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  • 1. acumen school of BUSINESS, new delhi2010PROJECT REPORT ON PERFORMANCE APPRAISAL IN MARUTI UDYOG Kuldeep, Sandeep,Mini, Bunty model town 3, g7, new delhi<br />-9525384810<br />2564542-15337843434005715<br />459105043815<br />2435311-580064-228085-219761<br />7048502216153419475288290<br />Submitted to:Mr. AKSHAT JAIN<br />Submitted for the partial fulfillment of the requirement<br />For the award of degree of “Master OF Businessadministration”<br />MBA II Sem.<br />SUBMITTED TO<br /> Mr. AKSHAT JAIN <br />466725441960<br />3533775225425<br />Acknowledgement<br />We are sincerely thankful to all those people who have been giving us any kind of assistance in the making of this project report.<br />We express our gratitude to Mr. AKSHAT JAIN who has through his vast experience and knowledge has been able to guide ussuccessfully towards the completion of the project. We express our gratitudeto Acumen school of Business (NewDelhi).<br />We would hereby, make most of the opportunity by expressing our sincerest thanks to all our facultySpeciallyMs. CHANDNI & Mr. ACHAL ARYA whose teachings gave us conceptual understanding and clarity of comprehension, which ultimately made our job easier. Credit also goes to all our friends <br />Whose encouragement kept us in goodstead.Their continuous support has given us the strength and confidence to complete the project without any difficulty.<br />Last but not the least we would like to acknowledge our gratitude to the respondents without whom this survey would not have been complete. <br />We are also thankful to authority of MARUTI UDYOG (GURGAON & IMT) for providing us the information. <br /> Group (MBA Semester-2)<br />Mini Miglani<br /> Kuldeep Pareek<br />Bunty marshal<br /> Sandeep Kumar<br />Preface <br />Human resource should not be looked upon in a vacuum or in isolation. It is an essence taking a view of the whole business organization and its ultimate objective concern for marketing must penetrate all areas of the enterprise. Humans are asset of company not expense. Human resource manager helps to the employees of their career and job satisfaction <br />This project is a study of performance appraisal system adopted by maruti udyog. The rationale behind this particular study is to find out the present system to awards and promotion of the employees and their perception and need of the employees towards management.<br />It was a exciting experience to conduct a research on behalf of maruti udyog pertaining to the study of the Automobile Sector.<br />To carry out this research a sample study was pursued where the target was made to the people of Delhi region (NCR, Gurgaon). Various statistical and analytical tools and techniques are applied to ascertain and depict the present scenario.<br />Conclusion and there by recommendation has been arrived at by proper and justified<br />Interpretation of the result derived from the above said analytical tools and techniques.<br />METHODOLOGY<br />In conducting the whole Analysis of Performance Appraisal Systems we have used two main sources of data collection, Primary and Secondary. In primary data sources we have mainly focused on Questioner as a tool for collecting data from executives of organizations under consideration. We developed a questioner having following main questions in it:<br />What Performance Appraisal System mean to your organization?<br />How many methods of Performance Appraisal your organization is using presently?<br />Why your organization is using that particular Performance Method?<br />How much it is important to your organization?<br />Why there is need to appraise employees?<br />Is your organization using sabbaticals? <br />Are you satisfied with your job in Maruti<br />Are you paid efficient money for their work<br />Are you get promotion acc to your experience<br />What are your first requirement from company <br />Are you sharing holder of co.<br />How much you respect your job<br />What are you doing if company chuck out you without any pre-notification <br />Secondly we have used survey to some extent in our data collection for Analysis of Performance Appraisal Systems; in this regard we have surveyed 3 to 4 employees of each organization from customer relation officer to assistant Human Resource manager. <br />They gave information regarding performance appraisal system that they are satisfied with the overall performance management system but they showed some reservations regarding their long term benefits.<br />The appraisal needs to be thoughtfully prepared with good examples which support the points the manager wants to make. The manager needs to review the definition for the job and appraise the performance in relation to the written job description. In addition, the job description often isn't sufficient to clarify the manager's expectations since the job description is normally written for groups of jobs rather than specific positions. The supervisor usually does the actual appraising. The HR department serves a policy making and advisory role. The supervisor needs to conduct an appraisal interview in which the written appraisal is presented.<br />Finally we have used internet or online reviews of different analysts regarding performance appraisal system of each organization. In these reviews we found that majority of the analysts were satisfied with the overall performance appraisal system. But they have pointed out that each organization has to revise the overall performance management system regarding employee compensation and motivation.<br />Executive summery <br />It was in 1970 that Sanjay Gandhi envisioned the manufacture of maruti which is known popularly as the people’s car it is maruti which is known to give wheels to the nation. The first car of mauti was rolled out on Dec. 14, 1983 after s collaboration with Suzuki motors.<br />This survey is conducted by us of HR is no longer a non-core function and in the ongoing talent war, itwill play a critical role in employee engagement and retention.<br />HR in our companies is still in a nascent stage and needs to grow in every direction and should act as the core competence for the organisation. In this article the need for modern HR is clearly seen. One of the solutions to the above said problems which I felt is PERFORMANCE APPRAISAL, which should be conducted effectively and efficiently to completely eliminate such problems.<br /> Maruti udyog is using 360 Degree Performance appraisal method. Company Conduct an appraisal interview before rewarding someone. What are the methods for appraising?<br />This project is benefitted for a company for essential for a successful appraisal system. <br />We study the objectives of performance appraisal in Maruti Udyog and conditions for effective counseling. It is necessary to appraise an employee. There is clarity what is expected from the employee. According to performance feedback is given to Maruti Udyog and then suggestions and innovations are rewarded with the help of training and development programs in improving employees’ performance. <br />contents<br />
    • Acknowledgement
    • 2. Review of literature
    • 3. Executive summery
    • 4. History of company
    • 5. Head of director
    • 6. Organizational chart of MUL
    • 7. Objective of study
    • 8. Chapter 1 :- literature review
    • 9. preview of auto mobile industry
    • 10. Wheel of change of automobile industry
    • 11. Structure of automobile industry
    Chapter 2 :- history of indian automobile market<br />
    • Indian automobile market
    • 12. Different player in India
    • 13. Chapter 3 theoritical frame work
    • 14. Performance appraisal introduction
    • 15. Performance appraisal system
    • 16. Indian auto mobile industry
    • 17. Current scenario
    • 18. Indian four wheel industry
    • 19. Competitive forces
    Chapter 4 about maruti udyog<br />
    • Synopsis of maruti udyog
    • 20. Partner of joint venture
    • 21. Production of milestones
    • 22. Chapter 5 theoretical approach
    • 23. Overview of performance appraisal modern
    • 24. Approach to tradition method
    • 25. Objective of performance appraisal
    • 26. Process of conduct performance appraisal in org.
    • 27. Method of performance appraisal
    • 28. Advantage and benefit of performance appraisal
    • 29. Conduct counseling
    • 30. Human resource accounting
    Chapter 6 Research undertaken<br />
    • Analysis and study of performance appraisal in maruti udyo
    • 31. Conclusion
    • 32. Suggestion and recommendation
    • 33. Bibliography
    • 34. Appendix :- questionnaires
    • 35. Thanks letter
    Review of literature <br />Performance appraisal has widened as a concept and as a set of practices and in the form of performance management has become part of a more strategic approach to integrating HR activities and business policies. As a result of this, the research on the subject has moved beyond the limited confines of measurement issues and accuracy of performance ratings and has begun to focus more of social and motivational aspects of appraisal. This article identifies and discusses a number of themes and trends that together make up the developing research agenda for this field. It breaks these down in terms of the nature of appraisal and the context in which it operates. The former is considered in terms of contemporary thinking on the content of appraisal (contextual performance, goal orientation and self awareness) and the process of appraisal (appraiser–appraise interaction, and multi-source feedback). The discussion of the context of appraisal concentrates on cultural differences and the impact of new technology. <br />A performance management system includes the following actions: -<br />Develop clear job descriptions.<br />Select appropriate people with an appropriate selection process.<br />Negotiate requirements and accomplishment-based performance standards, outcomes, and measures.<br />Provide effective orientation, education, and training.<br />Provide on-going coaching and feedback.<br />Conduct quarterly performance development discussions.<br />Design effective compensation and recognition systems that reward people for their contributions.<br />Provide promotional/career development opportunities for staff.<br />Assist with exit interviews to understand WHY valued employees leave the organization.<br />Profile of company<br />Maruti on strong foundation:- <br />Maruti Suzuki India Limited is a publicly listed automaker in India. It is a leading four-wheeler automobile manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority stake in the company. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India. On 17 September 2007, Maruti Udyog was renamed to Maruti Suzuki India Limited. The company's headquarters remain in Gurgaon, near Delhi.<br />Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983. Through 2004, Maruti has produced over 5 Million vehicles. Marutis are sold in India and various several other countries, depending upon export orders. Cars similar to Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki in Pakistan and other South Asian countries.Until recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% of the company in June 2003. As of May 10, 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.<br />The company annually exports more than 30,000 cars and has an extremely large domestic market in India selling over 500,000 cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts.<br />Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, was associated to the Maruti 800 model.<br />Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for over two decades.<br />REGISTERED AND CORPORATE OFFICE:<br />11th Floor, Jeevan Prakash Building,<br />25, Kasturba Ganghi Marg,<br />New Delhi – 110001<br />
    • KEY DATA
    • 36. Country: INDIA
    • 37. BSE: 532500
    • 38. NSE: MARUTI
    • 39. Exchanges:BOM
    • 40. Major Industry:Automotive
    • 41. Sub Industry:Diversified Automotive Mfrs.
    • 42. 2009 Sales:206,638,000,000(Year Ending Jan 2010)
    • 43. Employees:7,159
    • 44. Currency:Indian Rupees
    • 45. Market Cap:399,028,129,369
    • 46. Fiscal Yr Ends:March
    • 47. Shares Outstanding:288,910,060
    • 48. Share Type: Ordinary
    • 49. Closely Held Shares:156,618,440
    • 50. VISION
    The leader in the India Automobile Industry, Creating Customer Delight and Shareholder’s Wealth; A pride of India”<br />
    To provide maximum value for money to their customers through continuous improvement of products and services.<br />74295098425<br />80962567310<br />A BIT ABOUT ITS PARENT COMPANY ITS OWNER<br />Suzuki Motor Corporation is a Japanese multinational corporation that specializes in manufacturing compact automobiles, a full range of motorcycles, All-Terrain Vehicles (ATVs), outboard marine engines, wheelchairs and a variety of other small internal combustion engines. Suzuki is the 12th largest automobile manufacturer in the world, employs over 45,000 people, has 35 main production facilities in 23 countries and 133 distributors in 192 countries.<br />"Suzuki" is pronounced in Japanese as "soo-zoo-kee" Suzuki, with emphasis on a high "kee". It is almost always wrongly pronounced as "suh-ZOO-kee" with a stressed "zoo". This pronunciation is used by the English-speaking public and by the Suzuki company in marketing campaigns directed towards this demographic<br />In 1909, Michio Suzuki founded the Suzuki Loom Company in the small seacoast village of Hamamatsu, Japan. Business boomed as Suzuki built weaving looms for Japan's giant silk industry. Suzuki's only desire was to build better, more user-friendly looms. In 1929, Michio Suzuki invented a new type of weaving machine, which was exported overseas. Suzuki filed as many as 120 patents and utility model rights. The company's first 30 years focused on the development and production of these exceptionally complex machines.<br />Despite the success of his looms, Suzuki realized his company had to diversify and he began to look at other products. Based on consumer demand, he decided that building a small car would be the most practical new venture. The project began in 1937, and within two years Suzuki had completed several compact prototype cars. These first Suzuki motor vehicles were powered by a then-innovative, liquid-cooled, four-stroke, four-cylinder engine. It featured a cast aluminum crankcase and gearbox and generated 13 horsepower (9.7 kW) from a displacement of less than 800cc.<br />With the onset of World War II, production plans for Suzuki's new vehicles were halted when the government declared civilian passenger cars a "non-essential commodity." <br />After the war, the Japanese had a great need for affordable, reliable personal transportation. A number of firms began offering "clip-on" gas-powered engines that could be attached to the typical bicycle. Suzuki's first two-wheel ingenuity came in the form of a motorized bicycle called, the "Power Free." Designed to be inexpensive and simple to build and maintain, the 1952 Power Free featured a 36 cc two-stroke engine. An unprecedented feature was the double-sprocket gear system, enabling the rider to either pedal with the engine assisting, pedal without engine assist, or simply disconnect the pedals and run on engine power alone. <br />The system was so ingenious that the patent office of the new democratic government granted Suzuki a financial subsidy to continue research in motorcycle engineering, and so was born Suzuki Motor Corporation.<br />In 1953, Suzuki scored the first of many racing victories when the tiny 60 cc "Diamond Free" won its class in the Mount Fuji Hill Climb.<br />By 1954, Suzuki was producing 6,000 motorcycles per month and had officially changed its name to Suzuki Motor Co., Ltd. Following the success of its first motorcycles, Suzuki created an even more successful automobile: the 1955 Suzulight. Suzuki showcased its penchant for innovation from the beginning. The Suzulight included front-wheel drive, four-wheel independent suspension and rack-and-pinion steering -- features common on cars half a century later.<br />History of maruti udyog <br />In 1970 , Sanjay Gandhi the son of Indira Gandhi envisioned the manufacture of an indigenous , cost effective , low maintenance compact car for the Indian middle class . Indira Gandhi’s cabinet passed a unanimous resolution for the development and production of a people’s car. Sanjay Gandhi’s company was christened Maruti limited. The name of the car was chosen after a Hindu deity named Maruti Ltd. That time Hindustan Motors’ Ambassador was the chief car and the company had come out with a new entrant the premier Padmini that worked slowly gaining a part of the market share dominated by the ambassador. For the next ten years the Indian car market had stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983.<br />Sanjay Gandhi was awarded the exclusive contract and license to design, develop and manufacture the “People’s Car.” These exclusive rights of production generated some criticism in certain quarters, which was directly targeted at Indira Gandhi. Over the next few years the company was sidelined to Bangladesh liberation war and emergency.<br />In the early days under the powerful patronage of Sanjay Gandhi the company was provided with free land, tax breaks and funds. Till the end of 1970 the company had not started the production and a prototype test model was welcomed with criticism and skepticism. The company went into liquidation IN 1977. The media perceived it to be another area of growing corruption. Unfortunately Maruti’s started to fly only after the death of Sanjay Gandhi, when Suzuki motors joined the government of India as a joint venture partnered with 50% share. After his death Indira Gandhi decided that the project should not be allowed to die. Maruti’s entered into this collaboration with Suzuki motors. The collaboration heralded a revolution in the Indian car industry by producing the maruti-800. It created a record of taking 13 months time to go from design to rolling out cars from a production line.<br />The production of Maruti-800 in 1983 marked the beginning of a revolution in the Indian automobile industry. It brought in the latest technology of that time more fuel efficiency and lower prices that led to the creation of a huge market for all car segments as the Indian, middle class grew in size. This in turn brought in more players in this segment. A number of auxiliary car parts making units were set up as more car manufacturers realized it was more cost effective to make their car parts in India rather than importing them. <br />Maruti’s major influence was in helping the component industry in the country because of its emphasis on localization and indigenization. As in the beginning that sector hadn’t grown much Maruti’s had to start dozens of joint ventures with Indian entrepreneurs. It got them from foreign collaborations that led to collaborations for other manufacturers so that over a period of time the whole component industry was able to upgrade itself and improve its quality who had given their income leading to major existing export potential vehicle components. It also brought in better methods of financing that allowed more people who given their income levels could not afford to buy a car on their own, to buy cars. It still remains the leader not only in the terms of market share but also in customer satisfaction surveys. It has consistently topped J.D. power quality surveys, including 2005. By the year 1993 the company had sold 1, 96,820 cars. By March 1994 it produced 1 million vehicles becoming the first Indian company to cros the 2 million mark in October, 1997 and rolled out 4 millionth vehicles as Alto-LX .Then it introduced Wagon-R followed by Swift. Swift has been a great success in the market .In 2007 Maruti came up with SX4 and Grand Vitara.<br />
    • Maruti has largest production capacity vis‐à‐vis its peers in India.
