Summer Training Project Report

1. PROJECT REPORT
ON
PERFORMANCE APPRAISAL & REVIEW
IN
HINDUSTAN AERONAUTICS LIMITED (HAL)
SUBMITTED IN PARTIAL FULFILLMENT OF
BACHELOR IN BUSINESS ADMINISTRATION
SESSION 2011-12
SUBMITTED BY:
SUMIT SINGH SISODIA
BBA III Semester
UNDER THE SUPERVISION OF
MR. RAHUL MAURYA
BBA FACULTY
B.B.D.N.I.T.M., LUCKNOW
BABU BANARASI DAS NATIONAL INSTITUTE OF
TECHNOLOGY AND MANAGEMENT
LUCKNOW
1

2. PREFACE
There are number of forces that make HR the greatest support system in the
Organization. Employees play a great role in the success of any organization. So
measuring the performance of employees is really a task of great concern and also
recruiting the right person for the right job contributes to the success of the organization.
This Project Report has been completed in Partial fulfillment of my Management
Program, Bachelor of Business administration (BBA) in the company ―Hindustan
Aeronautics Limited ”. The topic of my project was “Performance Appraisal in
Hindustan Aeronautics Limited”. This topic is come under Performance Management
System of Hindustan Aeronautics Limited.
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3. ACKNOWLEDGEMENT
I avail the opportunity to express my gratitude to Mr. Jatin Srivastava (HOD-BBA) who
always try to sow seed of agronomism amongst us and created a disciplinary culture in
the student.I also express my gratitude to my faculty Mr. Rahul Maurya, Faculty of
management, B.B.D.N.I.T.M., Lucknow and staff of who have been instrumental in
making this report useful one.
Finally, I wish to thank to my family and friends for their inspiration, encouragement and
support which enabled me to in timely submission and report.
Sumit Singh Sisodia
BBA III semester
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4. TABLE OF CONTENT
1. Preface…………………………………………………………………
2. Acknowledgement……………………………………………………..
Part I
(A) Introduction to company…………………………………………
(B) Introduction to performance appraisal…………………………….
Part II
(I) Research Objectives………………………………………………
(II) Research Methodology …………………………………………..
(III) Scope of Research ……………………………………………….
(IV) Data Analysis & Interpretation …………………………………
(V) Findings…………………………………………………………
(VI) SWOT Analysis …………………………………………………
(VII) Recommendation ………………………………………………
(VIII) Conclusion………………………………………………………
(IX) Limitation………………………………………………………
(X) Bibliography……………………………………………………
(XI) Appendix
1. Questionnaire …………………………………………………
List of table
1. Financial Highlights…………………………………………………….
2. Assignment of Weightages……………………………………………. .
3. Scoring of KRAs………………………………………………………….
4. Modification in KRAs…………………………………………………....
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5. List of Figures
1. Our services…………………………………………………………………
2. Organization structure………………………………………………………
3. The cycle of performance management…………………………………….
4. PMS process flow…………………………………………………………..
5. Goal…………………………………………………………………………
6. Mid year review …………………………………………………………….
7. Annual review……………………………………………………………….
8. Rating scale…………………………………………………………………
9. Competency framework …………………………………………………….
10. Competency framework with rating scale ………………………………….
11. Feedback process……………………………………………………………
12. Satisfaction level of employees with new PMS…………………………..
13. Satisfaction level of employees with online system of PMS …………….
14. Satisfaction level of employees with the critical incident diary ……………
15. Performance of balanced score card………………………………………
16. KRAs measuring performance ……………………………………………
17. Hoshin kanri approach ………………………………………………………
18. Satisfaction level with recruitment & selection process …………………
19. Deduction from salary………………………………………………………
20. Recruitment through employees referral………………………………….
21. Satisfaction level with salary package …………………………………….
22. Recruitment & selection process fulfills the requirement of organization
23. Formalities after recruitment & selection process ………………………
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6. 6

