1

A TRAINING REPORT ON

PERFORMANCE APPRAISAL IN OCM India Ltd

Submitted in partial fulfillment of the degree of master of business Administration (2010-2012) affiliated to Punjab Technical University, Jalandhar.

UNDER THE SUBMITTED BY:

SUPERVISION

OF:

Mr Sukhjit Singh

SS

Khera

Manager (Personnel) MBA III Semester

Amritsar Amritsar

OCM India Ltd, SSCMT

CHAPTER 1 INTRODUCTION TO THE COMPANY

TEXTILE INDUSTRY IN PUNJAB Rising input costs and high taxes have pushed the textile industry in Punjab to the brink of closure with many of them even facing the danger of winding up, which could render many people jobless, an industry body said today. Because of rising input cost and high taxes, the textile industry in Punjab is passing through the most tough and difficult times in recent times. Punjabs textile sector mainly consists of small and medium units with considerable noteworthy textile units consisting of stand-alone spinning and fabric manufacturing units. Total textile output of Punjab is estimated at Rs 10,500 crore, including Rs 3,250 crore export of Knitwear, shawls, made-ups and yarns. The direct and indirect employment of textile activity in the Punjab is estimated at 2 million people. The state produces approximately 1.8 to 2.2 million bales, about 11-12 per cent of the countrys output of cotton. But only 43 per cent of the cotton yarns produced in Punjab is used within the state and rest is sold outside the state. Punjab can muster its economic strength through consumption of cotton yarns within the state and rest is sold outside the state for value addition by encouraging & establishing down stream fabric manufacturing and procession units. The textile industry particularly spinning units located in the state are suffering more because of the higher taxes and levies, higher cotton cost and power shortage. The taxes and levies in the state are much higher than other states. In Punjab various taxes (excluding VAT) are 10 per cent the highest, compared to the Haryana 4 per cent, Gujrat 0.5 per cent, Rajasthan 1.6 per cent, Madhya Pradesh 2 per cent and Maharashtra one. The logistic costs have further increased the problems of the already burdened industry. To offset this, the state government introduced the scheme Freight subsidy to help industry to be competitive; however, this was never disbursed to the Industry in last 4 years.

TAKEOVER Gone are the days when OCM Textile mill when it was badly debt ridden and running in loss for the last one decade, now heading towards profit with new summer collection, since February 2007 OCM is leaping towards huge profit after being this textile firm OCM India Ltd acquired by the American based company in $37 million in cash (Rs 170 crore ). Turn around specialist Wilbur L Ross jr has made his first investment in India. The acquisition has been carried out through The Asset Reconstruction Company of India (ARCIL) as said by Mr. Rajeev Surana who is Chartered Accountant manages the Finance policy 0f OCM. Sudhamoy Khasnobis, Managing Director & CEO of ARCIL, said, The OCM acquisition is the first 100 per cent buyout of a major Indian enterprise by a global turnaround fund. Mr. Surana said that now the of Amritsar based OCM is Rs 125 crore and it would touch Rs 160 crore by next year. Now total employment employment in the OCM is eleven hundred staff members. Wilbur L Ross, Jr., Chairman and CEO of WL Ross said, OCM establishes us in Indias textile sector and further adds to the resources and synergies of our textile holdings. We expect rapid growth there in the future.

REASONS As the company remains heavily leveraged, interest costs will continue to be a drag on profitability in the immediate term. It might take a while before the company makes a complete turnaround. Birla VXL., part of the S.K. Birla group, is a manufacturer of worsted/woolen fabric and sells under the brand name Digjam. The brand has a 10 per cent market share and has a brand recall. The company also has a readymade garment unit. It exports about 40 per cent of its production. At a capacity of 6 million metres, it remains a relatively small player compared to

market leader Raymond, which has a capacity of 30 million metres. BVXL expanded massively in the mid-1990s ; this did not yield results. Surplus capacity, input pressures and a difficult demand environment affected profitability. Accumulated losses completely eroded its net worth by june 2004. Shortly afterward, ARCIL (Asset Reconstruction Company India) took over debt from some of BVXLs lenders. The securitisation outfit, which now owns 54 per cent of the pre-issue share capital, has begun to restructure its Rs 400 crore debt. As the part of the restructuring process, the Amritsar facility, which manufactured the OCM brand of worsted fabric, was carved out into a separate division, OCM India, as a 100 per cent subsidiary. Loans worth Rs 160 crore were transferred to the division. BVXLs entire shareholding in OCM India was recently sold to US buy-out firm, WL Ross, for about Rs 170 crore. The proceeds were to be used to pay off loans that had been transferred to the division. BVXL has also divested its other subsidiaries Masuzawa Punjab Silk and VXL technologies; it exited from its joint venture with Dormeuil Freres of France end of September. About Rs 50 crore worth of debt will be paid off through the disposal of non-core assets, which have been allocated to a separate investment division. About Rs 25 crore has been converted into equity . Post-conversion and carving out of OCM India, the share capital of company stands reduced to Rs 43 crore from about Rs 100 crore. Long term debt, even after the restructuring initiatives, however, remains at about Rs 150 crore.

