Performance Appraisal Essay Example

Performance Appraisal Essay A study of the Human Resource issue of Nakilat Damen Shipyards Qatar Table of Contents 1. 0Executive Summery5 2. 0Introduction of the Company6 3. 0The background of the issue – high employee turnover6 4. 0The impact on the business7 4. 1 Drop in production7 4. 2 Cost for the company7 4. 3 Time7 4. 4 Team dynamics8 4. 5 Continuity8 5. 0Root cause of the issue9 6. 0The Human Resource issue10 7. 0Impact on Human resource11 7. 1 Low employee morale11 7. 1 Loss of Trained workforce12 7. 2 Cost for new recruitment12 8. 0Conclusion13 9. 0References16 ANNEX A. NDSQ Performance appraisal (iniciated in Nov 2012)17 Executive SummeryHuman Resource management refers to the policies, practices, and systems that influence employees’ behavior, attitudes, and performance. There are some important human resource practices which are shown in figure 1, that influence the company performance. | |Strategic HRM | | | | |Analysis and design of work |HR planning |Recruiting |Selecting |Training and development |Compensation |Performance management |employee relations | | |Company Performance | | | | | | | | | | | | | | |Figure 1: Human Resource Management PracticesThe roles of the Human Resource functions include three product lines, Administrative role, Business partner and Strategic partner. In most companies the Human resource department handles mainly the administrative part, but for a growth of the company performance the human resource manager needs to focus on all the three areas. In my report I would like to discuss an issue that the company faced that involved a human resource practice. I will further elaborate how this issue has influenced the company and its functions and the solutions that could be used to solve the problem.Note: As I have left the company in 2012 March, the statistics includes in my report are when I was working in the company and the problem faced was during that time. In order to manage performance effectively the following human resource p ractices should be in place so that the performance of the employees can be measured and reviewed accordingly in order for them to know where they stand in the organization and what improvements need to be done so that they will be more competent in their job role.Performance management is the means through which managers ensure that employee’ activities and outputs are congruent with the organization’s goals. Performance appraisal is the process through which an organization gets information on how well an employee is doing his job. Performance feedback is the process of providing employees information regarding their performance effectiveness. Introduction of the Company Nakilat Damen Shipyards Qatar (NDSQ) which was established in 2010, which was joint venture of Qatar Gas Transport Ltd (Nakilat) and Damen Shipyards Qatar Holding BV (Damen Shipyards Group).As a startup company we had a small number of employees initially. The work force was recruited in batches of a bout 20 persons, from India and Philippines. The company staff was consists of a different mix of cultures. The background of the issue – high employee turnover The company which was started in 2010 with the initial number of 80 employees increased the head counts within a year to more than 200 employees. According to the statistics from Human resource department which was in January 2011, the total number of employees was 328 and the End of Service (EOS) was 62.Which creates a problem in the company as the turnover comes to about 15%. From this number most were the initial employees who had started off with the company and grown learning and performing from the beginning of the project. The impact on the business Nakilat Damen Shipyards Qatar, as a new company was given the initial project of completing the ‘LOR Barge’ for Qatar Gas Transport Company. This project was started with the incorporation and was due to be launched in mid 2012, which was delayed to Sep tember 2012.The high turnover in the early stage of the company with the employees who know their work better had a major contribution for this factor. This slows the business performance. 4. 1 Drop in production The overall productivity of the work place tends to decrease with the high turnover. Since a new employee has a period of adjustment, he won’t complete tasks as quickly as the person he replaces. Group projects that rely on the new team member may slow down, which effects experienced employees’ productivity levels. 4. 2 Cost for the companyEach employee that resigns cost the company, the cost for visa training them of the process and procedure. These employees were hired during the initial stages and they were exposed to the environment form the beginning and the hands on experience they have had was unique. When new employees are hired the earlier cost for recruitment, advertising need to be spent again. 4. 3 Time Managers and human resources staff spend time conducting exit interviews, advertising the job, recruiting candidates and interviewing. The new employees may take several months to fully learn the job and achieve competency in the position. 4. 4 Team dynamicsWhen the staff changes frequently, the employees who stay have a difficult time building a positive team dynamics. A group of employees learns to work together, only to have one or more members leave. Teams need to be rearranged regularly. 4. 