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    • Appendix – I A Major Project Report On “A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC SECTOR” Submitted for partial fulfillment of requirement for the award of degree Of Master of Business Administration CHHATTISGARH SWAMI VIVEKANAND TECHNICAL UNIVERSTY BHILAI (C.G.) Session 2010-2012Supervision By Submitted byMiss Swati Shukla Nazeesh AliLecture (G.D.R.C.E.T) Roll No.: 5423610015MBA department EnrollmentNo.:AG8065 MBA IV Semester DEPARTMENT OF MANAGEMENT G.D.RUNGTA COLLEGE OF ENGINEERING &TECHNOLOGY approved by AICTE,New Delhi Kohka Kurud Road, Bhilai 490024 (C.G.) 1
    • Appendix – II DECLARATION I am undersigned solemnly declare that the report of the project work entitled “ASTUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC SECTOR”, isbased my own work carried out during the course of my study under the supervision of MissSwati Shukla. I assert that the statements made and conclusions drawn are an outcome of the projectwork. I further declare that to the best of my knowledge and belief that the project reportdoes not contain any part of any work which has been submitted for the award of any otherdegree/diploma/certificate in this University or any other University. (Signature of the Candidate) Nazeesh Ali Roll No.:5423610015 Enrollment No.:AG8065 2
    • Appendix – III CERTIFICATE BY GUIDEThis to certify that the report of the project submitted is the outcome of the project work entitled“A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC SECTOR” carriedout by Monali Vaidya, Roll No.:5423610015 & Enrollment No.: AG8065 carried by under myguidance and supervision for the award of Degree in Master of Business Administration ofChhattisgarh Swami Vivekanand Technical University, Bhilai (C.G), India.To the best of the my knowledge the report i) Embodies the work of the candidate him/herself, ii) Has duly been completed, iii) Fulfils the requirement of the ordinance relating to the MBA degree of the University and iv) Is up to the desired standard for the purpose of which is submitted. (Signature of the Guide) Miss Swati Shukla Lecture (G.D.R.C.T) MBA departmentThe project work as mentioned above is hereby being recommended and forwarded forexamination and evaluation. 3
    • Appendix –IV CERTIFICATE BY THE EXAMINERSThis is to certify that the project entitled “A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC SECTOR” Submitted byNazeesh Ali Roll No.: 5423610015 Enrollments No.: AG8065Has been examined by the undersigned as apart of the examination for the award of Master ofBusiness Administration degree of Chhattisgarh Swami Vivekanand Technical University, Bhilai(C.G.).Name & Signature of Name & Signature ofInternal Examiner External ExaminerDate: Date: Forwarded by Academic Head Department of Management 4
    • Appendix – V ACKNOWLEDGEMENT In order to complete any project successfully, functional environment & properguidance of the expert on the subject is inevitable. It is often the result of valuable contribution of anumber of individual in direct and indirect manner that helps in shaping and achieving the objective.I take the opportunity to extend my sincere thanks to my guide respect Miss Swati Shukla.Member MBA department. I believe that this endeavor of support has greatly boosted my morale and will help ina long way to reach. Further mile stone and greater height. (Signature of the student) Nazeesh Ali Roll No.: 5423610015 MBA IV th Semester 5
    • Title page iDeclaration iiCertificate by guided iiiCertificate by the examiner ivAcknowledgement v TABLE OF CONTENTS Chapter No. Topic Name Page No. 1. Declaration 2. Certificate by examiner 3. Certificate by the guide 4. acknowledgement Chapter 1 Introduction 1.1 introduction of topic 1.2 objectives of the study Chapter 2 Literature review Chapter 3 Problem identification Chapter 4 Research methodology Chapter 5 Data analysis & interpretation Chapter 6 Result &discussion Chapter 7 Findings& conclusion Chapter 8 Annexure 6
    • 1.1 INTRODUCTION OF PERFORMANCE APPRAISALperformance appraisal is a method of evaluating the behavior of employees in a work place,normally including both the quantitative & qualitative aspects of job performance, performancehere refers to the degree of accomplishment of the tasks that make up individual’s job.Performance is measured in terms of results. thus, performance appraisal is the process ofassessing the performance or progress of an employee, or a group of employees on the given job,as well as his potential for future development .Thus ,performance appraisal comprises all formal procedures used in organizations to evaluatecontributions, personality & potential of individual employees . in other words performanceappraisal includes the comparison of performance scales of different individuals holding similarareas of work responsibilities & relate to determination of worth of the scale for the achievementof organizational objective.The Performance appraisals are essential for the effective management and evaluation of staff.Appraisals help develop individuals, improve organizational performance, and feed into businessplanning. Formal performance appraisals are generally conducted annually for all staff in theorganization. Each staff member is appraised by their line manager. (Directors are appraised bythe CEO, who is appraised by the chairman or company owners, depending on the size andstructure of the organization). Annual performance appraisals enable management and monitoring of standards, agreeingexpectations and objectives, and delegation of responsibilities and tasks. Staff performanceappraisals also establish individual training needs and enable organizational training needsanalysis and planning. Performance appraisals data feeds into organizational annual pay andgrading reviews, and coincides with the business planning for the next trading year. Performanceappraisals generally review each individual’s performance against objectives and standards forthe trading year, agreed at the previous appraisal meeting. Performance appraisals are alsoessential for career and succession planning.Performance appraisals are important for staff motivation, attitude and behavior development,communicating organizational aims, and fostering positive relationships between managementand staff. Performance appraisals provide a formal, recorded, regular review of an individual’sperformance, and a plan for future development. In short, performance and job appraisals arevital for managing the performance of people and organizations.DEFINITION“Performance appraisal is the systematic, periodic & an impartial rating of an employee’sexcellence in matters pertaining to his present job & his potential for a better job. 8
    • APPROACHS OF PERFORMANCE APPRAISAL _____________________________________________________________TRADITIONAL APPROAH MODERN APPROACH  Straight ranking method Assessment centre  Paired comparison technique Appraisal by results or(m.b.o)  Man to man comparison method Human asset accounting method  Grading Behavioral anchored rating  Graphic rating scale  Forced choice description method  Forced description method  Check list method  Free essay method  Critical incidents method  Group appraisal method  Field review method TRADITIONAL METHOD STRAIGHT RANKING METHOD This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation. PAIRED COMPARISON A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings. CRITICAL INCIDENTS METHODS In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur. 9
    • FIELD REVIEW In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors’ personal bias. CHECKLIST METHOD The rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees. GRAPHIC RATING SCALE In this method, an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on the job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory. FORCED DISTRIBUTION To eliminate the element of bias from the rater’s ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion.MODERN METHOD Assessment centre method: This method was used for the first time in 1930 by theGerman army and then in 1960’s by the British army. This method tests a candidate indifferent social situations using a number of assessor and procedures. The performance ofan employee an also his potential for a new job is evaluated in this method by assessing hisperformance on job related simulations. Characteristics that the concerned managers feelare important for the success of a particular job are included in these simulations.Techniques like business games role playing and in basket exercises are used in thismethod. The employees are evaluated individually as well as collectively on job relatedcharacteristics. Personal interview and projective tests help in assessing the motivation,career orientation and dependence on others of an employee. To measure the intellectualcapacity written tests are used. The evaluators in this method consist of experiencedmanager working at different levels who prepare a summary report for the management aswell as for the employees. This technique usually measures the planning abilityinterpersonal skills and organizational skills of an employee. 10
    • Human Resource Accounting Method: Human resources are a valuable asset for anyorganization and it can be valued in monetary terms. This method evaluates theperformance of an employee in terms of costs and contributions. HR costs includeexpenses incurred on HR planning recruitment selection induction and training. Thedifference between this costs and the contribution by an employee reflects the performanceof that employee. This method is still developing hence is not very popular at present. Behaviorally anchored rating scale (BARS): This method combines the graphic ratingscale and the critical incident method. It determines in advance the critical areas of theperformance and the most effective behavior to achieve the results. Then the actual jobbehavior of an employee is evaluated against the predetermined behavior. Appraisal through management by objectives (MBO): This concept was introduced byPeter Drucker in 1954 who named it management by objectives and self control. It is aneffective way it is also known as goal setting approach to appraisal .In this process thesupervisor and subordinate members jointly identify the common goals of the organizationand set the areas of the responsibility of each individual in terms of results expected fromthat person. These measures are use for operating the unit as well as for appraising theperformance of the employees.The 360 degree appraisal: The 360 degree method of performance appraisal is used tomake the appraisal process more transparent, objective and participative. It introduced theconcepts of self appraisal subordinates appraisal, peer appraisal and appraisal bycustomers. It is called a 360 degree method because it involves the evaluation of anemployee by persons above him, below him and alongside him. Structured questionnairesare used to collect information from the seniors, subordinates and peers. The employee tobe evaluated thus acquires a central position and everyone around him participates in theappraisal process in the 360 degree method. The following four are the main componentsof 360 degree appraisal :Self appraisal: It allows an employee complete freedom in accessing his or her strengthsobjectively and identifying the areas of development. The employees get a chance to sharethe development areas with their seniors based on their self appraisal and jointly workedout a plan in tune with the organizational realities like the availability of resources andtime. It also gives a chance to the employee to express his career plans which is in theinterest of the organization as it knows beforehand the aspirations of its employee. 11
