Performance Appraisal at HAL

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CHAPTER-I
INTRODUCTION

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INTRODUCTION
There are number of forces that make HR the greatest support system in the
Organization. Employees play a great role in the success of any organization. So measuring
the performance of employees is really a task of great concern and also recruiting the right
person for the right job contributes to the success of the organization.
This Project Report has been completed in partial fulfillment of management
program, Master of Business Administration (MBA) in the company “Hindustan
Aeronautics Limited”. The topic of my project was “A study on Performance Appraisal
in Hindustan Aeronautics Limited”. This topic comes under Performance Management
System of Hindustan Aeronautics Limited.
Hindustan Aeronautics Limited (HAL) indisputably is an Asian aerospace giant,
with 16 production units and nine research and design centres spread across seven locations
in India. It has its headquarters in Bangalore. HAL is mainly involved in designs,
manufactures, repairs, and over-hauls aircrafts, helicopters, aero-engines, avionics,
instruments, and accessories. The company also designs, manufactures, and maintains
aerospace defence equipment. In addition, it develops software for aerospace application and
provides design consultancy services. The company also conducts research and development
programs for the military and civil aviation sectors. Since its inception, 1964, it has
pioneering efforts in strategic Human Resource Development (HRD) goal of the company.
The performance appraisal system emphasizes on the value adding services
rather on daily routine activities. Giving slow performers necessary training and high
performer’s growth opportunity has been a continuous procedure all these years. The other
HRD Plan also includes time-to-time OD Interventions to address specific requirement of the
Company.
Once the employee has been selected, trained and motivated, he is then
appraised for his performance. Performance Appraisal is the step where the Management
finds out how effective it has been at hiring and placing employees. If any problems are
identified, steps are taken to communicate with the employee and remedy them.

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Performance Appraisal is the process of assessing the performance and progress
of an employee or of a group of employees on a given job and his potential for the future
development. According to “EDWIN B FLIPO” Performance appraisal is the systematic,
periodic and impartial rating of an employee’s excellence in the matters pertaining to his
present job and his potential for a better job”. Performance appraisal focus on the
performance and future potential of the employee. Its aim is not simply to decide salary
increment but to develop a rational basis for personal decisions. Merit rating measures, what
the person is (traits) where as performance appraisal measures what the person does
(performance).
1.1 Statement of the problem
Managing human resources in today’s dynamic environment is becoming more
and more complex as well as important. All organization faces the problem of directing the
energies of their staff to the task of achieving business goals and objectives. In doing so,
organization need to devise means to influence and channel the behaviors’ of their employees
so as to optimize their contributions. Recognition of people as a valuable resource in the
organization has lead to increased trends in employee maintained job security. Performance
Appraisals constitute one of the major management tools employed in this process. In this
report, the performance appraisal process carried out in Hindustan Aeronautics Limited is
studied and evaluated.
1.2 Significance of the study
Once an employee is selected in an organization he is trained and motivated to
perform job. Then performance of the employee is assessed and evaluated through the system
called “Performance Appraisal”. Performance Appraisal is the most significant and
indispensable tool in the organization, which helps the management in taking decisions
related to promotions, retentions and proper compensation to the employees. It also suggests
the management to have the cases of employees who need any training, counseling and
mentoring. In view of significance of performance appraisal, the study was undertaken on the
proposed topic, “a study on performance appraisal at Hindustan Aeronautics Limited”.

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1.3 Review of literature
Performance Appraisals are essential for the effective management and
evaluation of staff. Appraisals help develop individuals, improve organizational performance,
and feed into business planning. Formal performance appraisals are generally conducted
annually for all staff in the organization. Each staff member is appraised by his or her line
manager. Directors are appraised by the CEO, who is appraised by the chairman or company
owners, depending on the size and structure of the organization.
The amount of research regarding the topic “Performance Appraisal” is so
vast. The topic is literally not new; it is as old as the formation of the organizations. Before
the early 1980’s, majority of theoretical studies emphasized on revamping the rating system
within the organization. The actions were a great thing to reduce the chaotic of employee’s
performance appraisal (Feldman, 1981). With the passage of the time the methods and rating
system among the employees got enhanced and received an immense appreciation and
attention of the managers.
According to Laurie J Mullins, The process of management involves a
continuous judgement on the behaviour and performance of staff. One way in which to
review the performance and potential of staff is through a system of performance appraisal. It
is important that members of the organization know exactly what is expected of them, and the
yardsticks by which their performance and results will be measured. A formalized and
systematic appraisal scheme will enable a regular assessment of the individual’s performance,
highlight potential, and identify training and development needs. Most importantly, an
effective appraisal scheme can improve the future performance of staff. The appraisal scheme
can also form the basis of a review of financial rewards and planned career progression.
Performance appraisal is therefore a crucial activity of the management of human resources.
A comprehensive appraisal system can provide the basis for key managerial decisions such as
those relating to allocation of duties and responsibilities, pay, empowerment and levels of
supervision, promotions, training and development needs, and terminations.
According to ACAS, the identification of individual training needs will best
be supported by a performance appraisal system which focuses on future development needs.
The system should be used by managers and workers to:

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 Create career plans which encompass not only training proposals but also areas of
work experience, job goals and personal development.
 Consider career tracks which may be as much about lateral moves designed to
expand learning and competence as upward promotion.
1.3.1 Benefits of Appraisal
The underlying objective of performance appraisal is to improve the
performance of individuals leading to improvement in the performance of the organization as
a whole. An effective appraisal scheme, therefore, offers a number of potential benefits to
both the individual and the organization.
 It can identify an individual’s strengths and areas of development and indicate
how such strengths may best be utilized.
 It can help to reveal problems which may be restricting progress and causing
inefficient work practices.
 It can develop a greater degree of consistency through regular feedback on
performance and discussion about potential. This encourages better performance
from staff.
 It can provide information for human resource planning, to assist succession
planning, to determine suitability for promotion and for particular types of
employment and training.
 It can improve communications by giving staff the opportunity to talk about their
ideas and expectations, and how well they are progressing.
1.3.2 Principles and Ethics of Performance Appraisal
Laurie suggests that performance appraisal has its roots in three well substantiated
psychological principles. People work, learn, and achieve more when they are given:
a) adequate feedback as to how they are performing, in other words knowledge of
results;
b) clear attainable goals; and
c) involvement in the setting of tasks and goals

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These principles underpinning effective performance appraisal have wider relevance than
simply improvements in individual performance. They are also concerned with the
development of a participative organizational culture by contributing to the broader goals of
creating satisfying, effective jobs, encouraging the involvement of people in the organization,
and the development of people.
Laurie goes on to suggest that a performance system operated in an
organizational context must, if it is to have any credibility, be based on clear ethical
principles. These are particularly important to an involved culture where individual
development, trust and openness are fundamental values. These principles would apply to
both appraiser and appraisee:
 appraise on the basis of representative information
 appraise on the basis of sufficient information
 appraise on the basis of relevant information
 make an honest appraisal
 keep written and oral appraisals consistent
The design and implementation of a successful appraisal system requires attention to the
following:
 Traditionally most appraisal schemes have been applied to staff in managerial,
supervisory or administrative positions. There is, however, no reason why appraisal
should not be applied to manual workers – especially skilled workers and those
involved in technical duties. The increasing adoption of flexible working practices
and harmonisation of conditions of employment, together with attempts to overcome
the attitude of ‘them and us’, has prompted the extension of appraisal to cover all
members of staff.
 The traditional practice is for appraisal to be carried out by the immediate manager or
supervisor – as the person who allocates work and has the closest knowledge of the
individual’s duties and performance. There is, however, an argument in favour of
appraisal at a higher level. This would extend the lines of communication and
feedback. This may also help to demonstrate ‘fair play’ and to overcome problems of
different managers/supervisors applying different standards of appraisal. A third
approach is for the immediate manager/supervisor to conduct the appraisal and write

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the report. Senior management are then asked to comment, to monitor the system, to
review the consistency of reporting and to countersign as confirmation of approval.
Appraisal can also be undertaken by a member of the HR department, or by
assessment centres. The removal of middle levels of management, flatter structures
and greater empowerment of self-managed teams also has possible implications for
who should undertake the appraisal process.
 With the majority of schemes, staffs receive an annual appraisal; and for many
organisations this may be sufficient. However, the frequency of appraisal should be
related to the nature of the organisation, the purpose and objectives of the scheme, and
the characteristics of the staff employed. For some organisations, for example, those
operating in a dynamic, changing environment, more frequent appraisals may be
called for. More frequent appraisals may also be appropriate for new members of
staff, those recently promoted or appointed to a new position or for those whose past
performance has not been up to the required standard.
 There is an argument which suggests that open reporting restricts managers from
giving a completely honest and frank appraisal. However, the more staff sees of their
appraisal report – that is the more ‘open’ the system – the more they are likely to
accept the process of appraisal. Staffs are better able to check the consistency of the
appraisal report with verbal feedback from the manager. With an open system of
reporting, staff should be given the opportunity to sign the completed form and to add
any comments on their perception of the accuracy of the assessment.
1.4 Objectives of the study
 To study and identify the performance appraisal practice of the company.
 To find out the perception of employees about performance appraisal.
 To make suitable recommendations to the company, after identifying the
weakness in performance appraisal.
 To understand performance based promotions.
 To find out the whether the Performance Appraisal system is able to gauge the
real performance of employees.
 To know the connection between Performance Appraisal and goal
achievement.

