Project Report on Performance Appraisal System and Effectiveness in Flora Hot...PS NEEMISH
The study covers employees of Flora Hotel Cochin.
A survey was conducted for information about the performance appraisal
system that was used in the company.
The study focuses on type, effectiveness and employee attitude of the
appraisal system.
To help management plan future development and growth.
The sample size of 50 employees was selected at random from all
departments.
Project Report on Performance Appraisal System and Effectiveness in Flora Hot...PS NEEMISH
The study covers employees of Flora Hotel Cochin.
A survey was conducted for information about the performance appraisal
system that was used in the company.
The study focuses on type, effectiveness and employee attitude of the
appraisal system.
To help management plan future development and growth.
The sample size of 50 employees was selected at random from all
departments.
this presentation covers the following portion of HR managent:
-Human Resource Planning Process
-Difference between recruitment and selection
-Objectives of HR management
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this presentation covers the following portion of HR managent:
-Human Resource Planning Process
-Difference between recruitment and selection
-Objectives of HR management
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What is the difference between performance management and performance appraisalkianramirez765
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Similar to A study on performance appraisal of banking sector (20)
A study on performance appraisal of banking sector
1. A STUDY ON PERFORMANCE APPRAISAL OF BANKING SECTOR
(ALLAHBAD BANK, Civil Lines Branch) RAIPUR CHHATTISGARH
ABSTRACT
This field of HRM is still in its evolutionary phase and it is difficult to identify any crystal clear
framework to retrofit the existing strewn perspectives. Available literature shows that HRM is a
system that strives to achieve a dynamic balance between the personal interests and concerns
of people and their economic added value. In this study all those papers which are published in
prominent HR journals were scanned and those published during last five year period were kept
under sharp focus. Papers pertaining to the field of HRM and organizational performance were
categorized and examined in detail. Categorization of the literature according to various
dimensions enabled the researcher to explore new areas that are not adequately covered in the
literature; hence this study is a structured overview covering significant aspects. It was found
that HRM is an area that continues to evoke a lot of debate and body of work in HRM is
relatively small, and most of the questions are sorely in need of further attention.
INTRODUCTION
A performance appraisal (PA), also referred to as a performance review, performance
evaluation, (career) development discussion, or employee appraisal is a method by
which the job performance of an employee is documented and evaluated. Performance
appraisals are a part of career development and consist of regular reviews of employee
performance within organizations.
Performance appraisal is essential to understand and Improve the employees
performance through HRD. It is the basis for employee development. It indicates the
level of desired performance, level of actual performance and the gap between the two.
The performance appraisal helps the HRD to bridge the gap between them.
WHATIS “PERFORMANCE APPRAISAL”?
Performance Appraisal is defined as the process of assessing the performance and progress of
an employee or a group of employees on a given job and his / their potential for future
development. It consists of all formal procedures used in working organizations and potential of
employees. According to Flippo, “Performance Appraisal is the systematic, periodic and an
2. important rating of an employee’s excellence in matters pertaining to his present job and his
potential for a better job.”
NEED
i) It provides information about the performance ranks.
ii) Performance appraisal is the systematic description of an employee’s job relevant
strengths and weaknesses.
iii) Performance appraisal is not job evaluation. It refers to how well someone is doing
the assigned job.
iv) Performance appraisal is a continuous process in every large scale organization.
v) Provides information which helps to counsel the subordinates.
vi) To prevent grievances and indisciplinary activities in case of Glaxo.
When they are conducted
Performance appraisals (PAs) are conducted at least annually, and annual employee
performance reviews appear to be the standard in most of organizations. However, "it
has been suggested by the questionnaires that appraisals should be conducted more
frequently (more than once a year) because it may have positive implications for both
the organization and employee.
PROCESS
The process of performance appraisal:-
1. Establishing performance standards
2. Communicating the Standards
3. Measuring Performance
4. Comparing the actual with the standards
5. Discussing the appraisal
6. Taking Corrective Action
3. Benefits of Performance Appraisals
Measures an employee’s performance.
Helps in clarifying, defining, redefining priorities and objectives.