BACKGROUND OF WL ROSS & CO. Talking about the Textile industry of WL Ross & CO. LLC of New York, It is a company of Rs 40,000 crore and Rs 5000 crore of the company is already involved the Textile business. Further majority owned by WL Ross is global diversified textile manufacturer with annual revenues in excess of $1.0 billion.

The company has founded in April 2000 as a global private equity firm and since then has created more than $4 billion of transactions. WL Ross affiliates own approximately 90% of the equity of International Textile Group. In October 2005, WL Ross formed a joint venture with Housing Development Finance Corporation Ltd (HDFC), Indias leading housing finance institution, to invest in corporate restructurings and turnaround. W.L.Ross (India) Pvt. Ltd, based in Mumbai, is a sub-advisor to India Asset Recovery Management Ltd- which advises various private equity funds, including the Mauritius-based $300 million India Asset Recovery Fund that W.L.Ross formed to invest in sick companies. W.L.Ross was formed by Mr.Wilbur L. Ross,Jr.,an American investor specializing in restructuring failed companies in industries such as steel, coal, telecommunications and textiles. He specializes in leveraged buyouts. The company acquired Ohio-based International Steel Group and sold it to the Mittal Steel Company in 2005 for $4.5 billion. W.L.Ross is now a part of Invesco, a leading global investment management company with assets under management as of December 31,2007 of $500 billion. According to the Invescos 2007 annual report, it acquired W.L.Ross & Co in October 2006 for an intial consideration of $134 million. The annual report further says that the assests under management by W.L.Ross went up from $2.6 billion at the time it was acquired by Invesco to $6.8 billion of December 31,2007. W.L.Ross now has about $7.9 billion of assets under management. Business Line had reported in August 2006 that W.L.Ross was interested in investing over Rs. 1,500 crore($350 million) in the Chennai-headquatered ailing fertilizer manufacturer Southern Petrochemical Industries Corporation Ltd. This deal did not go through. The investment by W.L.Ross & Co in Spice Jet is its second in India, after it bought 100 per cent stake in OCM Ltd, worsted fabric manufacturer, for Rs 170 crore ($35 million) in October 2006. The count down has finally begun for OCM Indias long-awaited sale. OCM, which has been on the block for a while now, is likely to be snapped up by one of the three final bidders: stressed-asset management fund WL Ross, global investment fund eight capital or Raymond.

Sources

confirmed that (ARCIL), which owns majority shares in OCMs parent

company Bira VXL, is expected to announce the outcome of the bid by September 30. OCM was spun off as a separate entity from Birla VXL following the reconstructions of S.K.Birla group company. Though the Birlas still have management control of the company, ARCIL has been in-charge of finding a buyer for the suitings brand. The OCM India deal has been in the news because of disagreements over the valuations of the company and protracted negotiations with the bidders. The race for OCM has been hotly contested one with most Indian textile majors and a couple offoreign funds queuing up to acquire the company. S Kumars, Arvind Mills, Raymond, WL Ross and some other global funds have figured in the constantly-changing list of suitors. The fabric manufacturing facility for the OCM brand in Amritsar, with a capacity to produce 8.4m metres of suiting fabric, is being sold off as part of debt recast exercise. However, the companys valuation still remains a moot point, with ARCIL expecting around Rs 180 crore from the sale while most of the bidders stayed put in the Rs 120-150 crore range. It is not known at what price the deal is likely to be sealed. OCM, along with the other Birla VXL suitings brand Digjam, is considered to be among the top three suitings brands in the country. OCM specialises in all wool worsted as well as wool-blended worsted suitings.

INTERNATIONAL TEXTILE GROUP

Itg
International Textile Group was formed by Wilbur L.Ross in 2004 and operates 5 primary business units: Automotive Group, Cone Denim and Burlington Worldwide(Apparel Fabric), Government Uniform Fabric, Burlington House(Interior fabrics and furnishings) and

 Carlisle Finishing (Commission Finishing)

The company employs over 10,500 people worldwide with operations in the United States, Mexico, China, Germany, Romania, Czech Republic, Poland, South Africa, Nicaragua and vietnam.

BURLINGTON WORLDWIDE AND OCM INDIA A new commercial partnership was announced on 12 September, 2007 between US fabric maker Burlington Worldwide and Indian worsted wool fabric maker OCM India to provide an additional source of suiting products for the US and European markets. Under the agreement, Burlington WorldWide will help OCM to develop new manufacturing processes and woolen fabrics which can be exported to the US, European and Asian markets. In return, OCM, which is located in Amritsar, will be licensed to produce and sell wool fabrics under the Burlington brand name to the domestic Indian market. According to Wilbur L.Ross, chairman of International Textile Group (ITG) which owns Burlington WorldWide, this is a tremendous opportunity to expand ITGs footprint into the growing Indian market and provide an additional supply chain of products for the US and European markets. Burlington WorldWide is the North American leader in worsted wool products and its expertise in the wool manufacturing and new fabric development will further OCMs operations and breadth of product to grow a global wool platform for both companies.

