This document provides an overview of performance appraisals and profitability analysis for businesses. It discusses various methods for conducting performance appraisals, including rating scales, checklists, forced choice, and behavioral anchored rating scales. It also outlines objectives of performance appraisals like promotions, training, and compensation reviews. The document then discusses techniques for analyzing profitability, like net profit margin, gross profit margin, and operating margin. Finally, it summarizes challenges faced by entrepreneurs like cash flow, hiring, time management, and self-doubt, providing strategies for addressing each challenge.

1. Growth strategies and
Networking
Presented by
Ranjeet singh
2nd SEM. M-Pharm
BAPUJI PHARMACY COLLEGE
DAVANAGERE 1

2. Performance appraisal:
• Performance appraisal is a systematic process that evaluates an
individual employee’s performance in terms of his productivity
with respect to the pre-determined set of objectives.
• It is an annual activity, which gives the employee an
opportunity to reflect on the duties that were dispatched by
him, since it involves receiving feedback regarding their
performance.
• It also evaluates the individual’s attitude, personality, behaviour
and stability in his job profile. There are various applications of
appraisals like compensation, performance improvement,
promotion, termination, test validation, and much more.
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3. • Various performance appraisal methods are followed by
organisations to ensure fair appraisals to their employees.
• The criteria for performance appraisal methods are based
on various aspects like productivity, quality of work,
duration of service and training. Productivity is measured
mostly in the case of manufacturing i.e. the number of
units manufactured or delivered by the employee.
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4. Objectives of Performance Appraisals
• Use of Performance Appraisals
1. Promotions
2. Confirmations
3. Training and Development
4. Compensation reviews
5. Competency building
6. Improve communication
7. Evaluation of HR Programs
8. Feedback
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5. TECHNIQUES / METHODS OF
PERFORMANCE APPRAISALS
Broadly all methods of appraisals can be divided into two
different categories.
• Past Oriented Methods
• Future Oriented Methods
• 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.
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6. 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
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7. 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.
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8. 5.Critical Incidents Method: The approach is focused on
certain critical behaviors of employee that makes all the
difference in the performance.
Advantages – Evaluations are based on actual job behaviors,
feedback is easy, chances of subordinate improvement are
high.
Disadvantages – Negative incidents can be prioritized,
forgetting incidents, feedback may be too much and may
appear to be punishment.
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. 8

9. 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,
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 measure potential more than
actual performance.
Disadvantages – Tests may suffer if costs of test development
or administration are high. 9

10. 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.
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, existing
capabilities and qualifications of performing jobs, strengths and
weaknesses and training needs of the employee.
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11. 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 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.
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12. • 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. this 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.
Advantage – It is more useful for managerial positions.
Disadvantages – Not applicable to all jobs, allocation of merit pay
may result in setting short-term goals rather than important and
long-term goals etc.
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13. 2.Psychological Appraisals: 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
depend upon the skills of psychologists who perform the
evaluation.
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14. 3.360-Degree Feedback: It is a technique which is systematic
collection of performance data on an individual group, team
members, customers, peers and self. In fact anyone who has
useful information on how an employee does a job may be one
of the appraisers.
• This technique is highly useful in terms of broader perspective,
greater self-development and multi-source feedback is useful.
• 360-degree appraisals are useful to measure inter-personal
skills, customer satisfaction and team building skills.
• However on the negative side, receiving feedback from multiple
sources can be intimidating, threatening etc.
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15. Profitability
• Definition: Profitability is the ability of a business to earn a
profit. A profit is what is left of the revenue a business
generates after it pays all expenses directly related to the
generation of the revenue, such as producing a product, and
other expenses related to the conduct of the business
activities.
• There are many different ways for you to analyse
profitability. This lesson will focus on profitability ratios,
which are a measure of the business' ability to generate
revenue compared to the amount of expenses it incurs. Let's
look at a few of the primary analytical approaches:
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16. Net Profit Margin
• Net profit margin measures the profitability of your business. The
formula is:
• Net profit margin = (net income / net sales) * 100 (We multiply by
100 to make the result a percentage)
Gross Profit Margin
• Gross profit margin measures the cost of production. The formula
is:
• Gross profit margin = (gross profit / net sales) * 100.
Operating Margin
• Operating margin tells you how much costs unrelated to producing
the product for sale are cutting into your profits. Costs unrelated to
production can include such things as general business, staff and
administrative expenses of the business. Net operating margin is
often referred to as your earnings before interest and taxes. The
formula for this is:
• Operating margin = (operating profit / net sales) * 100
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17. Types of Control
strategic, Tactical, and Operational Control
• Organizational control involves using strategy, tactics, and
operational oversight to monitor and improve company
processes.
• Organizations are built with the goal of profitability through
processes in mind. The organizational control approach
incorporates goals and the strategy used to reach them.
• Strategic management is a level of managerial activity below
setting goals and above tactics. Strategic management
provides overall direction to an enterprise.
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18. • A tactic is a method intended to fulfill a specific objective in
the context of an overall plan.
• Operational control regulates day-to-day output relative to
schedules, specifications, and costs.
• Good managers have a broad vision of the process, a series of
embedded tactics for efficiency and differentiation, and a
careful operational control for cost control.
In management terms, control means setting standards,
measuring actual performance, and taking corrective action.
Control involves making observations about past and present
control functions to make assessments of future outputs.
These are called feedback, concurrent control, and feed
forward, respectively.
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19. Feedback
• Feedback is a process in which information about the past or
the present is used to influence the present or future. As part
of a chain of cause-and-effect that forms a circuit or loop,
actions are said to “feed back” into themselves.
• Feedback helps an organization seeking to improve its
performance make the necessary adjustments.
• Feedback serves as motivation for many people in the
workplace. When employees receive negative or positive
feedback, they decide how to apply it in their daily work.
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20. Concurrent Control
• Concurrent control is active engagement in a current process
where observations are made in real time. A set of processes
are implemented to monitor project execution to discover
and solve problems or potential problems in a timely manner.
Picture a floor manager actively measuring each component
of the operation with a checklist to identify issues as they
occur.
Feed forward
• Feed forward is a management and communication term that
refers to giving a control impact to an employee or an
organization from which you are expecting an output.
• Feed forward is not just pre-feedback, because feedback is
always based on measuring an output and sending feedback
on that output. Pre-feedback given without measuring output
may be understood as a confirmation or just an
acknowledgment of control command. 20