7. INTRODUCTION TO COMPANY
ABOUT THE ORGANISATION:
HAL a flagship company of our country is a great organization, with a glorious future.
The Hindustan Aeronautics Limited is the only organization of its kind engaged in
the production; maintenance and overhauling of defense Aircraft and missiles. MIG 27,
MIRAGE 2000, DORNIER, JAGUAR, CHEETAH, LIGHT COMBAT AIRCRAFT
(LCA), SU-30, HJT-36 (IJT) AJT, ADVANCE LIGHT HELICOPTOR (ALH) are some
of the major Aircrafts supplied by H.A.L. to the Indian Air Force. Organization is also
involved in the manufacture and assembly of system for India‘s space program.
Hindustan Aeronautics Limited is an organization, where integrated air-borne
weapons platform are conceived, developed, manufactured and service. It has got a rare
distinction of holding the capability spanning from the entire range of production
conception to after sales report.
The beginning of HAL can be traced to the year 1940, when a far-sighted
industrialist, the late Seth Walchand Hirachand set up a company called Hindustan
Aircraft Limited at Bangalore with the object of establishing an Aviation Industry that
can manufacture, assemble and overhaul aircraft under license. Initially, aircraft like
Curtiss Hawk, Vultee Bomber and Harlow trainer were taken up for manufacture and
overhaul in collaboration with Inter continental Aircraft Company of USA.
With the escalation of the Second World War, the government of India took over
the management of the company in 1942 and handed it over to US Air Force for repair
and overhaul of various aircraft. Between 1942 and 1945, a total of 1000 aircraft and
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8. 3400 engines were overhauled. The main activity for the next few years after the war was
reconditioning and conversion of war surplus aircraft for the use of IAF and Civil
operators.
MISSION & VALUES
MISSION:
“To become a globally competitive aerospace industry while working as an
instrument for achieving self-reliance in design, manufacture and maintenance of
aerospace Defense equipment and diversifying to related areas, managing the business on
commercial lines in a climate of growing professional competence‖.
VALUES:
We are committed to these values to guide us in our activities.
CUSTOMER SATISFACTION:
We are dedicated to building a relationship with our customers where we become
partners in fulfilling their mission. We strive to understand our customer‘s needs and to
deliver products and services that fulfill and exceed all their requirements.
COMMITMENT TO TOTAL QUALITY:
We are committed to continuous improvement to all our activities. We will supply
products and services that conform to highest standards of design, manufacture,
reliability, maintainability and fitness for use as desired by our customer.
COST AND TIME CONSCIOUSNESS:
We believe that our success depends on our ability to continually reduce the cost
and shorten the delivery period of our products and services. We will achieve this by
eliminating waste in all activities and continuously improving all processes in every area
of our work.
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9. INNOVATION AND CREATIVITY:
We believe in striving for improvement in every activity involved in our business
by pursuing and encouraging risk- taking, experimentation and learning at all levels with
in the company with a view to achieving excellence and competitiveness.
TRUST AND TEAM SPIRIT:
We believe in achieving harmony in work-life through mutual trust, transparency,
co-operation and sense of belonging. We will strive for building empowered teams to
work towards achieving organization goals.
RESPECT FOR THE INDIVIDUAL:
We value our people. We will treat each other with dignity and respect and strive
for individual growth and realization of every one‘s full potential.
INTEGRITY:
We believe in a commitment to be honest, trustworthy and fair in all our dealings.
We commit to be loyal and devoted to our organization. We will practice self-discipline
and own responsibility for our actions. We will comply with all requirements so as to
ensure that our organization is always worthy of trust.
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10. OBJECTIVES OF HAL
In April, 1971 the board of directors of HAL appointed a committee of HAL to
review the total functioning of the company and make its recommendations. One of the
study teams set up by committee had gone into various aspects of the objectives of HAL
in great detail and made valuable suggestions for determining the objectives of HAL.
The objectives of HAL can be divided into two parts:
1. Basic objectives
2. Other objectives
Basic Objectives:
(i) To serve as an instrument of the national policy to achieve self-reliance in the
design, development and production of aircraft and aeronautical equipment to meet
the country‘s changing and growing needs with special emphasis on military
requirements.
(ii) In fulfillment of this objective the company shall regard itself fundamentally
responsible for design and development, relaying however upon such relevant
facilities as are available in other national institutions but always holding itself
basically responsible for the growth and furtherance of the country‘s aeronautical
capacity.
(iii) To so conduct its business economically and efficiently that it can contribute its due
shares to the national efforts to achieve self-reliance and self-generating economy.
(iv) Towards this end, to develop and maintain this organization which will readily
respond to and adopt the changing matrix of socio-techno economic relationship
and wherein a socio climate of growing professional competence, self-discipline,
mutual understanding, deep commitment and a sense of belonging will be fostered
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11. and each employee will encouraged to grow in accordance with his potential for the
furtherance of the organizational goal.
Other Objectives:
Consistent with the basic objective of the company, the personnel development of
the corporate office has adopted certain specific objectives which will act as a source of
inspiration and guidance in involving personal policies and farming rules and regulation
for growth and development of employees and to ensure their deep commitment and
sense of belonging to the company. The specific objectives are stated below:
(i) Ensure quality of personnel of all level and provide them the right work
environment, job satisfaction and professional challenges.
(ii) Provide a healthy blend of employees who have growth with the organization and
those selected from outside.
(iii) Ensure employment of minimum number of personnel and avoid surpluses.
(iv) Motivate employees to be increasingly achievement oriented.
(v) Provide adequate opportunities for personnel to improve the level of their
professional knowledge.
(vi) Personnel with talent and potential growth to be developed to should have higher
responsibilities.
(vii) Ensure uniformity in principal conditions of service.
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12. HISTORY AND GROWTH of HAL
Hindustan Aeronautics Limited (HAL) came into
existence on 1st October 1964. The Company was formed by the merger of Hindustan
Aircraft Limited with Aeronautics India Limited and Aircraft Manufacturing Depot,
Kanpur.
The Company traces its roots to the pioneering efforts of an industrialist with
extraordinary vision, the Late Seth Walchand Hirachand, who set up Hindustan Aircraft
Limited at Bangalore in association with the erstwhile princely State of Mysore in
December 1940. The Government of India became a shareholder in March 1941 and took
over the Management in 1942.
Today, HAL has 16 Production Units and 9 Research and Design Centers in 7 locations
in India. The Company has an impressive product track record - 12 types of aircraft
manufactured with in-house R & D and 14 types produced under license. HAL has
manufactured 3550 aircraft (which includes 11 types designed indigenously), 3600
engines and overhauled over 8150 aircraft and 27300 engines.
HAL has been successful in numerous R & D programs developed for both Defense and
Civil Aviation sectors. HAL has made substantial progress in its current projects:
Dhruv, which is Advanced Light Helicopter (ALH).
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13. Tejas - Light Combat Aircraft (LCA).
Intermediate Jet Trainer (IJT).
Various military and civil upgrades.
Dhruv was delivered to the Indian Army, Navy, Air Force and the Coast Guard in
March 2002, in the very first year of its production, a unique achievement.
HAL has played a significant role for India's space programs by participating in the
manufacture of structures for Satellite Launch Vehicles like
PSLV (Polar Satellite Launch Vehicle)
GSLV (Geo Stationary Launch Vehicle)
IRS (Indian Remote Satellite)
INSAT (Indian National Satellite)
There are three joint venture companies with HAL:
BAeHAL Software Limited
Indo-Russian Aviation Limited (IRAL)
Snecma HAL Aerospace Pvt Ltd
Apart from these three, other major diversification projects are Industrial Marine Gas
Turbine and Airport Services. Several Co-production and Joint Ventures with
international participation are under consideration.
HAL's supplies / services are mainly to Indian Defense Services, Coast Guards and
Border Security Forces. Transport Aircraft and Helicopters have also been supplied to
Airlines as well as State Governments of India. The Company has also achieved a
foothold in export in more than 30 countries, having demonstrated its quality and price
competitiveness. HAL has won several International & National Awards for
achievements in R&D, Technology, Managerial Performance, Exports, Energy
Conservation, Quality and Fulfillment of Social Responsibilities.
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14. HAL was awarded the ―INTERNATIONAL GOLD MEDAL AWARD‖ for
Corporate Achievement in Quality and Efficiency at the International Summit.
ORGANISATIONAL GROWTH OF HAL
1940: H.A.L was set up by Seth Warchand Hirachand in association with the
government of Mysore as a private limited company.
1941: First product ―HARLOW TRAINER AIRCRAFT‖ & ―CURLINESS HAWK
AIRCRAFT‖ handed over to government of India.
1942: Company was handed over to the U.S. AIR FORCE. HAL repaired over 100
different varieties of aircraft and 3800 piston engines.
1945: Government of India took over the management of HAL again after the Second
World War.
1949: First percivical apprentice aircraft assembled.
1951: The control of HAL was shifted to ministry of defence from ministry of industry.
1954: The first HINDUSTAN TRAINER II (HT—II) had its maiden flight.
1956: HAL comes under the public sector.
1960: Aircraft Manufacturing Department at Kanpur was established.
1962: HINDUSTAN AERONAUTICS INDIA LIMITED (HAIL) was formed to
manufacture MIG-21 aircraft. Three factories at Nasik, Koraput, and Hyderabad
were established.
1964: HAIL was dissolved and its assets merged with aeronautics India limited and
company by the name of HAL was formed.
1969: An agreement with USSR AWS reached for the license production of MIG-21
AIRCRAFT.
1970: Helicopters Division was established to manufacture Helicopters.
1973: Lucknow Division was formed for manufacture of more than 500 types of
Instruments and Accessories.
1976: An agreement with USSR for license for MIG-21 AND BIS –AIRCRAFT.
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15. 1979: Agreement with British aerospace for manufacture JAGUAR AIRCRAFT.
1982: Agreement with USSR for license manufacturing of MIG-27M AIRCRAFT.
1983: Korwa Division lraged division for HAL formed.
1990: Design and Development of Advanced Light Helicopter.
1996: Major servicing of the first batch of MIRAGE – 2000 AIRCRAFT was under
taken. It conducted several ―C‖ CHECKS ON BOEING 737 AIRCRAFT.
1998: IGMT a new Division was established at Bangalore.
1998: Establishment of Industrial & Marine Gas Turbine Division for aerodoriative gas
turbines / Industrial engines.
2000: Establishment of Airport Service Service Centre for C0-ordinating the operations
at HAL Airport – Bangalore.
2002: Establishment of Sukhoi Engine Division at Koraput.
2002: Expansion of Nasik Division as Aircraft Manufacturing Division and Aircraft
Overhaul Division.
2006: HAL ranked 45th among Top Defense Firm in the World.
2006: 19th July, HAL – IAI cooperation in Aero structure.
2006: 21st July, Rolls – Royce & HAL celebrate 50 year of partnership.
2006: HAL launches newspaper from Minsk square on 1st September.
2006: 3rd September, SU-30 MKI Programme on schedule: HAL.
2006: 14th October, HAL Launches Helicopter ambulance, Charter Service named
―Vayu Vahan‖.
2006: 20th December, HAL receives EEPC Award for the year 2004-05.
2007: 5th June, HAL completes planting 25 Lakh saplings.
2007: 22nd June, HAL gets Navratna Status.
2007: 2nd July, Ashok Nayak is HAL‘s new MD.
2007: 6th August, HAL ranked 34th among top 100 defence firm in the world.
2007: 16th August, DHRUV with SHAKTI ENGINE and Weapons make maiden flight.
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16. Figure (1) our services
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17. REPAIRS, MAJOR SERVICING AND SUPPLY OF SPARES
The Division carries out Repair and Overhaul of Accessories, with minimum turn-
around-time. Site Repair facilities are offered by the Division by deputing team of expert
Engineers / Technicians.
Services provided for:
 Military Aircraft
MIG Series
Jaguar
Mirage-2000
Sea - Harrier
AN-32
Kiran MK- I / MK- II
HPT - 32
SU-30 MKI
 Civil Aircraft
Dornier-22B
AVRO HS-748
 Helicopters
Chetak (Alouette)
Cheetah (Lama)
ALH (IAF / NAVY / COAST GUARD / CIVIL)
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18.  Sub-contract Capabilities
The Division has comprehensive manufacturing capabilities for various Hi-tech
components, Equipment and Systems to customer's specifications and ensures
high quality, reliability and cost effectiveness.
The Division has over 25 years of experience in producing aeronautical
accessories making it an ideal partner for the International Aero Engineering
Industry.
The Division also manufactures and supplies complete range of components of
Cheetah (Lama) & Chetak (Alouette) Helicopters, Jaguar and MIG series Aircraft to
Domestic and International Customers to support their fleet.
CUSTOMER SERVICES
The Division has full-fledged infrastructure, facilities and systems for ensuring
optimum level of Customer satisfaction for the products and services rendered. The major
areas include:
Overhaul/Repair of Rotables
The Division takes up the overhaul/repair of the entire range of Electrical,
Instrument, Mechanical and Armament Rotables.
Supply of Spares and other major units
The Division manufactures and supplies the entire range of spares required for
first and second-line servicing of aircraft at the IAF bases. Canopies, Flexible Rubber
Fuel Tanks, Main and Nose Undercarriages, Ejection seats and Ground Support / Ground
Handling Equipment are a few of the items supplied.
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19. Site Repair
The Division undertakes site repair of Aircraft at the IAF bases by deputing site
repair teams.
Defect Investigation/Failure Analysis
The aggregates which are received on premature withdrawal from the units is
studied and the causes for defects/failures are investigated. Repetitive cases are taken up
for in-depth study and modifications are incorporated in the units to minimise the
recurrence of such defects/failures in future.
Product Training
The Division conducts various training programs for customers in specialised
areas for better utilisation of the products. The programs cover Weapon Systems, Auto
Pilot Systems, Electrical Systems and Hydraulic Systems.
Positing of Service Engineers
The Division has posted Service Engineers at various IAF bases to closely liaise
and assess the requirement of the customers. Based on the feed-back received from these
Service Engineers, the Division renders adequate support for fully utilising the products.
DESIGN SUPPORT
Product Improvement Modifications
The Division has incorporated various modifications on the MIG variants with
respect to -
Flight Safety
Reliability and Maintainability
Performance Improvement
Integration of New Equipment
Additional Armament Carrying Capability
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20. PARTICIPATION IN OTHER PROJECTS
ALH
The Division has been manufacturing and supplying a large number of components
for the Advanced Light Helicopter (ALH). In addition, the Division manufactures under-
carriages for.
LCA
The Division has undertaken NC machining of frames for Light Combat
Aircraft (LCA). The Division manufactures undercarriages for LCA also.
MIRAGE 2000 UNDERCARRIAGE OVERHAUL
The Division is in the process of setting up facilities to undertake overhaul of
undercarriages for Mirage-2000 aircraft.
TRANSPORT AIRCRAFT
The Division is participating in the development and co-production of 15-seater
Transport aircraft for the civil market. Wing Panels, Interspar Ribs and Bulkheads will be
produced at the Division. In addition, the Division will be undertaking the assembly
of wings.
Other Service Facilities (Engine Division)
1. Repair and Overhaul of Engines
2. Spectro Photo-metric Oil Analysis (SOAP test)
3. Electron Beam Welding
4. Robotic Plasma Spray Facility
5. Sermetal Coating (High Temperature Corrosion Resistance Painting)
6. Chemical Milling
20