    • Appraisal by superiors: An appraisal by superiors involves providing constructive,feedback about the performance of any employee as well as his development areas duringthe review period. It helps in setting goals for the employees that help in achieve theorganizational goals and improve the performance of the employee. The career aspirationsof an employee are also put in proper prospective.Appraisal by subordinates: This is a unique feature of the 360 degree method ofappraisal. As the subordinates play an important role in the performance of the employee.The feedback by the subordinates gives firsthand account of how they look at theirsuperior in terms of working style. The capability of a superior in motivating, delegatingthe work, building a team and communicating with them effectively form the basis ofappraisal by the subordinates.Peer appraisal: It also plays an important role in 360 degree appraisal as the role of peersis quite important in life of an employee. Selecting the right peers is very important andpeers from the departments that are directly related with the department of the employeeshould also be included. It mainly focuses on feedback about the style of functioning of theemployee under review and can also include his ability to work as team leader besides hisco-operation and collaboration.Potential appraisal: It is different from performance appraisal as it refers to the abilitiesof the employees that are not being used at the time of appraisal. It searches for the latentabilities of the employee in discharging higher responsibilities in future. The potential ofthe employees is judged on the basis of his present performance, personality traits, pastexperience and age and qualification. It also looks at the unused skills and knowledge ofan employee. It aims at informing the employee their future prospectus and helps theorganization in drawing your suitable successions plan. It also requires updating thetraining efforts regularly and advised the employees on things which they can do toimprove their career prospectus. 12
    • 1.2 OBJECTIVE 1. To evaluate the performance of employees. 2. Its help to identify the strength & weakness of employees. 3. Its provide feedback to employees regarding their performance. 4. Its help to identify the necessary training & development programmes. 13
    • 2.1 LETRATURE REVIEWThe objectives of the Improving Public Sector Performance Project for Honduras are tostrengthen the management of public finances and to establish a more efficient, effective andtransparent public procurement system through: (i) upgrading the public financial managementsystem; (ii) upgrading the e-procurement platform; (iii) enhancing the internal control systemsover personnel expenditures; and (iv) building capacity of the central administration. There arefive components to the project. The first component is strengthening and consolidating financialmanagement systems. The objective of this component is to upgrade the technological platformof the financial management system (SIAFI) and to strengthen its conceptual and functionalframework in order to provide a more efficient processing and effective access to financialmanagement information. The second component is to strengthening the public procurementsystem. The objective of this component is to support the governments initiative to create aregulatory body with specific goals and objectives, thus strengthening overall governance in thepublic procurement system and to improve transparency and compliance. The third component isimproving public sector human resource management. This component has the objective toimprove human resource management (HRM) in the public sector through: (i) enhancingcontrols over personnel expenditures, and (ii) improving the attraction and retention of qualifiedpersonnel to gradually. The part of the economy concerned with providingbasic government services. The composition of the public sector varies by country, but in mostcountries the public sector includes such services as the police, military, public roads,public transit, primary education and healthcare for the poor. The public sector might provideservices that non-payer cannot be excluded from (such as street lighting), serviceswhich benefit all of society rather than just the individual who uses the service (such as publiceducation), and services that encourage equal opportunity. Public sector organizations include allthose financed by public money. For example: all the Departments of central government and itsagents, local authorities and regional assemblies, the NHS, police and the emergency services,schools and universities, publicly funded arts venues and organizations. The sector includesmany organizations that are extremely large and complex. In most areas of the country, forexample, the NHS and the local council are by far the largest employers. 15
    • The last decade or so has seen a growing interest amongst both academics andpractitioners in the alleged emergence of a post-Fordist production paradigm. It is depicted asthe fulcrum on which the UK’s move towards a knowledge driven economy should turnand is similarly as one of the ways to address theUK’s perennial productivity lag. Any changeto the organization of work has wide ranging micro and macro implications. Unsurprisingly,therefore, the purported transformation has stimulated a plethora of research from a varietyof academic disciplines ranging from political economy to ethnographic sociology. This reviewseeks structure to this somewhat variegated discourse. By invoking a multidisciplinaryperspective, it attempts to offer a succinct and critical summary of the key theoretical debatessurrounding new forms of work organisation.The paper is structured as follows. First, in order tolocate and clarify the precise terrain of the phenomenon under review, the conceptualization ofthe reconfigured production model is explored. As will become clear, this remains an area ofsome dissent and indeed controversy. The paper will then review the principal theoretical issuessurrounding the emergent paradigm. For analytical purposes, these will be subdivided in to threeresearch streams: (a) the potential for the consolidation of the news production regime withinliberal market economies; (b) issues relating to organisational performance and; (c) theimplications of changing organizational practices vis-à-vis employees. As will become evident,at present research in this area is hampered by both insufficient data and inadequate conceptualtools. In the final section, therefore, in line with the intellectual thrust of the CLMS Learning asWork project, the synergies and complementary between the high performance andlearning at work literatures are briefly explored.While the increased demand for executive coaching in the marketplace has opened up, theincreasing number of coaches of every type, training, and perspective has also grown (Brotmanet al., 1998; Joo, 2005; Kampa-Kokesh, & Anderson, 2001;Wasylyshyn, 2003). It is surprisingthat with the increased use of executive coaching and the rising number of coaches, there has notbeen a professional association formed to develop and monitor the standards, requirements, andcompetency validation solely for executive coaches (Brotman et al., 1998; ICF,2006;Wasylyshyn, 2003). This need has brought reactions from executives, coaches, and clientswho suggest standardized methods. Executives have recognized the significance of executivecoaching in their professional performance, both personally and organizationally (Effron et al.,2005;Joo, 2005; Kampa-Kokesh, & Anderson, 2001; Turner, 2006; Wasylyshyn, 2003).Duringthe beginning years of executive coaching, it was seen as an executive crutch to assist non-performers. Today, executive coaching is looked upon as a necessary tool and in some casesreserved only for senior executives (Joo, 2005; Kampa-Kokesh, & Anderson, 2001;Stevens, 2005; Turner, 2006; Wasylyshyn, 2003). One reason for the about face attitude could bethe value executive coaching brings as a “time-out" break, from the unyielding demands of thecorporate world, for inner-thought, assessment, positive criticism, and a co-development ofstrategies (Bacon &Spear, 2003; Brotman et al., 1998; Joo, 2005; Kampa-Kokesh & Anderson,2001;Kilburg, 1996a; Orenstein, 2002; Stevens, 2005; Turner, 2006; Wasylyshyn, 2003).One ofthe premier uses of executive coaching is to deliver "just-in-time" strategies for increasing onespersonal performance and effectiveness by transforming weaknesses into strengths (Bacon &Spear, 2003; Kampa-Kokesh, & Anderson, 2001;Kilburg, 1996a; Orenstein, 2002; Wasylyshyn,2003). Due to this increase in personal ROI, corporate America is enamored with executivecoaching and the benefits it has brought in recent years (Bacon & Spear, 2003).With manycorporate incomes decreasing over the past few years, corporations have reevaluated theirtraining and development practices, to include the use of external sources (Joo, 2005; Kampa- 16