    • 51. Suzuki will invest ~$3.0 bn over next 4‐5 years in
    Capacity at Manesar to be increased from 100,000 cars to 300,000 cars by FY10, leading to overall capacity of 960,000 units/ year.<br />
    • We believe that increase in sales network will enable Maruti to retain its leadership in India
    • 52. Incremental capacities at the Manesar plant to also be used for exports (A‐star) and supplying to Nissan.
    .<br />Board of director <br />Managing Director And CEOShinzo Nakanishi Director (Production) Tsuneo Ohashi Director (Marketing & Sales) Shuji Oishi Director O Suzuki Chairman (Non-Executive) R C Bhargava Directors Amal Ganguli   D S Brar  Manvinder Singh Banga   Pallavi Shroff Company Secretary Anil Rustgi Whole-time Director Keilchi Asai Additional Director Kenichi Ayukawa Director D S Brar  Tsuneo Kobayashi <br />Objectives of Study<br />Primary Objectives<br />To study the performance appraisal system in MARUTI UDYOG.<br />To study the transformation of performance appraisal form traditional to modern.<br />To get an insight into the relative importance of performance appraisal in MARUTI UDYOG .<br />To study the effectiveness of performance appraisal system in MARUTI UDYOG.<br />To study the practical application of performance appraisal.<br />To compare appraisal system of different organization and find out the most common parameters for appraisal in MARUTI UDYOG.<br />How can companies use performance appraisal as an effective tool to achieve organisational effectiveness and efficiency.<br />Secondary Objectives.<br />To observe the work environment in organization.<br />To get experience and expertise in making projects.<br />To enhance our communication skills.<br />To increase our confidence.<br />To making everything in observable like our confidence <br />Chapter 1 literature review<br />Preview of Automobile Industry<br />The automobile industry, one of the core sectors, has undergone metamorphosis with the adventof new business and manufacturing practices in the light of liberalization and globalization.<br />The sector seems to be optimistic of posting strong sales in the next couple of years in view of areasonable surge in demand.<br />The Indian automobile market is gearing towards having international standards to meet the needs of the global automobile giants and become a global hub. Players areStrategizing to consolidate their position and gradually increase market penetration with<br />the launch of new models, targeting different segments. Since the sector is price driven,<br />huge investment is envisaged to remain competitive through cost advantage, for which<br />indigenization is highly important. <br />The product becomes dearer if it is manufacturedusing imported parts. IT in the automobile sector plays a crucial role.. Some players areworking towards development of efficient production systems that control the entire production process with high precision and accuracy.Such systems working on real timeoperating systems allow efficient control of different parts of manufacturing and production.<br />It is essential to leverage skills of different engineering disciplines to build these kinds of<br />integrated systems.Analysts foresee high scope in the electronics for auto sector and expect the retailing of suchelectronics products to contribute a major chunk of future revenues.The government is increasing the research anddevelopment (R&D) fund for the automobileindustry over and above the Rs 1400 crores earmarked for eight years. All laboratories in the country researching on automobile technology, such as BHEL which is developing cell technologyas alternative fuel, have also been brought together through the setting up of a national R & Dworking group. <br />The group is working out a plan to link all major laboratories across the country to give a thrust to automotive research. Indian automobile sector being a driver of product and process technologies, and has become a excellent manufacturing base for global players, because of its high machine tool capabilities, extremely capable component industry, most of the raw material locally produced, low cost manufacturing base and highly skilled manpower Not only a large number of worldmanufacturers have set up production bases in India but also a large number of foreign companies are<br />collaborating with the auto component suppliers and vendors. Indian Automobile Components Industry has been making rapid strides towards achievement ofworld-class Quality Systems by imbibing ISO 9000/QS 9000 Quality Systems whereby the <br />Indian Automotive industry has become more competitive in the export market due to its<br />technological and quality advances, so much so that in quality conscious markets such as Europeand America, it is emerging as a major player, based on its performance. India today exports: Engine and engine parts, electrical parts, drive transmission<br />& steering pats, suspension & braking parts among others.<br />The sector is striding inroads into the rural middle class after its inroads into the<br />urban markets and rural rich. It is trying to bring in varying products to suit requirements<br />of different class segments of customers. States like Rajasthan, Uttar Pradesh, Maharashtra, Andhra Pradesh and West Bengal are vying to woo global players with proposals including heavy tax exemptions and to create a more investor friendly regime, each state is proposing to provide all regulatory clearances at express speed.<br />The Government should promote Research & Development in automotive<br />industry by strengthening the efforts of industry in this direction by providing suitable<br />fiscal and financial incentives. The current policy allows Weighted Tax Deduction under I.T. Act, 1961 for sponsored research and in-house R&D expenditure. This will be improved further for research and development activities of vehicle and component manufacturers from the current level of 125%. In addition, Vehicle manufacturers will also be considered for a rebate on the applicable excise duty for every 1% of the gross turnover of the company expended during the year on Research and Development carried either in-house under a distinctdedicated entity, faculty or division within the company assessed as competent and qualified for the purpose or in any other R&D institution in the country. <br />This would include R & D leading to adoption of low emission technologies and energy saving devices. Government will encourage setting up of independent auto design firms by providing them tax breaks, concessional duty on plant/equipment imports and granting automatic approval. Allocations to automotive cess fund created for R&D of automotive industry shall be increased and the scope of activities covered under it enlarged.<br />Automobile industry – Wheels of Change<br />India had its date with this wonderful vehicle first time in 1898. Then for the next fifty years, cars were imported to satisfy domestic demand. Between 1910 and 20's<br />the automobile industry made a humble beginning by setting up assembly plants in<br />Mumbai, Calcutta and Chennai. The import/assembly of vehicles grew consistently after<br />the 1920's, crossing the 30,000 mark in 1930. In 1946, Premier Automobile Ltd (PAL)<br />earned the distinction of manufacturing the first car in the country by assembling 'Dodge<br />DeSoto' and 'Plymouth' cars at its Kurla plant. Hindustan Motors (HM), which started as<br />a manufacturer of auto components graduated to manufacture cars in 1949.<br />Thanks to the Licence Raj which restrictedforeign competitors to enter the Indian car market, Indian roads were ruled by Ambassador Car fromHindustan Motors and the Fiat from Premier Auto Ltd. for many of the initial years.<br />In 1952, the GOI set up a tariff commission to devise regulations to develop an<br />indigenous automobile industry in the country. After the commission submitted its<br />recommendations, the GOI asked assembly plants, which did not have plans to set up<br />manufacturing facilities, to shut operations. As a result General Motors, Ford and other<br />assemblers closed operations in the country. The year was 1954 and this decision of the government marked a turning point in the history of the Indian car industry. The GOI also had a say in what type of vehicle each manufacturer should make. Therefore, each<br />product was safely cocooned in its own segment with no fears of any impending<br />competition. <br />Also, no new entrant was allowed even though they had plans of a fullfledged<br />manufacturing program. The restrictive set of policies was chiefly aimed at building an indigenous auto industry. However, the restrictions on foreign collaborations<br />led to limitations on import of technology through technical agreements. In the absence<br />of adequate technology and purchasing power, the car industry grew at a snail's pace in<br />the 60’s. The demand for cars in 1960 was to the tune of 15,714. In the next two decades the number increased to 30,989 i.e. a CAGR of only 3.5 per cent.<br />The other control imposed on carmakers related to production capacity and<br />distribution. The GOI control even extended to fixation of prices for cars and dealer commissions. This triggered the start of a protracted legal battle in 1969 between some carmakers and GOI. Simply put, the three decades following the establishment of the passenger car industry in India and leading upto the early 1980s, proved to be the 'dark<br />ages' for the consumer, as his choice throughout this period was limited to two models<br />viz. Ambassador and Padmini. It was only in 1985, after the entry of Maruti Udyog, that<br />the car makers were given a free hand to fix the prices of cars, thus, effectively abolishing all controls relating to the pricing of the end product.<br />In the early 80's, a series of liberal policy changes were announced marking<br />another turning point for the automobile industry. The GOI entered the car business, with a 74% stake in Maruti Udyog Ltd (MUL), the joint venture with Suzuki Motors Ltd of<br />Japan. <br />The very face of the industry was changed for ever in 1983 with the entry of public sector Maruti Udyog in a joint venture with the Suzuki Corporation of Japan. Car<br />sales grew by 42 per cent yoy in 1985 after Maruti 800 was launched. Thanks to MUL car sales registered a CAGR of 18.6 per cent i.e. from 1981 to 1990. In 1985, the GOI announced its famous broadbanding policy which gave new licenses to broad groups of automotive products like two and four-wheeled vehicles.<br />Though a liberal move, the licensing system was still very much intact. MUL introduced<br />'Maruti 800' in 1983 providing a complete facelift to the Indian car industry. The car was<br />launched as a "people’s car" with a price tag of Rs 40,000. This changed the industry's<br />profile dramatically. Maruti 800 was well accepted by middle income families in the<br />country and its sales increased from 1,200 units in FY84 to more than 200,000 units in<br />FY99. However in FY2000, this figure came down due to rising competition from<br />Hyundai's 'Santro', Telco's Indica and Daewoo's 'Matiz'.<br />MUL extended its product range to include vans, multi-utility vehicles (MUVs) and<br />mid-sized cars. The company has single handedly driven the sales of cars in the country cornering around 79.6% market share. With increasing competition from new entrants, this market share has plummeted to almost 62% in FY2000. A brief 3-year downturn till 1993 and car sales bounced back to register a 17 per cent growth rate in 1997.Since then, the economy slumped into recession and sales of cars remained quite stagnant FY97 and FY99. The Financial year 2000 has, however been the turnaround year for the Auto industry with the economy looking up. <br />The automobile industry, crossed the half million mark for the first time in FY2000.<br />Overwhelmed by newer models from new and existing players had led to an impressive<br />shift from a constrained supply situation to a surplus one. Within the past decade, about<br />30 models have entered the Indian market with a number of models still awaiting<br />launch. The de-licensing of auto industry in 1993 opened the gates to a virtual flood of<br />international auto makers into the country with an idea to tap the large population. Also<br />the lifting of quantitative restrictions on imports by the recent policy is expected to add<br />up to the flurry of foreign cars in to the country.<br />The Indian Automobile industry registered one of the strongest growth rates in<br />FY’04. Aided by sustained economic recovery, the industry registered high growth rates<br />in all major segments. The growth story was led by Medium and Heavy Commercial Vehicles (M&HCVs)registering a 40% growth while Light Commercial Vehicles (LCVs) recorded a 32% jump in total sales. Passenger cars also registered an impressive 34% growth in FY’04 and total sales volume crossed the 1 million mark for the first time. Interestingly, two wheelers registered the lowest but healthy growth rate of 13% in FY’04. While motorcycle volumes tripped on a high base, scooters registered a 10%<br />growth after 4 years of continuous decline. Three wheelers grew by 23% in FY’04.<br />Apart from strong economic growth in all sectors, low interest rate regime, normal<br />monsoon, continued infrastructure investment, fiscal measures like cut in excise duty (in<br />case of cars), etc provided impetus for the growth.<br /> The year also saw a sharp 56% rise in export volumes with all the sectors registering more than 40% growth, signalling the rising international competitiveness of the industry. Profitability improvements were recorded in companies across segments driven by rise in volumes and lower interest costs to some extent, notwithstanding the rise in prices of certain inputs like steel.<br />Though the peak customs duty had been reduced to 20% in January 2004 and Special Additional Duty was abolished, the domestic industry still enjoys adequate protection, with no import threats. The potential borne by the industry is well exhibited by the growing number of international players setting up base in India and increasing<br />competitiveness in the industry.<br />Many companies have entered the car manufacturing sector, to tap the middle and<br />premium end of car industry.<br />Structure<br />The Indian automobile industry can be broadly classified into:<br />2 /3 Wheelers<br />Passenger Cars<br />Commercial Vehicles (LCV/HCV/MCV)<br />UV (Utility vehicles)<br />Tractors<br />Chapter 2 HISTORY OF INDIAN AUTOMOBILE MARKET<br />INDIAN AUTOMOBILE MARKET<br />The Indian market confounds global carmakers simply because of the way it is<br />segmented. In the West, automobiles are generally segmented according to platforms --<br />that is chassis-engine combinations. Price plays a factor but only up to a point. In India,<br />though, price plays the primary role in segmentation.<br />Consider first the segments in the European or American market. At the bottom,<br />you have city cars' -- which include the Daewoo Matiz, the Hyundai Santro, the Maruti<br />800, Alto, Fiat Uno, the Zen as well as the Wagon R. Next come the budget minis --<br />which would include cars like the Suzuki Swift (our own Esteem). The next segment, the<br />superminis, would take in cars like the Opel Corsa, the Ford Ikon. Above the superminis<br />are small family cars -- which include models like the Opel Astra and the Ford Escort.<br />Medium-sized family cars are bigger and include cars like the Opel Vectra and Peugeot<br />406. Compact executive cars are small but immensely prestigious and include the BMW<br />3 series and the Mercedes C class. Executive cars embrace their bigger brothers -- the<br />BMW 5 series and the Mercedes E class. Only a handful of cars are classified as true-blue luxury cars namely-- Jaguar XJ8, the BMW 7 series. And of course there are the nicheslike sports, sports utility, and exotics.<br />The Indian market, of course, is quite differently segmented. The Maruti 800 and Zen fall in a class by their own -- and are referred to as the sub-Rs 2.5-lakh cars. The next<br />is the Rs 3-4 lakh segment -- which includes all the other cars that would normally be<br />classified as city cars in Europe. Strictly speaking, the Tata Indica should fall in the<br />super-mini category because of its specifications -- but because of price, it competes in<br />the same segment.<br /> Above Rs 4 lakh and all the way up to Rs 10 lakh is the luxury car range. It is loosely divided into two halves -- with Maruti Esteem, Ford Ikon, Hyundai Accent, Daewoo Cielo, Opel Corsa and Honda City 1.3 falling in the bottom layer, and the Opel Astra, Honda City 1.5 and Ford Escort in the upper range. The last segment is of premium car segment, which includes cars like Mercedes Benz and BMW.<br />Scooters India Ltd (SIL), US-based Amerigon and Bangalore-based Maini Group<br />are negotiating a joint venture to manufacture an electrical passenger car. Priced at Rs<br />1.75 lakhs, the car will target the segment between two-wheelers and petrol/diesel based cars. Assembly from imported Completely Knocked Down (CKD) kits will start as soon as an agreement is finalised among the partners. This venture represents a major <br />manufacturing shift for SIL, a public sector enterprise, which so far has only produced<br />two- and three-wheelers. It also plans to introduce an electric three-wheeler model,<br />already in use in Nepal, into the Indian market.<br />Bajaj Auto has introduced its diesel three-wheeler in Hyderabad. The vehicle has<br />a 416 cc engine and is priced at Rs 83,000, lower than its nearest competitor the Greaves Garuda, which is priced at Rs 85,000 (in Hyderabad). Bajaj’s petrol three-wheelers already account for 85 per cent of the India market. Its new product, consequentially, could erode its own base.<br />Indian Automobile industry has become more competitive in the export market<br />due to its technological and quality advances, so much so that in quality conscious<br />markets such as Europe and America, Indian automobile industry is emerging as a major player judging by its performance. India today exports: Engine and engine parts,<br />electrical parts, drive transmission & steering pats, suspension & braking parts among<br />others.