Motivates the employee through achievement and feedback.
Facilitates assessment and agreement of training needs.
Helps in identification of personal strengths and weaknesses.
Plays an important role in Personal career and succession planning.
Clarifies team roles and facilitates team building.
Plays major role in organizational training needs assessment and analysis.
Improves understanding and relationship between the employee and the reporting
manager and also helps in resolving confusions and misunderstandings.
Plays an important tool for communicating the organization’s philosophies, values, aims,
strategies, priorities, etc among its employees.
Helps in counseling and feedback.
RANKINGMETHODS
For comparative purposes, particularly when it is necessary to compare people who work for
different supervisors, individual statements, ratings, or appraisal forms are not particularly
useful. Instead, it is necessary to recognize that comparisons involve an overall subjective
judgment to which a host of additional facts and impressions must somehow be added. There is
no single form or way to do this.
The best approach appears to be a ranking technique involving pooled judgment.
4. Past Oriented Methods
1. Rating Scales: Rating scales consists of several numerical scales
representing job related performance criterions such as dependability,
initiative, output, attendance, attitude etc. Each scales ranges from excellent
to poor. The total numerical scores are computed and final conclusions are
derived. Advantages – Adaptability, easy to use, low cost, every type of job
can be evaluated, large number of employees covered, no formal training
required. Disadvantages – Rater’s biases
2. Checklist: 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. Advantages – economy, ease of administration, limited training
required, standardization. Disadvantages – Raters biases, use of improper
weighs by HR, does not allow rater to give relative ratings
3. Forced Choice Method: The 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. Advantages – Absence of personal biases because of
forced choice. Disadvantages – Statements may be wrongly framed.
4. Forced Distribution Method: here employees are clustered around a
high point on a rating scale. Rater is compelled to distribute the employees
on all points on the scale. It is assumed that the performance is conformed
to normal distribution. Advantages – Eliminates Disadvantages – Assumption
of normal distribution, unrealistic, errors of central tendency.
5. Critical Incidents Method: The approach is focused on certain critical
behaviors of employee that makes all the difference in the performance.
Supervisors as and when they occur record such incidents. Advantages –
Evaluations are based on actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases, chances of
subordinate improvement are high. Disadvantages – Negative incidents can
be prioritized, forgetting incidents, overly close supervision; feedback may
be too much and may appear to be punishment.
5. 6. Behaviorally Anchored Rating Scales: statements of effective and
ineffective behaviors determine the points. They are said to be behaviorally
anchored. The rater is supposed to say, which behavior describes the
employee performance. Advantages – helps overcome rating errors.
Disadvantages – Suffers from distortions inherent in most rating techniques.
7. Field Review Method: This is an appraisal done by someone outside
employees’ own department usually from corporate or HR department.
Advantages – Useful for managerial level promotions, when comparable
information is needed, Disadvantages – Outsider is generally not familiar
with employees work environment, Observation of actual behaviors not
possible.
8. Performance Tests & Observations: 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. Advantage – Tests
may be apt to measure potential more than actual performance.
Disadvantages – Tests may suffer if costs of test development or
administration are high.
9. Confidential Records: Mostly used by government departments,
however its application in industry is not ruled out. Here the report is given
in the form of Annual Confidentiality Report (ACR) and may record ratings
with respect to following items; attendance, self expression, team work,
leadership, initiative, technical ability, reasoning ability, originality and
resourcefulness etc. 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 subjective and ratings can be manipulated
because the evaluations are linked to HR actions like promotions etc.
10. Essay Method: In this method the rater writes down the employee
description in detail within a number of broad categories like, overall
impression of performance, promoteability of employee, existing capabilities
and qualifications of performing jobs, strengths and weaknesses and training
needs of the employee. Advantage – It is extremely useful in filing
information gaps about the employees that often occur in a better-structured
checklist. Disadvantages – It its highly dependent upon the writing skills of
rater and most of them are not good writers. They may get confused success
depends on the memory power of raters.