    • Kokesh, & Anderson, 2001; Turner, 2006; Wasylyshyn,2003). As a result, executive coachingfocuses on ensuring alignment with corporate strategy (Bluckert, 2005b; Brotman et al., 1998;Edwards, 2003; Levinson, 1996; Joo,2005; Orenstein, 2006; Peterson, 1996; Saporito, 1996;Turner, 2006). In this changing corporate setting, executive coaching must be used in a laser-focused manner, rather than a liberally used improvised solution (Orenstein, 2006). Thosecorporations who have identified the need and usefulness of executive coaching have created aninner coaching environment to facilitate coaching through internal coaches(Turner, 2006).It is inthe new corporate coaching culture of companies employing their own coaches(internal) wherethe chemistry of the coaching relationship takes a back measures in the coaching protocol (Joo,2005; Kampa-Kokesh & Anderson,2001; Stevens, 2005; Turner, 2006; Wasylyshyn, 2003). The internal coach, unfortunately, findshim or herself in a dilemma of possibly losing one of his most prized outcomes, which is,assisting clients to become masters of change management (Wasylyshyn, 2003). Anotherdownturn of this "commoditization" of executive coaching is to put a limit on the use ofcoaching, and to what extent, documenting the benchmarks, stages, and action steps. Doing so,realistically, diminishes the coaching process to a cookie cutter approach including a presetnumber of sessions and strategies rather than a co-developed strategic plan developed over thecourse of going relationship.The amount of research regarding the topic “Performance Appraisal” is so vast. The topic isliterally not new; it is as old as the formation of the organizations. Before the early 1980’s,majority of theoretical studies emphasized on revamping the rating system within theorganization. The actions were a great thing to reduce the chaotic of employee’s performanceappraisal (Feldman, 1981). With the passage of the time the methods and rating system amongthe employees got enhanced and received an immense appreciation and attentions of themanagers.Behavioral Observation Scale (BOS) is one of the best techniques utilized by the managers toarte the employees. The dilemma was on the peak in the 1960s and 1970s. In the same periodcouple of new innovated rating scales were introduced, which was Behaviorally AnchoredRating Scale (BARS) and the Mixed Standard Scale (MSS). The innovations were dominant onewhich condensed the errors and improved the observation skills from the performance appraisalpractice. According to the research of Avery and Murphy (1998), there were hundreds ofthousands of researches had been taken place between the periods of 1950 to 1980, which merelyfocused on the different types of rating scales? Landy and Farr (1980) reviewed and researchedthe methods of performance appraisal in totally a different manner, in which they understand therater and process in an organizational context. Other Performance appraisal reports include therater characteristics in their report like race, gender and likeability.After the year 1980 the biasness among the performance appraisal system occurred outrageouslyand appraisal had been granted on the favoritism or race and gender basis rather examined theknowledge, skills and style of the work of the employee. The accuracy criteria among theperformance appraisal system clutched its grip in the start of the 1980s, where the researcheswere emphasized on common psychometric biases which include the diversified rating errorslike leniency, central tendency and halo, which were termed as rating errors in the appraisalmethod. It has been observed that the bias free appraisals were inevitably true or more preciselywe can say more accurate, but the concept was totally refused by the research of Hulin in 1982. 17
    • According to them the biasfree appraisals were not necessarily accurate (Murphy & Balzer,1989).Researches which had been done in the year 1980 were found the most dominating one whichcontributed the appraisal system in a great deal. The researches of the1980 also helped out toclarify some presumed assumptions regarding the performance appraisal, just like the work ofMurphy (1982). Research has included the measure of employee attitudes towards the system ofperformance appraisal and its acceptance (Roberts, 1990). Bernardian and Beatty (1984),suggested in their research that behavioral and attitudinal kinds of measure ultimately prove to bebetter anticipator as compared with the traditional psychometric variables, which we havedeclared earlier as well, like leniency, halo and discriminability. A Performance Appraisalsystem is totally ineffective in practice due to the dearth of approval from the end users (Roberts,1990).According to a number of researchers, the enhanced and upgraded performance appraisalprocedure and method will enhance the satisfaction level of the employees and definitely willimprove the process of goal setting within the organization.Performance Appraisal has been considered as the most significant an indispensable tool for anorganization, for an organization, for the information it provides is highly useful in makingdecisions regarding various personnel aspects such as promotion and merit increases.Performance measures also link information gathering and decision making processes whichprovide a basis for judging the effectiveness of personnel sub-divisions such as recruiting,selection, training and compensation. Accurate information plays a vital role in the organizationas a whole. They help in finding out the weaknesses in the primary areas .public sector is leadingthe pack in performance management innovation was confirmed about a year ago, when I signedon as subject-matter expert for the national benchmarking study on best practices in performanceappraisal sponsored by the American Productivity and Quality Center, DDI, and Linkage, Inc.My first task was to identify the companies that are doing really innovative stuff in performancemanagement. But many of these companies turned out not to be “companies.” Many of themwere government agencies, and two of them — the Air Force Research Laboratory and theMinnesota Department of Transportation — made the final cut as best practice models.Performance management is the handy umbrella term for all of the organizational activitiesinvolved in managing people on the job. Performance appraisal, of course, is the one we think offirst, and people often use the terms “performance management” and “performance appraisal”interchangeably. But other activities also find room under the performance managementumbrella — discipline systems, for example. In addition to creating some novel approaches toassessing and evaluating just how well Charlie and Jane are doing their jobs — performanceappraisal, obviously — government agencies at all levels are reacting in entirely new ways whenCharlie and Jane drop the ball and create problems on the job. Discipline procedures are anothertype of performance management system. And what happens when it’s management that dropsthe ball? Charlie’s upset because he feels he shouldn’t have been assigned to work overtime;Jane’s indignant over what she sees as an undeserved written warning. Grievance procedures tooare performance management devices.In each of these areas, government agencies at all levels are developing and installingperformance management procedures and systems that can appear revolutionary to anyone who’slocked into old ways of managing people. Historically, performance appraisal has been seen asmerely an event—the painful annual exercise where the manager rates the performance of her 18
    • subordinates over the past 12 months. Operating independently all by itself, the performanceappraisal system was rarely linked directly to the stated mission of the organization or to anyother programs and processes designed to maximize human efforts and intellectual capital.Independence has now been replaced by integration. At the organizations ourAPQC/DDI/Linkage project team examined, public and private alike, the performance appraisalsystem is no longer an organizational loose cannon. Items on the performance appraisal aredirectly tied to the agency’s strategic plan. The system is designed to forge a visible link betweenorganizational and individual goals and to reinforce predetermined core competencies.Moreover, organizational expectations of the performance appraisal system have been upgraded.Where in the past the system may have been used merely to tell old Joe how he was doingand justify his annual step increase, organizations now realize that their performance appraisalsystem has enormous power to genuinely transform the agency’s culture. One of the majorfindings of the national benchmarking study was that best-practice organizations are using theirperformance appraisal process as the primary driver in forcing culture change. What’s thechange? It’s the shift from being a best-effort results-driven climate. culture into a truly Thisdrive to focus organization members on results and not tenure has placed a new requirement onperformance appraisal’s shoulders: the expectation that performance appraisal must help muscle-build the organization. Government agencies are coming to see that traditional approaches topeople development—like promotion from within based almost exclusively on job tenure—areno longer good enough. An agency that uses time in grade as its organizational hardening of thearteries. fundamental criterion for getting ahead is encouraging One of the first organizations toemerge as a genuine model of best practices in the national benchmarking study was the AirForce Research Laboratory in Dayton, Ohio, an organization of 3000 people. Their appraisalsystem completely designed by their scientists and not by the personnel department, makes thenovel assumption that everyone is performing at a competent level. The appraisal system, theyargue, needs to focus not on the quality of an individual’s performance but on the degree of thejob’s contribution. AFRL deliberately builds jobs big and loads each person with as muchresponsibility as possible. When a person can’t handle a job, they ratchet the responsibilitiesdown to where he can handle the demands. People migrate to the jobs they can handle. Pay isdetermined less by the individual’s performance and more by the contribution his or her jobmakes to the overall mission. Focusing on results clearly indicates whether an employee is doingthe job for which he is paid. That’s why AFRLs performance management system evaluatesemployees contributions / outputs / results. As a result, AFRL pay raises are based oncontributions to the organization’s mission. The system does not appraise performance orbehavior, only contribution. All employees have variable pay to motivate their performancetoward achieving results that will impact the organization. The new employee has the incentiveto contribute at or above the expected level because next year’s pay may be lowered or theemployee removed if the contribution does not meet or exceed expectations. More specifically,AFRLs Contribution-based Compensation System (CCS) delineates six key factors:‰ Technical Problem Solving‰ Communications/Reporting‰ Corporate Resources Management‰ Technology Transition / Transfer (Taking technology out of the laboratory environment and put it to real-world use)‰ R&D Business Development‰ Cooperation and Supervision 19