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 To understand the effectiveness of Performance Appraisal system on
identifying the training needs.
 To find out the effect of Performance Appraisal on HR function such as
selection, training and transfer.
1.5 Methodological design of the study
1.5.1 Research Design
A research design is a type of blueprint prepared on various types of blueprints
available for the collection, measurement and analysis of data. A research design calls for
developing the most efficient plan of gathering the needed information. The design of a
research study is based on the purpose of the study. A research design is the specification of
methods and procedures for acquiring the information needed. It is the overall pattern or
framework of the project that stipulates what information is to be collected from which
source and by what procedures.
1.5.2 Research Design Used for the Study
Descriptive research design: It deals with describing the characteristics of a particular
individual, or a group. The design focuses on the following:
a) Formulating the objective of the study
b) Designing the methods of data collection
c) Selecting the sample
d) Collecting the data
e) Processing and analyzing the data
f) Reporting the findings
1.5.3 Sources of Data Collection
Collection of data is the most important stage in the research process. If any
mistake occurs in the collection of data, it will affect the entire study. Hence care was
exercised in the process of collection of data. The study is descriptive, empirical and
analytical in nature. It is descriptive with regard to the theoretical concepts and regarding the
analysis and interpretation of data collected. Data will be collected both from primary and
secondary.

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Two types of data were collected.
1) Primary Data
Primary data are collected with the help of structured and unstructured interview
conducted with the managerial executives and employees of HAL with the help
of questionnaire.
2) Secondary Data
These are the sources containing data collected and compiled for another
purpose. The secondary data consists of readily available data and statistical
statements and reports that the researcher may use for further studies and
reference. The secondary data was collected from the published sources like data
published in the internet, company records, journals reports, books and
company’s website.
1.6 Sampling Design
Sample design is a definite plan for obtaining sample from a given population.
It refers to the procedure, adopted by a researcher for selecting items for a sample. In this
project random sampling method is used. The respondents are the permanent employees of
HAL, Bangalore.
1.6.1 Sample Population
Sample population in the organization is 425.
1.6.2 Sample Size
In this study the sample size is 75 employees.
1.7 Tools Used for Analysis
The research was conducted by using contact instruments like questionnaire,
interview and observation. Questions were prepared accordingly in line with the scaling
method. Five point scales used here are strongly agree, agree, disagree, strongly disagree, not
applicable. Two point scales like yes or no questions and open ended questions are also used
here.
The data is analyzed through simple percentage method. It is a useful method

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of expressing the relative frequency of survey responses and other data. The percentage
frequency distributions are displayed as tables and bar graphs.
1.8 Reference Period
The reference period is the time for which the data is to be collected and
analyzed. The period of the study was 8 weeks and the data from last 5 years were referred.
1.9 Limitations of the Study
 Due to inadequate time, it is not possible to analyze all aspects relevant to the study.
 Certain confidential information regarding study was not available and the analysis
and interpretation are subject to limitations.
 The sample includes only a percentage of the total number of workers working in the
company.
 The survey was only to the HR department of the company.
 Most of the respondents seemed to be very busy with their jobs and they are not
interested in answering the questionnaire.
 The bias on the parts of respondents cannot be ignored.
 Accuracy of the study is purely based on the information as given by the respondents.
1.10 Chapterisation
 The first chapter gives a general introduction about the study, statement of the
problem, scope of the study, objectives of the study, review of literature, research
methodology, sampling design, tools used for analysis, reference period, and
limitations of the study.
 The second chapter deals with the theoretical frame work of the study.
 The third chapter gives a clear picture about company profile of Hindustan
Aeronautics Limited, industry profile, organization structure, product profile,
department details and detailed description of the topic.
 The forth chapter deals with data analysis and interpretation which includes tables,
graphs etc.
 The fifth chapter carries summary of findings, suggestion and conclusion.
 The sixth chapter contains bibliography and appendices.

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CHAPTER- II
THEORETICAL FRAMEWORK
OF THE STUDY

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THEORETICAL FRAMEWORK OF THE STUDY
The theoretical framework of the study is a structure that supports a theory of a
study work. It presents the theory which explains why the problem under the study exists.
Thus, the theoretical framework is a theory that serves as a basis for conducting research. The
main purpose is to help us to see clearly the variables that pertain to the study. It can provide
us with a general framework for data analysis and it is essential in preparing a study using
descriptive methods.
2.1 Performance Appraisal
A performance appraisal (PA), performance review, performance evaluation, or
employee appraisal is a method by which the job performance of an employee is evaluated.
Performance appraisals are a part of guiding and managing career development. It is the
process of obtaining, analyzing and recording information about the relative worth of an
employee to the organization. Performance appraisal is an analysis of an employee’s recent
successes and failures, personal strengths and weaknesses, and suitability for promotion or
further training. It is also the judgement of an employee’s performance in a job based on
considerations other than productivity alone.
2.2 Main Features
A performance appraisal is a systematic and periodic process that assesses an
individual employee’s job performance and productivity in relation to certain pre-established
criteria and organizational objectives. Other aspects of individual employees are considered
as well, such as organizational citizenship behavior, accomplishments, potential for future
improvement, strengths and weaknesses, etc. To collect PA data, there are three main
methods: objective production, personnel, and judgmental evaluation. Judgmental evaluations
are the most commonly used with a large variety of evaluation methods. Historically, PA has
been conducted annually (long-cycle appraisals), however many companies are moving
towards shorter cycles (every six months, every quarter), and some have been moving into
short-cycle (weekly, bi-weekly) PA. The interview could function as “providing feedback to
employees, counseling and developing employees, and conveying and discussing
compensation, job status, or disciplinary decisions”. PA is often included in performance

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management systems. Performance management systems are employed “to manage and
align" all of an organization's resources in order to achieve highest possible
performance. How performance is managed in an organization determines to a large extent
the success or failure of the organization. Therefore, improving PA for everyone should be
among the highest priorities of contemporary organizations.
Some applications of PA are compensation, performance improvement,
promotions, termination, test validation, and more. While there are many potential benefits of
PA, there are also some potential drawbacks. For example, PA can help facilitate
management-employee communication; however, PA may result in legal issues if not
executed appropriately as many employees tend to be unsatisfied with the PA process.
2.3 Application of Results
 A central reason for the utilization of performance appraisals (PAs) is performance
improvement (“initially at the level of the individual employee, and ultimately at the
level of the organization”).
 It acts as a basis for employment decisions (e.g. promotions, terminations, transfers),
as criteria in research (e.g. test validation),
 To aid with communication (e.g. allowing employees to know how they are doing and
organizational expectations),
 To establish personal objectives for training” programs, for transmission of objective
feedback for personal development, “as a means of documentation to aid in keeping
track of decisions and legal requirements” and in wage and salary administration.
 PAs can aid in the formulation of job criteria and selection of individuals “who are
best suited to perform the required organizational tasks”.
 A PA can be part of guiding and monitoring employee career development. PAs can
also be used to aid in work motivation through the use of reward systems.
2.4 Potential Benefits of Performance Appraisals
There are a number of potential benefits of organizational performance
management conducting formal performance appraisals (PAs). There has been a

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general consensus in the belief that PAs lead to positive implications of
organizations. Furthermore, PAs can benefit an organization’s effectiveness. One way is PAs
can often lead to giving individual workers feedback about their job performance. From this
may spawn several potential benefits such as the individual workers becoming more
productive.
Other potential benefits include:
 Facilitation of communication: communication in organizations is considered an
essential function of worker motivation. It has been proposed that feedback from PAs
aid in minimizing employees’ perceptions of uncertainty. Fundamentally, feedback
and management-employee communication can serve as a guide in job performance.
 Enhancement of employee focus through promoting trust: behaviors, thoughts,
and/or issues may distract employees from their work, and trust issues may be among
these distracting factors. Such factors that consume psychological energy can lower
job performance and cause workers to lose sight of organizational goals. Properly
constructed and utilized PAs have the ability to lower distracting factors and
encourage trust within the organization.
 Goal setting and desired performance reinforcement: organizations find it efficient
to match individual worker’s goals and performance with organizational goals. PAs
provide room for discussion in the collaboration of these individual and organizational
goals. Collaboration can also be advantageous by resulting in employee acceptance
and satisfaction of appraisal results.
 Performance improvement: well constructed PAs can be valuable tools for
communication with employees as pertaining to how their job performance stands
with organizational expectations. “At the organizational level, numerous studies have
reported positive relationships between human resource management (HRM)
practices" and performance improvement at both the individual and organizational
levels.
 Determination of training needs: “Employee training and development are crucial
components in helping an organization achieve strategic initiatives”. It has been
argued that for PAs to truly be effective, post-appraisal opportunities for training and
development in problem areas, as determined by the appraisal, must be offered. PAs
can especially be instrumental for identifying training needs of new employees.