21. challenges faced by entrepreneurs today:
1. Cash flow : it is essential to small business survival, yet many
entrepreneurs struggle to pay the bills (let alone themselves)
while they’re waiting for checks to arrive.
• Part of the problem stems from delayed invoicing, which is
common in the entrepreneurial world.
• You perform a job, send an invoice, then get paid (hopefully)
30 days later.
• In the meantime, you have to pay everything from your
employees or contractors to your mortgage to your grocery
bill.
• Waiting to get paid can make it difficult to get by and when a
customer doesn’t pay, you can risk everything.
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22. strategy for improving cash flow is to require faster
invoice payments. This means if a customer is late on
payment I have two weeks to address it and get paid
before the next month’s bills are due.
One way to improve cash flow is to require a down
payment for your products and services.
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23. 2.Hiring employees
oThe challenge: Do you know who dreads job interviews the
most? It’s not prospective candidates – it’s entrepreneurs.
oThe hiring process can take several days of your time:
reviewing resumes, sitting through interviews, sifting through
so many unqualified candidates to find the diamonds in the
rough. Then, you only hope you can offer an attractive package
to get the best people on board and retain them long-term.
Far too many help wanted ads are incredibly vague in terms of
what qualifications candidates must have, what the job duties
are, what days and hours will be worked, and what wages and
benefits will be paid. You can save yourself a ton of time by
pre-qualifying candidates.
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24. 3.Time management
oThe challenge: Time management might be the biggest problem
faced by entrepreneurs. If you only had more time, you could
accomplish so much more!
oThe solution: Make time. Like money, it doesn’t grow on trees,
of course, so you have to be smart about how you’re spending
it. Here’s how:
Create goal lists: You should have a list of lifetime goals, broken
down into annual goals, broken down into monthly goals, then
broken down into weekly goals. Your weekly goals, then will be
broken down into specific tasks by day. In this manner, what is
on your task list in any given day is all you need to do to stay on
track with your lifetime goals
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25. If any tasks do not mesh with your goals, eliminate it or
delegate them.
If any tasks do not absolutely have to be completed by
you, delegate them.
Consistently ask yourself: “Is what I’m doing right now
the absolute best use of my time?”
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26. 4.Delegating tasks
oThe challenge : You know you need to delegate or
outsource tasks, but it seems every time you do
something gets messed up and you have to redo it
anyway.
oThe solution: Find good employees (see above) and good
outsourced contract help, for starters. You might have to
pay a little more for it, but the savings in time (and the
resulting earning potential) more than make up for it.
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27. 5.Choosing what to sell
oThe challenge: You know you could make a mint if you
just knew what products and services to sell. You’re just
unsure how to pick a niche.
oThe solution: Admit that you’re weak in identifying
prosperous niches, and delegate the task to someone
who is strong in this area. Have them conduct market
research and create a report with suggested niches,
backed by potential profit margins and a complete SWOT
analysis: Strengths, Weaknesses, Opportunities, and
Threats.
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28. 6.Marketing strategy
oThe challenge: You don’t know the best way to market your
products and services: print, online, mobile, advertising, etc.
You want to maximize your return on investment with efficient,
targeted marketing that gets results.
oThe solution: Again, if you’re not adept at creating marketing
plans and placing ads, it’s a good idea to outsource your
marketing strategy to someone who is. At this point, all you
need is a core marketing plan.
7.Capital
oThe challenge: You want to start or grow your business, but
you have little capital to do it with.
oThe solution: There are many ways to earn funding, from
traditional bank loans to family and friends.
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29. 8.Strapped budget
oThe challenge: Even though cash flow is fine, it seems you
never have enough in your budget to market your company to
its full potential.
oThe solution: The key is to prioritize your marketing efforts
with efficiency in mind – spend your money where it works –
and reserve the rest for operating expenses and
experimenting with other marketing methods.
9.Business growth
oThe challenge: We’re assuming you are growing, not that you