21. PRESENT SETUP OF THE ORGANISATION
Hindustan Aeronautics Limited has three production complexes – Bangalore, MIG and
Accessories and one Design complex each headed by a Managing Director, reporting to
Chairman, HAL. HAL has spread its wings to cover various activities in the area of
Design, Development, Manufacturing and Maintenance. Today HAL has 16 production
divisions / units, 7 at Bangalore and 1 each at Nasik, Koraput, Lucknow, Kanpur,
Korwa, Hyderabad and Barrackpore. These divisions / units are fully backed by nine
Design Centers, these Centers are engaged in the design and development of the
Combat aircraft, Helicopters, Aero engines, Engine test beds, Aircraft communication
and Navigation Systems Accessories of Mechanical and Fuel system and instruments.
Major products of Accessories Complex:
Lucknow Division Landing Gear, Wheels, Brakes, Hydraulic
& Fuel accessories & aircraft instruments
GSE & GHE, ECS etc.
Korwa Divison INS, HUDWAC, NAV attack LRMTS,
FDR, Auto Stab System.
Hyderabad Division Surveillance Radar, Precision Approach
Radar, INCOM, RAM, IFF, VHF /
UHF (5).
Kanpur Division DO-228, HPT-32 and Civil aircrafts.
21

22. ORGANISATION STRUCTURE
HAL CORPORATE
DESIGN
COMPLEX
 Aircraft R & D
Center
 Rotatory wing R
& D Center
 Engine & Test BANGLORE
bed R & D COMPLEX
Center
 Strategic  Aircraft
Electronics R & Division ACCESSORIES
D Center  Engine COMPLEX
 Aircraft Updates Division
R & D Center  Foundry &  Accessories
 Aerospace Forge Division Division
System &  Helicopter Lucknow
Equipment R & Division  Avionics
D Center  Aerospace Division
 Gas Turbine R & Division Korwa MIG
D Center  Overhaul  Avionics COMPLEX
 Control Division Division
Materials &  Industrial & Hyderabad  Nasik
Processes lab & Marine gas  Transport Division
NDT Center R & Turbine Aircraft  Koraput
D Center Division Division Division
Kanpur
Figure (1) Organization Structure
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23. ORGANIZATIONAL CHART
All over India H. A. L has 7 divisions; these divisions are dedicated for different purpose
related to the manufacturing of commercial and fighter aircrafts. The divisions are as
follows:
1. Bangalore Division It is divided into 5 divisions:
a) Air craft division, which also consist a runway.
b) Engine division, which is indulged mainly in manufacturing of LCA Engine.
c) Helicopter division.
d) Overhaul division.
e) Design bureau.
2. Nasik DivisionIt is currently dealing with Russian accessories repair, overhaul and
manufacturing which are used in aircrafts.
3. Kanpur DivisionIt is dealing with assembly of whole commercial aircrafts like
Puspak, Dornier and other major products are DO-228, HPT-32 and Civil aircrafts etc.
4. Lucknow DivisionIt is an accessories division which deals with manufacturing of
more than 1400 accessories like, alternator, generators, tachometer, tacho generator
and other major products are Landing gear, Wheels, Brakes, Hydraulic & Fuel
accessories, aircraft instruments GSE, GHE & ECS etc.
5. Korwa DivisonIt also deals with design and manufacturing of accessories (mainly
electronics) and other major products are INS, HUDWAC, NAV attack LRMTS, FDR,
Auto Stab System.
6. Koraput Division It is indulged in assembly of engines of aircraft.
7. Hyderabad Division It is an accessories division. They manufacturing an
accessories like Surveillance Radar, Precision Approach Radar, INCOM,
RAM, IFF, VHF / UHF (5).
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24. Financial Highlights
Hindustan Aeronautics Limited (HAL) has cruised past the Rs.5, 000-crore mark
for the first time with a sales turnover of Rs.5, 341.50 crores ($1.20 billion) during the
Financial Year 2005-06, The Value of Production has also gone up by 18.69% to Rs.
5,916.62 crores, while the Profit of the Company (Profit Before Tax) soared to Rs.1,
126.29 crores, which is an increase of 48.54% over the previous year's performance.
Contracts worth Rs. 17,800 crores (4 billion USD) were concluded during the year.
The highlights are given below:
Rupees in Crores
Growth over
Particulars 2004-05 2005-06
Previous Year
Sales 4534 5342 17.82%
VOP 4984 5916 18.69%
Profit before tax 758 1126 48.54%
Profit after tax 501 771 53.89%
Gross Block 1417 1694 19.54%
Table (1) Financial Highlights
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25. INTRODUCTION TO TOPIC
Performance Appraisals are essential for the effective management and evaluation of
staff. Appraisals help develop individuals, improve organizational performance, and feed
into business planning. Formal performance appraisals are generally conducted annually
for all staff in the organization. Each staff member is appraised by his or her line
manager. Directors are appraised by the CEO, who is appraised by the chairman or
company owners, depending on the size and structure of the organization.
Annual performance appraisals enable management and monitoring of standards,
agreeing expectations and objectives, and delegation of responsibilities and tasks. Staff
performance appraisals also establish individual training needs and enable organizational
training needs analysis and planning.
Performance appraisals also typically feed into organizational annual pay and grading
reviews, which commonly also coincides with the business planning for the next trading
year.
Performance appraisals generally review each individual's performance against objectives
and standards for the trading year, agreed at the previous appraisal meeting.
Performance appraisals are also essential for career and succession planning - for
individuals, crucial jobs, and for the organization as a whole.
Performance appraisals are important for staff motivation, attitude and behaviour
development, communicating and aligning individual and organizational aims, and
fostering positive relationships between management and staff.
Performance appraisals provide a formal, recorded, regular review of an individual's
performance, and a plan for future development.
25