5 Continuity High turnover rate affects the continuity of production, which will lead to production drops. Root cause of the issue When the issue is put through the ‘why why analysis’, the root cause was found to be that there was no proper performance management system, in order to measure and manage the performance of the individuals in order to motivate and increase the production.Cause : High employee turnover Why : Job dissatisfaction Why : Absenteeism Why : change of attitudes/ behaviour Why : No recondition / job se curity Why : salary / benefit packages Why : change of levels Why : No proper appraisal Why : No proper performance management The reasons for voluntary turnover can be grouped as follows; salary related reasons (salary, benefit packages, and staff levels). In order to gather more accurate information the analysis can be done by exit interviews and conduct a survey of former employees. The Human Resource issueThe high turnover was mainly from the employees that were recruited at the start of the company. There were no proper performance measurements and appraisals when Forman and Team leaders were allocated. The Line Managers choose the next career advancements from their teams, which created a unrest among the other employees. This creates a dissatisfaction of the job which in time leads to high employee turnover. The dissatisfaction of the job can be termed mainly because there was no proper appraisal done for the previous batches. The new employees were appraised in a month due t o visa purposes, but no proper system was in place.This creates unrest with the employees that the new batches get more benefits in terms of career levels and salary. There was no way of measuring the performance of each employee, this brings about indications of none reconditions of employees who learned and worked hard. When all the above were considered the main reason for the turnover was due to none recondition of employees who are skilled and knew the work as there was no proper performance management system. Impact on Human resource The human resources can provide a sustained competitive advantage when four basic requirements are met.They must add value to the company’s production process; levels of individual performance must matter. Second, the skills the company looks for matters. The performance plays a major role here. The third the combined human capital investments a company’s employees represent cannot be easily imitated. Human resources practises influe nce employee skills through the acquisition and development of a company’s human capital. Recruiting procedures that provide a large pool of qualified applicants, pared with a reliable and valid selection process, will have a substantial influence over the quality and type of skills new employee possess.Providing formal and informal training experience such as basic skills training, on-the-job experience, coaching, mentoring can further influence an employee’s development. The company’s human resource is important in the development and execution of its strategic business plan. Human resource management practices can help to create a source of sustained competitive advantage, especially when they are aligned with a firm’s competitive advantage. The impact on human resource indicating the high turnover of the employees is as follows; 7. 1 Low employee morale High turnover rate can result in low employee morale.This can result from overworked employees who had increased workloads and responsibilities due to lack of an active or trained workforce. New employees can also suffer from low morale as they struggle to learn new job duties and procedures. Continuation of this environment can cost the company. 7. 1 Loss of Trained workforce The training gained on the job from the beginning of the project is hard to teach. These employees are highly skilled and know the job better than the new recruits. Loss of these employees cost the company a lot, which leads to drop of production and trained workforce. . 2 Cost for new recruitment The cost of hiring a new employee is more than the salary; it all comes to a high cost in the process of recruitment alone. Advertisements, time cost for the initial recruiter, time cost for the line managers, time cost for conducting interviews, medical and other visa purpose and documentations, cost of travelling, cost of uniforms and tools. Also the cost of the time taken and the loss of production till the emp loyee are present at the work station. (Visa, documentation, travelling, induction) ConclusionThe effectiveness of even highly skilled employees will be limited if they are not motivated to perform, Human resource management practices can affect employee motivation by encouraging them to work both harder and smarter. One of the examples a company uses to direct and motivate employee behaviour include the use of performance appraisals that assess individual or work group performance, linking these appraisals tightly with incentives compensation systems, the use of internal promotion systems that focus on employee merit, and other forms of incentives intended to align the interests of the employees.Also the contribution of a highly skilled and motivated workforce will be limited if jobs are structured, or programmed in such a way that employees, who know their work better than anyone else, do not have the opportunity to use their skills and abilities to design new and better ways of p erforming their roles. In this instance Human resource management practices can influence company performance through structuring of the organization that encourages participation among employees and allow them to improve how their jobs are performed.Cross-functional teams, job rotation, and quality circles are all examples of such structures. These clearly suggests that the behaviour of employees within the organization has important implications for organizational performance and that human resources management practices can effect individual employee performance through their influence over employees’ skills and motivation and through organizational structure that allow employees to improve how their jobs are performed.If proper human resource practices in performance management is practised, it can directly have a control on employee turnover and productivity, which the employees have direct control. Lower turnover and greater productivity in turn enhance corporate financ ial performance. The performance management should be in place that the employee can evaluate his own performance at a frame of time, which the line manager can approve. Proper objectives can be in place as per the individual (job specific) and team objectives.These can be reviewed monthly, with one on one discussion with the line manager and the human resource team which can be recorded for the career advancements and increments. These proper systems will lead the employee to know where they stand and what needs to be improved to get