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Finally, PAs can help in the establishment and supervision of employees’ career
goals.
2.5 Potential Complications of Performance Appraisals
Despite all the potential advantages of formal performance appraisals (PAs),
there are also potential drawbacks. It has been noted that determining the relationship
between individual job performance and organizational performance can be a difficult
task. Generally, there are two overarching problems from which several complications
spawn. One of the problems with formal PAs is there can be detrimental effects to the
organizations involved if the appraisals are not used appropriately. The second problem with
formal PAs is they can be ineffective if the PA system does not correspond with
the organizational culture and system.
Complications stemming from these issues are:
 Detrimental to quality improvement: it has been proposed that the use of PA
systems in organizations adversely affect organizations’ pursuits of quality
performance. It is believed by some scholars and practitioners that the use of PAs is
more than unnecessary if there is total quality management.
 Negative perceptions: “Quite often, individuals have negative perceptions of PAs”.
Receiving and/or the anticipation of receiving a PA can be uncomfortable and
distressful and potentially cause “tension between supervisors and subordinates”. If
the person being appraised does not trust their employer, appraiser or believe that they
will benefit from the process it may become a "tick box" exercise.
 Errors: Performance appraisals should provide accurate and relevant ratings of an
employee’s performance as compared to pre-established criteria/goals (i.e.
organizational expectations). Nevertheless, supervisors will sometimes rate employees
more favorably than that of their true performance in order to please the employees
and avoid conflict. “Inflated ratings are a common malady associated with formal"
PA.
 Legal issues: when PAs are not carried out appropriately, legal issues could result
that place the organization at risk. PAs are used in organizational disciplinary

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programs as well as for promotional decisions within the organization. The improper
application and utilization of PAs can affect employees negatively and lead to legal
action against the organization.
 Performance goals: Performance goals and PA systems are often used in association.
Negative outcomes concerning the organizations can result when goals are overly
challenging or overemphasized to the extent of affecting ethics, legal requirements, or
quality. Moreover, challenging performance goals can impede on employees’ abilities
to acquire necessary knowledge and skills. Especially in the early stages of training, it
would be more beneficial to instruct employees on outcome goals than on
performance goals.
 Derail merit pay or performance-based pay: Some researchers contend that the
deficit in merit pay and performance-based pay is linked to the fundamental issues
stemming from PA systems.
2.6 Improving Performance Appraisals
Although performance appraisals can be so easily biased, there are certain steps
that can be taken to improve the evaluations and reduce the margin of errors through the
following:
 Training: Creating an awareness and acceptance in the people conducting the
appraisals that within a group of workers, they will find a wide range in difference of
skills and abilities.
 Providing Feedback to Raters: Trained raters provide managers who evaluated
their subordinates with feedback, including information on ratings from other
managers. This reduces leniency errors.
 Subordinate Participation: By allowing employee participation in the evaluation
process, there is employee-supervisor reciprocity in the discussion for any
discrepancies between self ratings and supervisor ratings, thus, increasing job
satisfaction and motivation.

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2.7 Who conducts them?
Human Resource Management and Performance Management
Human resource management (HRM) conducts performance management.
Performance management systems consist of the activities and/or processes embraced by an
organization in anticipation of improving employee performance, and therefore,
organizational performance. Consequently, performance management is conducted at the
organizational level and the individual level. At the organizational level, performance
management oversees organizational performance and compares present performance with
organizational performance goals. The achievement of these organizational performance
goals depends on the performance of the individual organizational members. Therefore,
measuring individual employee performance can prove to be a valuable performance
management process for the purposes of HRM and for the organization. Many researchers
would argue that “performance appraisal is one of the most important processes in Human
Resource Management”.
The performance management process begins with leadership within the
organization creating a performance management policy. Primarily, management governs
performance by influencing employee performance input (e.g. training programs) and by
providing feedback via output (i.e. performance assessment and appraisal). “The ultimate
objective of a performance management process is to align individual performance with
organizational performance”. A very common and central process of performance
management systems is performance appraisal (PA). The PA process should be able to
inform employees about the “organization's goals, priorities, and expectations and how well
they are contributing to them”.
2.8 When are they conducted?
Performance appraisals (PAs) are conducted at least annually, and annual
employee performance reviews appear to be the standard in most American
organizations. However, “it has been acknowledged that appraisals conducted more
frequently (more than once a year) may have positive implications for both the organization
and employee.” It is suggested that regular performance feedback provided to employees may
quell any unexpected and/or surprising feedback to year-end discussions. In a recent research
study concerning the timeliness of PAs, “one of the respondents even suggested that the

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performance review should be done formally and more frequently, perhaps once a month, and
recorded twice a year.”
Other researchers propose that the purpose of PAs and the frequency of their
feedback are contingent upon the nature of the job and characteristics of the employee. For
example, employees of routine jobs where performance maintenance is the goal would
benefit sufficiently from annual PA feedback. On the other hand, employees of more
discretionary and non-routine jobs, where goal-setting is appropriate and there is room for
development, would benefit from more frequent PA feedback.
2.9 Process of Performance Appraisal
 Establishing performance standards: 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. 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.
 Communicating the standards: 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 to
them. This will help them to understand their roles 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.
 Measuring the actual performance: 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.

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 Comparing the actual with the desired performance: 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 employees’ performance.
 Discussing results: 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 are discussed with the
aim of problem solving and reaching consensus. The feedback should be given with a
positive attitude as this can have an effect on the employees’ future performance. The
purpose of the meeting should be to solve the problems faced and motivate the
employees to perform better.
 Decision making: 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, transfers
etc.
Fig 2.1
Process of Performance Appraisal
Establishing performance
standards
Communicating standards and
expectations
Measuring the actual
performance
Comparing with standards

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2.10 Objectives of Performance Appraisal
 To measure and improve the performance of employees and increase their future
potential and value to the company.
 To provide a feedback to employees regarding their performance and related status.
 Performance appraisal makes it easier for the organization to make good decisions
about making sure that the most important positions are ﬁlled by the most capable
individuals.
 Performance appraisal helps make sure that the most talented individuals are retained
and to identify poor performers who affects the productivity of the organization.
 A good performance appraisal points out areas where individuals need to improve
their performance.
 Performance appraisal helps motivate people to deliver superior performance in
several ways.
 The performance appraisal process is commonly used to make sure that every member
of the organization sets and achieves effective goals.
 Performance appraisal forces managers to confront those whose performance is not
meeting the company’s expectations.
 Performance appraisal provides the mechanism to make sure that those who do better
work receive more pay.
 It identiﬁes the areas where coaching is necessary and encourages managers to take an
active coaching role.
 It determines Individual Training and Development Needs.
 A performance appraisal procedure allows the organization to communicate
performance expectations to every member of the team and assess exactly how well
each person is doing.
 It serves as a basis for influencing working habits of the employees.
Discussing results
(Providing feedback)
Decision making – taking
corrective actions

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2.11 Techniques/Methods of Performance Appraisal
Numerous methods have been devised to measure the quantity and quality of performance
appraisals. Each of the methods is effective for some purposes for some organizations only.
None should be dismissed or accepted as appropriate except as they relate to the particular
needs of the organization or an employee.
Broadly all methods of appraisals can be divided into two different categories.
 Past Oriented Methods
 Future Oriented Methods
2.11.1 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

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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.
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,

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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.
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

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2.11.2 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.
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.
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 depends upon the
skills of psychologists who perform the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943. An
assessment center 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 behaviors across a series of select exercises or work samples.
Assessees 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. The characteristics assessed in assessment center
can be assertiveness, persuasive ability, communicating ability, planning and
organizational ability, self confidence, resistance to stress, energy level, decision making,
sensitivity to feelings, administrative ability, creativity and mental alertness etc.
Disadvantages – Costs of employees traveling and lodging, psychologists, ratings
strongly influenced by assessee’s inter-personal skills. Solid performers may feel

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suffocated in simulated situations. Those who are not selected for this also may get
affected.
Advantages – well-conducted assessment center 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 centers. The tests also
make sure that the wrong people are not hired or promoted. Finally it clearly defines the
criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of performance
data on an individual group, derived from a number of stakeholders like immediate
supervisors, 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. Multiple
raters may be less adept at providing balanced and objective feedback.

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CHAPTER-III
PROFILE OF
HINDUSTAN AERONAUTICS LIMITED

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3.1 Profile of Indian Aerospace Industry
3.1.1 Introduction
The Indian aerospace industry, both military and civil, stands uniquely poised
today, on the threshold of catapulting itself into the global arena. Due to the overwhelming
support and involvement of the government in the demand and supply of defense and civil
aerospace products, the industry has set itself on the firm path towards a transformational
change. The process of transformation has begun and there are encouraging signs of the
aerospace industry emerging as a major factor in our increasing self-reliance as well as the
export-oriented sector, with the potential and capacity to provide world-class opportunities
for established firms in the global market. At the same time, the domestic capability is being
significantly enhanced, through extensive tie-ups, joint ventures and technology transfers.
Fundamental strength in the Indian Industry already exists, in the form of a large number of
Small and Medium sized Enterprises (SMEs), which in the past have been suppliers at the
sub-component and component level, for aerospace DPSUs, HAL, DRDO, ISRO etc. These
companies are gradually transforming themselves into major players in this sector,
modernizing with cutting edge technologies to become suppliers for global aerospace
companies vying to outsource products and components from India.
The Indian manufacturing sector is internationally competitive with
international quality standards, efficiency and manufacturing facilities. India is fast
developing into a manufacturing hub for world corporations wanting to leverage the sector’s
proven skills in product design, reconfiguration and customization with creativity, assured
quality and value addition. India, also keen to strengthen its own aerospace industry and has
asked major weapon exporting countries to transfer technology to India.
In most industrial countries, the aerospace industry is a cooperation of public
and private industries. For example, several countries have a civilian space program funded
by the government through tax collection, such as NASA in the United
States, ESA in Europe, the Canadian Space Agency in Canada, Indian Space Research
Organization in India, JAXA in Japan, RKA in Russia, China National Space
Administration in China, SUPARCO in Pakistan, Iranian Space Agency in Iran, and Korea
Aerospace Research Institute (KARI) in South Korea.
Along with these public space programs, many companies produce technical
tools and components such as spaceships and satellites. Some known companies involved in