26. Job performance appraisals - in whatever form they take - are therefore vital for
managing the performance of people and organizations.
Managers and appraisees commonly dislike appraisals and try to avoid them. To these
people the appraisal is daunting and time-consuming. The process is seen as a difficult
administrative chore and emotionally challenging. The annual appraisal is maybe the only
time since last year that the two people have sat down together for a meaningful one-to-
one discussion. No wonders then those appraisals are stressful - which then defeats the
whole purpose.
There lies the main problem - and the remedy.
Appraisals are much easier, and especially more relaxed, if the boss meets each of
the team members individually and regularly for one-to-one discussion throughout
the year.
Meaningful regular discussion about work, career, aims, progress, development, hopes
and dreams, life, the universe, the TV, common interests, etc., whatever, makes
appraisals so much easier because people then know and trust each other - which reduces
all the stress and the uncertainty.
Put off discussions and of course they loom very large. So one should not wait for the
annual appraisal to sit down and talk. The boss or the appraised can instigate this. An
employee with a shy boss, then take the lead.
A boss who rarely sits down and talks with people - or whose people are not used to
talking with their boss - should set about relaxing the atmosphere and improving
relationships. Appraisals (and work) all tend to be easier when people communicate well
and know each other.
26

27. So one needs to sit down together and talk as often as one can, and then when the actual
formal appraisals are due everyone will find the whole process to be far more natural,
quick, and easy - and a lot more productive too.
Appraisals - Social responsibility and whole-person development:
There is increasingly a need for performance appraisals of staff and especially managers,
directors and CEO's, to include accountabilities relating to corporate responsibility,
represented by various converging corporate responsibility concepts including: the 'Triple
Bottom Line' ('profit people planet'); corporate social responsibility (CSR);
Sustainability; corporate integrity and ethics; Fair Trade, etc. The organization must
decide the extent to which these accountabilities are reflected in job responsibilities,
which would then naturally feature accordingly in performance appraisals. More about
this aspect of responsibility is in the director‘s job descriptions section.
Significantly also, while this appraisal outline is necessarily a formal structure this does
not mean that the development discussed with the appraisee must be formal and
constrained. In fact the opposite applies. Appraisals must address 'whole person'
development - not just job skills or the skills required for the next promotion.
Appraisals must not discriminate against anyone on the grounds of age, gender, sexual
orientation, race, religion, disability, etc.
When designing or planning and conducting appraisals, seek to help the 'whole-person' to
grow in whatever direction they want, not just to identify obviously relevant work skills
training. Increasingly, the best employers recognize that growing the 'whole person'
promotes positive attitudes, advancement, motivation, and also develops lots of new
skills that can be surprisingly relevant to working productively and effectively in any sort
of organization.
27

28. Developing the whole-person is also an important aspect of modern corporate
responsibility, and separately (if you needed a purely business-driven incentive for
adopting these principles), whole-person development is a crucial advantage in the
employment market, in which all employers compete to attract the best recruits, and to
retain the best staff.
Therefore in appraisals, be creative and imaginative in discussing, discovering and
agreeing 'whole-person' development that people will respond to, beyond the usual job
skill-set, and incorporate this sort of development into the appraisal process. Abraham
Maslow recognized this over fifty years ago.
If you are an employee and your employer has yet to embrace or even acknowledge these
concepts, do them a favour at your own appraisal and suggest they look at these ideas, or
maybe mention it at your exit interview prior to joining a better employer who cares
about the people, not just the work.
Are performance appraisals beneficial and appropriate :
It is sometimes fashionable in the 'modern age' to dismiss traditional processes such as
performance appraisals as being irrelevant or unhelpful. Be very wary however if
considering removing appraisals from your own organizational practices. It is likely that
the critics of the appraisal process are the people who can't conduct them very well. It's a
common human response to want to jettison something that one finds difficult.
Appraisals - in whatever form, and there are various - have been a mainstay of
management for decades, for good reasons.
Think about everything that performance appraisals can achieve and contribute to when
they are properly managed, for example:
 Performance measurement - transparent, short, medium and long term
 Clarifying, defining, redefining priorities and objectives
28

29.  Motivation through agreeing helpful aims and targets
 Motivation though achievement and feedback
 Training needs and learning desires - assessment and agreement
 Identification of personal strengths and direction - including unused hidden
strengths
 Career and succession planning - personal and organizational
 Team roles clarification and team building
 Organizational training needs assessment and analysis
 Appraisee and manager mutual awareness, understanding and relationship
 Resolving confusions and misunderstandings
 Reinforcing and cascading organizational philosophies, values, aims,
strategies, priorities, etc
 Delegation, additional responsibilities, employee growth and development
 Counseling and feedback
 Manager development - all good managers should be able to conduct
appraisals well - it's a fundamental process
 The list goes on.
People have less and less face-to-face time together these days. Performance appraisals
offer a way to protect and manage these valuable face-to-face opportunities. The advice is
to hold on to and nurture these situations, and if one is under pressure to replace
performance appraisals with some sort of (apparently) more efficient and cost effective
methods, one should be very sure that he can safely cover all the aspects of performance
and attitudinal development that a well-run performance appraisals system is naturally
designed to achieve.
There are various ways of conducting performance appraisals, and ideas change over
time as to what are the most effective appraisals methods and systems. Some people
advocate traditional appraisals and forms; others prefer 360-degree-type appraisals;
others suggest using little more than a blank sheet of paper.
29

30. In fact performance appraisals of all types are effective if they are conducted properly,
and better still if the appraisal process is clearly explained to, agreed by, the people
involved.
Managers need guidance, training and encouragement in how to conduct appraisals
properly. Especially the detractors and the critics. One should help anxious managers
(and directors) develop and adapt appraisals methods that work for them and also be
flexible. There are lots of ways to conduct appraisals, and particularly lots of ways to
diffuse apprehension and fear - for managers and appraisees alike.
Particularly - encouraging people to sit down together and review informally and often -
this removes much of the pressure for managers and appraisees at formal appraisaltimes.
Leaving everything to a single make-or-break discussion once a year is asking for trouble
and trepidation.
One should look out especially for the warning signs of 'negative cascaded attitudes'
towards appraisals. This is most often found where a senior manager or director hates
conducting appraisals, usually because they are uncomfortable and inexperienced in
conducting them. The senior manager/director typically will be heard to say that
appraisals don't work and are a waste of time, which for them becomes a self-fulfilling
prophecy. This attitude and behavior then cascades down to their appraises (all the people
in their team) who then not surprisingly also apply the same 'no good - not doing it'
negative attitude to their own appraisals responsibilities (teams). And so it goes. A 'no
good - not doing it' attitude in the middle ranks is almost invariably traceable back to a
senior manager or director who holds the same view. As with anything, where people
need help doing the right thing, one must help them.
All that said, performance appraisals that are administered without training (for those
who need it), without explanation or consultation, and conducted poorly will be counter-
productive and are wastes of everyone's time.
30

31. Well-prepared and well-conducted performance appraisals provide unique opportunities
to help appraisees and managers improve and develop, and thereby also the organizations
for whom they work.
Just like any other process, if performance appraisals aren't working, one should not
blame the process, but should ask oneself whether it is being properly trained, explained,
agreed and conducted.
An Effective Performance Appraisal
Aside from formal traditional (annual, six-monthly, quarterly, or monthly) performance
appraisals, there are many different methods of performance evaluation. The use of any
of these methods depends on the purpose of the evaluation, the individual, the assessor,
and the environment.
The formal annual performance appraisal is generally the over-riding instrument which
gathers together and reviews all other performance data for the previous year.
Performance appraisals should be positive experiences. The appraisals process provides
the platform for development and motivation, so organizations should foster a feeling that
performance appraisals are positive opportunities, in order to get the best out of the
people and the process.
In certain organizations, performance appraisals are widely regarded as something rather
less welcoming ('bollocking sessions' is not an unusual description), which provides a
basis only on which to develop fear and resentment, so never, never, never use a staff
performance appraisal to handle matters of discipline or admonishment, which should
instead be handled via separately arranged meetings.
31

32. Types of performance and aptitude assessments, including formal
performance appraisals:
 Formal annual performance appraisals
 Probationary reviews
 Informal one-to-one review discussions
 Counseling meetings
 Observation on the job
 Skill- or job-related tests
 Assignment or task followed by review, including secondments (temporary
job cover or transfer)
 Assessment centers, including observed group exercises, tests presentations,
etc.
 Survey of opinion of others who have dealings with the individual
 Psychometric tests and other behavioral assessments
 Graphology (handwriting analysis)
None of these methods is mutually exclusive. All of these performance assessment
methods can be used in conjunction with others in the list, depending on situation and
organizational policy. Where any of these processes is used, the manager must keep a
written record, and must ensure agreed actions are followed up. The notes of all review
situations can then be referred to at the formal appraisal.
32

