To Some Extent
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Very Good
Good
Average
Poor
_______________________________________________
_______________________________________________
_______________________________________________
Thank you for giving your responses to the questions in the questionnaire. I sincerely assure you that your responses will be kept strictly confidential and shall only be used for academic purpose.
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