    • Employees certainly recognize the results-driven nature of the system. AFRL’s leaders admit it:Fear of being held accountable for results was apparent in some AFRL employees upon thedeployment of the Contribution-based Compensation System. Some employees who didn’t farewell under the new system have left the organization; others have noticeably worked to improvetheir level of contribution. The majority of employees, however, embraced the system becausethey recognized the equitable nature of CCS.REINFORCING CORE COMPETENCIESOver the past several years, one of the significant developments in the technology ofperformance management has been the identification of specific “core competencies” byorganizations. Competencies define for all members of the organization the behaviors, skills,attributes, performance factors and proficiencies that every organization member is expected topossess and display. They are limited in number and critical to organizational success. Theperformance appraisal system plays several roles here. First, it is the mechanism that helps theorganization highlight and communicate the small number of critically important behaviors andskills against which every single employee will be assessed. In addition, creating a newperformance appraisal system may help force the organization to define just what attributes orfactors are actually at the organization’s core. Finally, the appraisal system can guarantee thatthese competencies are fully understood and institutionalized. The senior management of theMinnesota Department of Transportation defined its mission, vision and values several years agoin response to a 1996 employee survey. Seven core competencies and a dozen individualcharacteristics expected of every Mn/DOT employee were also identified as part of that process.Top management realized that determining the core competencies — as difficult as doing thathad been — was in fact the easy job. The hard job would be communicating them to everyMn/DOT employee. Even harder would be making sure that they showed up, day in, day out, ineverybody’s job performance. That’s where performance appraisal came in. In early 1998Mn/DOT’s senior management commissioned a performance appraisal implementation team.They put together a group representing a diagonal slice of the organization: managers andprofessional employees, supervisors, and technicians from different levels and functions andgeographical locations throughout the agency. This twenty-member task force was maderesponsible for creating a performance appraisal system that directly related Mn/DOT’s mission,vision and values to each employee’s job. In addition, top management demanded that thesystem reinforce the importance of all employees’ demonstrating the core competencies andindividual characteristics they had identifiedPUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENTTo begin, “Positive Contacts” are included as a formal element of the system. Makingrecognition a formal part of the system reminds managers that reinforcing good performance isjust as important as confronting poor performance. It also makes employees aware that theorganization expects that they will be recognized when they perform well. Most important, itmakes recognition of good performance a policy expectation of the organization, not merely aneasily ignored piece of prosaic advice dispensed in a management-training program. 20
    • Now consider the other end of the chart. Another major difference between the conventional andpositive models is the new approach’s recognition that the discipline process actually involvesonly three steps, not four. Termination is not the final step of the discipline system, as thetraditional progressive-discipline model would have it. More accurately, termination representsthe failure of the discipline system. A commonly used metaphor holds that “Discharge is thecapital punishment of organizational life.” That metaphor is nonsense. The proper metaphor fordischarge is that it is a no-fault divorce. “You’re a good person,” the organization says to theindividual when all the steps of disciplinary action have proved fruitless, “and we’re a goodemployer. But your goals and needs and our goals and needs can’t be reconciled. You need tofind a place to work where you can be happy; we need to find someone to fill this job who canmeet our expectations. We now must go our separate ways.”PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENTTHE INITIAL STEPS OF FORMAL DISCIPLINARY ACTION:REMINDERS I AND IIWhen informal coaching sessions and performance improvement discussions are unsuccessful insolving a performance or behavior problem, the first level of formal disciplinary action is aREMINDER I. The supervisor discusses the problem, reminds the employee of hisresponsibility to meet the organizations standards, and gains the employee’s agreement to returnto fully acceptable performance. If the problem continues, the supervisor moves to aREMINDER II. Again the supervisor talks to the employee and gains his or her agreement tosolve the problem. After the meeting, the supervisor formally documents the discussion in awritten memo to the employee. The term Reminder is chosen deliberately. Unlike a warning orreprimand, we are in fact reminding the employee of two things. First, we’re reminding him ofthe specific gap between his existing performance and the performance we expect. Second, weare reminding him that it is his responsibility to deliver the goods and do the job that he is beingpaid to do. Using Reminders I and II eliminates another nagging annoyance generated by thetraditional system: the issue of “oral” and “written.” If a supervisor gives a subordinate a “VerbalReprimand” or an “Oral Warning,” is that action documented? Of course. Is the documentationwritten down? Of course. So doesn’t that turn an “Oral Warning” into a “Written Warning”?Don’t fight that battle. Call it a Reminder I or a Reminder II to indicate simply the level of thestep, and describe the documentation procedures separately.THE FINAL STEP: DECISION MAKING LEAVEWhen the initial steps of formal disciplinary action are unsuccessful in convincing an individualto solve a performance problem, the need for a dramatic, final-step gesture arises. The positivediscipline approach now provides an unexpected, authoritative, and counterintuitive final step:the Decision Making Leave. The employee is suspended for one day. He is told to return the onfollowing day with a final decision: either to solve the immediate problem and make a totalperformance commitment to fully acceptable performance in every area of the job, or to resignand seek more satisfying employment elsewhere.PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENT 21
    • The employee is paid for the day to demonstrate the organization’s good faith desire to see himchange and stay. He is also specifically advised that if another problem requiring disciplinaryaction arises, he will be terminated. The unconventional aspect of a paid disciplinarysuspension is the element of the non-punitive approach that immediately attracts the mostattention. But the organizations that have adopted the process report significant benefits:IT DEMONSTRATES GOOD FAITH.Most organizations see themselves as decent and enlightened employers; they want everythingthat they do in their employee relations practices to reflect and confirm this view. Paying theemployee for the day allows them to send the message that when we say we want the individualto use the time seriously to think through whether this is the right job for him, we’re serious.IT TRANSFORMS ANGER INTO GUILT.Test your experience: most employees who receive an unpaid suspension are irate; many returnembittered by the experience. But our intent, even with the old system, is not primarily to punishan individual for his transgressions. It is to send a wake-up call, to get him to take responsibilityfor his own behavior and performance. But docking his pay makes the agency’s words hollow.Paying the employee, on the other hand, routinely eliminates the anger that commonly resultsfrom final step disciplinary transactions.IT’S APPROPRIATE FOR ANY JOBTraditional approaches to discipline are typically seen as appropriate only for employees inoperational, direct-labor, blue-collar jobs. But people problems arise throughout the organization.Public sector organizations often reject tradition al approaches to discipline for professional,exempt, managerial employees but find no satisfactory alternative. A decision making leave is anappropriate transaction for any individual whose performance violates organizational norms.IT MAKES LIFE EASIER FOR SUPERVISORS.Most supervisors hate having to take disciplinary action. Many supervisors themselves havecomeup from the ranks and know their subordinates better as peers than as bosses. Using a decisionmaking leave allows supervisors to handle even the most serious disciplinary problems withoutfeeling the need to apologize.PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENTIT GETS RID OF MONEY AS AN ISSUE.While the employee is away, we want him to be thinking about the requirements of his job, hisown occupational goals, and whether the two can be reconciled. Forcing the employee to worryabout how he will make up for the pay he has lost dilutes the chances that the more importantissues will be seriously considered.IT REDUCES HOSTILITY AND THE RISK OF WORKPLACE VIOLENCE.IT REINFORCES YOUR VALUES.Most public sector organizations take pride in being fair employers and want to be seen as highlydesirable places to work — an employer of choice. But traditional, punitive discipline systemsviolate the spirit of the organization’s values. Using a decision making leave and focusing on 22