6. 11. Cost Accounting Method: Here performance is evaluated from the
monetary returns yields to his or her organization. Cost to keep employee,
and benefit the organization derives is ascertained. Hence it is more
dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired
Comparisons): 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.
Ranking Methods: 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 and explanation.
Paired Comparison Methods: In this method each employee is rated with
another employee in the form of pairs. The number of comparisons may be
calculated with the help of a formula as under.
N x (N-1) / 2
Future Oriented Methods
1. Management By Objectives:It means management by objectives and the performance is
rated against the achievement of objectives stated by the management. MBO process goes as
under.
Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the employee
Establish new goals and new strategies for goals not achieved in previous year.
1. “Alternation ranking”:
Ranking of employees from best to worst on a trait or traits is another method for evaluating
employees. Since it is usually easier to distinguish between the worst and the best employees
than to rank them, an alternation ranking method is most popular. Here subordinates to be
rated are listed and the names of those not well enough to rank are crossed. Then on a form
the employee who is highest on the characteristic being measured and the one who is the
7. lowest are indicated. Then chose the next highest and the next lowest, alternating between
highest and lowest until all the employees to be rated have been ranked.
2. “Paired-comparison ranking”:
This technique is probably just as accurate as alternation ranking and might be more so. But
with large numbers of employees it becomes extremely time consuming and cumbersome.
Both ranking techniques, particularly when combined with multiple rankings (i.e., when two or
more people are asked to make independent rankings of the same work group and their lists
are averaged), are among the best available for generating valid order-of-merit rankings for
salary administration purposes.
360 DEGREE FEEDBACK
Many firms have expanded the idea of upward feedback into what the call 360-degree
feedback. The feedback is generally used for training and development, rather than for pay
increases.
Most 360 Degree Feedback system contains several common features. Appropriate parties –
peers, supervisors, subordinates and customers, for instance – complete survey, questionnaires
on an individual. 360 degree feedback is also known as the multi-rater feedback, whereby
ratings are not given just by the next manager up in the organizational hierarchy, but also by
peers and subordinates. Appropriates customer ratings are also included, along with the
element of self appraisal. Once gathered in, the assessment from the various quarters are
compared with one another and the results communicated to the manager concerned.
Limitations of performance appraisal:-
1. Bias of Appraiser:
The presence of ‘Halo Effect’ in evaluation of employees is the biggest weakness of this
method.
A high rate is given to favoured employees whereas unfriendly employees are rated
low.
8. 2. Ambiguity in Standards:
If the standards are not clear, the supervisors may follow different standards for different
employees.
3. Insufficient Evidence:
An employee who can impress the boss may get a positive evaluation though his
impression in his own department may be very poor. In such cases, the performance
appraisal will be superfluous.
4. Several Qualities Remain Without Appraisal:
Through performance appraisal, only few qualities of employees can be measured. All
individuals differ from each other in terms of background, values and behaviour.
5. Leniency or Strictness Tenancy:
Every evaluator has his own valuation procedure which is regarded as his own standard
for evaluation. For example, some teachers are strict in evaluation of answer books
whereas others are lenient. The lenient tendency is known as ‘Positive Leniency Error’
whereas strict tendency is called as ‘Negative Leniency Error’. The rating may be high
or low depending upon the nature of evaluators.
6. Average Rating Problem:
In order to give very low or very high rating, the top managers are required to give
reasons to justify the rating. The most common error committed in performance
appraisal is to give average rating to all employees. Moreover, low rating antagonizes
the subordinates.
7. Influence of Man’s Job:
There is a tendency to give a high rating to highly paid jobs. So a senior employee may
get a higher rating than a junior employee.
8. Similarity Error:
The evaluator tries to look those qualities in subordinates which he himself possesses.
Those who show the similar characteristics are rated high.
9. CHAPTER – 2
Literature review:
T. R. Manoharan (2002) has written In this article authors have discussed that they
have noticed that in many organizations appraisal systems are: (a) not relevant to
organizational objectives, (b) subject to personal bias, and (c) are often influenced
more heavily by personality than by performance. To eliminate these negative things
there is a attempt with a computer based tool called Data Envelopment Analysis
(DEA) which is used in the working place to evaluate the performance of employees.