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space programs include Boeing, EADS, Lockheed Martin, MacDonald
Dettwiler and Northrop Grumman. These companies are also involved in other areas of
aerospace such as the construction of aircraft.
3.1.2 History
Modern aerospace began with Sir George Cayley in 1799. Cayley proposed an
aircraft with a "fixed wing and a horizontal and vertical tail," defining characteristics of the
modern airplane.
The 19th century saw the creation of the Aeronautical Society of Great
Britain (1866), the American Rocketry Society, and the Institute of Aeronautical Sciences, all
of which made aeronautics a more serious scientific discipline. Airmen like Otto Lilienthal,
who introduced cambered airfoils in 1891, used gliders to analyze aerodynamic forces
The Wright brothers were interested in Lilienthal's work and read several of his
publications. They also found inspiration in Octave Chanute, an airman and the author of
Progress in Flying Machines (1894). It was the preliminary work of Cayley, Lilienthal,
Chanute, and other early aerospace engineers that brought about the first powered sustained
flight at Kitty Hawk, North Carolina on December 17, 1903, by the Wright brothers. War and
science fiction inspired great minds like Konstantin Tsiolkovsky and Werner von Braun to
achieve flight beyond the atmosphere.
3.1.3 Manufacturing
Aerospace manufacturing is a high technology industry that produces "aircraft,
guided missiles, space vehicles, aircraft engines, propulsion units, and related parts". Most of
the industry is geared toward governmental work. For each Original Equipment
Manufacturer (OEM), the US government has assigned a CAGE code. These codes help to
identify each manufacturer, repair facilities, and other critical aftermarket vendors in the
aerospace industry.
In the United States, the Department of Defense and the National Aeronautics
and Space Administration (NASA) are the two largest consumers of aerospace technology
and products. Others include the very large airline industry. The aerospace industry employed
472,000 wage and salary workers in 2006. Most of those jobs were in Washington State and
in California, with Missouri and Texas also important. The leading aerospace manufacturers
in the U.S. are Boeing, United Technologies Corporation, and Lockheed Martin.

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In the European Union, aerospace companies such as EADS, BAE
Systems, Thales, Dassault, Saab AB and Finmeccanica account for a large share of the global
aerospace industry and research effort, with the European Space Agency as one of the largest
consumers of aerospace technology and products.
In India, Bangalore is a major center of the aerospace industry, where Hindustan
Aeronautics Limited, the National Aerospace Laboratories and the Indian Space Research
Organization are headquartered. The Indian Space Research Organization (ISRO) launched
India's first Moon orbiter, Chandrayaan-1, in October 2008.
India is poised to become a large commercial and defense aircraft market. With
rising passenger traffic and increasing military and defense expenditures, the demand for
aircrafts is expected to increase. Boeing expects a demand of between 900 to 1,000
commercial aircraft worth USD100 billion approximately in the next 20 years. This also
suggests that a significant portion of business opportunity could accrue to India, due to the
associated offsets.
There are several factors driving growth in manufacturing in India’s aerospace
industry. These include both macro and micro factors - strong economic growth that has
resulted in rapidly growing domestic aircraft demand, the liberalization of civil aviation
policies, offset requirements, a strong domestic manufacturing base, cost advantages, a well-
educated talent pool, the ability to leverage IT competitiveness and a liberal Special
Economic Zones law that provides attractive fiscal benefits for developers and manufacturers.
The challenges include access to technology, funding, poor availability and high cost of raw
material and certification processes.
3.1.4 Indian Aerospace Industries
Among domestic aerospace companies in India, the leader by far is Hindustan
Aeronautics Limited (H.A.L, and not pronounced Hal in India) headquartered in Bangalore.
Ranking 36th worldwide on the Defense News 100 in 2012, H.A.L had 2012 sales of Rs
14,204 crores or roughly $2.8 billion. It collaborates with American, French, Indian, Israeli,
Russian and UK agencies in design, fabrication and supply of civilian and military aircraft.
The company also has factories in Hyderabad, Kanpur, Koraput, Korwa, Lucknow and Nasik
besides Bangalore. H.A.L. is owned 100% by India’s Ministry of Defence via its Department
of Defence Production.

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Other domestic aerospace companies in India include Bharat Electronics Ltd
and Electronic Corporation of India Ltd also owned by the Government of India. Both offer
products to aerospace, security and other markets. A special joint venture between Russia and
India is Brahmos, 50.5 percent owned by India’s Defense Research and Development
Organization and 49.5 percent by Russia’s NPO Mashinostroyenia. Brahmos designs and
manufactures supersonic cruise missiles.
Domestic aerospace companies in India that are privately owned include Samtel
which makes avionics, Taneja Aerospace which offers machining and assembly, Tata
Manufacturing Solutions Ltd which makes some floor beams for the Boeing 787 Dreamliner.
Many engineering services companies in India offer design services for the global and
domestic aerospace Industry.
Foreign aerospace companies in India must have 74 percent domestic ownership
if operating in the defense sector. Companies from the West such as Airbus, BAE Systems,
Bell Helicopter, Boeing, Dassault, Embraer, GE Aviation, Honeywell Aerospace, Israel
Aerospace Industries, Lockheed Martin, Rockwell Collins, Rolls Royce, Sukhoi Aviation
Holding Company have been successful in India largely via foreign sales or via joint
manufacturing with HAL.
Organizations such as the National Aeronautics Labs, the Gas Turbine Research
Institute, the Wind Tunnel at IIT Kanpur are not aerospace companies in India but do provide
services to the industry. Amritt’s aerospace and defense industry experts understand how best
American and Canadian executives should communicate effectively with aerospace
companies in India and with Indian customers.

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3.2 Company Profile
Hindustan Aeronautics Limited (HAL)
3.2.1 Introduction
Hindustan Aeronautics Limited (HAL) came into existence on 1st October
1964. The Company was formed by the merger of Hindustan Aircraft Limited with
Aeronautics India Limited and Aircraft Manufacturing Depot, Kanpur.
The Company traces its roots to the pioneering efforts of an industrialist with
extraordinary vision, the late Seth Walchand Hirachand, who set up Hindustan Aircraft
Limited at Bangalore in association with the erstwhile princely State of Mysore in December
1940. The Government of India became a shareholder in March 1941 and took over the
Management in 1942.
Headquartered in Bangalore, Hindustan Aeronautics Limited (HAL) is mainly
involved in manufacturing aircraft, aerospace, navigation and communication equipment. It
has the distinction of building the first military aircraft constructed in South Asia and is
currently involved in the design, fabrication and assembly of aircraft, jet engines, helicopters
and their components and spares.
HAL's facilities are located throughout India including Nasik, Korwa, Kanpur,
Koraput, Lucknow and Hyderabad. The Company’s business is presently organised into five
complexes headed by a Managing Director/Director.
 Bangalore Complex - Production, Repair & Overhaul of Fixed Wing Aircraft/Engine
(Indian & Western origin)
 MiG Complex – Production, Repair & Overhaul of Fixed Wing Aircraft/Engine
(Russian origin)
 Helicopter Complex – Design, Production, Repair & Overhaul of Helicopters
 Accessories Complex - Production, Repair & Overhaul of Accessories and Avionics
 Design Complex – Design & Development of Fixed Wing Aircraft.

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Adopting the slogan "Asia's Premier Aerospace Complex," India's aerospace
and defence major, Hindustan Aeronautics Limited (HAL), continues to take large strides in
the sector with every passing year. In size HAL is indisputably an Asian aerospace giant,
with 16 production units and nine research and design centres spread across seven locations
in India.
Today, HAL has 16 Production Units and 9 Research and Design Centres in 7
locations in India. The Company has an impressive product track record - 12 types of aircraft
manufactured with in-house R & D and 14 types produced under license. HAL has
manufactured 3550 aircraft (which includes 11 types designed indigenously), 3600engines
and overhauled over 8150 aircraft and 27300 engines.
HAL's supplies / services are mainly to Indian Defence Services, Coast Guards
and Border Security Forces. Transport Aircraft and Helicopters have also been supplied to
Airlines as well as State Governments of India. The Company has also achieved a foothold in
export in more than 30 countries, having demonstrated its quality and price competitiveness.
HAL has been successful in numerous R & D programs developed for both
Defence and Civil Aviation sectors. HAL has made substantial progress in its projects:
• Dhruv, which is Advanced Light Helicopter (ALH)
• Tejas- Light Combat Aircraft (LCA)
• Intermediate Jet Trainer (IJT)
• Various military and civil upgrades.
HAL has played a significant role for India's space programs by participating
in the manufacture of structures for Satellite Launch Vehicles like
• PSLV (Polar Satellite Launch Vehicle)
• GSLV (Geo Stationary Launch Vehicle)
• IRS (Indian Remote Satellite)
• INSAT (Indian National Satellite)