<br />Different players in Automobile industry<br />Jagdish Khattar. Y.S. Kim. Ratan Tata. S.G. Awasthi. The four men are peers. Each has<br />unequivocally established himself as one of the winners in the first round of the car wars.Between them, they control almost 80% of the Rs 30,500-crore Indian automobile market.<br />The battle royale in the Indian car market has entered the next phase. As the dust and<br />excitement of the dozens of new models introduced in the past one year settles down, the winners have pulled way ahead of the also-rans. One old assumption has been vindicated that over 80% of the Indian car market is still confined to the small, sub-Rs 4 lakh models. And those mid-size and bigger models can only provide the icing on the cake, not the cake itself to any manufacturer.<br />Maruti found out that price is no longer the most important factor in winning car battles.<br />Daewoo's Awasthi admits candidly that he learnt precisely the opposite lesson -- that<br />price does matter. Kim of Hyundai found out the hard way that you could get your<br />pricing and value equation just right and still land up with egg on your face if you tried to<br />cut corners in the technology game. Ratan Tata learnt that providing an internationally<br />designed car with a great value proposition didn't get you far if you couldn't provide<br />global quality standards. Both the Indica and the Matiz had to upgrade their engines in<br />less than one year after launch, the Honda City had to bring in both a new body and a<br />more powerful engine, and Hyundai had to start offering a new variant with the power<br />steering option barely a year after it hit the market.<br />From now on, the battle is expected to get more vicious. In 1999-2000, the car market<br />bounced back from the recession by showing a 55.83% growth! But now, no one expects the market to grow by more than 10-15% per annum. The really big volume gains will come from wresting market share away from rivals rather than because the market itself is growing exponentially.<br />Chapter 3 THEORITICAL FRAMEWORK<br />PERFORMANCE APPRAISAL INTRODUCTION <br />People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Therefore, performance management and performance appraisal is necessary to understand each employee‘s abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance. Performance appraisals are widely used in the society. The history of performance appraisal can be dated back to the 20th century and then to the second world war when the merit rating was used for the first time. An employer evaluating their employees is a very old concept. Performance appraisals are an indispensable part of performance measurement. Performance appraisal is necessary to measure the performance of the employees and the organization to check the progress towards the desired goals and aims. The latest mantra being followed by organizations across the world being – ―get paid according to what you contribute‖ – the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. If the process of performance appraisals is formal and properly structured, it helps the employees to clearly understand their roles and responsibilities and give direction to the individual‘s performance.It helps to align the individual performances with the organizational goals and also review their performance. Performance appraisal takes into account the past performance of the employees and Focuses on the improvement of the future performance of the employees. FEATURES OF PERFORMANCEAPPRAISAL 1) Setting SMART Goals for Employees: Goal setting provides leaders, managers and employees with web-based tools to set SMART goals and track progress on frequent intervals. 2) Evaluate Employee Performance: Employee Appraisal ensures objective and accurate evaluation of your employee‘s performance and helps you find the strengths and weakness of the employee. 3)Coach and Train Employees to improve their performance: To continually improve performance of your organization you need to continuously training employees to update their skills and competencies. Training Management allows you manage employee training effectively. 4) Define competitive employee compensation plans: Employee compensation plan helps you to remain competitive in your business and attract and retain talented employee. 5)Promote right employees to critical positions: Organizations success by placing right employee in right positions. <br />OBJECTIVE OF PERFORMANCE APPRAISAL <br />Objectives of Performance appraisal: <br />To review the performance of the employees over a given period of time. <br />To judge the gap between the actual and the desired performance.<br />To help the management in exercising organizational control<br />Helps to strengthen the relationship and communication between superior – subordinates and management – employees<br />To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future. <br />To provide feedback to the employees regarding their past performance<br />Provide information to assist in the other personal decisions in the organization.<br />Provide clarity of the expectations and responsibilities of the functions to be performed by the employees<br />To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development<br />To reduce the grievances of the employees <br />PERFORMANCE APPRAISAL SYSTEMS <br />Issues like promotions, demotions, bonuses and pay will affect the success or failure of a 360 degree performance appraisal. Keep in mind that performance appraisal systems are used to define employee goals, employee contributions and determine the employee‘s results in meeting those goals and contributions. It is a genuine review of past employee performance.<br />PERFORMANCE APPRAISAL - PUNISHMENT TOOL OR ORGANIZATIONA CATALYST <br />Performance Appraisal is one of the core HR activities. It is the assessment of the employee‘s job performance. It is completely based on employee‘s job description and objectives to be achieved.<br />Performance Appraisal (PA) has 2 basic purposes. First, PA serves an administrative purpose. It provides information for making salary, promotion and layoff decisions as well as providing documentation for justifying these decisions. Second, rather more importantly, performance appraisal serves a developmental purpose. <br />This information can be utilized for determining training needs, career planning and succession planning. Employees have mixed views about performance appraisals. <br />According to one segment, it is for the betterment of the employees and the organization. Those employees, who work efficiently and effectively, will get the agreed intrinsic as well as extrinsic benefits. It is being regarded as an excellent method of keeping everyone motivated. The better you perform, the more you get. <br />On the contrary, some employees suggest to their managers that companies should get rid of performance appraisals as it is a bitter process which has the ability to create emotional pressures and stress for the employees.<br />A manager‘s bias also plays its role. Furthermore, he might lack proper training for evaluating employees‘ performances. Their perception is that ―no matter how well we perform, our contributions will never be acknowledged.<br />Annual performance<br />The annual performance appraisal might be the most important meeting you have with your employees all year. Appraisals offer an opportunity to clarify job descriptions, set goals and objectives, formulate sensible compensation decisions, and decisively address any performance challenges. <br />Properly handled, performance appraisals can correct personnel issues and set employees on a positive course for the coming months. Handled poorly, they have the potential to demoralize employees, provoke EEO complaints, and erode trust in management. <br />This session is a must for managers and human resource professionals who are frustrated with the typical ineffectiveness of performance management discussions in advancing organizational goals and promoting positive employee relations.<br />360 DEGREE PERFORMANCE APPRAISAL<br />INTRODUCTION<br />Unlike, the traditional top-down appraisal where a supervisor appraises the performance of their subordinate, 360 Performance Appraisal incorporates multiple perspectives by using feedback from a variety of sources. 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees‘ performance comes from all the sources that come in contact with the employee on his job. <br />360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the ―on-the-job‖ performance of the employee.<br />360 degree appraisal has four integral components: 1. Self appraisal 2. Superiors appraisal 3. Subordinate‘s appraisal 4. Peer appraisal. <br />Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superior‘s appraisal forms the traditional part of the 360 degree appraisal where the employees‘ responsibilities and actual performance is rated by the superior. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and <br />motivating abilities, superior‘s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees‘ abilities to work in a team, co-operation and sensitivity towards others.<br />Its the most costly and time consuming type of appraisal.These programs tend to be somewhat shocking to managers at first. "reaction: Shock, Anger, Rejection,Acceptance,Help".The problems may arise with subordinate assessments where employees desire to "get the boss" or may alternatively "scratch the back" of a manager for expected future favors. The organization implementing this type of performance appraisal must clearly define the mission and the scope of the appraisal. Otherwise it might prove counterproductive.One of the reason for which 360 degree appraisal system might fail is because the organizations attempt to assimilate the 360-degree method within a traditional survey research scheme. In traditional survey research, investigators attempt to maximize data collection with as many items/questions as possible and with large sample sizes. In the case of 360-degree appraisal, creating measurement instruments with many items will substantially increase non-response errors.<br /> In addition, large sample sizes are not typically possible considering that perhaps 4 or 5 sources will rate an employee’s performance. As such, statistical procedures that rely on large sample sizes in order to ensure statistical validity might not be appropriate.Organizations must consider other issues like safeguarding the process from unintentiona,respondent ratingerrors.The culture shock that occurs with any system that creates "change." And especiallwith a modern system like 360 degree performance appraisal; must be taken care of.================================================== ==========================The design and implementation of the 360 degree feedback system requires thoughtful planning. Are the employees accepting the system? Are the goals, procedures and benefits of the system clearly defined? Is the rating instrument relevant, valid and reliable? Please carefully review the recommendations made in this article that have been derived from extensive research on how to ensure the success of the 360 degree feedback,system.CritaeraFactors for Success . <br />In order for the 360 degree feedback system to be successful there must be employee acceptance of the system. Both perceived accuracy and justice are considered critical factors for system acceptance. If the system is unjust or has errors, it will be dismissed for obvious reasons. Fortunately, reputable providers of 360 degree feedback have often delivered hundreds of thousands of ratings, and are experienced in maximizing the likelihood of system acceptance. There are three key steps to using the 360 degree feedback system successfully:<br />1. make it fit into the organization; <br />2.make it psychometrically sound; <br />3.use with care. <br />Make it Fit .<br />Try to make the 360 feedback fit into the culture of the organization. In doing so it will appear less threatening and more fair . <br />Increase Employee Participation . <br />To increase the perception of justice, employees should be encouraged to be active participants in the evaluation. A multiple source feedback works best in an environment that is team-oriented and cooperative. Giving individuals the opportunity to voice their opinions about the system's construction, process, and results will increase employee buy-in, acceptance, and will yield useful suggestions.<br />Train Feedback Providers .<br />It is also important to train the feedback providers to be sensitive, respectful and polite. Treating employees in a friendly and respectful manner, and offering constructive advice will make them more open to accepting the performance appraisal system.<br />Communication is Key .<br />People tend to be suspicious of things they do not understand. Thus, it is important to communicate to the employees the precise way in which ratings are to be combined, as well as the purpose, benefits and procedures of the 360 degree feedback system. It is particularly important to communicate the intended uses of the information.<br />Make it psychometrically Sound .<br />Ensure that the Instrument is Applicable .<br />A good assessment should be reliable and valid. It must measure what it proposes to measure, consistently and accurately. The 360 degree feedback system only works effectively if it measures the relevant job performance, knowledge, skills, abilities and personality characteristics necessary for high levels of job performance. Thus, the first step is to identify, define, and incorporate these job performance behaviors, knowledge, and skills into the appraisal system.<br />Increase Rater Familiarity .<br />Select raters who are well acquainted with the employee. Rater familiarity is linked to accuracy and fairness in performance ratings. To evaluate rater familiarity, some 360 degree feedback systems include a rating for familiarity and provide the option of indicating "inadequate opportunity to observe" for performance characteristics. To increase reliability and decrease the impact of individual biases a large sample of raters should be selected. Reliability continues to increase when up to twenty raters are included, but adequate reliability can be obtained using 6 or more raters . <br />Promote Rater Accuracy .<br />Both 'self' and 'other' appraisal accuracy should be promoted and rewarded. The nature of the 360 degree feedback system should reduce the problem of rater accuracy, as the use of multiple raters will average out individual biases. Furthermore, there is an apparent tradeoff when using either 'self' or 'other' ratings. Other-ratings are perceived to be more accurate, however, they may also be perceived by the employee to be less fair. The inverse is true for self-ratings. Clearly, both rating methods have advantages and disadvantages; thus, a performance appraisal system that combines both 'self' and 'other' <br />Ratings will be the most beneficial.<br />Use with Care . <br />When implementing the 360 degree feedback system it is important to be consistent across employees (all of the employees should have an equal opportunity to participate in the system), and administered frequently. A consistent system will be perceived as more accurate and fair. A one-time 360 feedback exercise is not recommended — they are best when at least a three to five term is planned. Furthermore, evaluating performance over time provides employees with benchmarks for development . <br />Review<br />When implementing the 360 degree feedback system it is imperative to gain employee acceptance at the outset. The following guidelines will help make the system fair and accurate:<br />1. ensure that the 360 degree feedback system is consistent with the culture of the organization and the expectations of the employees; <br />2.conduct an information campaign that highlights the benefits and fairness of 360 feedback, and outline the process in some detail. <br />3.ensure that the rating instruments are relevant, valid, and reliable; <br />4.emphasize the importance of the raters being familiar with the employee's performance and provide raters the opportunity of "opting out" if they are not; <br />5encourage and train raters on how to provide accurate ratings; <br />6.promote a participative environment where individual feedback is rewarded; <br />7.administer the performance appraisal system regularly and consistently; <br />8.continue to communicate information about the 360 degree feedback system; <br />9.treat employees with sensitivity and respect; <br />10.ensure that offensive or actionable coworker feedback is not returned to an employee. <br />Strategies for Success .<br />Don't force it on peopleExplain what it is, what it does, how it's used, and its' benefits to all concerned, continuallyEmphasize confidentialityDisconnect it from any compensation decisions (raises, bonuses, etc.) - make it developmentalProvide information on its purpose and process to assessorsConduct structured feedback workshops for feedback recipientsSpend time with those people having difficulty with their feedbackKnow the instrument you're using thoroughlyProvide seamless coordination and support for distributing and collecting the assessment instrumentsMake sure your vendor provides back-up support in case problems occur with the instruments or the process .Be trained in how to facilitate a 360° process. There's more to it than meets the eye. Align your 360° process with the organization's culture, procedures, and practices. Support and reinforce it.==================================================<br />Guaranteed Strategies For 360° Disaster<br />*Use it inappropriately: Take an instrument designed for developmental purposes and use it to reward or punish performance (Performance Appraisal).*Use 360° feedback without systemic support in place. Examples include:<br />*No facilitated workshops to support the receiving of feedback <br />*No institutionalized process or procedures are put in place to support, safeguard, and reinforce its benefit to the organization *Lower levels of the organization use it but not the upper levels*No up front explanation of the process to assessors or assesses*Insufficient administrative support to distribute, collect, and process assessment instruments*Failure to provide support for feedback recipients. More examples:*Data "dumped" on users; no framing or context provided. ("Here, read this and get back to me.") *When contradictory or negative feedback is received, no trained facilitator is on hand to help the assessee work through it. *When feedback is rejected, no facilitator or coach is available to probe the assessee's resistance, or search for ways to allow them to "hear" the feedback*Unethical behavior within the organization:*Breach of confidentiality by report processor or facilitator (leaking or talking about a person's results). *"Hammering" recipients with their results after they've shared it with facilitator or boss *Threatening assessors to reveal how they assessed someone<br />*Recriminations against those who provided (or didn't provide) feedback to the assesses<br />Feedback is almost always a sensitive subject. People are often cautious, sometimes fearful, and occasionally emotional about it. A good facilitator or administrator recognizes and appreciates the sensitive nature surrounding 360° feedback and takes serious steps to insure the integrity of the process and support of the individual. Once the process has been breached by any of the above actions, it will be difficult to recover. Spend the time up front doing the homework necessary to make the process successful. The results will be more than worth it.<br />INTRODUCTION TO INDIAN AUTOMOBILE INDUSTRY<br />