33. Holding regular informal one-to-one review meetings greatly reduces the pressure and
time required for the annual formal appraisal meeting. Holding informal reviews every
month is ideal all staff. There are several benefits of reviewing frequently and informally:
 The manager is better informed and more up-to-date with his or her people's
activities (and more in touch with what lies beyond, e.g., customers, suppliers,
competitors, markets, etc)
 Difficult issues can be identified, discussed and resolved quickly, before they
become more serious.
 Help can be given more readily - people rarely ask unless they see a good
opportunity to do so - the regular informal review provides just this.
 Assignments, tasks and objectives can be agreed completed and reviewed
quickly - leaving actions more than a few weeks reduces completion rates
significantly for all but the most senior and experienced people.
 Objectives, direction, and purpose is more up-to-date - modern organizations
demand more flexibility than a single annual review allows - priorities often
change through the year, so people need to be re-directed and re-focused.
 Training and development actions can be broken down into smaller more
digestible chunks, increasing success rates and motivational effect as a result.
 The 'fear factor', often associated by many with formal appraisals, is greatly
reduced because people become more comfortable with the review process.
 Relationships and mutual understanding develops more quickly with greater
frequency of meetings between manager and staff member.
 Staff members can be better prepared for the formal appraisal, giving better
results, and saving management time.
 Much of the review has already been covered throughout the year by the time
comes for the formal appraisal.
 Frequent review meetings increase the reliability of notes and performance
data, and reduce the chances of overlooking things at the formal appraisal.
33

34. Performance Appraisals Process
For any organization to make it appraisal system effective, one must follow the under-
mentioned procedure, which helps to make an appraisal system effective.
 Prepare - prepare all materials, notes agreed tasks and records of performance,
achievements, incidents, reports etc - anything pertaining to performance and
achievement - obviously include the previous performance appraisal documents and a
current job description. A good appraisal form will provide a good natural order for
proceedings, so use one. If your organization doesn't have a standard appraisal form
then locate one, or use the template below to create one, or download and/or adapt the
appraisal forms from this page.
Whatever is used, the necessary approval from the organization should be ensured,
and understand how it works. Paperwork should be organized to reflect the order of
the appraisal and the sequence of items to be covered should also be written down. If
the appraisal form includes a self-assessment section and/or feedback section (good
ones do) this is passed to the appraisee suitably in advance of the appraisal with
relevant guidance for completion. Part of the preparation should also consider 'whole-
person' development - beyond and outside of the job skill-set - as might inspire and
appeal to the appraisees. Many people are not particularly interested in job skills
training, but will be very interested, stimulated and motivated by other learning and
development experiences. The organization should know what the organization‘s
people are good at outside of their work. People's natural talents and passions often
contain significant overlaps with the attributes, behaviours and maturity that are
required and valued in the workplace. The organization should use its own
imagination in identifying these opportunities to encourage 'whole-person'
development and will find appraisals can become very positive and enjoyable
34

35. activities. Appraisals are not just about job performance and job skills training.
Appraisals should focus on helping the 'whole person' to grow and attain fulfillment.
 Inform - inform the appraisee – ensures that the appraisee is informed of a suitable
time and place (change it if necessary), and clarify purpose and type of appraisal - the
appraisee should be given the chance to assemble data and relevant performance and
achievement records and materials.
If the appraisal form does not imply a natural order for the discussion then provide an
agenda of items to be covered.
 Venue - ensures a suitable venue is planned and available - private and free from
interruptions - observes the same rules as with recruitment interviewing - avoids hotel
lobbies, public lounges, canteens.
Privacy is absolutely essential (it follows also that planes, trains and automobiles are
entirely unsuitable venues for performance appraisals).
 Layout - room layout and seating are important elements to prepare also – the
organization should not simply accept whatever layout happens to exist in a borrowed
or hired room.
Layout has a huge influence on atmosphere and mood - irrespective of content, the
atmosphere and mood must be relaxed and informal - barriers should be removed.
 Introduction - the appraisee should be relaxed. It is the manager‘s responsibility to
create a calm and non-threatening atmosphere. He should simply explain what will
happen - encourage a discussion and as much input as possible from the appraisee -
tell them it's their meeting, confirm the timings, especially finishing time.
Asking the appraisee, if there are any additional points to cover and note them down
so as to include them when appropriate, is also appreciable.
35

36.  Review and measure - reviewing the activities, tasks, objectives and achievements
one by one, keeping to distinct separate items one by one - avoid going off on
tangents or vague unspecific views. If the appraiser has done his preparation
correctly, he will have an order to follow. If something off subject comes up then he
must note it down. He should concentrate on hard facts and figures, solid evidence -
avoid conjecture, anecdotal or non-specific opinions, especially about the appraisee.
Being objective is one of the greatest challenges for the appraiser - as with
interviewing, resist judging the appraisee in his own image, according to his own
style and approach - facts and figures are the acid test and provide a good neutral
basis for the discussion, free of bias and personal views.
For each item agree a measure of competence or achievement as relevant, and
according to whatever measure or scoring system is built into the appraisal system.
This might be simply a yes or no, or it might be a percentage or a mark out of ten, or
an A, B, C. Reliable review and measurement requires reliable data - if he doesn‘t has
the reliable data, he can't review and he might as well re-arrange the appraisal
meeting. If a point of dispute arises, he must get the facts straightened out before
making an important decision or judgment, and if necessary must defer to a later date.
 Agree an action plan - An overall plan should be agreed with the appraisee, which
should take account of the job responsibilities, the appraisee's career aspirations, the
departmental and whole organization's priorities, and the reviewed strengths and
weaknesses.
The plan can be staged if necessary with short, medium and long-term aspects, but
importantly it must be agreed and realistic.
 Agree specific objectives - These are the specific actions and targets that together
form the action plan. As with any delegated task or agreed objective these must
36

37. adhere to the SMARTER rules - specific, measurable, agreed, realistic, time-bound,
enjoyable, recorded. If not, don't bother.
The objectives can be anything that will benefit the individual, and that the person is
happy to commit to. When helping people to develop, you are not restricted to job-
related objectives, although typically most objectives will be.
Agree necessary support - This is the support required for the appraisee to achieve the
objectives, and can include training of various sorts (external courses and seminars,
internal courses, coaching, mentoring, secondment, shadowing, distance-learning,
reading, watching videos, attending meetings and workshops, workbooks, manuals and
guides; anything relevant and helpful that will help the person develop towards the
standard and agreed task.
Also, the appraiser must consider training and development that relates to 'whole-
person development' outside of job skills. This might be a hobby or a talent that the
person wants to develop. Developing the whole person in this way will bring benefits
to their role, and will increase motivation and loyalty. The best employers understand
the value of helping the whole person to develop. He should be careful to avoid
committing to training expenditure before suitable approval, permission or
availability has been confirmed - if necessary discuss likely training requirements
with the relevant authority before the appraisal to check. Raising false hopes is not
helpful to the process.
37

38.  Invite any other points or questions - makes sure to capture any other concerns.
 Close positively – The appraiser should thank the appraisee for their contribution to
the meeting and their effort through the year, and commit to helping in any way he
can.
 Record main points, agreed actions and follow-up – The appraiser must swiftly
follow-up the meeting with all necessary copies and confirmations, and ensure
documents are filed and copied to relevant departments, (HR, and his own line
manager typically).
Appraisals Timing With Pay Reviews, Performance Awards, And Training
Planning
Some people advocate separating appraisals from pay review; however this does not
make sense in organizations which require staff to be focused on their contribution to
organizational performance, especially where there are clear accountabilities and
measures (which in my view should apply in all organizations).
Organizations rightly or wrongly are geared to annual performance, and the achievement
of a trading plan. This cascades to departments, teams and individuals, so it makes sense
to assess people over a time period that fits with what the organization is working to. Put
another way, it's not easy to appraise someone on his or her year's performance half way
through the year. Transparency and accountability are prerequisites for proper assessment
and appraisals.
Arguably 'best practice' is to schedule appraisals close to trading year-end, when year-end
results and full year performance - for individuals and departments and organizations -
38