Sample size is 23 employees. A DEA study provides the following four properties
(Paradi, Smith & Schaffnit-Chatterjee 2002).
A piecewise linear empirical envelopment surface to represent the best practice
frontier, consisting of units which exhibit the highest attainable outputs in relation to
all other in the population, for their given level of inputs
An efficiency metric to represent the maximal performance measure for each
DMU(Decision Making Units) measured by its distance to the frontier
Specific targets or efficient projections onto the frontier for each inefficient DMU
An efficient reference set or peer group for each DMU defined by the efficient units
closest to the DMU
Here regression analysis is used and correlation has been checked in between
these factors of DEA data set: Job knowledge, customer relation, work habit,
interpersonal relations, quality and quantity. Through this analysis they have
measured the efficiency and productivity of each employee.
10. Rafikul Islam(July 8-10, 2005) has discussed In this article scholars have discussed
that to evaluate the performance of organization that it is meeting its goals or not, it
is important to evaluate the performance of employees of the organization and for
this evaluation effective performance appraisal system should be maintained. They
have mentioned two main objectives of this study first is to give rewards to those
employees who have performed good in achieving organizational goals and second
is to identify those objectives which are not met and make an action plan to ensure
that they will achieved in future. In this paper AHP (analytic hierarchy process) to
evaluate employee performance. The criteria is used for appraisal is: quantity/quality
of the work, planning/organization, initiative/commitment, teamwork/cooperation,
communication and external factors. Their sample size is 294 employees. There are
many advantages of using AHP i.e AHP can compare two decision elements at a
time, it is easy and simple to use, it can easily accommodate multiple decision
makers to solve any specific problem.
Graeme Redshaw (2008) has written in this article is about to improve the
performance appraisal system of nurses in organization. Author distributed
questionnaire to 8 nurses to know about the performance appraisal system of the
organization. 7 nurses were nervous before the appraisal and 1 was confident after
the appraisal all nurses were agreed with the outcomes of appraisal. If the
successful appraisal system is established so there will be clear aims and
objectives, and will be able to implement fairly. Proper training will be provided to the
managers to appraise the staff correctly.
Diane Shaffer(May 11, 2009) has written in his article writer has discussed that
motivation and performance appraisal are interrelated. Motivation is dependent on
performance management. Employees who are motivated and happy with their jobs
want to stay connected with the company for a long time. Many organizations have
not implemented correct performance appraisal system to evaluate the performance
of employees. Author has discussed here that they should implement a successful
appraisal method/system and also give reward to employees who perform good in
the organization. Through this practice employee become motivated towards their
jobs and improve their performance and performance of organization as a whole will
also improve.
11. The questionnaire used to collect the primary data
Resource size- 10employees
Questionnaire on Performance Management
System
Disclaimer: The data gathered through this interview schedule would
be used exclusively for the purpose of academic research only.
Section – A: General Profile of Respondents:
1. Name - _______________________
2. Sex: Male Female
3. Age group: 25 – 35 36-45 46+
4.Designation : _______________________
5.Marital status : Married Unmarried
6.Educati onal quali fi cati on : SSLC HSC Diploma UG PG
7. Experience a. Less than 1year b. 2-4years c. 5-7 years d. More than 7
years
8.In your Opinion Performance Appraisal is ?
a. Evaluation of Employees b. Promotion of Employees
c. Job Satisfaction of Employees d. Motivation
9.. What are techniques used by your organization for assessing performance?
a) Observation b)development centre
c) checklists d) other(please specify)
10. Do you think performance appraisal improves organization result as it
requires a huge expense. Please state.
a. Yes because________________________________________________
b. No because_________________________________________________
12. 11. Do you think that performance of employees improve after process of
performance appraisal ?
a. Yes b. No
12. Do you think performance appraisal improves motivation and job
Satisfaction?
a. Yes b. No
13. How Performance Appraisal affects the productivity of the employees?
a) Positively b) Negatively c) Both
14. Does performance appraisal leads to identification of hidden potential?
a) Yes b) no
15. Do you think that performance appraisal can be done only in monetary
term? Please specify.
a. Yes because________________________________________________
b. No because_________________________________________________
16. Are there any other comments you would like to make about your
performance management arrangements not covered in the questions above?