    • The Automobile sector is one of the fastest growing manufacturing sectors in India
    The world leaders in the sector are evincing keen interest in establishing manufacturing facilities for manufacturing and assembling components.<br />A politically stable and vibrant State, Andhra Pradesh is centrally located with the<br />support of seaports, international airports, assured and reliable power supply,<br />abundant water, broad base of auto component manufacturers, highly trained, skilled<br />and disciplined manpower and is therefore, the preferred location for Automobile<br />industries.<br />INDIAN FOUR WHEELER INDUSTRY <br />Evolution<br />The Indian automobile industry developed within the broader context of import substitution during the 1950s. The distinctive feature of the automobile industry in India was that in line with the overall policy of State intervention in the economy, vehicle production was closely regulated by an industrial licensing system till the early 1980s that controlled output, models and prices. The cars were built mostly by two companies, Premier Automobiles Limited and HM. However, the Indian market got transformed after 1983 following the relaxation of the licensing policy and the entry of MUL into the car market. In 1991, car imports were insignificant, while component imports were equivalent to 20% of the domestic production, largely because of the continuing import of parts by MUL. The liberalization of the Indian automotive industry that began in the early 1990s was directed at dismantling the system of controls over investment and production, rather than at promoting foreign trade. Multinational companies were <br />allowed to invest in the assembly sector for the first time, and car production was no longer constrained by the licensing system. However, QRs on built-up vehicles remained and foreign assemblers were obliged to meet local content requirements even as export targets were agreed with the Government to maintain foreign exchange neutrality. The new policy regime and large potential demand led to inflows of foreign direct investment (FDI) by the mid-1990s. By the end of 1997, Daewoo, Ford India, GM, DaimlerChrysler and Peugeot had started assembly operations in India. They were followed by Honda, HMIL, and Mits<br />Current Scenario<br />Major Players<br />Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat India Automotive Private Limited, Ford India Limited, General Motors India Limited, Hindustan Motors Limited, Honda Siel Cars India Limited, Hyundai Motor India Limited, Mahindra & Mahindra Limited, Maruti Udyog Limited, Skoda Auto India Limited, Tata Motors Limited, Toyota Kirloskar Motors Limited.<br />Current scenario in Passenger Car Category<br />The dominant basis of competition in the Indian passenger car industry has changed from price to price-value, especially in the passenger car segment. While the Indian market remains price sensitive, the stranglehold of Economy models has been slackening, giving way to higher-priced products that better meet customer needs. Additionally, a dominant trend in the Indian passenger car segment is the increasing fragmentation of the market into sub-segments, reflecting the increasing sophistication of the Indian consumer.  With the launch of new models from FY2000 onwards, the market for MUVs has been redefined in India, especially at the upper-end. Currently, the higher-end MUVs, commonly known as Sports Utility Vehicles (SUVs), occupy a niche in the urban market, having successfully shaken off the tag of commercial vehicles attached to all MUVs till recently. Domestic car manufacturers are now venturing into areas such as car financing, leasing and fleet management, and used-car reconditioning/sales, to complement their mainstay-business of selling new cars.<br />COMPETITIVE FORCES IN INDIAN PASSENGER CAR MARKET<br />Critical Issues and Future Trends<br />The critical issue facing the Indian passenger car industry is the attainment of break-even volumes. This is related to the quantum of investments made by the players in capacity creation and the selling price of the car. The amount of investment in capacities by passenger car manufacturers in turn depends on the production<br />Threat from the new players: Increasing<br />·         Most of the major global players are present in the Indian market; few more are expected to enter.<br />·         Financial strength assumes importance as high are required for building capacity and maintaining adequacy of working capital.<br />  Access to distribution network is important.<br />  Lower tariffs in post WTO may expose Indian companies to threat of imports.<br /> Chapter 4 about marutiudyog<br />“Synopsis on MARUTI Udyog Limited (Mul)”<br />Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the company was owned by the Indian Government, and 54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.<br />Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car available in India, its' only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point. Through 2004, Maruti has produced over 5 Million vehicles. Marutis are sold in India and various several other countries, depending upon export orders. Models similar to Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki and manufactured in Pakistan and other South Asian countries.<br />The company annually exports more than 50,000 cars and has an extremely large domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts and Maruti Swift is the largest selling in A2 segment.<br />Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, was associated to the Maruti 800 model.<br />Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for over two decades.<br />Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of New Delhi. Maruti’s Gurgaon facility has an installed capacity of 350,000 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over 700,000 units annually.<br />More than half the cars sold in India are Maruti cars. The company is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. The rest is owned by the public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange in India.<br />During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.<br />Maruti Suzuki offers 15 models, Maruti 800, Omni,Esteem, Baleno, Alto, Versa, Ritz, Gypsy, A Star, Wagon R, Zen Estilo, Swift, Swift Dzire, SX4, and Grand Vitara. Swift, Swift dzire, A star and SX4 are maufactured in Manesar, Grand Vitara is imported from Japan as a completely built unit (CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant.<br />Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient.<br />Maruti is clearly an “employer of choice” for automotive engineers and young managers from across the country. Nearly 75,000 people are employed directly by Maruti and its partners.<br />The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers)first in customer satisfaction among all car makers in India for nine years in a row in annual survey by J D Power Asia Pacific.<br />Maruti Suzuki was born as a government company, with Suzuki as a minor partner to make a people's car for middle class India. Over the years, the product range has widened, ownership has changed hands and the customer has evolved. What remains unchanged, then and now, is Maruti’s mission to motorise India.<br />Partner for the joint venture<br />Pressure started mounting on Indira and Sanjay Gandhi to share the details of the progress on the Maruti Project. Since country's resources were made available by mother to her son's pet project. A delegation of Indian technocrats was assigned to hunt a collaborator for the project. Initial rounds of discussion were held with the <br />giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki's bid was considered negligible.<br />In the initial rounds of discussion the giants had their bosses present and in the later rounds related to the technical discussions executives of these automobile giants were present. Osamu Suzuki, Chairman and CEO of the company ensured that he was present in all the rounds of discussion. Osamu in an article writes that it subtly massaged their (Indian delegation) egos and also convinced them about the sincerity of Suzuki's bid. In the initial days Suzuki took all steps to ensure the government about its sincerity on the project. <br />Suzuki in return received a lot of help from the government in such matters as import clearances for manufacturing equipment (against the wishes of the Indian <br />machine tool industry then and its own socialistic ideology), land purchase at government prices for setting up the factory Gurgaon and reduced or removal of excise tariffs. This helped Suzuki conscientiously nurse Maruti through its infancy to become one of its flagship ventures.<br />Joint venture related issues<br />Maruti Suzuki's A-Star vehicle during its unveiling in Pragati Maidan, Delhi. A-Star, Suzuki's fifth global car model, was designed and is made only in India. Besides being Suzuki's largest subsidiary in terms of car sales, Maruti Suzuki is also Suzuki's leading research and development arm outside Japan Relationship between the Government of India, under the United Front (India) coalition and Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indian media till Suzuki Motor Corporation gained the controlling stake. This highly profitable joint venture that had a near monopolistic trade in the Indian automobile market and the nature of the partnership built up till then was the underlying reason for most issues. The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in 1992. In 1982 both the venture partners had entered into an agreement to nominate their candidate for the post of Managing Director and every Managing Director will have a tenure of five year.<br />Initially R.C.Bhargava, was the managing director of the company since the inception of the joint venture. Till today he is regarded as instrumental for the success of Maruti Udyog. Joining in 1982 he held several key positions in the company before heading the company as Managing Director. Currently he is on the Board of Directors. After completing his five year tenure, Mr. Bhargava later assumed the office of Part-Time Chairman. The Government nominated Mr. S.S.L.N. Bhaskarudu as the Managing Director on 27 August 1997. Mr. Bhaskarudu had joined Maruti in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited as General Manager. Later in 1987 he was promoted as Chief General Manager, 1988 as Director, Productions and Projects, 1989 Director, Materials and in 1993 as Joint Managing Director.<br />The Suzuki Motor corporation didn't attend the Annual General Meeting of the Board with the reason of it being called on a short notice Later Suzuki Motor Corporation went on record to state that Mr. Bhaskarudu was "incompetent" and wanted someone else. However, the Ministry of Industries, Government of India refuted the charges. Media stated from the Maruti sources that Bhaskarudu was interested to indigenise most of <br />components for the models including gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu was a proxy for the Government and would not let it increase its stake in the venture If Maruti would have been able to indigenise gear boxes then Maruti would have been able to manufacture all the models without the technical assistance from Suzuki. Till today the issue of localization of gear boxes is highlighted in the press the relation strained when Suzuki Motor Corporation moved to Delhi High <br />Court to bring a stay order against the appointment of Mr. Bhaskarudu. The issue was resolved in an out-of-court settlement and both the parties agreed that R S S L N Bhaskarudu would serve up to 31 December 1999, and from 1 January 2000, <br />Jagdish kumar Executive Director of Maruti Udyog Limited would assume charges as the Managing Director Many politicians believed, and had stated in parliament that the Suzuki Motor Corporation is unwilling to localize manufacturing and reduce imports. This remains true, even today the gear boxes are still imported from Japan and are assembled at the Gurgaon facility.<br />Production Milestones<br />➢ 1st vehicle produced, December 1983<br />➢ 1,00,000 vehicles produced by August, 1986<br />➢ 5,00,000 vehicles produced by June, 1990<br />➢ 10,00,000 vehicles produced by March, 1994<br />➢ 15,00,000 vehicles produced by April, 1996<br />➢ 20,00,000 vehicles produced by October, 1997<br />25,00,000 vehicles produced by March, 1999<br />➢ 30,00,000 vehicles produced by June, 2000<br />➢ 35,00,000 vehicles produced by December 2001<br />➢ 40,00,000 vehicles produced by April, 2003<br />➢ 45,00,000 vehicles produced by April, 2007-2008<br />Chapter 5 theortical approach<br />OVERVIEW<br />Performance appraisals are a systematic way of evaluating the standard of an employee’s performance.<br />Steps for developing a systematic performance appraisal<br />1. Identify key performance criteria<br />Development of key performance criteria should be based on a comprehensive job description and undertaken in consultation with employees.<br />2. Develop appraisal measures<br />In order to obtain accurate and valid performance appraisals, appraisal measures should be tailored to the specific job or “job family” (i.e., groups of similar jobs). An evaluation of factors in the work environment which help or hinder performance is also recommended. This ensures that realistic expectations are set for employee’s performance, and is also likely to increase the perceived fairness and acceptability of performance appraisals.<br />3. Collect performance information from different sources<br />Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organisational members (e.g., clients, coworkers, subordinates) can be a valuable source of information as they are likely to have exposure to different aspects of an employee’s performance. Collecting information from multiple sources can increase the accuracy of performance evaluation (i.e., reduce bias), and increase employee’s perceptions of fairness.<br />4. Conduct an appraisal interview<br />The two central purposes of the appraisal interview are to:<br />1. Reflect on past performances to identify major achievements, areas for further improvement, and barriers / facilitators to effective performance<br />2. Identify goals and strategies for future work practice.<br />The appraisal interview should be a constructive, two-way exchange between the supervisor and employee, with preparation for the interview done by both parties beforehand.<br />5. Evaluate the appraisal process<br />The performance appraisal process should undergo regular review and improvement. For example, focus groups or surveys could be conducted to gauge employee’s perceptions of the appraisal process. A successful performance appraisal process <br />should demonstrate a change in both the ratings of employee’s performance and aspects of the work environment that impact upon work performance.<br />Best practice in performance appraisal<br />In essence, best practice in performance appraisals involves:<br />• Integrating performance appraisal into a formal goal setting system<br />• Basing appraisals on accurate and current job descriptions<br />• Offering adequate support and assistance to employees to improve their performance<br />(e.g., professional development opportunities)<br />• Ensuring that appraisers have adequate knowledge and direct experience of the employee’s performance<br />• Conducting appraisals on a regular basis.<br />Meaning and Definition of Performance Appraisal<br />Performance appraisal is a formal system that evaluates the quality of a employee’s performance. An appraisal should not be viewed as an end in itself, but rather as an important process within a broader performance management system that links:<br />.Organizational objectives<br />• Day-to-day performance<br />• Professional development<br />• Rewards and incentives<br />In simple terms, appraisal may be understood as the assessment of an individual’s performance in a systematic way, the performance being measured against such factors as job knowledge, quality, and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility, health, and the like. Assessment should <br />not be confined to past performance alone. Potentials of the employee for future performance must also be assessed.<br />A formal definition of performance appraisal is:<br />“It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development.”<br />A more comprehensive definition is:<br />“Performance appraisal is a formal, structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization, and society all benefit.”