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Table 3.1
Joint Ventures of HAL
Name of Joint Venture Company Product Profile
BAe HAL Software Ltd., Bangalore
Software Solutions & Services to
defence & aerospace industries
Snecma HAL Aerospace Pvt. Ltd. ,
Bangalore
Manufacture of Precison Aero Engine
components
HALBIT Avionics Pvt. Ltd. Bangalore Design & Development of Simulators
Indo Russian Aviation Ltd. Nasik Product Support for Russian Aircraft
HAL Edgewood Technologies Pvt.
Ltd., Bangalore
Manufacture of Miniature Electronic
modules & avionic systems
HATSOFF Helicopter Training Pvt.
Ltd.
Simulator based Training
International Aerospace Manufacturing
Pvt. Ltd.
Manufacture of shrouds for Civil Aero
Engines (Rolls Royce)
Multirole Transport Aircraft Ltd.
(MTAL)
Design, Development & Manufacture
of Multirole Transport Aircraft
InfoTech HAL ltd.
Design Work packages for Aero
engines
Samtel HAL Display Systems Airborne Multi Function Displays
Tata HAL Technologies Ltd.,
Bangalore
Design Work Packages for Airframe
structures

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HAL has won several International & National Awards for achievements in
R&D, Technology, Managerial Performance, Exports, Energy Conservation, Quality and
Fulfilment of Social Responsibilities. HAL was awarded the “INTERNATIONAL GOLD
MEDAL AWARD” for Corporate Achievement in Quality and Efficiency at the International
Summit (Global Rating Leaders 2003), London, UK by M/s Global Rating, UK in
conjunction with the International information and management centre (IIMC).
HAL was presented the International - “ ARCH OF EUROPE ” Award in Gold
Category in recognition for its commitment to Quality, Leadership, Technology and
Innovation At the National level, HAL won the "GOLD TROPHY" for excellence in Public
Sector Management, instituted by the Standing Conference of Public Enterprises (SCOPE).
3.2.2 Products
 Aircraft of Russian origin
 Aircraft of western origin
 Helicopters
 Communication/Navigation Equipment
 Advanced communication equipment
 Accessories for Aircraft, Helicopters and Aero engines
 Aerospace equipment
 Aero engines of Russian origin
 Aero engines of western origin
3.2.3 Vision of the company
To make HAL a dynamic, vibrant, value-based learning organisation with human resources
exceptionally skilled, highly motivated and committed to meet the current and future
challenges. This will be driven by core values of the Company fully embedded in the culture
of the organisation.
3.2.4 Missionof the company
To enable all those working for HAL to give their best to ensure their all-round growth as
well as that of the organization.

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3.2.5 Objectives
• To ensure availability of Total Quality People to meet the Organizational Goals and
Objectives.
• To have a continuous improvement in Knowledge, Skill and Competence
(Managerial, Behavioural and Technical)
• To promote a Culture of Achievement and Excellence with emphasis on Integrity,
Credibility and Quality
• To maintain a motivated workforce through empowerment of Individual and Team-
building
• To enhance Organizational Learning
• To play a pivotal role directly and significantly to enhance Productivity, Profitability
and improve the Quality of Work Life
3.2.6 Strategy
• To be in total alignment with Corporate Strategy
• To maintain Human Resource at optimum level to meet the objectives and goals of
the Company
• Be competent in Mapping, Analysis and Up gradation of Knowledge and Skills
including Training, Re-training, Multi-skilling etc
• Cultivate Leadership with Shared Vision at various levels in the Organization
• Focus on Development of Core Competence in High-Tech areas
• Build Cross-functional Teams
• Create awareness of Mission, Values and Organizational Goals throughout the
Company
• Introduce / Implement personnel policies based on performance that would ensure
growth, Rewards, Recognition, Motivation
3.2.7 Focus of Human Resource Policy
• Competence Building
• Commitment
• Motivation
• Employee Relations

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In the backdrop of the above, the focus of Human Resource Development initiatives at HAL
emphasizes the following:
I) Man Power Planning
• Out sourcing of low tech and medium tech jobs.
• Fresh induction only in critical / highly specialised areas based on requirements due to
increase in work load. In the Workmen Cadre, induction will be restricted to Direct
Workmen only.
• Improving the existing qualification profile by focusing on induction of professionally
qualified personnel and diploma holders.
Hence focus of recruitment is to recruit people with a combination of knowledge, skill,
experience and attitude in line with the organisational requirement through appropriate
manpower plan both short term (contract appointments) and long term recruitment
programme.
II) Training and Development
Training is one of the most important tools for developing human resource. Hence,
identification of training competency profile in terms of Vision, Mission of the Company is
the strategic point of the training and development strategy of the Company. The following
objectives have been set in this regard:-
• To provide training to all employees at regular intervals in a plan period of 5 years.
• Training to become an integral component of individual professional evolution by:
o updating knowledge to avoid obsolescence
o enhancing professional creativity
o enabling employees to shoulder higher responsibility
o creating a business trend and strategic thinking to take up new business
challenges
The goals of training will be to progressively achieve 7 days training per employee per year
with a budget of 2% of annual Wage Bill.
Keeping in view the organisational requirement and goals and objectives of training, the
following have been identified as the key focus areas of training:
• Technology
• Tooling

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• Quality
• Information Technology
Further, to facilitate the development of soft skills (change of mind-set, managerial
development etc.) training would be imparted on a continuous basis. Tie-ups with Centres of
Excellence like IITs, NDC, FIAS France etc. for imparting training would be given prime
importance.
III) Performance Appraisal:
Appraising people for meeting the Company's goal would be the prime focus of performance
management. The new Performance Appraisal System based on work planning and
commitment (mutually agreed tasks) , self-review and performance analysis, performance
review and feedback would ensure that the focus would be on value adding activities rather
than on routine activities which bear no relationship with the Organisation's goals and
objectives.
Identification of low performers and resultant corrective action throughout the Company
would be given priority. Similarly, faster career growth opportunity would be provided to
high performers.
IV) Reward System
The focus of the reward system in the Company is to promote team work and cultivate a
sense of achievement and excellence in the Organisation. This is in addition to the existing
scheme of reward for an individual who innovatively and creatively makes exemplary
contributions in the key thrust areas of the Company that would lead to its achieving overall
excellence. Coupled with the above, schemes like "Inter Divisional Competition" and "Profit
Sharing Scheme" have been institutionalised in the Company for team reward.
V) Scheme for Learning and Certification for Executives
A "Learning Organisation" is essential for survival in the present era of Liberalisation,
Privatisation and Globalisation. Therefore, "Knowledge" is the only core competence of
Organisations for coping with changes.
In line with the above philosophy, among other initiatives like institutionalizing Learning
Centres in Divisions etc., HAL has also introduced the scheme for Learning and Certification
for executives as a starting point for building individual knowledge. The scheme inter-alia
provides an opportunity for the Junior and Middle Management Cadre Executives to broaden

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their perspective by not only learning about all functions and procedures in their respective
disciplines but also in related areas and overall knowledge about the Organization and its
environment. It is proposed to expand the coverage of this scheme further, if required, by
linking the scheme to some kind of reward mechanism.
Lastly, the HRD Plan will also include time-to-time OD Interventions to address specific
requirement of the Company.
3.2.8 Performance Appraisalin HAL
Some of the salient features of the performance appraisal system are as under:-
a. Two tier system (Initiating Authority(IA) & Reviewing Authority (RA))
b. Quarterly task setting and evaluation on a quarterly basis.
c. Traits based on the responsibilities associated with each level.
d. Self- appraisal by the officers at all levels.
e. Qualitative assessment, management review categorisation & identification of training
and developmental needs, both by IA & RA.
Level Grades
Level- I I & II
Level- II III & IV
Level- III V & VI
Level- IV VII & VIII
Level- V IX & X
The performance appraisal system was amended in 2000-01 year. The
assessment of performance for the year 2000-01 was based on the evaluation for the
remaining three quarters viz. quarters ending 30th September 2000, 31st December 2000 and
31st march 2001. Required exercise of task setting for the 2nd quarter of the year (1st July to
30th September 2000) was done immediately between each appraisee and the concerned
initiating authority. For this purpose, copies of the quarterly task setting and assessment
sheets were used till such time the formats got printed. Divisions/ officers had taken all
necessary steps to implement the revised procedure for the performance appraisal
immediately.