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
13. Analysis and interpretation of data collected.
Gender of the employees
INTERFERENCE- In theorganization, 60% of the employees are female while 40%
are male.
0
1
2
3
4
5
6
7
Male Female
Series1
14. 3. Age group: 25 – 35 36-45 46+
INTERFERENCE- Theorganization has 70% of young employees it indicates that
there is new and warmblood in the organization where as the 20% of employees
are middle-aged and 10% are46+.
0
1
2
3
4
5
6
7
8
25-35 36-45 46+
Series1
15. 5.Marital status : Married Unmarried
INTERFERENCE- Theabove graph shows thatthe 70% of the employees working
in the organization are married and only 30% are unmarried.
0
1
2
3
4
5
6
7
8
Married Unmarried
Series1
16. 6.Educational qualification : SSLC HSC Diploma UG PG
INTERFERENCE- Theeducational qualifications of the employees is shown in the
graph, 30% of the employees are under graduated, and the superior bodies are
postgraduated.
0
1
2
3
4
5
6
7
8
SSLC HSC Diploma UG PG
Series1
17. 7. Experience a. Less than 1year b. 2-4years c. 5-7 years d.
More than 7 years
INTERFERENCE- Thework experience is on the abovegraph, only 10% of the
employees are having equal or less than one year experience whereas the other
the criteria are having equal weight age of 30% each.
0
0.5
1
1.5
2
2.5
3
3.5
1year or less 2-4years 5-7years More than 7years
Series1
18. 8.In your Opinion Performance Appraisal is ?
INTERFERENCE- The20% of employees think that performanceappraisalhelps in
evaluation of employees and promotion of employees, only 10% thinks that it is
job satisfaction of employees whereas the half (i.e. 50%) says thatit is the
motivation for employees
0
1
2
3
4
5
6
Evaluation of
employees
Promotion of
employees
Job Satisfaction of
employees
Motivation
Series1
19. 9. What are techniques used by your organization for assessing
performance?
INTERFERENCE- Techniques used for performanceappraisalin the organization
got weightage as observation-20%. Developmentcentre60%, checklists 10% and
the rest10%
0
1
2
3
4
5
6
7
Observation Development centre Checklists Other
Series1
20. 10. Do you think performance appraisal improves organization result as it
requires a huge expense?
INTERFERENCE- Mostof the employees in the organization thinks that it helps in
motivating the employees, only a handful(10%) thinks that it gives honor to the
employees.
0
1
2
3
4
5
6
7
8
9
10
Yes No
Series1
21. 11. Do you think that performance of employees improve after process of
performance appraisal?
INTERFERENCE- Everyonesays thatyes there is a improvein the performanceof
employees after performanceappraisal.
0
2
4
6
8
10
12
Yes No
Series1
22. 12. Do you think performance appraisal improves motivation and job
Satisfaction?
INTERFERENCE- Everyonesays thatyes there is an improvementin job
satisfaction of employees after performanceappraisal.
0
2
4
6
8
10
12
Yes No
Series1
23. 13. How Performance Appraisalaffects the productivity of the
employees?
INTERFERENCE- Mostof employees says that the performanceappraisalaffects
the organization positively and only some say it affects in both ways, positively
and negatively as well.
0
1
2
3
4
5
6
7
8
9
Positively Negatively Both
Series1
24. 14. Does performance appraisal leads to identification of hidden
potential?
INTERFERENCE- Everyonesays thatyes the performanceappraisalleads to find
the hidden potential of employees.
0
1
2
3
4
5
6
7
8
9
10
Yes No
Series1
25. 15. Do you think that performance appraisal can be done only in monetary
term?
INTERFERENCE- Noteveryoneneeds money, the abovegraph shows. As it
indicates that the employees may work more efficiently if their work is respected
and they are honored, not every time in monetary term only.
0
1
2
3
4
5
6
7
8
9
Yes No
Series1