39. can reliably be predicted. By holding appraisals at this time, and staff knowing that
appraisals are focused on this trading period, people's thoughts and efforts can be
concentrated on their contribution towards the organization's annual trading plan, which
is a main appraisals driver and output (as well as individual development of course).
Holding appraisals after year-end means that people start the year without formal agreed
objectives, and also creates bigger delays for financial and payroll departments in their
task to process pay awards and adjustments.
Departmental, team and individual objectives provide the context for the appraisal,
linking clearly to performance bonus and performance-based pay awards, the rationale
for which needs to be transparent and published prior to the start of the year to which
they relate, for the full benefit and effect on staff effort to be realized.
Pay review would also coincide with the trading year, which makes sense from the
planning and budgeting perspective. The business is in a position to know by the close of
the final quarter what the overall pay review position is because the rationale has already
been (it jolly well should have been) established and year-end financials can be predicted.
Moreover the next year's trading plan (at least in outline) is established, which gives
another useful context for appraising people, especially those (most staff hopefully) who
have contributed to the planning process (i.e., committed as to what they can do for the
coming year, targets, budgets, staffing levels, priorities, objectives, etc).
The appraising managers can therefore go into appraisals fully briefed and prepared to
discuss and explain the organization's overview results and financials to the appraises.
And the appraises can see results and think in terms of their full year performance and
contribution to corporate results, plus what they plan for next year, which provides the
basis of the aims and objectives to be reviewed through the coming year and at the next
year's appraisal.
39

40. THEORY OF PERFORMANCE APPRAISAL
After an employee has been selected for a job, has been trained to do it and has worked
on it for a period of time, his performance should be evaluated. Performance Appraisal is
the process of deciding how employees do their jobs. Performance here refers to the
degree of accomplished of the tasks that make up an individual‘s job. It indicates how
well an individual is fulfilling the job requirements.
―Performance Appraisal is a method of evaluated the behaviour of employee in the work
spot, normally including both the quantitative and qualitative aspects of job performance.
It is a systematic and objective way of evaluating both work-related behaviour and
potential of employees. It is a process that involves determining and communicating to an
employee how he or she is performing the job and ideally establishing a plan of
improvement.‖
What is Performance Appraisal?
Identification: Means determining what areas of work the manager should be
examining when measuring performance essentially focusing on performance that
affects organizational success.
Measurement: Entails making managerial judgment of how good or bad
employee performance was.
Management: Appraisal should be more than a post-mortem examination of post
events, criticizing or praising workers for their performance in the preceding year.
Instead, it must take a future oriented view of what workers can do to realize their
potential.
40

41. PERFORMANCE APPRAISAL AS PMS AT HINDUSTAN
AERONAUTICS LIMITED ORGANOSYS LTD
PERFORMANCE MANAGEMENT SYSTEM IS ALL ABOUT:
 Establishing a shared understanding about what is to be achieved, and it is to be
achieved
 A continuous process of everyday actions and behaviors, which individuals take
to manage performance improvement in themselves and others
 Increasing the probability of achieving job related success
WHY REVAMP THE PMS AT HINDUSTAN AERONAUTICS LIMITED?
 Top Management realized that PMS is a weak link at Hindustan Aeronautics
Limited.
 Grievance against the PMS very high among employees.
A need was felt to make changes in old PMS in Hindustan Aeronautics Limited and
for this purpose “GROW TALENT COMPANY LIMITED” did a survey in
Hindustan Aeronautics Limited to know the opinion of employees about PMS so
that necessary changes can be made in PMS and new PMS can be revamped in
Hindustan Aeronautics Limited.
41

42. A workshop was organized to make Hindustan Aeronautics Limited Organosys’
employees effective trainers in the Performance Management System (PMS) and
similar training programs.
OBJECTIVES AND AGENDA OF THE WORKSHOP
“To make myself redundant” was the reply of a manager when asked for his
professional objective. Grow Talent also believes in the same – to help people and
organizations realize their potential and develop internal consulting skill.
The train the trainer workshop is aimed at developing Hindustan Aeronautics Limited
Organosys’ employees to become effective trainers in the Performance Management
System (PMS) and similar training programs.
Each of the employees is aware of certain personal challenges, which obstruct you in
effective communication/ program delivery. We encourage you to come up with a
personal agenda in improving these skills.
THE LEARNING OBJECTIVE OF THE TRAIN THE TRAINER
WORKSHOP IS:
“Participants will be able to conduct training programs in PMS. They will acquire
knowledge of the PMS training design, training methods and skills required for
delivering a PMS training program.”
42

43.  As members of the core group engaged in carrying the message of PMS activities,
to the members of the organization, all employees will be involved in imparting
new learning.
 In this endeavor employees will be playing a key role in terms of identifying the
development needs and the inputs required by the team, developing effective
vehicles for imparting these inputs and creating continuous learning communities.
 This workshop on ―Train the Trainer” will develop us to carry out the PMS
awareness programs. The program will provide us with an opportunity to examine
the values, process and approaches in learning with an objective of understanding
our role as trainers and developing skills required for creating learning
communities and delivering learning experiences effectively.
ROLES AND RESPONSIBILITIES:
1. APPRAISEE
 To ensure that goal setting is SMARTS and completed within the timelines.
 To capture real time data in the critical incidents diary.
 To conduct self appraisal with critical incidents and data wherever possible.
 To seek and accept periodic feedback.
 The appraise can view the appraisal done by the appraiser(s) however the rating
can be viewed only after it has been normalized by the harmonization committee.
 To take training inputs inputs for self improvement.
 To voice a concern in case one is not satisfied with the appraisal process.
43

44. 2. APPRAISER
 Goals and targets are realistic.
 To ask questions of understanding and help appraise to reflect better in round one
appraisal.
 To provide his perspective on the appraisal to the Reviewer.
 To discuss appraisals in the Harmonization Committee; get feedback and finalize
rating.
 To give consolidated feedback to appraise to provide consistency feedback on
KRA.
 Justify exceptionally high and low ratings.
3. REVIEWER
Reviewer provides inputs on the appraisal forms duly filled by the appraisee and
appraiser. He ensures there has been no bias, positive or negative, in the appraisal. If
needed he can seek inputs from internal customers/ suppliers once again (may/ may not
be the ones contacted by the appraiser). He also checks for internal parity in ratings.
4. INTERNAL CUSTOMER/ SUPPLIER
 To bring in perspective from a customer‘s/ supplier‘s point of view.
 To provide unbiased and balanced inputs on an appraisee‘s performance.
5. HEADS OF DEPARTMENTS
 To provide normalized ratings to HR.
 All escalated cases of grievances after Appraisal process to be sent to HR.
44

45. 6. HR
 All escalated cases of grievances to be studied and compiled by HR.
 HR to escalate grievances cases further to the Harmonization Committee.
7. HARMONIZATION AND TALENT REVIEW COMMITTEE
 Decide on rewards/ kitty etc.
 Moderate inter- functional issues/ ratings/ inconsistencies.
 Separate Harmonization & Talent Review committee for DGMs and above.
Executive Directors and President HR to be a part of the committee. Business
Unit level moderation to be done involving leadership team at the unit.
 Enforcing bell curve for rating, to be clearly communicated to all appraisers at
Manager Level and above. This is not applicable for specialist functions.
PMS AT HINDUSTAN AERONAUTICS LIMITED- KEY OBJECTIVES
 A very critical aspect of the new Performance Management System is
Performance Planning. Typically, in most organizations, employees are put on the
job without giving them a perspective of the importance of their job and its
linkage to the larger scheme of things. Also, their opinion on whether or not they
would be able to accomplish the task assigned to them is never sought, and
neither are they asked about the resources that would enable them to succeed.
This forced allocation of work affects the employees in two ways. Firstly, it does
not bring about a natural buy- in from the employees. Secondly, it does not take
into consideration an employee‘s strength, areas of development and interests,
which may render the task all the more difficult to achieve. To avoid this, the
system focuses on proper performance planning for the organization, which will
be cascaded down to the individuals.
45

46.  The most remarkable feature of performance planning in the new system is the
horizontal and vertical alignment of individual goals to those of the organization.
This enables employees to appreciate the way in which they are linked with the
 Others in the organization, and how one‘s contribution helps others and is also
helped by others. Horizontal and vertical alignment of goals also brings to the
fore, any overlaps that might exist on the organization.
 The new system would facilitate accountability in the organization because of the
following reasons:
 Participative goal setting would ensure ownership by the employees.
 One has the opportunities to articulate the resources and support
required to achieve his/ her goals. This creates a scope for negotiation
between employee and supervisor and/ or his/ her peer group and thus
is likely to make goals more realistic.
 The Performance Management System throws out the areas of development for
employees, which should be addressed so as to ensure the same mistakes are not
repeated the next time. HR should thus, utilize this system to identify the learning
needs of people.
 Performance Management System cannot succeed as a stand alone system. It
reveals important insights, which should keep getting linked to the other HR
systems. Training is an example. Rewards and Recognition is another very
obvious example. Career or Succession planning would also use inputs from
Performance Management System. Likewise, most HR systems should be linked
to it.
46