HISTORY OF OCM
While starting out as the dominant manufacturers in Persia and Turkey, it was OCMs revival of India as the major Oriental Carpet origin that first provided the company with the volume of merchandise and control over designs and colors upon which its success in the western markets depended. By encouraging a native craft that had begun under Mughal Emperors of the 16 th and 17th centuries and combining this inherent artistry of the weavers of Uttar Pradesh and Rajasthan with modern production methods and appropriate technology, OCM(through its associates E.Hill & Co) turned India into the worlds single largest source of handmade oriental carpets. It was OCMs Persian and Turkish carpets that enjoyed the greatest popularity in the Old World of Britain and Europe; it was the far largest output of these exclusively designed Indian items, and subsequently the companys huge Chinese production, which serve to gain them market leadership in Canada and USA. Much of the power of the EKOCM marketing platforms derives from the huge reputation of its founding company Oriental Carpet Manufacturers- known as OCM. For the first 70 years of the last century, OCM was the best Known Oriental Carpet company in the world dominating the carpet production in the East. And through its subsidiaries controlling the main consumer markets of the West. OCM was founded in the 1908, from a merger b/w the six major carpet manufacturing companies then in existence. The company had a start-up capitalization of 400,000-a massive sum by the standards of early 20 th century. Every year, over the next five years, OCMs share capital doubled-listed at an astonishing 12,000,000 by 1912. Since its inception in 1924 as a manufacturer of hand-knotted carpets, OCM has come a long way to become one of the largest worsted suiting producers, the first one to implement a customized textile ERP solution. A completely vertically intergrated plant, OCM has in-house production facilities to convert tops to finished fabrics through dyeing, spinning, weaving and
10

finishing using state-of-the-art machinery. All the materials and processes pass through stringent checks at every stage and help in delivering outstanding quality. The company belongs to S.K.Birla Group. Birla VXL products carry ISO-9001 and Wool Mark Certifications. At present the companys capacity includes 34064 spindles and 182 high speed shuttles less looms thereby giving spinning capacity of 12000 kg yarn and weaving capacity of 25000 metres of fabric per day. The spinning preparatory is from NSC, France, spindle from Zinser, Germany, Autoconers from Schlhafhort, Germany, IFOs from Leewha, Korea and looms from Lindaeur Dornier, Germany, Sulzar, Switzerland and Belgium. Apart from this, color continuityis tested on color matching system from Gretag Mac breadth,UK and fabric gets final finish on KD from Bhelle shrunk, rotatory press of Mario Crosta, Italy continuous decastising from Spretu Rimar, Italy, super-finish from M-Tech, Germany and shearing machine from Xetma Vollen Wrider, Switzerland. THE PLANT Company has a sprawling 37 acres complex with latest imported machines and contemporary processes. Infact, OCM has distinct advantage of possessing an in-house single roof facility for every process right from fibre to fabric.

CATERING TO NEEDS OF BRANDS Madura Garments Crocodile Mayfair Trent Limited Givo Ltd. Benetton India Pvt Ltd. Indus League Clothing
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 Silver Crest Clothing Pvt Ltd. Mohan Clothing Co. Arvind Clothing Co. Shoppers Stop Embassy Apparels

SUPPLIERS TO GOVT./ FORCES Rashtrapati Bhawan Lok Sabha Secretariate HRTC BHEL Dehli Metro Corporation National Fertilizers Ltd. Assam Rifles Haryana Road Trans. Corp. Ltd. Ordnance Clothing Factories Airforce HQs Indian Navy UP Police Dept. of Police, Bihar

12

 Indian Oil Corporation

SUPPLIERS TO HOTELS/AIRLINES Kingfisher Airlines Spicejet Airlines Jet Airways Airport Authority of India Jet Lite Airlines Royal Nepal Airlines Hotel Radisson The Park Hotel, New Delhi Air Deccan Centaur Hotel Limited

OCM EXPORT CUSTOMERS Levis ODLR Nautica JC Penney

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 Superior Original Penguin Supreme Haggar Clothing Company Kakiuchi Konaka Golden Brand Lanier Kiza

CHAPTER 2

14

INTRODUCTION TO THE TOPIC

Human Resource (or personnel) management, in the sense of getting things done through people, is an essential part of every managers responsibility, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently. People are our most valuable asset is a clich, which no member of any senior management team would disagree with. Yet, the reality for many organizations are that their people remain under valued, under trained and under utilized. Performance Appraisal is the process of assessing the performance and progress of an employee or a group of employees on a given job and his / their potential for future development. It consists of all formal procedures used in the working organizations to evaluate personalities, contributions and potentials of employees.

RATIONALE OF THE STUDY

15

Performance Appraisal is the important aspect in the organization to evaluate the employees performance. It helps in understanding the employees work culture, involvement, and satisfaction. It helps the organization in deciding employees promotion, transfer, incentives, pay increase.