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3.2.8.1 Performance Appraisal Format
The revised performance appraisal system from 2000 consists of five formats,
one for each level of officers. The format comprises of nine major parts from Part-A to Part-I.
Table 3.2
Performance Appraisal Format
PART CONTENTS
TO BE
FILLED BY
COVER PAGE Bio-data of the Appraisee Appraisee
PART-A
Quarterly Task Setting and
Assessment
Appraisee &
IA
PART-B
Self Appraisal
Comments on Self Appraisal &
Integrity
IA & RA
PART-C Assessment of Traits IA & RA
PART-D Qualitative Assessment of the
Appraisee (Pen Picture)
IA & RA
PART-E General Assessment & Management
Review Categorisation
IA & RA
PART-F Training and Development Needs IA & RA
PART-G
Evaluation by Performance Review
Board
Remarks of Higher Authorities
PRB
GM / MD / FD
/ CH
PART-H Illustrative list of areas for Training -
PART-I Check List HRD Cell

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PART-A : Quarterly Task Setting and Assessment
The revised Performance Appraisal System envisages setting up Quarterly
Tasks between the Appraisee and the Initiating Authority. The set tasks would be recorded on
the Quarterly Task Setting and Assessment Sheets .At the time of setting the tasks, the IA
may consult the RA also.
Table 3.3
Quarterly Task Setting Period
Quarter Period
I 1st April to 30th June
II 1st July to 30th September
III 1st October to 31st December
IV 1st January to 31st March
The Task Setting for each Quarter would be done, jointly by the Appraisee and
IA, by the 7th of the first month of each Quarter. The maximum marks of 100 would be
distributed among all the tasks, based on their relative weight age or importance. Separate
task setting and assessment sheets are to be used for each and the same would be signed both
by the Appraisee and the IA. The task setting sheets would be prepared in duplicate and one
copy will be with the Appraisee and the other with the IA. The tasks set should be as far as
possible be quantitative or measurable, either in terms of quantity or time limits. The IA
would evaluate the performance of the appraisee, by 7th of the 1st month of the subsequent
quarter, after joint discussion with the appraisee, against the set tasks and will award marks
for each task, keeping in view the maximum marks decided for each task at the beginning of
the quarter. Completed task setting and assessment sheet of each quarter would be retained by
the IA with him and the same would be attached by him with the Annual / probationary
Performance Appraisal Review at the end of the assessment year / period.

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PART-B: Self Appraisal
All officers should assess themselves in Part-B of the appraisal format. Self-Appraisal is
aimed at providing officers an opportunity to assess their performance against mutually
agreed tasks. Self-Appraisal should be brief and to the point. Comments on the Self-
Appraisal by the IA & RA are to be made in the space provided. Self-Appraisal by officers
should also be taken into account by the IA and RA, while making the assessment in PART-
C of the format.
Table 3.4
Levels of Initiating / Reviewing Authorities for various grades
Levels of the IA and RA for officers in various grades would be as follows:
Grade of the Appraisee Initiating Authority Reviewing Authority
I / II Minimum grade III or Above
Minimum grade V or
above
III / IV Minimum grade V or above
Minimum grade VI or
above
V / VI Minimum grade VII or above
Minimum grade VIII or
above
VII / VIII Minimum grade XI or above
Minimum grade X or
above
IX / X
Managing Director(MD) /
Functional Director(FD)
Chairman(CH)
PART-C: Assessment of Traits
The skills required to be possessed by an officer vary as he moves from one
level to the next. Keeping this aspect in view, separate set of traits against which officers are
to be assessed have been devised. Assessments of the traits have to be made part C.1 of the
format, indicating marks scored for each trait, out of maximum marks allotted for each trait,
both by the IA and the RA.

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For the first trait (performance), marks awarded by the IA will be the equivalent
% of the average marks for the year awarded by him in part-A. For example, if the average
marks awarded by the IA in part-A for a year is 70 out of 100, marks against performance in
part C.1 for an officer in grade I/II will be 56(i.e. 80 % of 70). In case the marks awarded by
the RA vary from that awarded by the IA, the RA will indicate justifications for such
variation in part-C.1.1 of the format. For the remaining traits, the IA & RA have to award
marks individually out of the maximum marks indicated against each trait.
Scale of Gradation:
Table 3.5
Scale of Gradation
TOTAL MARKS 100-90 89-80 79-50 BELOW 50
Performance Rating Exceptional Above Average Average
Below
Average
PART-D: Qualitative Assessment of the Appraisee
Both the IA & RA have to give a brief description of the Appraisee at part-D of
the format, as Pen Picture. The Pen Picture should be written carefully highlighting all
aspects of the personality of the Appraisee. By reading the Pen Picture, one should be in a
position to get a clear picture about the Appraisee, his effectiveness and his personal
qualities. The IA & RA should use this part of the Appraisal report to narrate about the traits
of the Appraisee that are not covered under specific traits under part C.1
PART-E: General Assessment & Management Review Categorisation
The IA & RA have to indicate the strengths and areas requiring improvements
in respect of the Appraisee, with reference to his performance, at part-E of the format. This
will enable Performance Review Board to get a balanced picture about the Appraisee and
would also facilitate positive HRD intervention.
Both the IA & RA have to indicate the “Management Review Categorisation” of
the Appraisee, which forms the potential assessment area of the performance appraisal
system, as follows:
Category – A: An officer who has high degree of potential for advancement.
Category – B: An officer who has potential for limited advancement.

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Category – C: An officer who has no potential for advancement.
While indicating the Management Review Categorisation, the IA & RA should take into
account the educational qualifications of the Appraisee, variety and richness of experience,
job knowledge, effectiveness, personal qualities and his performance on various assignments.
This assessment should also be made for officers on probation.
PART-F: Training / Development Needs
Both the IA and RA should indicate specific areas to which the Appraisee
should be job rotated as well as training to be given to prepare him for future advancements.
An illustrative list of areas for Training and Development is at Part-H of the PAR format.
PART-G: Evaluation by Performance Review Board
Performance Review Board will be constituted at the Divisional / Complex /
Corporate level for determining the final marks / Performance Rating of the Appraisee, taking
into consideration the assessment made by the IA & RA. The PRB will consult the IA & RA,
where ever necessary, if they are not members of the PRB.
Table 3.6
Indication of Chairman and Members of the PRB
LEVEL GRADE CHAIRMAN OF PRB MEMBERS OF PRB
I I / II Senior most AGM / DGM in the
Division
Other AGMs / DGMs /
HODs in the Division &
HRD Representative
II III / I GM / Divisional Head
AGMs / DGMs / HODs
in the Division & HRD
Representative
III V / VI MD / FD
GMs of the Divisions &
HRD Representative
IV VII / VIII CH MDs / FDs
V IX & X CH MDs / FDs
In respect of Complex offices, MDs will be Chairman of the PRB for officers in
Grades I to IV also. In respect of officers in Grades I to VI of Corporate office, Director
(Corporate Planning & Marketing), Director (Finance), Director (Personnel) and General

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Manager (P&A) will be the members of the PRB. The senior most Director will be the
Chairman of the PRB.
The Marks and Performance Rating awarded by the PRB would be final.
Remarks by Higher Authorities
GMs / MDs / FDs / CH would indicate their general remarks in Part-G of the
format.
3.2.8.2 Performance Appraisal of Officers on Probation
Two Performance Appraisal are to be submitted, one at the end of the sixth
month and the other at the end of the eleventh month of the probationary period of Officer.
Formats to be used and system to be followed for filling up the formats would be the same as
in respect of Annual Reports. Probationary Performance Appraisal Reports would not be put
up to the performance review Board. Marks / Performance Rating awarded by the RA would
be final in respect of these reports. These reports would, however, be put to the higher
authorities for their remarks at Part – G. The RA should ensure that the 6th and 11th monthly
reports are submitted to the HRD Cell within 7 days of the completion of the 6th and eleventh
monthly period. The Sixth / eleventh monthly Performance Appraisals would be the basis for
confirmation of officers appointed / promoted. The report should therefore indicate the
suitability or otherwise of the officer for confirmation by the competent authority, in the
eleventh monthly report.
3.2.8.3 Feedback System
All officers who have scored final marks of below 50 and rated as below
average would be intimated in writing about the same, through the concerned division / office
as follows:
Table 3.7
Feedback for different grade of officers
Officers in Grade To be intimated by
VII and Above Corporate Office
V / VI Complex Office
I to IV Division / Office

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This communication would be signed by the Head of the P & A Department at Corporate
Office / Complex Office / Division / Office.
In addition to the above oral feedback by the Appraisers, to the Appraisee, on his
performance, should be an ongoing process. It is necessary to encourage progress and correct
mistakes. The Appraisee should be encouraged and the areas requiring immediate attention
for improving his performance should be highlighted. The IA should inform the Appraisee in
writing as and when the need arises.
Further to the feedback / communication mentioned above, the HRD cell should ensure
communication of the Areas / Traits for improvement, if any, to the Appraisee, after the
Report is completed by all concerned. Such communication would be issued as follows:
i. For officers up to and including IV
The HRD cells of the respective divisions / offices would identify the cases where
feedback is required and would ensure that necessary communications are issued to
the officers, through the IA/RA
ii. For officers in Grades V & VI
The HRD cell of the complex office will identify the cases where feedback is required
to be given and would communicate the same to the officers concerned through the
concerned division / office
iii. For officers in Grade VII & Above
Corporate office will identify the cases where feedback is required to be given and
would communicate the same to the officers concerned, through the concerned
division / office with a copy to the Complex Office.
3.2.8.4 Appraisals on Officers in Vigilance Department
Performance Appraisal on officers in Vigilance Department will be raised as
indicated below:
Executive Director (Vigilance). Corporate Office, will be the IA in respect of
Heads of Vigilance Departments in the Divisions
Executive Director (Vigilance) will also be the RA in respect of Heads of
Vigilance Department in the Divisions / offices up to and including Grade III. Chairman will
be the RA in respect of Heads of Vigilance Department in Grade IV & above
In respect of officers of vigilance department who are working under the Heads
of Vigilance in each Division / Office. Executive Director (Vigilance) would be the RA. In