47. THE CYCLE OF PERFORMANCE MANAGEMENT
1
Establish Mutual
Expectations
2
6
Train and Observe &
Develop Measure
Performance
Management
Cycle
5 3
Recognize and Guide, Coach and
Reward Correct
4
Evaluate,
Feedback
& Document
Figure (2) Cycle of Performance Management
1. ESTABLISHING MUTUAL EXPECTATION- This makes appraisees cognizant
of what is expected of them, and also gives them an opportunity to express what they
expect from their supervisors, peers and sub- ordinates in order to successfully meet
expectations. This stage can easily be called the foundation of Performance
Management. If this stage is not handled effectively, it would lead to a mismatch of
the definition of ―Performance‖ in the minds of the appraiser and the appraisee, which
would become evident towards the end of the cycle when the appraisal is done.
47

48. 2. OBSERVE AND MEASURE- This would enable the appraisee to seek guidance
from the appraiser wherever required, and accelerate his progress towards his goals.
This would also keep the appraiser informed of the developments, and prevent any
rude shocks to both of them at the time of appraisal.
3. GUIDE, COACH AND CORRECT- Appraiser should guide, coach and correct the
appraisee through the year, so as to facilitate his accomplishing targets. The appraiser
should not wait for the annual appraisal to point out the appraisee‘s mistakes and
provide guidance. This is a key part of his responsibilities as a supervisor, and should
be done on a continuous basis.
4. EVALUATE, FEEDBACK AND DOCUMENT- It is also expected of the
appraiser to evaluate the progress made by the appraisee after a pre-defined period
(mid year review, annual Review etc), and provide him constructive and
developmental feedback. This feedback should be documented in the system, and
accessible for future use.
5. REWARD AND/ OR RECOGNITION- After having gone through the entire
Performance Management Cycle, it is natural for the appraisees to expect some
“Reward and/ or Recognition” for their efforts and performance. This can be
monetary i.e. in the form of performance pay, bonus, increments etc; or non-
monetary i.e. Best performer trophy, employee of the year award etc. Of course, it
can be a combination of the two. Reward and Recognition is an obvious fall- out of
the Performance Management System, and ensures that the motivation levels in the
organization are maintained. Also, it is critical for any organization to be perceived as
fair by their employees. This again reinforces the need for a visible linkage of
Performance Management System with the Rewards and Recognition framework.
48

49. 1. TRAIN AND DEVELOP- Lastly the Performance Management System brings
out a lot of data with respect to the learning needs of individuals. In today‘s era,
when Capability Building has become the key to retain employees, no
organization can afford to overlook this data. Appraisee wants to know what the
organization would do to bridge the gap between expectation and performance.
Therefore training and development also becomes a fall- out of the Performance
Management System. This would not only keep the employee morale upbeat, but
also equip them to give better performance in coming years.
49

50. PMS PROCESS FLOW
1 Organization KRA Setting – Strategic Planning/ Annual Budget setting
Performance
Planning Individual KRA Setting
2
Performance
Data capturing
Monitoring
Mid Year Self-Appraisal
Review Feedback Discussion With Appraiser
3
Performance Modification of goals
Review
Self-Appraisal
Annual Appraisee / Appraiser seeks feedback from
Appraisal Internal Customers
Performance Dialogue with Appraiser 1
Performance Dialogue with Appraiser 2
Reviewer
Harmonization & Talent Review Committee
Feedback & Coaching Session
4 5 6
Reward & Learning & Potential
Recognition System Development Development
System System
Figure (3) PMS Process Flow
50

51. FOLLOWING ARE THE THREE KEY STAGES OF THE SYSTEM:
1. Performance Planning
2. Performance Monitoring
3. Performance Review
The boxes 4, 5 and 6 shows the other HR systems which draw inputs from the
Performance Management System.
PERFORMANCE PLANNING- Performance Planning is all about goal setting – for the
organization as well as individuals. A goal can be defined as a statement of intent. It is
basically a commitment from the appraisee on what he would achieve within a specified
time period. Of course, this commitment cannot be in isolation of what the organization,
and the appraisee‘s department, commits to achieve within the said time period.
Therefore, there has to be a clear linkage between the goals of the organization‘s goals
and the goals of each and every employee of the organization. This would start from
organizational level and flow to the individuals. In other words, the first step would be to
articulate what the organization wants to achieve in the given time period, and what are
the strategic initiatives it would undertake to achieve the same. Once, this is frozen, only
then would the individuals formalize the goals. This would enable each and every
employee to see the connection between his goals and the goals of the organization.
Performance Planning is all about goal setting- for the organization as well as individuals.
51