CHAPTER 3

16

HUMAN RESOURCE MANAGEMENT

Human Resource (or personnel) management, in the sense of getting things done through people, is an essential part of every managers responsibility, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently. People are our most valuable asset is a clich, which no member of any senior management team would disagree with. Yet, the reality for many organizations are that their people remain under valued, under trained and under utilized. The market place for talented, skilled people is competitive and expensive. Taking on new staff can be disruptive to existing employees. Also, it takes time to develop cultural awareness, product / process / organization knowledge and experience for new staff members.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT Following are the various functions of Human Resource Management that are essential for the effective functioning of the organization: 1. Recruitment 2. Selection 3. Induction 4. Performance Appraisal 5. Training & Development

Recruitment The process of recruitment begins after manpower requirements are determined in terms of quality through job analysis and quantity through forecasting and planning. Selection

17

The selection is the process of ascertaining whether or not candidates possess the requisite qualifications, training and experience required.

Induction a) Induction is the technique by which a new employee is rehabilitated into the changed surroundings and introduced to the practices, policies and purposes of the organization.

CHAPTER 4
18

PERFORMANCE APPRAISAL

Performance Appraisal is defined as the process of assessing the performance and progress of an employee or a group of employees on a given job and his / their potential for future development. It consists of all formal procedures used in working organizations and potential of employees. According to Flippo, Performance Appraisal is the systematic, periodic and an important rating of an employees excellence in matters pertaining to his present job and his potential for a better job.

CHARACTERISTICS 1. Performance Appraisal is a continuous process. 2. It is the systematic examination of the strengths and weakness of an employee in terms of his job. 3. It is scientific and objective study. Formal procedures are used in the study. 4. It is an ongoing and continuous process wherein the evaluations are arranged periodically according to a definite plan. 5. The main purpose of Performance Appraisal is to secure information necessary for making objective and correct decision an employee.

PROCESS
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The process of performance appraisal: 1. Establishing performance standards 2. Communicating the Standards 3. Measuring Performance 4. Comparing the actual with the standards 5. Discussing the appraisal 6. Taking Corrective Action

LIMITATIONS 1. Errors in Rating 2. Lack of reliability 3. Negative approach 4. Multiple objectives 5. Lack of knowledge

METHODS OF PERFORMANCE APPRAISAL

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The foregoing list of major program pitfalls represents a formidable challenge, even considering the available battery of appraisal techniques. But attempting to avoid these pitfalls by doing away with appraisals themselves is like trying to solve the problems of life by committing suicide. The more logical task is to identify those appraisal practices that are (a) most likely to achieve a particular objective and (b) least vulnerable to the obstacles already discussed. Before relating the specific techniques to the goals of performance appraisal stated at the outset of the article, I shall briefly review each, taking them more or less in an order of increasing complexity. The best-known techniques will be treated most briefly.

ESSAY APPRAISAL In its simplest form, this technique asks the rater to write a paragraph or more covering an individual's strengths, weaknesses, potential, and so on. In most selection situations, particularly those involving professional, sales, or managerial positions, essay appraisals from former employers, teachers, or associates carry significant weight. . GRAPHIC RATING SCALE This technique may not yield the depth of an essay appraisal, but it is more consistent and reliable. Typically, a graphic scale assesses a person on the quality and quantity of his work (is he outstanding, above average, average, or unsatisfactory?) and on a variety of other factors that vary with the job but usually include personal traits like reliability and cooperation. It may also include specific performance items like oral and written communication.

FIELD REVIEW

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The field review is one of several techniques for doing this. A member of the personnel or central administrative staff meets with small groups of raters from each supervisory unit and goes over each employee's rating with them to (a) identify areas of inter-rater disagreement, (b) help the group arrive at a consensus, and (c) determine that each rater conceives the standards similarly.

FORCED-CHOICE RATING Like the field review, this technique was developed to reduce bias and establish objective standards of comparison between individuals, but it does not involve the intervention of a third party.

MANAGEMENT BY OBJECTIVES To avoid, or to deal with, the feeling that they are being judged by unfairly high standards, employees in some organizations are being asked to set - or help set - their own performance goals. Within the past five or six years, MBO has become something of a fad and is so familiar to most managers that I will not dwell on it here.

RANKING METHODS For comparative purposes, particularly when it is necessary to compare people who work for different supervisors, individual statements, ratings, or appraisal forms are not particularly useful. Instead, it is necessary to recognize that comparisons involve an overall subjective judgment to which a host of additional facts and impressions must somehow be added. There is no single form or way to do this. The best approach appears to be a ranking technique involving pooled judgment. The two most effective methods are alternation ranking and paired comparison ranking.

1. Alternation ranking:

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Ranking of employees from best to worst on a trait or traits is another method for evaluating employees. Since it is usually easier to distinguish between the worst and the best employees than to rank them, an alternation ranking method is most popular. Here subordinates to be rated are listed and the names of those not well enough to rank are crossed. Then on a form as shown below, the employee who is highest on the characteristic being measured and the one who is the lowest are indicated. Then chose the next highest and the next lowest, alternating between highest and lowest until all the employees to be rated have been ranked. 2. Paired-comparison ranking:

This technique is probably just as accurate as alternation ranking and might be more so. But with large numbers of employees it becomes extremely time consuming and cumbersome. Both ranking techniques, particularly when combined with multiple rankings (i.e., when two or more people are asked to make independent rankings of the same work group and their lists are averaged), are among the best available for generating valid order-of-merit rankings for salary administration purposes.