    • individual responsibility allows the discipline system to be the most visible evidence of theorganization’s bone-deep commitment to assuring that its values are practiced, even in the mostdifficult situations.PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENTSince TDMHMR lead the way, dozens of other public sector organizations have adopted a nonpunitive procedure for dealing with the everyday problems of failure to maintain regularattendance, poor performance, and unacceptable conduct. Their implementations of the systemare always met with the same initial concerns and misconceptions: that somehow, by not makingthe employee suffer financially, we are somehow rewarding misbehavior. That employees willintentionally misbehave in order to get a free day off. That employees will view the system as ajoke or management gimmick. Their concerns have been checked, tested and proven unfounded.One of the greatest advantages of the non-punitive approach, organizations report, is that it shiftsthe responsibility for performance management from the supervisor to the employee. Instead ofreprimanding the employee for his misdeeds, the supervisor now insists that the individual makea choice: change and stay with the organization, or leave and find greener pastures elsewhere.The dignities of both parties are preserved, but the demand that everyone adhere to theorganizations standards is reinforced. When Mecklenburg County implemented the DISCIPLINEWITHOUT PUNISHMENT system a few years ago, the first person to reach the point of adecision making leave was a young man who functioned as the department receptionist. “He waseverything you didn’t want in an employee — arrogant, insolent and unconcerned with anyonebut himself,” his supervisor explained later. He went through the reminder steps and quicklyreached the decision-making leave level. He returned the following day, chagrined. He told hissupervisor that while on the decision making leave he realized that all his life he’d really wantedto be a barber. He had called all the barber schools in the county, had found one with a classstarting in three weeks, and asked if he could resign voluntarily and work the three weeks untilhis class started. She instantly agreed. “His performance during those three weeks wasexcellent,” she reported. “And just before he left he wrote a memo to every county employee hehad worked with, telling them he was leaving to go to barber school, and asking that in sixmonths, when they needed a haircut, to look him up!” Not every story has that happyending. But public sector organizations that adopt the positive approach discover that problemsget resolved faster, supervisory stress decreases, and challenges to discipline and dischargeaction are significantly reduced.PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENTTHE STATE OF GEORGIA STUDYIn 1996 the State of Georgia decided to implement the DISCIPLINE WITHOUTPUNISHMENT system in every agency throughout the state. Late in 1998 a major study wascompleted of the results of DISCIPLINE WITHOUT PUNISHMENT in the first five agencies toimplement the approach. In addition to other research, 282 supervisors in these five agencieswere surveyed about their experiences with the new system. In his November 13, 1998 letter to 23
    • every state agency executive, Dana Russell, Commissioner of the State Merit System ofPersonnel Administration, wrote: “A little over a year ago five Georgia State agenciesstreamlined their ability to handle disciplinary action by installing DISCIPLINE WITHOUTPUNISHMENT as their discipline policy. “Last June, surveys were sent to the personnelofficers and supervisors of those five agencies to learn how well the program had served them. Aglance at the results reveals that the overwhelming majority of managers and supervisors reportvery positive results. For example, out of 282 supervisors, 63% report that the PerformanceImprovement Discussion prevented disciplinary action “every time.” That alone represents asignificant savings of time and productivity.PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENTPEER REVIEWOne of DISCIPLINE WITHOUT PUNISHMENT’S great benefits is that it makes you look goodto a jury. But even better than looking good to a jury is avoiding facing a jury — or anarbitrator, or administrative law judge, or EEOC hearing officer — at all. Peer Review is aformal management system — an Alternative Dispute Resolution system — for resolving theeveryday complaints and disputes that arise in all companies. It is a grievance procedure for anorganizations non-union work force that can prevent problems from ever getting to court. Mostgovernment agencies that have adopted the approach follow a similar procedure. When anemployee cant get a problem solved by talking to his or her boss and following the normal chainof command, he or she can elect to use the Peer Review procedure for a final and bindingresolution of the complaint. The employee presents his case to a panel made up of both trainedemployee volunteers — people just like himself — and managers. He explains the problem andtells the panel what he feels should be done to solve it. Panel members (typically three peers andtwo managers) ask questions, interview witnesses, research precedents and review policy. Whenthe panel feels sufficiently well informed, each member casts a secret ballot to grant or to denythe employees grievance. Majority rules. A letter explaining the panels decision is sent to theemployee. All panel members sign; no minority opinions are permitted. Everyone gets back towork. The issue is settled. Organizations that have implemented Peer Review report that itcreates a problem solving partnership between employees and managers. It builds employeerespect for management and the tough decisions managers are often required to make. Itdemonstrates managements genuine belief in decision-making at the lowest possible level. PeerReview proves managements conviction that employees are trusted partners in the enterprise.But isn’t giving employees the power to overturn management’s decisions just turning theasylumover to the inmates? No, experienced organizations report. With Peer Review, complaints areheard, investigated and resolved by people who know your organization. Outside arbitrators andmediators, judges and juries dont care about your company. Your employees do. And forget“open door” policies — they just dont do the job. Employees are usually skeptical; courts rarelyuphold them. Open door systems cant work well when managers are expected to back each otherup.PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS INPERFORMANCE MANAGEMENT Any organization implementing a peer review complaintprocedure maintains a lot of control over the process. It decides what complaints are appropriatefor a panel to hear and which fall outside its jurisdiction. Management decides who’s eligible to 24
    • serve as a panelist, how the pool of potential panelists will be trained, and how individuals willbe selected when a case comes up for review. When the City of Carrollton, Texas installed itssystem several years ago, they provided for the city manager in conjunction with personnel todecide who will be panelists. Panelists can volunteer others, volunteer themselves, andsupervisors can recommend. They ended up with more volunteers than they were able to train.They decided to train a total of thirty panelists — six Department/Division Managers, sixsupervisors, and 18 non-management employees. Kathryn Usrey, Carrollton’s director ofpersonnel, acts as the panels facilitator. She insures that all documentation and witnesses areavailable to the panel. While she doesn’t have a vote, she does have the authority to advise thepanel about the boundaries of their roles. Besides getting employee complaints resolved, Ms.Usrey reports another benefit — it helps keep supervisors from making illogical decisions. It’seasy to get a supervisor to rethink his position by asking, “How do you think this will play out ifhe takes it to a jury of his peers?” "The hardest part is selling the system to supervisors,” Usreysaid. “They fear that youre turning control of the workplace over to the employees." Tocounteract that, the City held a series of "massive" employee meetings chaired by the CityManager. Peer Review is efficient and inexpensive. Once an employee becomes an adversary,costs balloon. With Peer Review, salary and travel costs are typically the only expenses. Theatmosphere of a panel meeting is businesslike with no complicated rules of evidence, nocourtroom trappings, no lawyers. Issues get surfaced, explored and resolved. Finally, youremployees can be trusted. Peers dont automatically stick together; theres no “us vs. them” onthe panel. Your employees are just as concerned about fairness and justice as you are. Three-to-two splits between peers and managers are rare. But the best part of Peer Review is its ability tokeep unions at bay and problems out of court. The only benefit union organizers can still deliveris an impartial grievance system. Peer Review removes the organizers last tool and can keep acompany union-free..IN PERFORMANCE MANAGEMENT, PUBLIC SECTOR LEADS THEPACKInnovative performance management systems are no longer found exclusively in private sectororganizations. The evidence is clear — America’s cities, state and federal agencies, and otherpublic sector organizations are taking a leading role in creating and implementing novel andhighly effective approaches to managing people on the job.INTEGRATING MISSION, VISION AND VALUES INTOPERFORMANCE APPRAISALThe performance appraisal implementation team created one of the most sophisticatedperformance management systems of any organization in the country. To begin, they took eachof the core competencies — Leadership, Learning and Strategic Systems Thinking, QualityManagement, Organizational Knowledge, Technical Knowledge and People Management — anddeveloped a unique twist on conventional appraisal techniques. Instead of defining what each ofthose terms meant, they instead described the behavior one would likely see exhibited by a truemaster performer. 25