<br />Traditional Performance Appraisal<br />The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion <br />studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management.<br />During the First World War, appraisals concept was adopted by US army which was in the form of merit rating. It was man-to-man rating system for evaluation of military personnel. From the army this concept entered the business field and was restricted to hourly-paid workers. During 1920s, relational wage structures for hourly- paid workers were adopted in industrial units and each worker was used to be rated in comparison to other for determining wages rates. This system was called merit rating.The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order.<br />Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed.<br />For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have <br />quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence.<br />As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time.<br />Modern Appraisal<br />Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.<br />In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions.By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.)<br />Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter.<br />Objectives of Performance Appraisal<br />Salary Increase<br />Performance appraisal plays a role in making decision about salary increase. Normally salary increase of an employee depends upon on how he is performing his job. There is continuous evaluation of his performance either formally or informally. This may disclose how well an employee is performing and how much he should be compensated by way of salary increase.<br />Promotion<br />Performance appraisal plays significant role where promotion is based on merit and seniority. Performance appraisal discloses how an employee is working in his <br />present job and what are his strong and weak points. In the light of these, it can be decided whether he can be promoted to the next higher position.<br />Training and Development<br /> Performance appraisal tries to identify the strengths and weakness of an employee on his present job. This information can be used for devising training and development programmes appropriate for overcoming weaknesses of employees.<br />Feedback<br />Performance appraisal provides feedback to employees about their performance. A person works better when he knows how he is working. This works in two ways, firstly, the person gets feedback about his performance. Secondly, when the person gets feedback about his performance, he can relate his work to the orgaisational objectives.<br />Pressure on Employees<br />Performance appraisal puts a sort of pressure on employees for better performance. If the employees are conscious that they are being appraised in respect of certain factors and their future largely depends on such appraisal.<br />Others<br />Identifying systemic factors that are barriers to, or facilitators of, effective performance.<br />To confirm the services of probationary employees upon their completing the<br /> probationary period satisfactorily.<br />To improve communication. Performance appraisal provides a format for<br /> dialogue between the superior and the subordinate, and improves<br /> understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee.<br /> d) To determine whether HR programmes such as selection, training, and transfer have been effective or not.<br />How to Conduct a Performance Appraisal Process<br />The following five-step approach to conducting a systematic performance appraisal is recommended:<br />Identify key performance criteria<br />Develop appraisal measures<br />Collect performance information from different sources<br />Conduct an appraisal interview<br />Evaluate the appraisal process.<br />Step 1: Identify Key Performance Criteria<br />Perhaps one of the most challenging aspects of setting up a performance appraisal is deciding what to assess. In essence, four key dimensions of performance should be considered in a performance appraisal.<br />Key Dimensions of Performance<br />Competencies Knowledge, skills, and abilities relevant to performanceBehavioursSpecific actions conducted and / or tasks performedResults / outcomesOutputs, quantifiable results, measurable outcomes and achievements, objectives attainedOrganisational citizenship behavioursActions that are over and above usual job responsibilities<br />To ensure that the performance criteria are relevant to work practice and acceptable to appraisers and employees:<br /> I)Base the performance criteria on an up-to-date job description<br />ii) Develop criteria in consultation with appraisers and employees.<br />i)Base the performance criteria on an up-to-date job description:<br />Clear and explicit links between performance appraisal and a job description will ensure the relevance of the appraisal. If a detailed job description is not available or is out-of-date, it is strongly recommended that an accurate job description be developed prior to conducting a performance appraisal.<br />ii)Develop criteria in consultation with appraisers and employee:<br />Linking performance appraisals with job descriptions can help to focus the appraisal process on the key competencies, behaviours and outcomes associated with a particular role or position. It can also be useful to consult with employees to:<br />Ensure that key aspects of a role / position are represented in the job description, for example:<br />Conduct assessments<br />Plan interventions<br />Manage cases<br />Liaise with and refer to other providers<br />Keep up-to-date service records and case notes<br />Write reports<br />Develop a clear understanding of the relative importance of various competencies, <br />Behaviours and outcomes<br />Identify how these key competencies, behaviours and outcomes can be fairly and accurately assessed.<br />Employees are more likely to accept and be satisfied with the appraisal system if they participate in the development of appraisal criteria and measures, and in the process of conducting appraisals.<br />Strategies for facilitating employee’s participation include:<br />Engagement in formal meetings or informal discussions with supervisors to seek input and / or feedback on appraisal measures and criteria<br />Representation on groups / committees involved in the design and implementation of <br />performance appraisals Inclusion of self appraisals in the appraisal process.<br />Providing opportunities for employees to contribute to the performance appraisal of coworkers and managers / supervisors.<br />It is also important that employees perceive the appraisal system to be equitable and fair.<br /> Step 2: Develop Appraisal Measures<br />Once clear and specific performance criteria have been developed, the next step is to decide how to assess employee’s performance. It is recommended that a structured and systematic approach is taken to assessing performance. Problems that arise when an unstructured “blank sheet” approach is used include:<br />Increased chance of appraiser errors (i.e., reduced accuracy)<br />Knowledge, skills and abilities most critical to job performance may be overlooked<br />(i.e., feedback may have limited impact on performance effectiveness)<br />Reduced consistency between appraisers (i.e., evaluations may reflect differences<br /> between appraisers rather than actual differences in a employee’s performance)<br />Perceptions of “subjectivity” in evaluations, which may in turn, reduce employee’s <br />satisfaction with, and acceptance of appraisals.<br />There are three important considerations in the design of appraisal measures:<br />Generic versus individually tailored measures<br />Objective versus subjective assessments<br />Assessing the impact of the work environment on performance.<br />Generic versus individually tailored measures<br />Many workplaces use a generic rating form for all employees irrespective of their role or position within the organisation. Although this approach can save time and minimise cost, the accuracy and relevance of appraisals may be significantly diminished. The “one size fits all” approach of generic measures may overlook important performance criteria that are relevant to particular jobs, and may also include criteria that are irrelevant to others.<br />Where time and other resources permit, it is more appropriate to construct appraisal formats tailored to specific jobs or “families” of jobs. If the development of job-specific (i.e., individually tailored) appraisal formats is beyond the resource capacity of the organisation, an alternative would be to develop two groups of criteria:<br />1) Core competencies that have applicability to the performance appraisal of all employees <br />within the organisation<br />2) Additional competencies applicable only to some jobs and included in the performance <br />appraisal if relevant.<br />ii)Objective versus subjective assessments<br />A basic distinction between different types of appraisal measures concerns the use of objective or subjective criteria.<br />Objective assessments of work performance<br />Objective measures of job performance involve counts of various work-related <br />behaviours. Some common objective job performance measures include<br />Absenteeism (number of days absent) Accidents (number of accidents)<br />Incidents at work (number of incidents / assaults / altercations)<br />Lateness (days late) Meeting deadlines.<br />Objective measures can be relatively quick and easy to obtain (given good organisational record-keeping). However, it can be unwise to place too much emphasis on these types of objective measures. An exclusive focus on results / outcomes may mask factors that impact on employee’s performance that are beyond their control (e.g., client workload).<br />Subjective assessments of work performance<br />Subjective measures rely on the judgment of an appraiser (self, coworkers, or supervisor). Subjective assessments are commonly used in performance appraisals and often involve the use of rating scales. Subjective assessments are more likely to provide accurate performance appraisals when:<br />The behaviours and outcomes being assessed are stated in clear behavioural terms<br />The employee understands the measures (e.g., rating scales) being used to evaluate their <br />performance, and agree that the measures are fair and accurate (i.e., measures what it is <br />supposed to)<br />Measurement is as brief as possible whilst addressing essential behaviours and outcomes (frustration with long and unwieldy questionnaires may introduce error in responses<br />Assessing the impact of the work environment on performance<br />The goal of a performance appraisal is to support and improve employee’s performance and effectiveness. Therefore, it makes sense for an appraisal to include an assessment of factors in the work environment that help or hinder a employee’s capacity to perform effectively. Explicit assessment of environmental factors is also likely to increase the perceived fairness and acceptability of performance appraisals. <br />For example, an employee’s capacity to provide effective treatment interventions is influenced by factors such as:<br />Access to private, soundproofed, adequately sized rooms for counselling<br />Availability of validated, user-friendly assessment tools<br />Availability of reliable and approachable management / administration.<br />Step 3: Collect Performance Information from Different Sources<br />Once the appraisal measures are developed, the next step involves collection of accurate performance information. A common trap is to begin noting observations of employees just before conducting appraisals. This is likely to give an inaccurate picture of a employee’s performance. Ideally, employee’s performance should be observed in a systematic way over time (e.g., in a diary). This method ensures the accuracy of information about their performances.<br />Many employees in the organisation operate with a relatively high degree of autonomy. This combined with the heavy workload of most managers / supervisors, may limit opportunities to conduct regular observation of employee’s performance. In addition, perceptions of ongoing monitoring may foster a sense of surveillance which can damage staff morale.<br />A more suitable approach may be to keep critical incident reports that note specific examples of both excellent and unsatisfactory performances. Supervisors can also encourage employees to keep track of their own performance records such as emails or letters that commend them on their achievements.<br />Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organisational members can be a valuable source of information as they are likely to have exposure to different aspects of a employee’s performance. This approach is known as 360-degree feedback. For instance, coworkers can provide valuable information on teamwork skills, and subordinates can provide useful information on leadership style.<br />There are many advantages to obtaining feedback on performance from sources other than supervisors or managers. Key benefits include:<br />Accuracy and reduced bias (incorrect information from one source can be corrected from another)<br />Increased likelihood that employees will perceive the performance appraisal system to be a fair and accurate reflection of their performance (compared to relying on supervisor ratings alone).<br />If time and resources are limited, it is recommended that supervisor appraisals be conducted in conjunction with self-assessment. Including self-assessments as part of the appraisal process is likely to enhance employee’s commitment to, and satisfaction with, the appraisal process. It also provides employees with an opportunity to identify barriers and facilitators to effective performance in their work environment.<br />Five different sources of performance appraisal information are considered here:<br />Manager / supervisor appraisals<br />Self appraisals<br />Coworker appraisals<br />Subordinate appraisals<br />Client appraisals.<br />Manager / supervisor appraisals:<br />Managers / supervisors play a central role in the appraisal process, and should always be included as one of the main appraisers. In essence, managers and supervisors have two roles in performance appraisal:<br />1.“Judge”: assessing performance<br />“Coach”: providing constructive feedback and identifying areas for improvement.<br />Performing both roles simultaneously can be difficult. Employees may be reluctant to admit areas for improvement if performance assessment is linked with desired outcomes such as pay, promotion or opportunities to work in desired areas. One solution is to separate the judge and coach roles by conducting separate appraisal meetings.<br />Self-appraisals:<br />The process of evaluating one’s own performance can help to increase employee’s commitment to the appraisal process, perceptions of appraisal fairness, and satisfaction with the appraisal process. Self-appraisal can also be useful for identifying areas for development. Not surprisingly, self-appraisals are usually biased towards leniency. Strategies to increase the accuracy of self appraisals include:<br />Using clear definitions of performance criteria linked to specific, observable behaviours<br />Informing employees that their ratings will be checked and compared to other sources of <br />appraisal (i.e., for accuracy)<br />Ensuring employees receive regular feedback on their performance.<br />It is recommended that self appraisals are used for professional development purposes, rather than for making administrative decisions (i.e., pay increases, promotion).<br />Coworker appraisals:<br />Coworkers can provide valuable feedback on performance, particularly where teamwork occurs. Coworkers are often aware of different aspects of a employee’s performance that managers /supervisors may not have the opportunity to observe. In addition, as there is usually more than one coworker who rates a worker’s performance, their evaluations tend to be more reliable. Coworker evaluations, however, may be biased towards those individuals most well liked in an organisation (i.e., friendship bias). Furthermore, coworker appraisals may have a negative impact on teamwork and cooperation if employees are competing with one another for organizational incentives and rewards. It is recommended that coworker appraisals are used for professional development rather than administrative decisions.<br />Subordinate appraisals:<br />Subordinates are a valuable source of information regarding particular aspects of a supervisor or leader’s performance such as communication, team building or delegation. Subordinates can provide feedback to help managers / supervisors develop their skills in these areas. The focus should be on aspects of managerial performance that subordinates are able to comment upon. This source of appraisal may only be appropriate in larger organisations where there are sufficient subordinates to allow anonymity.<br />Client appraisals:<br />Clients may also offer a different perspective on a employee’s performance, particularly for jobs that require a high degree of interaction with people. For <br />example, client appraisals can be a valuable source of feedback regarding the quality of service provision (e.g., the quality of interaction, degree of empathy, level of support, degree of professionalism).<br /> Organisations often have performance contracts that specify goals and deliverables for client outcomes. Whilst it is important that organisational goals and deliverables are reflected in the appraisal criteria for individuals and teams, it is recommended that particular care be taken if incorporating client outcomes.<br />Relying on client outcomes as an indicator of performance can have undesirable effects due to the complex and sensitive nature of work. A range of factors may influence client outcomes, many of which are outside the control of an individual employee. It is rare for a successful (or otherwise)outcome to be the sole result of one person’s efforts. This makes client outcomes a poor reflection of the quality of treatment provided by the employee. For example, “good” employee performance will not always bring about client improvements, and client relapses may not be due to “poor” employee performance.