ASSESSMENT CENTERS So far, we have been talking about assessing past performance. What about the assessment of future performance or potential? In any placement decision and even more so in promotion decisions, some prediction of future performance is necessary. How can this kind of prediction be made most validly and most fairly?

360 DEGREE FEEDBACK Many firms have expanded the idea of upward feedback into what the call 360-degree feedback. The feedback is generally used for training and development, rather than for pay increases. Most 360 Degree Feedback system contains several common features. Appropriate parties peers, supervisors, subordinates and customers, for instance complete survey, questionnaires on an individual. 360 degree feedback is also known as the multi-rater feedback, whereby ratings are not given just by the next manager up in the organizational hierarchy, but also by peers and

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subordinates. Appropriates customer ratings are also included, along with the element of self appraisal. Once gathered in, the assessment from the various quarters are compared with one another and the results communicated to the manager concerned. Another technique that is useful for coaching purposes is, of course, MBO. Like the critical incident method, it focuses on actual behavior and actual results, which can be discussed objectively and constructively, with little or no need for a supervisor to "play God."

Advantages Instead of assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or exceeds the set objectives, then he or she has demonstrated an acceptable level of job performance. Employees are judged according to real outcomes, and not on their potential for success, or on someone's subjective opinion of their abilities. The guiding principle of the MBO approach is that direct results can be observed easily. The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements that go to make up employee performance. MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts, but to put all the parts together and the performance may be directly observed and measured.

Disadvantages This approach can lead to unrealistic expectations about what can and cannot be reasonably accomplished. Supervisors and subordinates must have very good "reality checking" skills to use MBO appraisal methods. They will need these skills during the initial stage of objective setting, and for the purposes of self-auditing and self-monitoring. Variable objectives may cause employee confusion. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance. Benefits of Performance Appraisals

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Measures an employees performance. Helps in clarifying, defining, redefining priorities and objectives. Motivates the employee through achievement and feedback. Facilitates assessment and agreement of training needs. Helps in identification of personal strengths and weaknesses. Plays an important role in Personal career and succession planning. Clarifies team roles and facilitates team building. Plays major role in organizational training needs assessment and analysis. Improves understanding and relationship between the employee and the reporting manager and also helps in resolving confusions and misunderstandings.

Plays

an

important

tool

for

communicating

the

organizations

philosophies, values, aims, strategies, priorities, etc among its employees.

Helps in counseling and feedback.

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RATING ERRORS IN PERFORMANCE APPRAISALS

Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as 'rating errors'. These errors can seriously affect assessment results. Some of the most common rating errors are: Leniency or severity: - Leniency or severity on the part of the rater makes the assessment subjective. Subjective assessment defeats the very purpose of performance appraisal. Ratings are lenient for the following reasons: a) The rater may feel that anyone under his or her jurisdiction who is rated unfavorably will reflect poorly on his or her own worthiness. b) He/She may feel that a derogatory rating will be revealed to the rate to detriment the relations between the rater and the ratee. c) He/She may rate leniently in order to win promotions for the subordinates and therefore, indirectly increase his/her hold over him. Central tendency: - This occurs when employees are incorrectly rated near the average or middle of the scale. The attitude of the rater is to play safe. This safe playing attitude stems from certain doubts and anxieties, which the raters have been assessing the rates.

Halo error: - A halo error takes place when one aspect of an individual's performance influences the evaluation of the entire performance of the individual. The halo error occurs when an employee who works late constantly might be rated high on productivity and quality of output as well ax on motivation. Similarly, an attractive or popular personality might be given a high overall rating. Rating employees separately on each of the performance measures and encouraging raters to guard against the halo effect are the two ways to reduce the halo effect.

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Rater effect: -This includes favoritism, stereotyping, and hostility. Extensively high or low score are given only to certain individuals or groups based on the rater's attitude towards them and not on actual outcomes or behaviors; sex, age, race and friendship biases are examples of this type of error.

Primacy and Regency effects: - The rater's rating is heavily influenced either by behavior exhibited by the ratee during his early stage of the review period (primacy) or by the outcomes, or behavior exhibited by the ratee near the end of the review period (regency). For example, if a salesperson captures an important contract/sale just before the completion of the appraisal, the timing of the incident may inflate his or her standing, even though the overall performance of the sales person may not have been encouraging. One way of guarding against such an error is to ask the rater to consider the composite performance of the rate and not to be influenced by one incident or an achievement.

Performance dimension order: - Two or more dimensions on a performance instrument follow each other and both describe or rotate to a similar quality. The rater rates the first dimensions accurately and then rates the second dimension to the first because of the proximity. If the dimensions had been arranged in a significantly different order, the ratings might have been different.