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respect of such officers in Grade IV and above, Chairman would endorse his views in Part-G
of the format.
After the reports are filled in, Executive Director (Vigilance) would also
complete the column of evaluation by Performance Review Board at Part G of the Report.
Completed reports would be retained in the office of Executive Director (Vigilance),
corporate office.
3.2.8.5 Appraisal on Officers of Systems Audit Department
Head of Systems Audit at corporate office will be the IA in respect of Head of
Systems Audit Cells in the Divisions. Head of Systems Audit at corporate office will also be
the RA in respect of Head of systems audit cell in the divisions who are in Grade I to III.
Director (Finance) will be the RA in respect of head of systems audit cell in the divisions in
grades IV and above
In respect of officers in systems audit who are working under the head of the
systems audit cell in the divisions, head of systems audit at corporate office would be the RA.
In respect of such officers in Grade IV and above, Director (Finance) would endorse his
views in Part G of the format.
After the reports are filled in, Head of Systems Audit at corporate office would
also complete the column of evaluation by performance Review Board at Part G of the report.
Completed reports would be sent back to the concerned division / office by the head of
systems audit at corporate office, for retention.
3.2.8.6 Appraisals on Heads of Finance and Personnel & Administration in the Complex
/ Division
In respect of Heads of Finance and Personnel & Administration in Grade VII
and above in the complex offices, Managing Director would be the IA and Chairman would
be the RA. In respect of such officers in Grade VI and below, concerned Managing Director
would be the IA and RA. In respect of Heads of Finance and Personnel & Administration in
the Divisions, Divisional Head would be the IA and concerned Managing Director would be
the RA. In all such cases, the concerned Functional Director at Corporate Office would
indicate his remarks at Part – G of the format.

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CHAPTER – IV
ANALYSIS & INTERPRETATION OF DATA

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ANALYSIS & INTERPRETATION OF DATA
A Sample size of 75 was selected for analysis and interpretation. The data’s
from officers were collected through questionnaire.
1) Is there a Formal Appraisal system in HAL?
Table 4.1
Awareness of the Performance Appraisal system
Responses No: of Respondents Percentage
Yes 75 100
No 0 0
Total 75 100
Fig 4.1
Awareness of the Performance Appraisal system
Interpretation
From fig 4.1 it is clear that all the employees in HAL are aware of the formal Performance
Appraisal system.
0
20
40
60
80
100
120
Yes No

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2) The Basic objective of Performance Appraisal (PA) is Performance Improvement.
Table 4.2
Objective of PA is Performance Improvement
Strongly Agree 15 20
Agree 44 58.7
Disagree 12 16
Strongly Disagree 4 5.3
Not Applicable 0 0
Total 75 100
Fig 4.2
Objective of PA is Performance Improvement
Interpretation
Majority of the employees of HAL agree that the basic objective of Performance Appraisal is
Performance Improvement but a few of them disagree to the above statement due to several
reasons.
0
10
20
30
40
50
60
70
Strongly Agree Agree Disagree Strongly
Disagree
Not Applicable

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3) The current Performance Appraisal system functions fairly and equitably.
Table 4.3
Fairness and equitability of the current performance appraisal system
Strongly Agree 4 5.3
Agree 29 38.7
Disagree 36 48
Strongly Disagree 6 8
Not Applicable 0 0
Total 75 100
Fig 4.3
Fairness and equitability of the current performance appraisal system
Interpretation
A high amount of employees disagree to the above statement. Certain officers are partial
while appraising the employees. But 40% of the employees feel that the current appraisal
system functions fairly and equitably.
0
10
20
30
40
50
60
Disagree
Not Applicable

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4) The Performance Appraisal system adopted by HAL is able to gauge the real
performance of employees.
Table 4.4
The PA system is able to gauge the real performance of employees
Agree 17 22.7
Disagree 47 62.7
Not Applicable 1 1.3
Total 75 100
Fig 4.4
The PA system is able to gauge the real performance of employees
Interpretation
Majority of the employees are of the opinion that the performance appraisal system is not
able to measure the real performance of the employees.
0
10
20
30
40
50
60
70
Disagree
Not Applicable

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5) Are you satisfied with the “Two tier system” adopted in the current Performance
Appraisal system?
Table 4.5
Satisfaction with the “Two tier system”
Yes 71 94.7
No 4 5.3
Total 75 100
Fig 4.5
Satisfaction with the “Two tier system”
Interpretation
Almost all the employees are satisfied with the “Two tier system”. They are not much
concerned about this kind of system.
0
10
20
30
40
50
60
70
80
90
100
Yes No

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6) The “Two tier system” is able to show the areas in which a person needs
improvement.
Table 4.6
“Two tier system” is able to show the areas in which a person needs improvement
Fig 4.6
“Two tier system” is able to show the areas in which a person needs improvement
Interpretation
Interpretation
The two tier system helps the employees in finding the areas in which a person needs
improvement.
Agree 51 68
Disagree 5 6.7
Not Applicable 3 4
Total 75 100
0
10
20
30
40
50
60
70
80
Disagree
Not Applicable

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7) The task setting is done jointly by the Appraisee and the IA on a mutually agreed
basis.
Table 4.7
Task setting is done jointly by the appraisee and the IA
Agree 48 64
Disagree 3 4
Not Applicable 0 0
Total 75 100
Fig 4.7
Task setting is done jointly by the appraisee and the IA
Interpretation
Most of the employees agree that the quarterly task setting is done jointly by the appraisee
and the initiating authority, but around 30% of them disagree to the above statement due to
the bureaucratic nature of the higher authority.
0
10
20
30
40
50
60
70
Disagree
Not Applicable

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8) The IA provides the appraisee with maximum marks, decided for each task,
according to their performance.
Table 4.8
IA provides maximum marks to the appraisee for each task
Agree 15 20
Disagree 42 56
Not Applicable 0 0
Total 75 100
Fig 4.8
IA provides maximum marks to the appraisee for each task
Interpretation
The employees are not given maximum marks in accordance to their performance.
0
10
20
30
40
50
60
Strongly Agree Agree Disagree Strongly Disagree Not Applicable

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9) Does the self-appraisal system provide an opportunity to identify the areas of
improvement?
Table 4.9
Self-appraisal system provides an opportunity to identify the areas of improvement
Agree 26 34.7
Disagree 8 10.7
Not Applicable 0 0
Total 75 100
Table 4.9
Self-appraisal system provides an opportunity to identify the areas of improvement
Interpretation
Self-appraisal system aid the employees to identify their areas of improvement and results in
self motivation.
0
10
20
30
40
50
60
Disagree
Not Applicable

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10) The self-appraisal system provides the appraisee an opportunity to identify areas of
strength.
Table 4.10
Self-appraisal system provides the appraisee an opportunity to identify areas of strength
Agree 29 38.7
Disagree 8 10.7
Total 75 100
Fig 4.10
Self-appraisal system provides the appraisee an opportunity to identify areas of strength
Interpretation
Majority of the employees can easily identify their areas of strength through self-appraisal
system by assessing their own job performance.
0
5
10
15
20
25
30
35
40
45
Disagree
Not Applicable

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11) The assessment of traits helps to identify the attribute which has the maximum
potential.
Table 4.11
Assessment of traits helps to identify the attribute which has the maximum potential
Fig 4.11
Assessment of traits helps to identify the attribute which has the maximum potential
Interpretation
Almost an equal number of employees agree and disagree that assessment of traits helps to
identify the attribute which has the maximum potential. Disagreement is due to the
inclination of Initiating and Reviewing Authority (IA & RA) towards certain employees.
Strongly Agree 9 12
Agree 31 41.3
Disagree 29 38.7
Not Applicable 0 0
Total 75 100
0
5
10
15
20
25
30
35
40
45
Disagree
Not Applicable

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12) Potential Appraisal form a part of the Performance Appraisal system at HAL
Table 4.12
Potential Appraisal form a part of the Performance Appraisal system
Agree 2 2.7
Disagree 21 28
Total 75 100
Fig 4.12
Potential Appraisal form a part of the Performance Appraisal system
Interpretation
From the above figure, it is clear that Potential Appraisal does not form a part of the current
Performance Appraisal system.
0
10
20
30
40
50
60
70
Disagree
Not Applicable

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13) Which in your opinion is given more importance?
Table 4.13
Importance given to kind of work
Quality of work 4 5.3
Quantity of work 58 77.4
Both 13 17.3
Total 75 100
Fig 4.13
Importance given to kind of work
Interpretation
Employees are of the opinion that Quantity of work is given more importance in HAL.
0
10
20
30
40
50
60
70
80
90
Quality of work Quantity of work Both

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14) The Appraisal system provides an opportunity for each appraisee to communicate the
support he needs from his superiors to perform his job well.
Table 4.14
Opportunity for each appraisee to communicate the support he needs from his superiors
Agree 15 20
Disagree 45 60
Not Applicable 0 0
Total 75 100
Fig 4.14
Opportunity for each appraisee to communicate the support he needs from his superiors
Interpretation
Appraisees are not given much opportunity to communicate with higher authority for the
support he needs, to perform his job well. But few of them are given this opportunity due to
the IA’s inclination towards certain employees.
0
10
20
30
40
50
60
70
Disagree
Not Applicable

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15) Performance Appraisal helps in
Table 4.15
Performance Appraisal helps in
Promotion 23 30.7
Career Planning 12 16
Goal Achievement 38 50.7
All of these 2 2.7
Total 75 100
Fig 4.15
Performance Appraisal helps in
Interpretation
From the analysis, majority of the employees says that performance appraisal helps them in
goal achievement (50%) and promotion (30%).
0
10
20
30
40
50
60
Promotion Career Planning Goal Achievement All of these