<br />In addition to considering client outcomes, it may also be beneficial to focus on employee’s skills and abilities in providing services per se (i.e., independent of client outcomes).<br />Strategies to support appraisers and enhance appraisal accuracy<br />Rating another person’s performance is not an easy task, particularly with complex jobs or performance criteria. Strategies to support appraisers and increase the likelihood of accurate assessments include:<br />Providing practical training in rating techniques, which includes opportunities to practice appraising performance and providing feedback<br />Limiting the assessment to performance criteria that an appraiser has observed /<br />experienced in regard to the employee<br />Providing structured assessment tools with clear explanations regarding the criteria to be assessed, and performance standards.<br />Step 4: Conduct an Appraisal Interview<br />The next step in a performance appraisal is to conduct the appraisal interview. The two central purposes of the appraisal interview are to:<br />Reflect on past performance to identify major achievements, areas that require further development, and barriers / facilitators to effective performance<br />Identify goals and strategies for future work practice.<br />As discussed below, supervisors and managers can use a range of strategies to ensure that the appraisal interview is positive, constructive and of greatest benefit for employee’s effectiveness.<br />Before the interview<br />Help employees to become familiar and comfortable with talking about their performance by engaging in regular, informal communication on work progress, potential obstacles and issues, possible solutions and assistance <br />Encourage employees to prepare – employees should be encouraged to review their own <br />performance before the interview <br />Do your own preparation – plan ahead. Draft a list of the issues that you want to address with the employee (i.e., strengths and weaknesses of performance, strategies to improve performance). Give specific examples of the employee’s performances that you want to highlight. <br />During the interview<br />Encourage employee participation – start by inviting the employee to share their views about their performance Begin with positive feedback to put the employee at ease Make it a two-way discussion <br />Set goals mutually – ensure employees participate in determining specific, challenging but attainable goals for future work performance <br />Ensure that there is a clear agreement on performance objectives and the evaluation criteria for the next year <br />Keep written records of the appraisal interview on which both parties have “signed off”.<br />After the interview<br />Coach employees regularly – provide frequent feedback to help employees improve their performance <br />Assess progress towards goals frequently – periodic reviewing of progress towards goals helps keep behaviour on track and enhances commitment to effective performance.<br />Relate rewards to performance – by linking appraisal results to employment decisions such as promotions and salaries, employees are more likely to prepare for, participate in, and be satisfied with the appraisal system.<br />Step 5: Evaluate the Appraisal Process<br />As with any organisational system, the performance appraisal process should undergo regular review and improvement. For example, the process of performance appraisal could be evaluated by conducting focus groups or surveys with employees to gauge their satisfaction with the appraisal process (and suggestions for improvements). It may also be useful to monitor the types of issues raised by supervisors and employees over time. A successful performance appraisal process should demonstrate a change in both the ratings of employee’s performance (i.e., ideally performance ratings should improve, or at least remain at a satisfactorily stable level over time) and the work environment (i.e., evidence that significant barriers to work practice are being addressed by the organisation.<br />methods of Performance Appraisal<br />Past-oriented methods<br />
    • Rating Scales:
    • 53. The rating scale method offers a high degree of structure for appraisals. Each employee trait or characteristic is rated on a bipolar scale that usually has several points ranging from “poor” to “excellent” (or some similar arrangement).
    The traits assessed on these scales include employee attributes such as cooperation, communications ability, initiative, punctuality and technical (work skills) competence. The nature and scope of the traits selected for inclusion is limited only by the imagination of the scale’s designer, or by the organization’s need to know. <br />The one major provision in selecting traits is that they should be in some way relevant to the appraisee’s job. <br />  Advantages<br />The greatest advantage of rating scales is that they are structured and standardised. This allows ratings to be easily compared and contrasted - even for entire workforces. <br />Each employee is subjected to the same basic appraisal process and rating criteria, with the same range of responses. This encourages equality in treatment for all appraisees and imposes standard measures of performance across all parts of the organization.<br />Rating scale methods are easy to use and understand. The concept of the rating scale makes obvious sense; both appraisers and appraisees have an intuitive appreciation for the simple and efficient logic of the bipolar scale. The result is widespread acceptance and popularity for this approach.  Disadvantages<br />Trait Relevance<br />Are the selected rating-scale traits clearly relevant to the jobs of all the appraisees? It is inevitable that with a standardised and fixed system of appraisal that certain traits will have a greater relevance in some jobs than in others. <br />For example, the trait “initiative” might not be very important in a job that is tightly defined and rigidly structured. In such cases, a low appraisal rating for initiative may not mean that an employee lacks initiative. Rather, it may reflect that fact that an employee has few opportunities to use and display that particular trait. The relevance of rating scales is therefore said to be context-sensitive. Job and workplace circumstances must be taken into account.<br />Systemic Disadvantage<br />Rating scales, and the traits they purport to measure, generally attempt to encapsulate all the relevant indicators of employee performance. There is an assumption that all the true and best indicators of performance are included, and all false and irrelevant indicators are excluded.<br />This is an assumption very difficult to prove in practice. It is possible that an employee’s performance may depend on factors that have not been included in the selected traits. Such employees may end up with ratings that do not truly or fairly reflect their effort or value to the organization. Employees in this class are systemically disadvantaged by the rating scale method.<br />Perceptual Errors<br />This includes various well-known problems of selective perception (such as the horns and halos effect) as well as problems of perceived meaning.<br />Selective perception is the human tendency to make private and highly subjective assessments of what a person is “really like”, and then seek evidence to support that view (while ignoring or downplaying evidence that might contradict it). <br />This is a common and normal psychological phenomenon. All human beings are affected by it. In other words, we see in others what we want to see in them.<br />An example is the supervisor who believes that an employee is inherently good (halo effect) and so ignores evidence that might suggest otherwise. Instead of correcting the slackening employee, the supervisor covers for them and may even offer excuses for their declining performance.<br />On the other hand, a supervisor may have formed the impression that an employee is bad (horns effect). The supervisor becomes unreasonably harsh in their assessment of the employee, and always ready to criticize and undermine them.<br />The horns and halo effect is rarely seen in its extreme and obvious forms. But in its more subtle manifestations, it can be a significant threat to the effectiveness and credibility of performance appraisal.<br />Perceived Meaning<br />Problems of perceived meaning occur when appraisers do not share the same opinion about the meaning of the selected traits and the language used on the rating scales.<br />For example, to one appraiser, an employee may demonstrate the trait of initiative by reporting work problems to a supervisor. To another appraiser, this might suggest an excessive dependence on supervisory assistance - and thus a lack of initiative.<br />As well, the language and terms used to construct a scale - such as “Performance exceeds expectations” or “Below average skill” - may mean different things to different appraisers.<br />Rating Errors<br />The problem here is not so much errors in perception as errors in appraiser judgement and motive. Unlike perceptual errors, these errors may be (at times) deliberate.<br />The most common rating error is central tendency. Busy appraisers, or those wary of confrontations and repercussions, may be tempted to dole out too many passive, middle-of-the-road ratings (e.g., “satisfactory” or “adequate”), regardless of the actual performance of a subordinate. Thus the spread of ratings tends to clump excessively around the middle of the scale.<br />This problem is worsened in organizations where the appraisal process does not enjoy strong management support, or where the appraisers do not feel confident with the task of appraisal.<br />Check-list Method:<br />Under this method, checklist of “Statements of Traits” of employee in the form of Yes or No based questions is prepared. Here, the rater only does the reporting or checking and HR department does the actual evaluation. The rater concerned has to tick appropriate answers relevant to the appraisees. When the check-list is completed, it is sent to HR department for further processing. Various questions in the check list may have either equal weightage or more weightage may be given to those questions which are more important. The HR department then calculates <br />the total scores which show the appraisal result of an employee.<br />• Advantages – economy, ease of administration, limited training required, standardization.<br />• Disadvantages – Rater’s biases, use of improper weights by HR Dept, does not allow rater to give relative ratings.<br />Force Choice Method:<br />A series of statements arranged in the blocks of two or more are given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR department does actual assessment.<br />• Advantages – Absence of personal biases because of forced choice. <br />• Disadvantages – Statements may not be correctly framed. <br />Force Distribution Method:<br />One of the problems faced in large organizations is relative assessment tendencies of raters. Some are too lenient and others too severe. This method overcomes that problem. It forces every one to do a comparative rating of all the employees on a predetermined distribution pattern of good to bad. Say 10% employees in Excellent Grade, 20% in Good Grade, 40% in Average Grade, 20% in Below Average Grade and 10% in Unsatisfied grade. The real problem of this method occurs in organizations where there is a tendency to pack certain key departments with all good employees and some other departments with discards and laggards. Relatively good employees of key departments get poor rating and relatively poor employees of laggards’ departments get good rating.<br />
    • Critical Incident Method:
    • 54. In this method, only critical incidents and behavior associated with these incidents are taken for evaluation. This method involves three steps. A test of noteworthy on the job behavior is prepared. A group of experts then assigns scale values to them depending on the degree of desirability for the job. Finally, a checklist of incidents which define good and bad employees is prepared.
    • 55. • Advantages ---This method is very useful for discovering potential of employees who can be useful in critical situation.
    • Disadvantages --- a) Negative incidents are, generally, more noticeable than positive ones.<br />b) The recording of incidents is a core to the superior and may be put off and easily forgotten.<br /> c) Overly close supervision may result.<br />
    • Essay Method:
    • 56. In the essay method approach, the appraiser prepares a written statement about the employee being appraised. The statement usually concentrates on describing specific strengths and weaknesses in job performance. It also suggests courses of action to remedy the identified problem areas. The statement may be written and edited by the appraiser alone, or it be composed in collaboration with the appraisee.  Advantages 
    • 57. The essay method is far less structured and confining than the rating scale method. It permits the appraiser to examine almost any relevant issue or attribute of performance. This contrasts sharply with methods where the appraisal criteria are rigidly defined.Appraisers may place whatever degree of emphasis on issues or attributes that they feel appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked into an appraisal system the limits expression or assumes that employee traits can be neatly dissected and scaled.
      Disadvantages Essay methods are time-consuming and difficult to administer. Appraisers often find the essay technique more demanding than methods such as rating scales.The techniques greatest advantage - freedom of expression - is also its greatest handicap. The varying writing skills of appraisers can upset and distort the whole process. The process is subjective and, in consequence, it is difficult to compare and contrast the results of individuals or to draw any broad conclusions about organizational needs <br />
    • Grading:
    • 58. In this method, certain categories of abilities of performance are defined well in advance and person are put in particular category depending on their traits and characteristics. Such categories may be definitional like outstanding, good, average, poor, very poor or may be in terms of letter like A, B, C, D etc with A indicating the best and D indicating the worst. This method, however, suffers
    • 59. from one basic limitation that the rater may rate most of the employees at higher grades.
    Performance Tests & Observations:<br /> This is based on the test of knowledge or skills. The tests may be written or an actual presentation of skills. Tests must be reliable and validated to be useful.<br />• Advantage – Tests only measure potential and not attitude. Actual performance is more a function of attitude of person than potential. <br />• Disadvantages – Some times costs of test development or administration are high. <br />Confidential Reports:<br />Though popular with government departments, its application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR). The system is highly secretive and confidential. Feedback to the assessee is given only in case of an adverse entry. Disadvantage is that it is highly prone to biases and recency effect and ratings can be manipulated because the evaluations are linked to future rewards like promotions, good postings, etc.<br />Comparative Evaluation Method (Ranking & Paired Comparisons):<br />These are collection of different methods that compare performance with that of other co-workers. The usual techniques used may be ranking methods and paired comparison method.<br />Ranking Method: <br />Superior ranks his worker based on merit, from best to worst. However how best and why best are not elaborated in this method. It is easy to administer.<br />Paired Comparison Method: <br />In this method each employee is paired with every other employee in the same cadre and then comparative rating done in pairs so formed. The number of comparisons may be calculated with the help of a formula – N x (N-1) / 2. The method is too tedious for large departments and often such exact details are not available with rater.<br />Future-Oriented Methods<br />
    • MBO (Appraisal By Results) :
    • 60. The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are results-oriented. That is, they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. Usually the objectives are established jointly by the supervisor and subordinate. Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the objective. Typically they do not rely on others to locate and specify their strengths
    • 61. and weaknesses. They are expected to monitor their own development and progress.
    • 62. AdvantagesThe MBO approach overcomes some of the problems that arise as a result of assuming that the employee traits needed for job success can be reliably identified and measured. Instead of assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or exceeds the set objectives, then he or she has demonstrated an acceptable level of job performance. Employees are judged according to real outcomes, and not on their potential for success, or on someone’s subjective opinion of their abilities. The guiding principle of the MBO approach is that direct results can be observed, whereas the traits and attributes of employees (which may or may not contribute to performance) must be guessed at or inferred. The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements
    • 63. that go to make up employee performance. MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts - as one might take apart an engine to study it. But put all the parts together and the performance may be directly observed and measured. Disadvantages
    • 64. MBO methods of performance appraisal can give employees a satisfying sense of autonomy and achievement. But on the downside, they can lead to unrealistic expectations about what can and cannot be reasonably accomplished. Supervisors and subordinates must have very good “reality checking” skills to use MBO appraisal methods. They will need these skills during the initial stage of objective setting, and for the purposes of self-auditing and self-monitoring.