    • For example, for their core competency of “Organizational Knowledge,” instead of definingwhat was meant by the phrase, they described how you could spot somebody who knows theorganization perfectlyLEARNING AND STRATEGIC SYSTEMS THINKING:Accepts responsibility for continued improvement/learning. Appreciates and can explain themission of each individual work unit and the importance of the tie between them to make theentire operation whole. Acquires new skills and competencies and can explain how they benefitMn/DOT. Regularly takes all transportation forms (i.e., bicycle, light rail, highways, etc.) intoaccount in planning and problem solving. Seeks information and ideas from multiple sources.Freely and intentionally shares ideas with others. By describing the performance that one mightobserve in someone who has mastered this area instead of just providing a dictionary-styledefinition, the implementation team made the lives of Mn/DOT appraisers much easier. Now,when an employee asks her boss what it is that the agency expects of her in the variouscompetency areas, all the boss has to do is hand her a copy of the appraisal form andsay, “Here. Read this. And then just do what it says.”A BETTER RATING SCHEMEAs clever as their descriptions of mastery performance are, the Mn/DOT team ingeniously solvedstill another perpetual performance appraisal dilemma when they constructed the rating scale forappraisers to use in evaluating people’s performance in each competency area. Instead of forcingraters to use absolute judgments for their assessment of the individual’s performance,instead theyasked how often Sally performed as a master would in each area. In other words, rather than askappraisers to judge the quality of a subordinate’s performance — was Susie Marginal orCompetent or Distinguished; did Joe Fail to Meet Standards, Meet Standards or ExceedStandards — the new Mn/DOT process instead asks the rater to indicate how frequently Susie orJoe performs at a mastery level .The scale values for this part of the Mn/DOT process areOccasionally, Sometimes, Frequently, and Regularly. This approach greatly increases theeffectiveness of coaching and lowers the recipient’s defensiveness when bad news has to bedelivered. The manager no longer has to confront Mary with his judgment that in the area ofquality she is “Unacceptable” or “Below Standard” or a “2.” The manager can now say, “Mary,in the competency area of Quality, occasionally I see you acting the way the form says a masterperformer would act. What do you need to do so that 12 months from now I can say that I seethat kind of performance frequently or regularly?” For those areas that don’t lend themselves toa behavioral frequency rating system, Mn/DOT incorporated two other inventive techniques.First, they recognized that the label for the middle position on the rating scale — the place wheremost people’s performance usually falls — is typically felt to connote average or mediocre.Nobody wants to be seen as a “—” student; nobody likes that middle rating. Their solution wasto abolish language that suggested that performing in a fully acceptable manner was tantamountto mediocrity. Instead the term they came up with for the middle rating was, “Fully Successful:Totally competent performance; Good solid contributor.” Who can complain about being calledfully successful, even if two higher categories of “Clearly Superior” and “Truly Distinguished”are available for those who have genuinely earned them? Finally, on the appraisal form itselfMn/DOT specifically indicated the ratings distribution likely to show up in a large organization.Thus the form tells appraisers that typically less than 5% of people fall into the categories of“Truly Distinguished” or “Unsuccessful”; about 15% might be “Somewhat Successful” with 26
    • 30% or so demonstrating “Clearly Superior” performance. Finally, the form tells raters andratees alike to expect about 50% or more to qualify for the middle “Fully Successful” rating.MAKING THE APPRAISAL PROCESS POSITIVEResearch on performance appraisal, going back to some of the first studies conducted at GeneralElectric and published in 1954, confirm that criticism has little effect on producing lastingbehavioral change. Reinforcement of strengths, talents, and positive behaviors however, cangenerate an increase in their frequency. How do we put a positive spin on performance appraisal,the most scorned and derided of all management processes? The National Security Agency founda simple and unpretentious way to create a positive tone for its new appraisal process that itincorporated into its formal appraisal procedures. At NSA, all raters are told to ask their ratees, afew weeks before the writing of the annual evaluation, to send in a list of all of the contributionsand accomplishments the subordinate has made over the past 12-month appraisal period.Onlyinclude the positives, supervisors are instructed to tell their subordinates. And keep it informal,too — just send me an email or write it on the back of an envelope and drop it on my desk?So what’s the big deal? First, asking the subordinate to compile a list of successes and send it tothe boss before the formal appraisal is written certainly reinforces the organization’s messagethat it wants the appraisal process to be an affirmative, constructive and positive process. Thisnotion is even more strongly reinforced when the appraiser goes on to explain that he doesn’twant a balanced picture. “If you’ve had any failures over the year,” he’s told to tell hisemployees, “or a project that didn’t go right, or anything else that doesn’t reflect you at yourbest, leave it off the list. I only want a list of things that you’re genuinely proud of.” Moreimportant, and more subtle, is the other reason for asking for the accomplishments list. Probablynothing is more embarrassing to an appraiser than having an employee finish reading her annualreview and moan, “You didn’t even mention the Thompson contract I landed last February!” It’seasy to overlook the triumphs and achievements of others; we rarely disregard our own. Byasking appraisers to request an accomplishments list from subordinates, it is helping to assurethat the appraiser will not be embarrassed by inadvertently ignoring a success that should berecorded on the annual review. The City of Irving, already a model of innovation for itsdevelopment of a unique approach to the assessment of competencies, took NSA’s ideas of theaccomplishments list one valuable step further. As annual appraisal time approaches, each cityemployee is asked to fill out a short questionnaire that kicks off the process. The form consistsonly of four open-ended questions:1. In appraising your performance, are there any other persons you work with or around withwhom your supervisor should speak to get a more complete picture of how you do your work /get results?2. Of what accomplishments and skills acquired during the last appraisal period are youparticularly proud?3. What can be done to make you more effective in your job?4. What can be done to help you provide better service to your customers?INCORPORATING TECHNOLOGY INTO PERFORMANCE APPRAISALTechnology can make the performance management process simpler. It is far easier for anappraiser to access an electronic form on her company’s Intranet than to labor with pencil andpaper. Sophisticated software can allow senior managers to see both the distribution ofperformance ratings across the entire organization and view pay inequities instantaneously. 27
    • Course enrollment to meet development needs can be done without forms and phone calls. Mostsophisticated organizations today, and all of the best-practice models in the nationalbenchmarking study, are seeking ways of using technology to reduce the administrative burdenof performance management, a burden that grows as the performance management system isincreasingly linked with compensation, development, and perhaps even an agency’s 360-degreefeedback system. Many are also finding innovative ways to use technology for just-in-time (JIT)feedback and training.No organization today is using technology better than the Air Force Research Laboratory —again, an example of a public sector organization leading the pack. AFRLs advantage comesfrom their highly sophisticated point-and-click software. In addition to allowing supervisors tomore efficiently create job descriptions and complete employee assessments, the software helpsthe organization automate what would otherwise be administratively difficult pay changes whilesimultaneously ensuring pay equity. Their computer-based, paperless process permitsperformance management system administrators to ensure equity throughout AFRL by graphingemployee positions based on the relationship between pay and performance. Both supervisorsand system administrators are provided with instant information. Furthermore, they canmanipulate pay variables and instantly see the effect on the overall distribution, thus allowingthem to make decisions that are more informed. Their software links ten geographicallydisbursed sites, walks managers through the complete appraisal process and allows allassessment and pay data to be hierarchically rolled up throughout the organization.FROM PERFORMANCE APPRAISAL TO PERFORMANCEIMPROVEMENTPerformance appraisal is only one example of the lead public sector organizations are taking inperformance management innovation. The purpose of performance appraisal is to identify thequality of an individual’s job performance. What happens when that quality is unacceptable?One of the most innovative performance management procedures public sector organizations areinstalling is a non-punitive, DISCIPLINE WITHOUT PUNISHMENT approach when informalconversations fail to solve problems of absenteeism, poor performance and shabby attitudes.Organizations as varied as the Charlotte (NC) Housing Authority, Florida’s Pinellas County andNorth Carolina’s Mecklenburg County, the Congressional Budget Office, the University ofIllinois, the City of San Angelo (TX), the Houston Department of Aviation and the entire State ofGeorgia have rejected traditional adversarial disciplinary responses. In these organizations,reprimands, warnings, demotions, and unpaid disciplinary suspensions are a thing of the past.Instead, they have adopted an approach that requires errant employees to take personalresponsibility for their behavior and commit to fully satisfactory performance as a condition ofcontinued employment.THE TRADITIONAL APPROACH TO DISCIPLINESince the 1930s, public and private organizations alike have settled on a common procedure tohandle organizational lapses from grace: “progressive discipline.” This traditional progressivediscipline system was developed seventy years ago when unions demanded that companieseliminate summary terminations and develop a progressive system of penalties that wouldprovide a worker with a brand new benefit — protection against losing his job without first beingfully aware that his job was at risk. This traditional, progressive-discipline model instructs thesupervisor to begin the problem solving process by conducting ill defined “coaching and 28