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16) The appraisal system provides an opportunity for each appraisee to express his
developmental needs.
Table 4.16
Opportunity for appraisee to express his developmental needs
Agree 11 14.7
Disagree 32 42.6
Not Applicable 0 0
Total 75 100
Fig 4.16
Opportunity for appraisee to express his developmental needs
Interpretation
High amount of employees disagree to the above statement. The appraisees rarely get an
opportunity to express their developmental needs.
0
5
10
15
20
25
30
35
40
45
Disagree
Not Applicable

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17) Is there an open communication between each appraiser-appraisee through
Performance Review Discussion?
Table 4.17
Open communication through Performance Review Discussion
Yes 9 12
No 66 88
Total 75 100
Fig 4.17
Open communication through Performance Review Discussion
Interpretation
An open communication is not encouraged much between appraiser and appraisee through
performance review discussion.
0
10
20
30
40
50
60
70
80
90
100
Yes No

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18) PRD encourages open discussion between Appraisee and your IA.
Table 4.18
PRD encourages open discussion between Appraisee and IA
Agree 3 4
Disagree 51 68
Not Applicable 6 8
Total 75 100
Fig 4.18
PRD encourages open discussion between Appraisee and IA
Interpretation
Majority of the officers in different grades disagree to the above statement. PRD do not
encourage an open discussion.
0
10
20
30
40
50
60
70
80
Strongly Agree Agree Disagree Strongly Disagree Not Applicable

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19) PRD happens with prior information and pre-determined time slot.
Table 4.19
PRD happens with prior information and pre-determined time slot
Agree 12 16
Disagree 4 5.3
Total 75 100
Fig 4.19
PRD happens with prior information and pre-determined time slot
Interpretation
The employees strongly agree that the Performance Review Discussion happens with prior
information and pre-determined time slot.
0
10
20
30
40
50
60
70
Disagree
Not Applicable

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20) The current appraisal system helps the employees to identify the training needs.
Table 4.20
The Appraisal system helps to identify the training needs
Agree 13 17.3
Disagree 21 28
Not Applicable 0 0
Total 75 100
Table 4.20
The Appraisal system helps to identify the training needs
Interpretation
From the fig 4.20 it is clear that, the current appraisal system is not so effective to identify the
training needs.
0
10
20
30
40
50
60
Disagree
Not Applicable

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CHAPTER-V
FINDINGS, SUGGESTIONS AND
CONCLUSION

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FINDINGS
1) HAL is one of the Asia’s largest aerospace companies.
2) HAL has a consistent record of growth in earnings and dividend payout.
3) The Company’s philosophy on Corporate Governance is based on the principles of
transparency, compliance of laws, procedures and adhering to the values and
business ethics.
4) Equipped with the latest facilities, the company is backed by high profile, highly
skilled manpower with an impressive track record of more than seven decades of
rich experience in all disciplines of aeronautics.
5) The Employee Relations scenario in the company has been peaceful, healthy and
cordial.
6) The company has recorded highest profit of 3,328.52 crore during the year 2011-12
compared to 2839.52 crore in the previous year.
7) HAL has a limited customer base.
8) The Company has well developed internal control system.
9) HAL’s greatest strength is its design capability.
10) All the divisions of HAL are certified with ISO 9001-2000 QMS.
11) HAL depend on foreign countries to import the raw materials.
12) HAL has a formal Performance Appraisal System.
13) The Performance Appraisal system was lastly reviewed in 2000.
14) The employees are satisfied with the “two tier system” adopted in the company.
15) Employees are of the opinion that the basic objective of Performance Appraisal is
Performance Improvement.
16) Certain employees are of the opinion that the current appraisal system do not
function fairly and equitably.
17) The task setting is done jointly by te appraisee and the initiating authority.
18) Employees are not satisfied with the current Performance Appraisal system.
19) Potential Appraisal does not form a part of the Performance Appraisal system.
20) The appraisee is not given maximum marks in accordance with their performance.
21) Self-appraisal system aid the employees to identify their areas of improvement.
22) Self-appraisal system enables the employees to assess their own job performance.
23) In HAL quantity of work is given more importance than quality of work.

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24) Majority of the employees says that Performance Appraisal helps them in goal
achievement and promotion.
25) The appraisal system does not provide an opportunity to express his/her
development needs.
26) The IA does not encourage an open communication with the appraisee.
27) The current appraisal system is not so effective to identify the training needs.
CONCLUSION
The project was done with a certain objective in mind and the main aim of the
same was to gather information regarding the company’s practices and procedures regarding
the “Performance Management System”. “Performance appraisal” in every organization is a
very important part as the success of any organization depends upon the hard work and full
contribution of the individuals and it also depends on good recruitment. Therefore, it is
concluded that in order to achieve higher targets and productivity a well planned appraisal
system should be continuously prepared so that the employees working with the organization
could be updated from time to time.
A right process of performance appraisal for the right evaluation of the
performance of the employees is very important. The method of performance management
should be unbiased and transparent so that no mistake can take place at the time of goal
setting and setting of KRAs. KRAs are the important element of the Performance
Management System at Hindustan Aeronautics Limited. Performance of an employee is
measured on the basis of goals achieved by him. So it is very important to adopt an organized
Performance Management System.

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SUGGESTIONS
1) The current Performance Appraisal system should be reviewed partly.
2) Potential Appraisal should form a part of the Performance Appraisal system.
3) The organization should build up open communication through Performance Review
Discussion which can enhance organizational effectiveness.
4) Both Quantity and Quality of work should be given equal importance.
5) Management can introduce suggestion scheme, inviting suggestions from employees.
6) Employees should be involved in decision making process.
7) The appraisal system should help the employees to identify the training needs.
8) An open communication should be established between the IA and the appraisee.
9) Proper training program should be implemented based on the appraisal system.

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BIBLIOGRAPHY
1. Kothari C.R, Research Methodology, 7th Reprint, 1994, Prentice Hall of India Private
Ltd., New Delhi.
2. C.R.Kothari, Research Methodology, 8th Edition, Wishva Prakashan, New Delhi,
2001.
3. C.B.Gupta Personal Management, III Edition, Sultan Chand & Sons Publications,
New Delhi, 2000.
4. Human Resource Management - William. P. Antony, Michele Kumar, Pamela.L,
Perreve, 4th Edition, 2002, Harcourt College Publishers.
5. Human Resource Management and Personal Management- Williams.BS, Keith Davis,
4th Edition 20044, McGraw Hill International.
6. Human Resource Management- Shashi K Gupta, Rosy Joshi, 3rd Edition 2009,
Kalyani Publishers.
7. Management and Organizational Behaviour- Laurie J. Mullins, 7th Edition 2005,
Pitman Publishing.
8. HAL Annual Report 2011-12
WEBLIOGRAPHY
www.hal-india.com
www.citehr.com

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APPENDIX
Sir/ Madam,
I, Anju Raj fourth semester MBA student of MACFAST, Tiruvalla, under MG University, as
part of the requirement of MBA programme I have to take up a project study about the topic
“A study on Performance Appraisal system at HAL”. A free and fair expression of your
opinion is needed for my project work. I assure that most secrecy will be maintained and the
data collected will be used solely for my research work.
Questionnaire
1) Name:
2) Age
a) Less than 30 b) 30-40 c) 40-50 d) above 50
3) Gender
a) Male b) Female
4) Qualification
a) Below Graduation b) Graduation c) PG d) Diploma
5) Is there a formal appraisal system in HAL?
a) Yes b) No
6) The basic objective of Performance Appraisal is Performance improvement.
a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not
Applicable
7) The current Performance Appraisal system functions fairly and equitably.
a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not Applicable
8) The Performance Appraisal system adopted by HAL is able to gauge your real
performance of employees.
a) Strongly Agree b) Agree c) Disagree d) Strongly Disagree e) Not
Applicable
9) Are you satisfied with the ‘Two tier system’ adopted in the current Performance
Appraisal system?
a) Yes b) No
10) The ‘Two tier system’ is able to show the areas in which a person needs
improvement.

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11) The task setting is done jointly by the Appraisee and the Initiating Authority (IA) on
a mutually agreed basis.
12) The IA provides the appraisee with maximum marks decided for each task at the
beginning of the quarter, according to their performance.
13) Does the Self-Appraisal system provide an opportunity to identify the areas of
improvement?
14) The Self-Appraisal system provides the appraisee an opportunity to identify areas of
strength.
15) The assessment of traits helps to identify the attribute which has the maximum
potential.
16) Potential appraisal form a part of the Performance Appraisal system at HAL.
17) Which in your opinion is given more importance?
a) Quality Of work b) Quantity of work c) Both
18) The Appraisal System provides an opportunity for each Appraisee to communicate the
support he needs from his superiors to perform his job well.
19) Performance Appraisal helps you in
a) Promotion
b) Career Planning
c) Goal Achievement
d) All of these
20) The appraisal system provides an opportunity for each appraisee to express his
developmental needs.
21) Is there an open communication between each appraiser-appraisee through
Performance Review Discussion (PRD)?
a) Yes b) No
22) PRD encourages open discussion between Appraisee and your IA.

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23) The PRD happens with prior information and a pre-determined time slot.
24) The current appraisal system helps you to identify the training needs.

Performance Appraisal at HAL

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