Spillover effect: - This refers lo allowing past performance appraisal rating lo unjustifiably influence current ratings. Past ratings, good or bad, result in similar rating for current period although the demonstrated behavior docs not deserve the rating, good or bad.

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ROLES IN THE PERFORMANCE APPRAISAL PROCESS

a) Reporting Manager Provide feedback to the reviewer / HOD on the employees behavioral traits indicated in the PMS Policy Manual Ensures that employee is aware of the normalization / performance appraisal process Address employee concerns / queries on performance rating, in consultation with the reviewer b) Reviewer (Reporting Managers Reporting Manager) Discuss with the reporting managers on the behavioral traits of all the employees for whom he / she is the reviewer Where required, independently assess employees for the said behavioral traits; such assessments might require collecting data directly from other relevant employees c) HOD (In some cases, a reviewer may not be a HOD) Presents the proposed Performance Rating for every employee of his / her function to the Normalization committee. HOD also plays the role of a normalization committee member Owns the performance rating of every employee in the department d) HR Head Secretary to the normalization committee

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Assists HODs / Reporting Managers in communicating the performance rating of all the employees

e) Normalization Committee Decides on the final bell curve for each function in the respective Business Unit / Circle Reviews the performance ratings proposed by the HODs, specifically on the upward / downward shift in ratings, to ensure an unbiased relative ranking of employees on overall performance, and thus finalize the performance rating of each employee

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KEY CONCEPTS IN PMS In order to understand the Performance Management System , some concepts need to be explained which play a very important role in using the PMS successfully. They are: KRAS (KEY RESULT AREAS): The performance of an employee is largely dependent on the KRA score achieved by the employee during that particular year. Thus, it is necessary to answer a few basic questions i.e. o o What are the guidelines for setting the KRAs for an employee? How does an employee write down his KRAs for a particular financial year? o o KRAs: The Four Perspectives. How is the KRA score calculated for an employee on the basis of the targets sets and targets achieved? BEHAVIORAL TRAITS: Some of the qualitative aspects of an employees performance combined with the general behavioral traits displayed by the employee during a year constitutes his behavior traits. An employee is assigned the rating on the basis of the intensity of the behavior displayed by him. They play a very important role in the deciding the final performance rating for an employee as is even capable of shifting the rating one level upwards/downwards. THE PERFORMANCE RATING PROCESS: The rating process tries to explain the four different types of rating that an employee can achieve i.e. EC, SC, C and PC. It also explains the criteria, which is considered for awarding any of these ratings to the employee. PROMOTION AND RATING DISRTRIBUTION GUIDELINES: The promotion and normal distribution guidelines provide the framework within which the performance appraisal process has to work. It is very

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important that the HR department pays due attention to these guidelines while preparing the bell curves for various functions and the consolidated bell curve for all the functions. These guidelines also help in deciding upon the promotion cases in a year.

PERFORMANCE RATING PROCESS EXCEPTIONAL CONTRIBUTOR (EC) SIGNIFICANT CONTRIBUTOR (SC)

Performs areas

consistently

and

Performs above expectations in all areas

substantially above expectations in all

Achieves final score between 100114%

Achieves a final score greater than or equal to 115% delivers on stretch

Versatile in his/ her area of operation Develops creative solutions and

Consistently targets

require little / minimal supervision anticipates problems, Sets examples for others Take ownership of own development Coaches others Demonstrates business initiative Is self motivated Supportive team player Leads own team very effectively Demonstrate functional initiative

Is proactive Spots and

implements solutions Sees and exploits opportunities Delivers ahead of time Sees the wider picture-impacts across business Focuses on whats good for the business Seen as role model by others

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Recognized as exceptional by other functions as well

Motivates others to solve problems Develops others Provides open and honest feedback Able to establish and lead crossfunctional teams

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OBJECTIVES OF THE STUDY

To carry out the study of OCM India Ltd, we framed the following objectives 1. The Primary objective of the study was Identification of the technique of performance appraisal followed . 2. The secondary objective of the study was to evaluate Employee attitude towards the present appraisal system. 3. Review the Primary objective of the study was of the current appraisal system in order to a). Enhance productivity b). Attain global standards 4. The Primary objective of the study was to provide suggestions & recommendations from the study conducted.

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CHAPTER 5 RESEARCH METHODOLOGY

RESEARCH DESIGN: Research Design refers to "framework or plan for a study that guides the collection and analysis of data". A typical research design of a company basically tries to resolve the following issues: a) Determining Data Collection Design b) Determining Data Methods c) Determining Data Sources d) Determining Primary Data Collection Methods e) Developing Questionnaires f) Determining Sampling Plan (1) Explorative Research Design: Explorative studies are undertaken with a view to know more about the problem. These studies help in a proper definition of the problem, and development of specific hypothesis is to be tested later by more conclusive research designs. Its basic purpose is to identify factors underlying a problem and to determine which one of them need to be further researched by using rigorous conclusive research designs. (2) Conclusive Research Design: Conclusive Research Studies are more formal in nature and are conducted with a view to eliciting more precise information for purpose of making marketing decisions. These studies can be either: a) Descriptive or

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b) Experimental Thus, it was mix of both the tools of Research Design that is, Explorative as well as Conclusive. SAMPLING PLAN: Sample Size = 10 Employees Duration = Two (2) weekshs. DATA COLLECTION: Data Sources: (i) Secondary Data through Internet (ii) Primary Data through Questionnaire (iii) Contact Method (iv) Personal Interaction DATA PRESENTATION AND ANALYSIS: Pie Diagrams

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CHAPTER 6 FINDINGS AND ANALYSIS

1.