    • counseling” sessions. When coaching and counseling fail, the supervisor then is told to moveinto formal disciplinary action, almost always described as a four-step process. An Oral Warningis followed by a Written Warning. If the problem continues, the supervisor then suspends theemployee for a period of several days without pay, or writes a final warning notice, or places theemployee on probation. If the individual still does not correct his performance, terminationfollows.WHAT’S WRONG WITH THIS TRADITIONAL APPROACH?Traditional progressive-discipline is Americas criminal justice system brought into theworkplace. The basic premise of this traditional discipline system is that crime must be followedby punishment. With its constant quest to “make the punishment fit the crime,” it attempts toprovide an awkward mix of retribution and rehabilitation. A growing number of public-sectororganizations have found a variety of problems with the traditional approach to discipline thathave caused them to examine and revise their practices and approach. 1930s and foisted onunwilling companies and agencies who resisted having a discipline system at all. As a result, ourtraditional system reflects the adversarial, labor vs. management, us vs. them assumptions thatprevailed in those hostile times. In fact, the discipline system that most organizations use today isprobably the only remaining vestige of the acrimonious 1930s approach to people-managementthat still remains in our managerial toolkit.IT MAKES THE SUPERVISOR THE BAD GUYMost supervisors hate having to take disciplinary action. With its criminal justice mechanism,the system forces the supervisor to become the employee’s adversary. The supervisor feels likehe’s the bad guy, the one who’s wearing the black hat.IT’S NOT A CORRECTIVE PROCESSOrganizations often discover that their supervisors don’t see their discipline procedure as acorrective devise. To them, it’s the procedure they must follow to generate enough paperwork tojustify discharge once they’ve decided that an employee’s termination is in order. They view thesteps of the discipline system merely as the hoops put up by the personnel department for themto jump through in order to effect a problem employee’s firing. As a result, they don’t evenbegin the discipline process until they have given up hope of ever correcting the problem.THE TRADITIONAL DISCIPLINE SYSTEM OFTEN CLASHES WITH THEORGANIZATION’S VALUESA large number of public sector organizations today have carefully-drafted, formal statements oftheir vision and values. They have considered carefully what kind of organization they are andwhat they aspire to be. But these values are often in direct conflict with organizational practiceswhen the time comes for disciplinary action.THE TRADITIONAL APPROACH SIMPLY ASKS TOO LITTLEThe traditional progressive-discipline approach is certainly unpleasant. It breeds resentment andhostility. But the traditional system is flawed by more than just its exclusive reliance onpunishment: it is insufficiently demanding. Punishment — warnings, reprimands, suspensionswithout pay — seems like a tough way of assuring compliance with organizational standards. Ifsomeone fails to meet expectations, we punish that individual until he complies. But compliance 29
    • is all that the traditional system can produce, and public sector organizations today need morethan mere compliance.We can punish people into compliance. But we cannot punish people into commitment. Andgenuine commitment to the organization is the primary impetus driving innovative public sectororganizations to seek a more effective approach. HOW DOES THE POSITIVE DISCIPLINE APPROACH WORK?Like traditional discipline systems, the DISCIPLINE WITHOUT PUNISHMENT approachstarts with informal discussions. Like conventional approaches, it then moves to a series ofprogressive disciplinary steps when these informal conversations fail to produce results. But thedifferences between positive discipline and conventional disciplinary practices are dramatic.To begin, “Positive Contacts” are included as a formal element of the system. Makingrecognition a formal part of the system reminds managers that reinforcing good performance isjust as important as confronting poor performance. It also makes employees aware that theorganization expects that they will be recognized when they perform well. Most important, itmakes recognition of good performance a policy expectation of the organization, not merely aneasily ignored piece of prosaic advice dispensed in a management-training program. Nowconsider the other end of the chart. Another major difference between the conventional andpositive models is the new approach’s recognition that the discipline process actually involvesonly three steps, not four. Termination is not the final step of the discipline system, as thetraditional progressive-discipline model would have it. More accurately, termination representsthe failure of the discipline system. A commonly used metaphor holds that “Discharge is thecapital punishment of organizational life.” That metaphor is nonsense. The proper metaphor fordischarge is that it is a no-fault divorce. “You’re a good person,” the organization says to theindividual when all the steps of disciplinary action have proved fruitless, “and we’re a goodemployer. But your goals and needs and our goals and needs can’t be reconciled. You need tofind a place to work where you can be happy; we need to find someone to fill this job who canmeet our expectations. We now must go our separate ways. 30
    • 3.1 PROBLEM IDENTIFICATION The research comprises of defining and redefining problems, formulating hypothesis orsuggested solutions; collecting, organizing and evaluating data, making deductions andreaching conclusion; and at last carefully testing the conclusions to determine whether theyfit formulating hypothesis. The research process is carried out to a series of step, which arerequired to be taken in chorological order. The major marketing research steps are as follows:  Problem identification.  Research design.  Fieldwork.  Data analysis & interpretation.  Report Presentation. The first and foremost step in this research is to identify the problem chosen forinvestigation. The step has very significance, once it is said “A Problem well identified ishalf way to solution”. On the other hand if the problem identified vaguely, a wrong problemis identified, or research is not clarified, then the research result may be completely uselessfor the management, and the research effort of the investigation will be a futile exercise. 32
    • 4.1 RESEARCH METHODOLOGY“Research Methodology is a way to systematically solve the research problem.” It is a science ofstudying how research is done scientifically. We study the various steps that are generallyadopted by a researcher in studying his research problem along with logic behind them.This study has used an exploratory design to analyze the effectiveness of training anddevelopment for retaining the employees of BSP.Research Methodology may be summarized in following steps:-1. Defining Research Objective.2. Preparing Research Design.3. Implementation of Research Design.“Research Design is arrangement of condition for collection & analysis of data in a manner thataims to combine relevance to research purpose with economy in procedure.” Methods of Data collectionQuestionnaire:-A Questionnaire consists of a number of questions printed or typed in a definite order on a form.Questionnaire is mailed to respondents who are expected to read & understand the questions &write down the reply in the space meant for purpose in questionnaire itself. Questionnairecontains simple & straight forward questions for the respondents.Survey:-Survey are concerned with describing, recording, analyzing & interpreting conditions that eitherexisted or exist. Surveys are example of field research.Sample UnitSample is the representative unit of the population .It is neither feasible nor desirable to coverentire population so; the sample size is taken 50. 34
    • Sources of DataPrimary Data :“The Primary Data are those which are collected afresh & for the first time & thus happen to beoriginal in character.”Secondary Data :“The Secondary Data are those which have already been collected by someone else & whichhave already been passed through statistical process.”Population :“Population refers to total of items about which information is desired.” Population is said to befinite if it consist of fixed number of elements to enumerate it in totality.Sample Unit :“The elementary units or group or cluster of such units form the basis of sampling process theyare called as Sample Units.”RESEARCH METHODOLOGY IN NUTSHELL:-Universe - EmployeesSample size - 50Sampling Method - Convenient SamplingSampling unit - Employees of public sectorSource of data - Primary, secondaryData collection tool - QuestionnaireSample location - Bhilai 35
    • 4.2 Hypothesis:-Null Hypothesis (H0):-Employees are aware with performance appraisal system in organization.Alternative Hypothesis (H1):-Employees are not aware with performance appraisal system in organization.Q1. In your Opinion Performance Appraisal is?Evaluation of employees 20Promotion of employees 10Job satisfaction of employees 10Motivation 10 Sales 10 20 Evaluation of employees 10 promotion of employees job satisfaction of employees 10 MotivationINTERPRETATION—While conducting the research project it is found that 20% of employees said performanceappraisal is evaluation of employee,10% employees said promotion of employees, 10% said jobsatisfaction of employee, where as 10% said motivation of employees. 36
    • TABULATION, INTERPRETION AND PIE PRESENTATION OF DATAQ1. In your Opinion Performance Appraisal is?Evaluation of employees 20Promotion of employees 10Job satisfaction of employees 10Motivation 10 Sales 10 20 Evaluation of employees 10 promotion of employees job satisfaction of employees 10 MotivationINTERPRETATION—While conducting the research project it is found that 20% of employees said performanceappraisal is evaluation of employee,10% employees said promotion of employees, 10% said jobsatisfaction of employee, where as 10% said motivation of employees. 38
    • Q2. Do you receive any increment in your salary after performance Appraisal?Yes 35No 15 Sales 15 Yes 35 NoINTERPRETATION—While conducting the research work it is found that 35% employees are receive any increment intheir salary after performance Appraisal & 15% are not receive. 39
    • Q3. Do you think that performance Appraisal help to provide an atmosphere where all areencouraged to share one another burden.Yes 30No 20 Sales 20 Yes 30 NoINTERPRETATION—30% employees are say yes that performance Appraisal help to provide an atmosphere where allare encouraged to share one another burden,& 20% employees say no. 40