can’t grow, and you’ve come to the point at which you can’t
take on any more work in your current structure.
oThe solution: Create new processes that focus on task
delegation.
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30. 10.Self-doubt
oThe challenge: An entrepreneur’s life is not enviable, at least
in the beginning. It’s extremely easy to get discouraged when
something goes wrong or when you’re not growing as fast as
you’d like. Self-doubt creeps in, and you feel like giving up.
oThe solution: Being able to overcome self-doubt is a
necessary trait for entrepreneurs. Having a good support
system will help: family and friends who know your goals and
support your plight, as well as an advisory board of other
entrepreneurs who can give direction of your business.
oOne of the best ways to deal with self-doubt is to work your
goals and tasks lists.
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31. Demands of Successful Entrepreneurs:
1. Know your personal brand: Entrepreneurs must interact
effectively with others. Successful entrepreneurs know
themselves well and can perceive others accurately.
• Having strong talent in this domain enables entrepreneurs to
connect and interact with employees, customers, suppliers,
and investors in a way that results in positive business
outcomes. This demand is relevant when the business is
established and entrepreneurs are likely to conduct
negotiations, influence others, and motivate
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32. 2. Take on challenges: There is an inherent risk involved in
venture creation. Entrepreneurs must constantly make decisions
in complex situations and often operate without complete
knowledge of the factors that could positively or negatively affect
their ventures. Moreover, most businesses are created with
scarce resources, high uncertainty, and ambiguity. These
conditions would deter most people from taking on the task of
starting or growing a venture.
3. Think through possibilities and practicalities: Entrepreneurs
must be creative and think beyond the boundaries of what exists.
High scores in this domain lead entrepreneurs to stretch their
imagination while absorbing existing facts to blend the present
with the future.
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33. 4. Promote the business: Successful entrepreneurs are their
own best spokespeople. Strong talent in this domain makes it
easy for them to persuade others. This enables them to convey
a clear and compelling message that promotes their point of
view and their business. This demand is relevant in the early
and the established stages of business.
5. Focus on business outcomes: Running a business requires
focus. Profit orientation is a spontaneous, moment-to-moment
mental activity. Highly successful entrepreneurs judge decisions
as good or bad based on their observed or anticipated effect on
profit. Successful business focused entrepreneurs set goals and
live by their commitment to them.
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34. 6. Be a self-starter: Start ups and businesses that are growing
rapidly demand long hours of work and high levels of energy
and stamina. Successful entrepreneurs are passionate doers
who push to make things happen. They show initiative and
possess an enduring sense of urgency because there is never
enough time to do it all. They see opportunity where others see
roadblocks. This demand is relevant in the early and the
established stages of business development.
7. Multiply yourself through delegation: As businesses grow,
the autocratic, unilateral decision making style of early-stage
entrepreneurs must change into one in which the
entrepreneurs delegate authority and take on the role of a
team manager.
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35. 8. Build relationships; Starting or growing a business involves
interacting with many people. An entrepreneur may be the
originator of the idea, but almost immediately, he or she must
interact with others to secure resources, engage with potential
customers and suppliers, or hire and manage employees. The
ability to build strong relationships is crucial for survival and
growth.
• Successful entrepreneurs are adept at building relationships.
• They have strong social awareness and can attract and
maintain a constituency
• These entrepreneurs also have high standards of personal
conduct that enable others to trust them and form strong
relationships with them.
• This demand is relevant in the early and established stages.
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36. References:
• https://www.deluxe.com/sbrc/financial/top-10-challenges-
faced-entrepreneurs-today-solved
• http://www.hajocacareers.com/files/2012/10/the_10_deman
dsof successful entrepreneurs.pdf
• https://www.sumhr.com/top-performance-appraisal-methods-
startups-small-businesses/
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