Employees

Opinion

as

to

the

Purpose

of

Performance

Appraisal

Performance standards / yardsticks Options Yes No Response (%) 96 % 04 %

Response%

Yes No

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Performance appraisal evaluates the behavior of employees in the work spot, normally including both qualitative and quantitative aspects of job performance. In the survey conducted it was observe that nearly 84% of respondents are agree and nearly 16% were not able to agree.

2. Awareness of technique of Performance Appraisal being followed among Employees. Options Yes No Response (%) 72 28

Response%
28%

Yes No 72%

The raterv may not be adequate trainees comes out performance appraisal action . the rater may not have sufficient time to carry out appraisal system and conduct through feedback session so. In the survey conducted it was observe that nearly 72% of respondents are agree and nearly 28% were not able to agree.

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3. Number of Employees being appraised during their service period . Options Yes No Response (%) 68 32

Response%
0% 0%

32% Yes No

68%

Performance appraisal process the individual learns how well he did during the previous twelve months and then use that information to inprove his performance in the future
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.Performance appraisal makes an individual good decision maker . some enployes are also fear of demotions. In the survey conducted it was observe that nearly 68%of respondents are agree and nearly 32%were not able to agree.

4. Employees opinion as to the present appraisal system. Options Fully Satisfied Satisfied Cant Say Dissatisfied Responses (in %) 90 5 3 2

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Responses(in% )

FullySatisfied Satisfied Can't Say Dissatisfied

5. Employee perception as to the frequency of appraisal. Options Once During Response (in %) The 2

Service Period Continuous Never Cant Say 92 0 6

40

Response(in% )

Once DuringThe Service Period Continous Never Can't Say

Employees perception about the appraisal is point out where individual need to improve the performance is commonly used to make sure every member of organization sets and acts according to goals . performance appraisal is focus on the past performance. In the survey conducted it was observe that nearly 2%of respondents say that performance appraisal should be dne once during the service period and nearly 92% are said continuously 6%of respondents cant say anything . 6.If continuous appraisal what should be the gap between two appraisal period. Options Quarterly Half Yearly Yearly Response (in %) 20 44 36

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Responses(In% )

Quartely Half Yearly Yearly

20% respondents say there should be held performance appraisal quarterly.44% respondents say there should be held performance appraisal half yearly. 36% respondents say yearly. 7. How Performance Appraisal affects the productivity of the employees. Motivated + Feedback 38 Indifferent 12 Demotivated -

- Feedback

12

10

28

Neutral

24

21

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Motivatedin %

+Feedback -Feedback Neutral

Performance apprtaisal affects the productivity of employees . in the survey conducted it was observe that feedback given by 38% feel motivated . 12% feel demotivated .24% are cant say anything. 8. Who should do the appraisal? Options Superior Peer Subordinate Self Appraisal Consultant All of the above Superior + Peer Response ( in % ) 24 0 0 8 4 48 16

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Response(in% )

Superior Peer Subordinate Self Appraisal Consultant All of Above

Performance appraisal should be done by superior it helps to motivate the employees .it helps to train the employees. in the survey conducted it was observe that feedback given by 24% feel that superior should done appraisal 8% feel that self appraisal should be done .4% feel that it should be done by consuliant. 48% feel that it should be done by all the above . 16% feel it should be done by superior and peers . 9. Does appraisal help in polishing skills and performance area? Options Yes No Somewhat Response ( in % ) 74 10 16

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Response(In% )

Yes no Som ewhat

Process of appraisal does not lead to the improvement of the skills and proficiency of the employees, the very purpose of appraisal becomes illogical. In the survey conducted it was observed that nearly 74 % of the respondents agree that Performance Appraisal does leads to polishing the skills of the employees. Nearly 10 % of the respondents view that it does not serve this purpose and around 16 % were not able to respond as to whether it serve any such purposes or not.

10.Does personal bias creeps-in while appraising an employee? Options Yes No Response ( in % ) 82 18

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Response(in% )

Yes No

In the process of appraising, both the parties are human being, that is, the one who is being apprised and the other who is appraising. Thus, there bound to be subjectivity involved, be it an objective way of appraising. Thus, when asked from among the sample size of 50 respondents, as huge as 82 % respondended that personal bias do creep in while appraising an individual. Hence, it is inevitable to say that personal likings do not come in the process of appraisal. It is the extent to which the appraiser manages it so that it does not become very partial and bias. 11. If given a chance, would employees like to review the current appraisal Technique? Options Yes No Cant Say Response ( in % ) 72 4 24

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RESPONSE%
Yes No Can't Say

The survey conducted that 72 % like the current appraisal system .4% dislike current appraisal. 24% cant say anything.