    • Q4. Do you think performance appraisal helps people to set and achieve the meaningful goals?Yes 35No 15 Sales 15 Yes 35 NoINTERPRETATION—While conducting the research work it is found that 25% employees think that performanceappraisal helps people to set and achieve the meaningful goals & 10% employees are not set andachieve the meaningful goals. 41
    • Q5. Do you think performance appraisal give constructive criticism in a friendly and positivemanner?Yes 35No 15 Sales 15 yes 35 noINTERPRETATION—35% employees said yes to the performance appraisal give constructive criticism in a friendlyand positive & 15% employees said no. 42
    • Q6. Do you think that performance of employees improve after process of performanceappraisal?Yes 30No 20 Sales 20 Yes 30 NoINTERPRETATION—35% said yes to the performance of employees improve after process of performance appraisal &10% employees said no. 43
    • Q7. Do you think performance appraisal improves motivation and job Satisfaction?Yes 45No 5 Sales 5 Yes No 45INTERPRETATION—While conducting research project it is found that 45% employees improves motivation& jobsatisfaction where as 5% employees not improves. 44
    • Q8. Is the top level management partial in Performance Appraisal?Yes 10No 40 Sales 10 Yes No 40INTERPRETATION—While conducting the research project it was found that 10% employees said yes the top levelmanagement partial in Performance Appraisal where as 40% said no 45
    • Q9. Do you think performance appraisal helps to change behavior of Employees?Yes 39No 11 Sales 11 Yes 39 NoINTERPRETATION—While conducting the research project it was found that 39% of employees said change behaviorof Employees through performance appraisal whereas 11% of employees said no. 46
    • Q10. In your opinion Performance Appraisal system of your organization is related to which ofthe following?Retention of employees 10Recruitment system 10Organizational culture 12Motivation 18 Sales 10 18 Retention of employee Recruitment system 10 Organisational culture 12 MotivationINTERPRETATION—While conducting the research project it was found that 10% of employees said PerformanceAppraisal system of organization is related to retention of employee, 10% of said Recruitmentsystem, 12 % of employee said Organizational culture whereas said motivation. 47
    • 6.1 HYPOTHESISNull Hypothesis (H0):-Employees are aware with performance Appraisal system in organization.Alternative Hypothesis (H1):-Employees are not aware with performance Appraisal system in organizationQ1. In your Opinion Performance Appraisal is?Evaluation of employees 20Promotion of employees 10Job satisfaction of employees 10Motivation 10 Sales 10 20 Evaluation of employees 10 promotion of employees job satisfaction of employees 10 MotivationINTERPRETATION—While conducting the research project it is found that 20% of employees said performanceappraisal is evaluation of employee,10% employees said promotion of employees, 10% said jobsatisfaction of employee, where as 10% said motivation of employees. 49
    • 6.2 HYPOTHESIS TESTINGMy major research report involves the z test. The z test is used for testing hypothesis of meanand the statistic z.Z testSAMPLE SIZE (n) = 50SAMPLE = 50/4 = 12.5 or 13POPULATION SIZE = 200 ( assumed)POPULATION MEAN = 10 (assumed) Sample dx dx2 20 -30 900 10 -40 1600 10 -40 1600 10 -40 1600 50 5700 Null hypothesis = H0 : µ= 50 Alternative hypothesis = H0 : µ≠ 50σ= = = 37.74Standard deviation of sample mean = = = 37.7/7.70 = 5.338Z test = = 13 -10 / 5.338 = 3/5.338 =0.562The table value of z at 99% level of significant =1.645Thus, null hypothesis is acceptedDECISION-Employees are aware with performance Appraisal system in organization. 50
    • 7.1 FINDINGS1. Most of the employees said performance appraisal is the evaluation of the employees.2. It has been found that performance Appraisal help to provide an atmosphere where all are encouraged to share one another burden.3. Most of the employees set & achieve the meaningful goals through the performance appraisal.4. Most of the employees think that improve their performance after the process of performance appraisal.5. Most of the employees think that performance appraisal improve their motivation & job satisfaction.6. Most of the employees think that performance appraisal help to change the behavior of Employees.7. Most of the employees receive any increment in their salary after performance Appraisal. 52
    • 7.2 LIMITATIONSA. Mental status of the respondent: - The respondents do not provide information whole heartedly as they are convinced for our project but when we asked to fill the questionnaire some sort of hesitations comes in mind to not to disclose their secrets, As these secrets are disclosed to others or they are used to completely remove from their business.B. Mismatch of time: - Respondents did not want to give a time for filling the questionnaire.C. Difficulty to approach: - There is proper hierarchy to approach 53
    • 7.3 SUGGESTION1. Training Appraisers: Training appraisers are essential for achieving better results withperformance appraisal. The training should be designed to improve appraiser’s capabilities to:observe, conduct constructive feedback, listen, support, counsel, set objectives and askappropriate questions. Some benefits that can be achieved by using appraiser training are as:• Improve understanding of the system, the forms and terminology to be applied.• Increase accuracy and reduce common judgment errors.• Enhance appraiser’s self confidence about his rating skills and improve the skill level throughpractice and feedback.2. Developing a positive culture: Changing culture requires leaders to understand the learningprocess dynamics and how the learning and unlearning of assumptions and beliefs can bemanipulated to modify behavior. Cultural aspects could be one of the areas of training.An organization’s leadership has the responsibility to develop a positive culture to facilitate theacceptance of performance appraisal among managers and their employees.3. Providing performance feedback: Employees naturally like to know how they are performingrelative to what is expected from them. Performance feedback lets employees know how wellthey have performed in comparison with the performance standards. Having day-to-dayemployee-manager interaction, through which the appraise is provided with constructivefeedback.4. Avoiding unequal performance standards: Effective performance appraisal requires equal 54
    • standards against which employees are assessed. In the absence of equal standards, employeesare assessed with subjectivity, which may destroy the process of appraisal and leave it as a bodywithout soul.Therefore, the problem of unequal standards can be minimized by ensuring that the appraisalcriteria are job-oriented, communicating performance expectations to the employees before theappraisal review.5. Avoiding multi-purpose programme: One performance appraisal programme should not bedesigned to serve a myriad of purposes, administrative and developmental, as it can be vague andis difficult & results into failure. The solution is to separate assessment from development inappraising employees. 55
    • 7.4 CONCLUSIONWith rewards being directly linked to achievement of objectives goals setting & performanceappraisal assumes utmost importance the performance appraisal system has been professionallydesigned & it is monitored by HRD. The implementation is the responsibility of each & everyemployee along with their supervisor, there should be adequate training to the evaluator that will goa long way in answering the quality of performance appraisal. In conclusion performance appraisalis a very important tool used to influence employees. A formal performance review is important as itgives an opportunity to get an overall view of job performance & staff development. It encouragessystematic and regular joint stocking & planning for the future good performance reviews thereforedo not just summarize the past they help determine future performance. 56
    • 8.1 QUESTIONAIRERespected Sir/ Madam, I am student of “GD RUNGTA COLLEGE ENGINEERING &TECHNOLOGY” bhilai is conducting the survey on the topic “ A STUDY ONPERFORMANCE APPRAISAL SYSTEM IN PUBLIC”. I need you help in conducting thestudy. Kindly provide me your valuable opinion to fill this questionnaire your information willbe kept confidential and will be exclusively used for academic purpose.Q1. In your Opinion Performance Appraisal is?a. Evaluation of Employees ( )b. Promotion of Employees ( )c. Job Satisfaction of Employees ( )d. Motivation ( )Q2. Which method of performance appraisal is implemented in the organization?a. Merit ( )b. Grading ( )c. Other ( )Q3. Do you receive any increment in your salary after performance Appraisal?a. Yes ( )b. No ( )Q4. Do you think that performance Appraisal help to provide an atmosphere where all areencouraged to share one another burden.a. Yes ( )b. No ( )Q5. Do you think performance appraisal helps people set and achieve meaningful goals?a. Yes ( )b. No ( )Q6. Do you think performance appraisal give constructive criticism in a friendly and positivemanner?a. Yes ( )b. No ( ) 58
    • Q7. Do you think that performance of employees improve after process of performanceappraisal?a. Yes ( )b. No ( )Q8. Do you think performance appraisal improves motivation and job Satisfaction?a. Yes ( )b. No ( )Q9. Is the top level management partial in Performance Appraisala. Yes ( )b. No ( )Q10. Do you think performance appraisal helps to change behavior of Employees?a. Yes ( )b. No ( )Q11. In your opinion Performance Appraisal system of your organization is related to which ofthe following?a. Retention of Employees ( )b. Recruitment System ( )c. Organizational Culture ( )d. Motivation ( ) 59
    • BIBLIOGRAPHYBook: Kothari C.R., Research Methodology, New Age International publishers New Delhi, 2nd Revised Edition, year of publication 2004, Chapter no.9 page no 197-202, Chapter no.11, page no.261-264. Chhabra T.N., Human Resource Management, Dhanpat Rai & Co(p.g.no.712-714).Dr.S.S.Khanka, Human Resource Management, S.Chand ( p.g. no.385-389)Websites:www.mspsteel.com-http://www.mspsteel.com/companyprofile/Logout2?cd=IN&hl=en-GB&=en-GB&zx=894498988.www.google.comhttp://www.google.co.in/accounts/Logout2?hl=en&service=mail&ilo=1&ils=s.IN&ilc=0&continue=https://www.google.com/accounts/ServiceLogin?service=mail&passive=true&rm=false&continue=google.com%2Fmail%2F%3Fui%3Dhtml&bsv=1eic6yu9oa4y3&ss=1&scc= 60