    • 65. Unfortunately, research studies have shown repeatedly that human beings tend to lack the skills needed to do their own “reality checking”. Nor are these skills easily conveyed by training. Reality itself is an intensely personal experience, prone to all forms of perceptual bias. One of the strengths of the MBO method is the clarity of purpose that flows from a set of well-articulated objectives. But this can be a source of weakness also. It has become very apparent that the modern organization must be flexible to survive. Objectives, by their very nature, tend to impose a certain rigidity. Of course, the obvious answer is to make the objectives more fluid and yielding. But the penalty for fluidity is loss of clarity. Variable objectives may cause employee confusion. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance.
    Assessment Center Method:<br />This technique was first developed in USA and UK in 1943. An assessment centre is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviours across a series of select exercises or work samples. Assesses are requested to participate in in-basket exercises, work groups, computer simulations, role playing and other similar activities which require same attributes for successful performance in actual job. <br />• Advantages – Well-conducted assessment centre can achieve better forecasts of future performance and progress than other methods of appraisals. Also reliability, content validity and predictive ability are said to be high in Assessment Centres. The tests also make sure that the wrong people are not hired or promoted. Finally, it clearly defines the criteria for selection and promotion.<br />• Disadvantages – Concentrates on future performance potential. No assessment of past performance. Costs of employees travelling and lodging, psychologists. Ratings strongly influenced by assessee’s inter-personal skills. Solid performers may feel suffocated in simulated situations. <br />360o Appraisal:<br />It is a technique in which performance data/feedback/rating is collected from all sections of people employee interacts in the course of his job like immediate supervisors, team members, customers, peers, subordinates and self with different weightage to each group of raters. This technique has been found to be extremely useful and effective. It is especially useful to measure inter-personal skills, customer satisfaction and team building skills. One of the biggest advantages of this system is that assesssees cannot afford to neglect any constituency and has to show all-round performance. However, on the negative side, receiving feedback from multiple sources can be intimidating, threatening, expensive and time consuming.<br />Psychological Appraisals: <br />These appraisals are more directed to assess employees potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance. This approach is slow and costly and may be useful for bright young members who may have considerable potential. However quality of these appraisals largely depends upon the skills of psychologists who perform the evaluation.<br />Essentials for a Successful Performance Appraisal System<br />Basing appraisals on accurate and current job descriptions <br />Ensuring that appraisers have adequate knowledge and direct experience of the employee’s performance <br />Providing ratings via aggregated anonymous feedback when multiple sources of information are used <br />Incorporating performance appraisals into a formal goal setting system <br />Offering adequate support and assistance to employees such as professional development opportunities in order to improve their performance <br />Conducting appraisals on a regular basis (at least two times a year) rather than annually.<br />If resource constraints do not permit frequent formal appraisals, consider conducting one formal appraisal annually, with a review of progress in the mid-year and ongoing review in regular supervision meetings.<br />Using Performance Appraisal to Address Workforce<br />Development Challenges<br />Regular performance appraisals provide a useful opportunity to conduct a “check-up” on<br />various workforce development issues that may impact on employee’s effectiveness and well being.<br />Performance appraisals can be used to:<br />• Recognise, reward and support effective performance<br />• Develop and reward effective teamwork<br />• Identify and manage issues likely to impact on retention<br />• Monitor and support employee’s well being.<br />Recognise, reward and support effective performance<br />Ensuring employees receive adequate rewards and recognition is a key workforce development issue for the performance. Performance appraisals provide a good opportunity to formally recognise employee’s achievements and contributions to the organisation, and to ensure a clear link is maintained between performance and rewards. The appraisal interview can also be used as a vehicle to demonstrate supervisory and organisational support for employees by discussing barriers and supports to effective performance, and strategies to address problems or difficulties.<br />Develop and reward effective teamwork<br />The appraisal interview is also a useful vehicle for recognising and rewarding employee’s contributions to various teams in the organisation, especially if appraisal information is gained from team members. An appraisal of the team as a whole can also be a useful strategy to recognise and reward team performance, and to identify strategies to improve team functioning.<br />Identify and manage issues likely to impact on retention<br />Open and constructive performance appraisals can be useful to identify issues that are likely to impact on employee’s willingness to stay with the organisation in the longer-term. Key factors associated with retention include salary and remuneration, professional development opportunities, and work-related demands and stress. The appraisal interview provides a good opportunity for a “check-up” regarding employee’s <br />satisfaction with their working conditions and environment, and a discussion of strategies to address any problems or issues.<br />Monitor and support employee’s well being<br />Performance appraisal interviews are a good opportunity to discuss employee’s health and well being in the workplace, particularly in regard to factors that contribute to feelings of stress and experiences that promote satisfaction with their work.<br />360 degree performance appraisal system adopted by Maruti Udyog <br />c. Performance Appraisal practices in maruti Udyog Gurgaon , <br />PERFORMANCE APPRAISAL<br />Introduction:<br />The appraisal system is a key human resources management system. While the system enables the setting of objectives and facilitates the review of performance against these objectives, it can also be effectively used to build customer focus and enhance competitiveness. This is possible if the nature of objectives and the manner in which they are achieved answers the following questions-<br />When achieved, to what extent will customer value be enhanced?<br />When achieved, to what extent will it help the company respond to change?<br />When achieved, to what extent will the company’s competitiveness be enhanced?<br />Setting objectives:<br />Objectives must flow from the business and functional plans and address the key result areas of the job. Objectives must be-<br />Specific: The appraisee must understand them clearly.<br />Measurable: In term of quality, quantity, cost and time.<br />Attainable: Targets must have inbuilt stretch but yet be within the capabilities of the appraisee.<br />Relevant: to the role and responsibilities with the job and link up with the unit, business and functional plans.<br />Time bound: agree to the timeframe within which the objectives must be achieved, which will also help prioritization.<br />Remember , objectives must be S.M.A.R.T<br />Pre-requisites of an effective appraisal process:<br />Purpose of the job- The overall rate of the job from organisation’s point of view; why the job exists and what contribution it is expected to make.<br />A statement of the key result areas that flow from the purpose of the job- statements of the continuing end results and outcomes required of the job, statements which identify what the job achieves and why.<br />Having listed the key result areas, it is necessary to clearly state the objectives for the year. These objectives must flow from the business, functional and unit plans.<br />For objectives to invoke commitment, they must be agreed between the job holder and his boss and not set unilaterally.<br />For objectives to be meaningful they must be specific, measurable, attainable, and relevant and time bound.<br />The appraisal process must focus on performance against agreed objectives, enable the individual to give feedback to the organization his own feelings, aspirations, difficulties, etc and serve as a forum for dialogue between the individual and the organization.<br />The process must focus on performance, not personality; on facts, not perception and demonstrated behavior, not hunches.<br />Performance appraisal process:<br />Chart 1:<br />Periodic review/feedbackObservationsFeedbackSupportPlanning for performanceGoalsStandardsKPA’S/KRA’SRating and actions <br />-Ratings<br />-Review<br />-Action <br />Annual performance evaluation/reviewRatingsReview discussionsAction plans-<br />Advantages/Benefits:<br />To Appraisers:<br />More productive- Allows the appraiser to concentrate efforts on the more productive managerial tasks and activities.<br />Less stressful- Creates a more harmonious, less adversarial, working relationship between appraiser and appraise.<br />More rewarding- Improved productivity of the work group.<br />To Appraises:<br />Feedback<br />Opportunity<br />Autonomy<br />PERFORMANCE COUNSELING<br />Definition:<br /> Performance counseling can be defined as the help provided by a manager to his subordinate in analyzing his performance and other job behaviors in order to increase his job effectiveness. There are three processes involved in counseling- communication, influencing and helping.<br />Objectives:<br />Helping the counselor to realize his potential as an employee.<br />Helping him to understand himself- his strengths and his weaknesses.<br />Helping him to have better understanding of the environment.<br />Encouraging him to set meaningful goals for further improvements.<br />Encouraging him to generate alternatives for dealing with various problems.<br />Providing him an empathic atmosphere for sharing and discussing his tensions, conflicts, concerns and problems.<br />Conditions for effective counseling:<br />General climate of openness and mutuality.<br />General helpful and empathic attitude of the counselor.<br />Uninhibited participation of the subordinate.<br />Joint goal-setting and performance review.<br />Focus on work behavior.<br />Solving work related problems.<br />Counseling process:<br /> A formal counseling process is of three phases-<br />PHASE I: Rapport building.<br />Attending.<br />Listening.<br />Acceptance.<br />PHASE II: Exploring.<br />Problem identification.<br />Diagnosis.<br />PHASE III: Action planning.<br />
    • Searching.
    Decision making.<br />Supporting.<br />Establishing for dialoguing:<br />The appraisal interview is also an ideal opportunity for the boss and the job holder to dialog on his career. Here are some sample questions that can constitute the basis for a dialog on an individual’s career-<br />Current assignment:<br />What do find challenging and exciting about your current assignment?<br />Do you feel you are being fully utilized in your current assignment?<br />Goals and aspirations:<br />What objective have you set for your personal and professional growth?<br />How do you intend to pursue these?<br />How can an organization assist in the process?<br />Career plan:<br />What responsibilities do you see yourself capable of assuming?<br />What do you see yourself doing three years from now?<br />Performance ratings:<br />Appraisal system requires an overall performance rating-<br />Outstanding performance.<br />Good performance.<br />Satisfactory performance.<br />Barely adequate performance.<br />Poor performance.<br />An ongoing process:<br />It is necessary to engage in a formal appraisal process once a year. However we must guard against the process degenerating into a year-end ritual- something to be got over with for the sake of the firm. Once objectives are set at the beginning of the year, any time is a good enough time for the job holder and his boss to engage in a review of how things are going.<br />Periodic review and feedback on performance as well as the process of dialoguing whereby the individual feeds back his overall feelings, difficulties, challenges, etc. spurs on performance and enables the achievement of results against agreed objectives as well as reinforces ‘desired behaviors’ which in turn enhances the competencies of the business. <br />CHAPTER 6 RESEARCH UNDERTAKEN<br />Analysis of the study on Performance Appraisal System in Maruti Suzuki India<br />Duration for which the respondent has been working in MARUTI UDYOG.<br /> This question was asked to the employees working in MARUTI UDYOG to find out the duration for which they have been working in the organization, based upon which we can know if the employees are satisfied with their job in the company or not.<br />Table 2: Duration of work period in MARUTI UDYOG.<br />Particulars No. of respondentsPercentage of respondents0-1 yrs2 3%1-5 yrs3355%5-10 yrs1525%10+ yrs1017%Total 60100%<br />Chart : Duration of work in MARUTI UDYOG.<br />3 percent of the respondents are dealing with MARUTI UDYOG for less than a year.55 percent of the respondents are dealing in Maruti udyog from 1-5 yrs.25 percent of the respondents are dealing in Maruti udyog from 5-10 yrs.17 percent of the respondents are dealing in Maruti udyog for over 10 yrs<br />Extent of satisfaction in setting goals/objectives in the beginning of the year.<br />This question was asked to the employees of MARUTI UDYOG to find out the extent of satisfaction of the employees in setting goals/objectives in the beginning of the year to know if they are being given opportunities to express their views.<br />Table 4: Extent of satisfaction<br />Particulars No. of respondentsPercentage of respondentsVery satisfied3863%Satisfied1830%Dissatisfied 47%Total 60100%<br />Chart 5: Extent of satisfaction.<br />63 percent of the respondents are very satisfied in setting their goals and objectives in the beginning of the year. 30 percent of the respondents are satisfied in setting their goals and objectives in the beginning of the year. 7 percent of the respondents are dissatisfied in setting their goals and objectives in the beginning of the year.<br />Ratings of the PA strategies and programmes in the company.<br />This question was asked to the employees of MARUTI UDYOG to rate the standard of various PA strategies and programmes that take place in the organization.<br />Table 6: Ratings of PA strategies.<br />Particulars No. of respondentsPercentage of respondentsGood 4270%Average 1830%Bad 00%Total 60100%<br />Chart 7: Ratings of PA strategies.<br />70 percent of the respondents rate the Performance Appraisal strategies as good. 30 percent of the respondents rate the Performance Appraisal strategies as average.None of the respondents rates the Performance Appraisal strategies as bad. <br />Performance Appraisal strategies are fair and objective.<br />This question was asked to the employees to know if the performance appraisal strategies are fair and objective to the employees.<br />Table 7: PA strategies are fair or not.<br />Particulars No. of respondentsPercentage of respondentsYes 3484%No2616%Can’t say00%Total 60100%<br />Chart 8: PA strategies are fair or not.<br />84 percent of the respondents say that the Performance Appraisal strategies are fair and objective.16 percent of the respondents say that the Performance Appraisal <br />strategies are not fair and objective.None of the respondents are there who can’t say anything.<br />It is necessary to appraise an employee.<br />This question was asked to the employees to know how important it is to appraise an employee.<br />Table 8: Necessity to appraise an employee.<br />Particulars No. of respondentsPercentage of respondentsYes 60100%No 00%Total 60100%<br />Chart 9: Necessity to appraise an employee.<br />100 percent of the respondents say that it is necessary to appraise an employee.None of the respondents says that it is necessary to appraise an employee.<br />There is clarity in what is expected from the employee.<br />This question was asked to the employees to know if they are made clear on what is expected of them so that they can work accordingly.<br />Table 9: Clarity in what is expected from the employee.<br />Particulars No. of respondentsPercentage of respondentsYes 60100%No 00%Total60100%<br />Chart 10: Clarity in what is expected from the employee.<br />100 percent of the respondents say that they are clear with what is expected of them.None of the respondents say that they are not clear with what is expected of them.<br />Feedback is given to the Management Cadre Staff for the task accomplished by them.<br />This question was asked to the employees to know if they are provided with proper feedback for the task they accomplish, based upon which they can work better in future.<br />Table 10: Feedback is given to MCS.<br />Particulars No. of respondentsPercentage of respondentsYes3762%No 2338%Total60100%<br />Chart 11: Feedback is given to MCS.<br />62 percent of the respondents say that the feedback is given to the MCS for the task accomplished by them.38 percent of the respondents say that the feedback is not given to the MCS for the task accomplished by them.<br />Suggestions and innovations are rewarded.<br />This question was asked to the employees to know if they are motivated by accepting their suggestions and innovations in the form of rewards. <br />Table 11: Suggestions and innovations are rewarded.