12. Appropriate method of conducting the performance appraisal

Options Ranking Method Paired comparison Critical incidents

Response(in%) 12 0 20

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MBO Assessment centre 360degree

58 4 6

response(in% )
4% 6% 12% 0% rankingmethod paired comparison 20% critical incidents MBO assessment centre 58% 360 degree

In the survey conducted MBO is the best method of conducting performance appraisal. 12% says ranking method and critical incident 20% and 4% assessment centre and 6% says 360% appraisal method . MBO 58%. 13. Does performance appraisal leads to identification of hidden potential?

Options Yes No

Response ( in % ) 96 4

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response(in% )
0% 0 4%

yes no

96%

The performance appraisal leads to identification of hidden potential. Ia the survey 96% respondents says yes and4% says no.

CHAPTER 7 LIMITATIONS OF THE STUDY

A few limitations and constraints came in way of conducting the present study, under which the researcher had to work are as follows:

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Although all attempts were made to make this an objective study, biases on the part of respondents might have resulted in some subjectivity.

Though, no effort was spared to make the study most accurate and useful, the sample Size selected for the same may not be the true representative of the Company, resulting in biased results.

This being the maiden experience of the researcher of conducting study such as this, the possibility of better results, using deeper statistical techniques in analyzing and interpreting data may not be ruled out.

CHAPTER 8 CONCLUSION AND SUGGESTIONS

After having analyzed the data, it was observed that practically there was no appraisal in the organization. To be an effective tool, it has to be on the continuous basis. This is the thing that

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has been mentioned time and again in the report, as, in the absence of continuity, it becomes a redundant exercise. Before actually deciding drafting what should be the kind of appraisal the following things should be taken care of: 1) The very concept of performance appraisal should be marketed throughout the organization. Unless this is done, people would not realize itsimportance to the organization. 2) To market such a concept, it should not start at bottom, instead it should be started by the initiative of the top management. This would help in percolating down the concept to the advantage of all, which includes the top management as well as those below them. This means that the top management has to take a welcoming and positive approach towards the change that is intended to be brought. 3) Further, at the time of confirmation also, the appraisal form should not lead to duplication of any information. Instead, detailed appraisal of the employees work must be done which must incorporates both the work related as well as the other personal attributes that are important for work performance. 4) It should be noted that the appraisal form for each job position should be different as each job has different knowledge and skill requirements. There should not be a common appraisal form for every job position in the organization. 5) The job and role expected from the employees should be decided well in advance and that too with the consensus with them. 6) A neutral panel of people should do the appraisal and to avoid subjectivity to a marked extent, objective methods should be employed having quantifiable data. 7) The time period for conducting the appraisal should be revised, so that the exercise becomes a continuous phenomenon. 8) Transparency into the system should be ensured through the discussion about the employees performance with the employee concerned and trying to find out the grey areas so that training can be implemented to improve on that.

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Ideally in the present day scenario, appraisal should be done, taking the views of all the concerned parties who have some bearing on the employee. But, since a change in the system is required, it cannot be a drastic one. It ought to be gradual and a change in the mindset of both the employees and the head is required.

1.

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ANNEXURE
1. How do you rate the present appraisal system? a) Fully Satisfied c) Cant Say 2. Should the appraisal process be: a) Once during the service period c) Never b) Continuous d) Cant Say Appraisal? b) Satisfied d) Dissatisfied

3. What in your opinion should be the time period of conducting continuous a) Quarterly b) Half Yearly c) Yearly

4. Does Performance Appraisal helps in improving the productivity of the employees? Motivated + Feedback - Feedback Neutral Indifferent Demotivated

5. Who in your opinion should appraise the employee? a) Superior b) Peer d) Self Appraisal f) All of the above

c) Subordinates e) Consultant

6. Does the appraisal system helps in polishing the skills or performance area? a) Yes b) No c) Somewhat

7. Do you think personal bias creeps in while appraising an individual?

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a) Yes

b) No

8. If given a chance or an opportunity would you like that the current appraisal procedure should be reviewed? a) Yes b) No c) Cant Say

9. What according to you should be the appropriate method for conducting performance appraisal? a. Rating the employee on number of traits along with the range of performance for each by the supervisor. b. For every trait, each subordinate is paired with and compared to every other Subordinate. c. Reviewing employees on the basis of identified specific examples of good or poor performance. d. Setting specific measurable goals with each employee and periodically reviewing the progress made. e. Reviewing performance through case studies, presentations, role playing, etc. for future performance. f. Receiving feedback from people whose views are considered helpful and relevant including the appraise himself. 10. Does Performance Appraisal leads to identification of hidden potential of the employees? a) Yes b) No

. Suggestions and views...............................

Sign of respondent

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