52. A GOAL is a statement of intent, describing situation or condition that will be
achieved in a specific time frame. Goals tell a person what he/she needs to
achieve and how much effort needs to be extended.
Annual Business Planning
 Cascade of BU/ Functional level
score card through a one day
BU/ Functional level Balanced
exercise
Scorecards
 BU Heads and Function Heads
set their individual KRAs in the
Cascade of the scorecards using
Balanced Scorecard format (only
the Hoshin Kanri Approach
upto Sec In Charge level)
 These KRAs further cascaded
Identify significant Internal using Hoshin Kanri approach
Customer/Supplier
 Service Level Agreements
between Business Unit and/or
Define Service Level Functions
Agreements between
departments
Figure (4)
TOOLS OF PERFORMANCE PLANNING
1. BALANCED SCORE CARD-Developed in the early 1990s by Dr. Robert
Kaplan and David Norton, Balanced Score card is a management system that
enables organizations to clarify their vision and translate them into action. The
balanced scorecard retains traditional financial measures and also provides a clear
prescription as to what companies should measure in order to ‗balance‘ the
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53. financial perspective. Financial measures tell the story of past events, an adequate
story for industrial age companies for which investments in long- term
capabilities and customer relations were not critical for success. The balanced
score card, thus, suggests that we view the organization from four perspectives,
and to develop metrics, collect data and analyze it relative to each of these:
i) THE FINANCIAL PERSPECTIVE- Financial success will always be a
priority, and managers will do whatever necessary to achieve it. This can be
measured through increase in revenue, decrease in costs, profitability, return
on investments etc.
ii) THE CUSTOMER PERSPECTIVE- Recent management philosophy has
shown an increasing realization of the importance of customer focus and
customer satisfaction in any business. These are leading indicators: if
customers are not satisfied, they will eventually find other suppliers that will
meet their needs. Poor performance from this perspective is thus a leading
indicator of future decline, even though the current financial picture may look
good.
iii) THE INTERNAL BUSINESS PROCESS PERSPECTIVE- This
perspective refers to internal business processes. Metrics based on this
perspective allow the managers to know how well their business is running.
iv) THE LEARNING AND GROWTH PERPECTIVE- This perspective
includes employee training and corporate culture attitudes related to both
individual and corporate self- improvement.
The Balanced Scorecard would be applicable to employees above Section In Charge level
only. This is because at lower levels, a balanced approach may not be very impact. For
Section In Charges and above, it is mandatory to have at least one KRA in each of the
four Balanced Scorecard perspectives. The weightage allotted to any perspective cannot
be less than 10%.
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54. 2) VERTICAL ALIGNMENT OF GOALS- HOSHIN KANRI- As discussed above, the
organization goals would be cascaded down to the individual level as per the new
performance management system. The methodology used for this is called ―Hoshin
kanri‖ which is a well known approach for strategy deployment. This methodology very
visibly links the goals of the organization to the goals of the individual.
According to this approach, there are four critical parts of a goal statement:
i) What needs to be done
ii) How would it be done
iii) Who would do it
iv) By when would it be done
Hoshin Kanri cascades the organizational goals to individuals through converting the
―How‘s‖ of one level to be the ―What‘s‖ of the second level and so on.
 An employee can have 6 – 10 KRAs.
 KRAs can be team based also, if it is felt that an individual would not be able to
take accountability for a specific initiative.
 Each KRA would have a weightage of minimum 5% and maximum 30%.
 The total weightage of any Balanced Scorecard perspective cannot be less than
10%.
 The goals of the organization would be set in the month of May every year. In
that respect, the month of May would be designated as the ―Goal setting Month‖.
 For any person joining the organization in the months of June – December, his /
her supervisor and entered in the automated system, for it to be considered final.
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55. SMARTS GOAL SETTING:
MEASURA
BLE
SPECIFIC AGREED
SMARTS
GOALS
REALISTIC
STRETCH
TIME
BOUND
Goals cannot be vague statements. Each and every goal needs to pass the SMARTS
test, which is an acronym for:
S- Specific
M- Measurable
A- Agreed
R- Realistic
T- Time Bound
S- Stretch
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56. 3) IDENTIFYING KEY INTERNAL CUSTOMERS/ SUPPLIERS- It has the following
important points:
i) Appreciation of inter-dependencies between departments and eliminates the risk of
appraisal bias to a large extent.
ii) Identification of key internal customers/ suppliers during Goal setting process
iii) Their feedback documented during Mid Year as well as Annual Appraisal
iv) Due consideration given to their feedback while deciding on the final rating for the
appraisee.
4) HORIZONTAL ALIGNMENT THROUGH SERVICE LEVEL AGREEMENTS-
Service level agreements is a formal negotiated agreement between two parties. Typically
it is a contract that exists between customers and their service provider, or between two
or more service providers.
SLAs serve the purpose of acknowledging inter- dependencies between Business units
and functions. Contracting of SLAs provide a forum to table grievances and
disappointments from other units/ departments, which an opportunity to collectively
arrive at solutions to the stated problems.
The service level Agreements would be contracted at the Business Unit/ Function Head
level. However, the entire Business Unit and/ or Function would be bound by the SLA.
Adherence to SLAs would have 5% weightage in the Performance Management System.
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57. ASSIGNMENT OF WEIGHTAGES
Category Goals Weightage
Financial Goal #1 10%
Goal #2 20%
Customer Goal #3 20%
Internal Process Goal #4 10%
Goal #5 10%
Learning & Goal #6 15%
Growth Goal #7 15%
100%C
Table (2) Assignment of Weightage
At the time of goal setting, there are five simple checks that need to be carried out, to
ensure that the goals are made in the right fashion:
1. No. of goals between 6 – 10
2. At least one goal in all four perspectives.
3. The sum of weightage to be equal to 100
4. All goals to have minimum 5% and maximum 30% weightage.
5. All perspectives to have a weightage of at least 10%
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58. Now that the goals meet the basic criteria, a SMARTS check needs to be conducted on
the goals by the appraiser/ HR. This is to ensure objectivity and common understanding
in the minds of the appraisee and the appraiser at the time of appraisals and feedback.
PERFORMANCE MONITORING- The system recommends continuous performance
monitoring, completely backed by data. The system has two critical aspects to it- KRAs
and Competencies. Performance needs to be monitored on both these aspects. Both the
appraiser and the appraisee should maintain records of the appraisee‘s exceptional
achievements or slip- ups and positive and negative behaviors displayed by them through
the year. This would address the Recency Error in appraisals – where the appraisal for
whole year is colored by the most recent performance of the appraisee.
For this purpose, a critical incident diary would be accessible online to both the appraiser
and the appraisee.Both of them can record positive or negative instances relating to
KRAs and/ or competencies. The appraiser and the appraisee should discuss this diary in
person every month to take stock of things on a regular basis and facilitate the
achievement of goals by the appraisee. In addition, it would also act as a memory
refresher at the time of midyear and annual appraisals.
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59. PERFORMANCE REVIEW- Performance review is sub divided into two parts:
1) Midyear review
2) Annual review
1) MID YEAR REVIEW
HR to initiate reminders for the review  Appraiser discusses appraisee’s progress
process and provides feedback
 Appraiser and appraisee agree on a
corrective action plan in case progress is
Appraisee completes self – appraisal
below expectations
 Appraiser and appraisee may decide to
Mid Year Feedback by 2 Internal change / modify the KRA’s on the basis of
Customers change in business conditions. Any such
change will need to be validated by
approving authority
Review discussion between appraisee  Business Unit Head is the Approving
and appraiser authority for the changes in KRAs
Figure (5) Mid Year Review
This is an opportunity for the appraiser and the appraisee to meet up in the middle of the
year and take stock of how things are going. This would also be the time to realistically
evaluate the goals, bearing in mind the business priorities, and make additions and/ or
deletions in the goals if required.
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60. 2. ANNUAL REVIEW-
HR to initiate reminders for annual appraisal
• Performance data to be
Appraisee to complete self – appraisal recorded and tracked by
appraisee and updated on IT
Appraiser has a discussion with appraisee to understand system
appraisee’s perspective and rationale behind self appraisal • Potential Assessment through
ratings on Competency
Appraiser to seek inputs from 2 internal customers Framework
• Harmonization & Talent
Appraiser notes his/her rating and comments. Second Review Committee to
Appraiser (if any) also fills in rating & comments comprise of EDs and Head
independently HR
Reviewer seeks inputs from the internal customers (if • All escalated cases of
required) and the appraiser (s) and mentions his comments grievances to be sent to HR.
HR to reconvene the
Harmonization and Talent
Harmonization & Talent Review Committee study and rate all Review Committee for all
reviews. The ratings of the committee will be final grievance issues for the year
• BU and Function Heads to
Communication of the final rating to the appraisee by the provide forced ranking of
appraiser with detailed feedback and joint sign off on a their team to HR
developmental plan
Figure (6) Annual Review
The annual appraisal would involve evaluation of an appraisee at four levels, to ensure
there is no bias in the appraisal. First level would be the appraisee himself/ herself;
second would be his appraiser (s) along with the internal/ external customers the
appraisee interact with; third would be a Reviewer, who would typically be a Business
Unit or Function. Head; and finally a Harmonization and talent Review Committee,
which would comprise the Executive directors and the Head HR. On completion of this
process, ratings would be communicated to the appraisee and detailed feedback would be
provided.
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61. RATING SCALE
Each KRA would be rated on a scale of 1 to 6, 1 being the lowest and 6 being the highest.
The scale is defined as shown:
6 – Consistently and
significantly exceeds
expectations
5 – Significantly
exceeds
expectations
4 – Exceeds
expectations
3 – Meets
expectations
2 – Doesn’t
meet
expectations
1 – Consistently
doesn’t meet
expectations
Figure (7) Rating Scale
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62. SCORING OF KRAs
We are now familiar with the 6 point rating scale to be used for scoring of goals. Now, at
the stage of Annual Appraisal, Let us see how the goals are scored. The score arrived at is
a multiplication of the weight with the rating. The bottom most cell gives the formula for
the overall rating. It is calculated by adding the score (305), and dividing them by the
sum total of weightage i.e. 100%, to get an overall score of 3.05.
Category Goals Weightage Rating Score
Financial Goal #1 10% 3 30
Goal #2 20% 4 80
Customer Goal #3 20% 3 60
Internal Goal #4 10% 2 20
Process
Goal #5 10% 4 40
Learning & Goal #6 15% 2 30
Growth
Goal #7 15% 3 45
100% = 305/100 =
3.05
Table (3) Scoring of KRAs
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63. MODIFICATION OF KRAs
THERE CAN BE THREE ALTERNATIVES FOR MODIFYING KRAs:
1. Addition of new KRA(s)
2. Deletion of KRA(s)
3. Addition and Deletion of KRA(s)
IN ALL THESE CASES:
 The sum of weightages should not exceed 100%. Therefore, a revision of the
weightages of other KRAs would be required.
 Whenever a KRA is dropped or accomplished before time, the supervisor‘s
feedback and rating is documented.
 At the of Annual appraisal rating. Weightages for dropped goals are also
considered (Ideally, weighted average method should be followed, but since it
complicates the system without having any significant impact, it has been
avoided.)
 In the event of modification in KRAs, the concerned Business Unit/ Function
head‘s approval is required. This is because change in one person‘s KRAs might
impact many others.
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64. MODIFICATION IN KRAs – EXAMPLE
Category Goals Weight Rating Score
age
Financial Goal #1 10% 3 30
Goal #2 20% 4 80
Custome Goal #3 20% 3 60
r
Goal #8 20% 2 40
Internal Goal #4 10% 2 20
Process
Goal #5 10% 4 40
Learning Goal #6 15% 2 30
&
Growth Goal #7 15% 3 45
= 345/120
=2.88
Table (5) Modification in KRAs examples
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65. Assume Goal 2 got dropped at the time of Mid Year Review due to change in the market
conditions. The rating and feedback of the appraiser on goal 2 is documented at the time
of Mid Year (which is when this goal was dropped). Also, at the time of Mid Year
Review, Goal 8 got added. Please note that the sum of weightages still remains 100%
(100- 20 + 20).
The appraisee had been performing very well on Goal 2 (a rating of 4 on 6). However, at
the time of annual appraisal, his performance on Goal 8 was considered below average (a
rating of 2 on 6). To acknowledge the effort put in by the appraisee towards goal 2, which
got dropped for no fault of his, the scoring would be done considering this goal also. This
is why the last cell shows a score of 345 over 120, and an overall rating on 2.88.
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