<br />Particulars No. of respondentsPercentage of respondentsYes 2135%No 3965%Total60100%<br />Chart 12: Suggestions and innovations are rewarded.<br />35 percent of the respondents say that their suggestions and innovations are rewarded.65 percent of the respondents say that their suggestions and innovations are not rewarded.<br />Supervisors take interest in sharing an employee’s personal concern.<br />This question was asked to the employees to know if the employees’ problems are dealt well by their supervisors so that their morale increases and they are satisfied with their job.<br />Table 12: Supervisors share an employee’s personal concern.<br />Particulars No. of respondentsPercentage of respondentsYes 4372%No 1728%Total60100%<br />Chart 13: Supervisors share an employee’s personal concern.<br />72 percent of the respondents say that the supervisors take interest in sharing their personal concern.28 percent of the respondents say that the supervisors do not take interest in sharing their personal concern.<br />Annual increments/promotions are based on performance.<br />This question was asked to the employees to know if the annual increments/promotions are based on their performance or not. <br />Table 13: Increments & promotions based on performance.<br /> Particulars No. of respondentsPercentage of respondentsYes 4982%No 915%Can’t say23%Total60100%<br />Chart 14: Increments & promotions based on performance.<br />82 percent of the respondents say that the annual increments/promotions are based on their performance. 15 percent of the respondents say that the annual increments/promotions are not based on their performance. 3 percent of the respondents can’t say or their answers are inapplicable.<br />Extent of satisfaction in interdepartmental teamwork.<br />This question was asked to the employees to know the extent of satisfaction in interdepartmental teamwork based on which their effectiveness in work can be known.<br />Table 14: Satisfaction in inter departmental team work.<br />Particulars No. of respondentsPercentage of respondentsVery satisfied1728%Satisfied3050%Dissatisfied 1322%Total60100%<br />Chart 15: Satisfaction in inter departmental team work.<br />28 percent of the respondents are very satisfied with interdepartmental teamwork.50 percent of the respondents are just satisfied with interdepartmental teamwork. 22 percent of the respondents are dissatisfied with interdepartmental teamwork.<br />Extent of help of training and development programs in improving employees’ performance.<br />This question was asked to the employees to know how far the training and development programme is helping the employees to learn and work better. <br />Table 15: <br /> Particulars No. of respondentsPercentage of respondentsTo great extent1322%To some extent4270%To very little extent58%Total60100%<br />Chart 16:<br />22 percent of the respondents say that the training and development programmes help to a great extent to improve their performance.70 percent of the respondents say that the training and development programmes help to some extent to improve their performance.8 percent of the respondents say that the training and development programmes help to a very little extent to improve their performance.<br />Performance Appraisal System is used in job rotation.<br />This question was asked to the employees to know the extent of use of performance appraisal system in job rotation.<br />Table 16:<br />Particulars No. of respondentsPercentage of respondentsMostly712%Partially5388%Nil 00%Total60100%<br />Chart 17:<br />12 percent of the respondents say that performance appraisal system is mostly used in job rotation. 88 percent of the respondents say that performance appraisal system is partially used in job rotation. None of the respondents say that performance appraisal system is not at all used in job rotation.<br />Extent of the purpose of performance appraisal system being fulfilled.<br />This question was asked to the employees to know how far the performance appraisal system is actually helping them in their work.<br />Table 17:<br />Particulars No. of respondentsPercentage of respondentsCompletely 3965%Partially 2135%Total60100%<br />Chart 18:<br />65 percent of the respondents say that the purpose of performance appraisal is completely fulfilled.35 percent of the respondents say that the purpose of performance appraisal is partially fulfilled.<br />How the HR Practiconer find the feedback from employees <br />Analyze :- Analyze and identify the training needs i.e. to analyze the department, job, employees<br />requirement, who needs training, what do they need to learn, estimating training cost etc.<br /> The next step is to develop a performance measure on the basis of which actual performance would be evaluated.<br />DESIGN and provide training to meet identified needs. This step requires developing objectives of training, identifying the learning steps, sequencing and structuring the contents.<br />DEVELOP- This phase requires listing the activities in the training program that will assist the participants to learn, selecting delivery method, examining the training material, validating information to be imparted to make sure it accomplishes all the goals & objectives.<br />IMPLEMENTING is the hardest part of the system because one wrong step can lead to the failure of whole training program.<br />EVALUATING each phase so as to make sure it has achieved its aim in terms of subsequent work performance. Making necessary amendmentsto any of the previous stage in order to remedyor improve failure practices.<br />How do these company define Performance Appraisal?<br />table 19<br />Company ->1234567Options↓ABCDEFG<br />A) A regular activity conducted periodically to rate an employee.<br />B) An activity to identify the developmental need of the employee.<br />C) An activity to keep a check on the performance of employees.<br />D) A system to help employees identify his own strengths and weakness with respect to his job.<br />E) An instrument to control employee’s behaviour through rewards, punishment and threats.<br />F) A system to assist a variety of personnel decisions by generating data about each employee periodically.<br />G) A means to improve communication between the superior and subordinate.<br />Objectives of Performance Appraisal<br />Table 20<br />Company->1234567Options ↓A B C D <br />A) To make decisions regarding salary increase.<br />B) To identify the training and developmental needs of the employees<br /> C) To make decisions regarding transfers or promotions.<br />D) To facilitate communication between the superior and his subordinates.<br />For which class of Employees<br />Table 21<br />CompanyClass of Employee1Executive and supervisory staff, new employees2Management and Non- management3Executive, clerical and supervisory staff4All white collar jobs5Executive, clerical, supervisory staff, new employees.6Executive and Customer Service Representative.7Band 1 to 7<br />The above table shows the classification of appraisal for different classes of employees.<br />Most of the organizations have different appraisal systems for every class of employees. This is because the factor on which a person is rated differs as per the nature of the job. For example, a manager is rated on factors like the ability to take decisions, ability to delegate work, leadership qualities, communication skills etc. whereas an officer or worker is rated on different parameters like job knowledge, accuracy and neatness of job, reliability, team spirit etc.<br />Most of the companies have appraisal system one for the executives level and the other for the middle level and lower level management. Many organizations have a separate appraisal for the new employees who are on probation. This is mainly to make decision regarding confirming them. Almost all the companies have their appraisals half-yearly and/or yearly.<br />How is appraisal done in maruti udyog ?<br />Pie chart 2<br />The above Pie chart 1 shows that a majority of the organizations have a formal method of appraisal. Formal method refers to method where appraisal is carried out in a more systematic manner and after a specific period of time (once a year or twice a year). The main aim here is employee evaluation. Informal method of <br />appraisal is followed whenever the appraiser feels the need to communicate something to the appraisee. It is a non-formal discussion between the appraiser and the appraisee. This can be simply for the reason of acknowledging outstanding performances of the appraisee during the daily course.<br />Formal method of appraisal is followed by 57% of the organizations.<br />43% of the organisations follow a combination of both –formal and informal method of appraisal. The reason for this could be:<br />In an informal method, the appraisee is likely to be more open and would discuss his problem in a candid way, in a formal method of appraisal, the appraisee might come under pressure during the appraisal process. He is also likely to be unsatisfied if only a formal appraisal process appraises him. However it is not feasible to appraise a person only on an informal basis, as this would not show the true position of the employee’s competency over a period of time. 0% respondents follow only informal appraisal<br />Appraisal Methods<br />Table 22<br />CompanyMethods of appraisal1Checklist and interview and discussions2Rating, Checklist and interview and discussions3Rating, critical incidents, MBO, 360o appraisal.4Rating, interview and discussions, 360o appraisal.5Rating6Rating, force distribution method.7Critical incident, confidential, interview or discussion<br /> Table 21 gives the various methods applied by organisation in their appraisal system. By observing this table we can easily note that the Rating method is the most popular method in the organizations. It is also seen that most of the companies have interviews and discussion as part of their appraisal system. This is because form the organisational view point it helps to understand the employee in a better manner and covers up the drawback and mistakes (if any) in the appraisal system. It also helps the organisation to communicate its goals, views, feedback, and opinion to the employees. From the employees viewpoint if there are any thing that the employee feels dissatisfying, he can communicate to the appraiser. He can also understand his goals, responsibilities and his current performance.<br />Problems in Appraisal<br />Table 23<br />Company ->1234567Administrative problemsTedious taskTime-consumingCasual approach of the AppraiserImplementation problemsUntrained AppraisersResistance from appraisees.Assessment problemsBias attitude of the appraiserDifference of opinion between the appraiser and the appraisee <br />The main problem in many companies is the difference of opinion between the appraiser and the appraisee. This is solved by interviews and discussion<br />Link with Incentive and Rewards <br />Table 24<br />Company Yes No 1234567<br />Attitude of the employees towards performance appraisal<br />a) Do employees work hard to get a better appraisal<br />Company All Some Very fewNone1234567<br />b) Do employees talk freely about their developmental need during the counseling session<br />Company All Some Very fewNone1234567<br /> HUMAN RESOURCE ACCOUNTING METHOD in maruti udyog<br />Human resources are valuable assets for every organization Human resource accounting methods tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judges in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in money terms). <br />The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them.<br />Process of Performance Appraisal<br />Appraisals Home >> Process of performance appraisal<br />ESTABLISHING PERFORMANCE STANDARDS<br />The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives.<br />The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.<br />COMMUNICATING THE STANDARDS<br />Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained this. This will help them to understand their role and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.<br />Establishing performance<br />standards<br />
    • Communicating standards and expectations
    • 66. Measuring the actual performance
    • 67. Comparing with standards
    • 68. Discussing results( Providing feedback )
    • 69. Decision making – taking
    • 70. Corrective actions
    MEASSURING THE ACTUAL PERFOMANCECE<br />The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work.<br />COMPARING THE ACTUAL WITH THE DESIRED<br />PERFORMANCE<br />The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employee’s performance.<br />DISCUSSION RESULTS<br />The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions ate discussed with the aim of problem solving and reaching consensus. The feedback should be given with appositive attitude as this can have an effect on the employee’s future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better . <br /> DECISION MAKING<br />The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfer<br />Pre – requisites for Effective & Successful PerformanceAppraisal<br />Appraisal Home >> Pre-requisites for Effective & SuccessfulPerformance Appraisal.<br />The essentials of an effective performance system are asfollows :<br /> Documentation – means continuous noting anddocumenting the performance. It also helps theevaluators to give a proof and the basis of their ratings.<br /> Standards / Goals – the standards set should be clear,easy to understand, achievable, motivating, time boundand measurable.<br /> Practical and simple format – The appraisal formatshould be simple, clear, fair and objective. Long andcomplicated formats are time consuming, difficult tounderstand, and do not elicit much useful information.<br /> Evaluation technique – An appropriate evaluationtechnique should be selected; the appraisal systemshould be performance based and uniform. The criteriafor evaluation should be based on observable andmeasurable characteristics of the behavior of theemployee.<br /> Communication – Communication is an indispensablepart of the performance appraisal process. The desiredbehavior or the expected results should becommunicated to the employees as well as theevaluators. Communication also plays an important rolein the review or <br />Feedback meeting. Open communicationsystem motivates the employees to actively participatein the appraisal process.<br />Feedback – The purpose of the feedback should bedevelopmental rather than judgmental. To maintain itsutility, timely feedback should be provided to theemployees and the manner of giving feedback should besuch that it should have a motivating effect on theemployees’ future performance.<br />Personal Bias – Interpersonal relationships caninfluence the evaluation and the decisions in theperformance appraisal process. Therefore, theevaluators should be trained to carry out the processesof appraisals without personal bias and effectively.<br />Purpose of performance Appraisal<br />Appraisals Home >> Purpose of Performance Appraisal <br />Performance Appraisal is being practiced in 90% of theorganizations worldwide. Self – appraisal and potentialappraisal also form a part of the performance appraisalprocesses.Typically, performance Appraisal is aimed at:-<br />To review the performance of the employees over agiven period of time.<br />To judge the gap between the actual and the desiredperformance.<br />To help the management in exercising organizationalcontrol.<br />To diagnose the training and development needs of thefuture.<br />Provide information to assist in the HR decisions likepromotions, transfers etc.<br />Provide clarity of the expectations and responsibilities ofthe functions to be performed by the employed.<br />To judge the effectiveness of the other human resourcefunctions of the organizations such as recruitment,selection, training and development.<br />To reduce the grievances of the employees.<br />Helps to strengthen the relationship and communicationbetween superior – subordinates and management –employees.<br />Conclusion<br />This project report shows that 360 degree performance appraisal system is the best way to promote the employees for excellent work. Maruti udyog adopted this modern technique of performance appraisal. <br />Employees get feedback of his or her work performance from all the components. According to Managing Director, Mr Jagdish Khattar, asking people to support the online questionnaire process. The 360-degree feedback system will also include a self-appraisal by the general manager. At the end of the process, he can compare his self-appraisal with the assessment of his subordinates and peers.<br />One of the benefits that Maruti is hoping to get out of the 360-degree feedback process is the sense of empowerment and importance felt by subordinates, when they are asked to offer their feedback about their superiors. Maruti currently has over 4,000 employees on its rolls.<br />Under the 360-degree feedback system, the employee is rated not just by his superiors, but also by his peers and subordinates. Ernst & Young, in consultation with Maruti, has listed a set of leadership competencies that are expected in a general manager. Based on that, it has prepared a questionnaire to which peers and subordinates can respond online.<br />It would seem that there is no corporate human resources policy that has not had its share of controversies for being biased with an increasing number of qualitative factorsthat affect employees at the workplace, democratizing the performance appraisal process to make it as fair as possible has been the dream of every HR manager.<br />Bibliography<br />Human Resource And Personnel Management - Aswathappa<br />Human Resource Management - Mamoria<br />Human Resource Management - vsp rao<br />Webliography<br />www.<br /><br /><br />a small message to employees of maruti<br />“Don’t Cry Because It Is over Now Laugh Because It Happened” it’s all BECAUSE OF performance appraisal system 360 degree…<br />