to the next level in career. The proper system will help the line managers in choosing the team leaders with a more accurate indication that the person is capable and competent in the new role. A well developed performance management system will include the following; †¢ A statement outlining the organizational values A statement of the organization’s objectives (each teams can have differently according to the projects) †¢ Individual objectives which are linked to the organizational objectives †¢ Regular performance reviews throughout the year †¢ Performance related pay/ career advancements †¢ Training and counselling Appraisals should be used to review constructively individual’s performance in order to encourage them. Accurate assessments can only be achieved if appraisers and appraisees are both very clear about what criteria will be used in determining how strong or weak the performance is.The major purpose of performance appraisals are to; †¢ Define the specific job criteria against which performance will be measured †¢ Measure past job performance accurately †¢ Justify the rewards given to individuals and/or groups thereby, discriminating between high and low performers †¢ Define the development experiences that the person being appraised needs to enhance their performance in the present job, and to prepare them for future responsibilities References Academic of Ma nagement Journal 1995 Vol. 58The impact of human resources management practices on turnover, productivity, and cooperate financial performance. Mark A. Huselid (Rutgers University) Human Resource Management – Gaining a Competitive Advantage Noe, Hollenbeck, Gerhart and Wright (8th edition) Nakilat Damen Shipyards Qatar website http://www. ndsq. com. qa NDSQ company forms and data from internal documentation Studies in Economics and Business Human Resource Management – Rob Dransfield A. NDSQ Performance appraisal (iniciated in Nov 2012) [pic] [pic] Performance Appraisal Essay Example Performance Appraisal Essay A study of the Human Resource issue of Nakilat Damen Shipyards Qatar Table of Contents 1. 0Executive Summery5 2. 0Introduction of the Company6 3. 0The background of the issue – high employee turnover6 4. 0The impact on the business7 4. 1 Drop in production7 4. 2 Cost for the company7 4. 3 Time7 4. 4 Team dynamics8 4. 5 Continuity8 5. 0Root cause of the issue9 6. 0The Human Resource issue10 7. 0Impact on Human resource11 7. 1 Low employee morale11 7. 1 Loss of Trained workforce12 7. 2 Cost for new recruitment12 8. 0Conclusion13 9. 0References16 ANNEX A. NDSQ Performance appraisal (iniciated in Nov 2012)17 Executive SummeryHuman Resource management refers to the policies, practices, and systems that influence employees’ behavior, attitudes, and performance. There are some important human resource practices which are shown in figure 1, that influence the company performance. | |Strategic HRM | | | | |Analysis and design of work |HR planning |Recruiting |Selecting |Training and development |Compensation |Performance management |employee relations | | |Company Performance | | | | | | | | | | | | | | |Figure 1: Human Resource Management PracticesThe roles of the Human Resource functions include three product lines, Administrative role, Business partner and Strategic partner. In most companies the Human resource department handles mainly the administrative part, but for a growth of the company performance the human resource manager needs to focus on all the three areas. In my report I would like to discuss an issue that the company faced that involved a human resource practice. I will further elaborate how this issue has influenced the company and its functions and the solutions that could be used to solve the problem.Note: As I have left the company in 2012 March, the statistics includes in my report are when I was working in the company and the problem faced was during that time. In order to manage performance effectively the following human resource p ractices should be in place so that the performance of the employees can be measured and reviewed accordingly in order for them to know where they stand in the organization and what improvements need to be done so that they will be more competent in their job role.Performance management is the means through which managers ensure that employee’ activities and outputs are congruent with the organization’s goals. Performance appraisal is the process through which an organization gets information on how well an employee is doing his job. Performance feedback is the process of providing employees information regarding their performance effectiveness. Introduction of the Company Nakilat Damen Shipyards Qatar (NDSQ) which was established in 2010, which was joint venture of Qatar Gas Transport Ltd (Nakilat) and Damen Shipyards Qatar Holding BV (Damen Shipyards Group).As a startup company we had a small number of employees initially. The work force was recruited in batches of a bout 20 persons, from India and Philippines. The company staff was consists of a different mix of cultures. The background of the issue – high employee turnover The company which was started in 2010 with the initial number of 80 employees increased the head counts within a year to more than 200 employees. According to the statistics from Human resource department which was in January 2011, the total number of employees was 328 and the End of Service (EOS) was 62.Which creates a problem in the company as the turnover comes to about 15%. From this number most were the initial employees who had started off with the company and grown learning and performing from the beginning of the project. The impact on the business Nakilat Damen Shipyards Qatar, as a new company was given the initial project of completing the ‘LOR Barge’ for Qatar Gas Transport Company. This project was started with the incorporation and was due to be launched in mid 2012, which was delayed to Sep tember 2012.The high turnover in the early stage of the company with the employees who know their work better had a major contribution for this factor. This slows the business performance. 4. 1 Drop in production The overall productivity of the work place tends to decrease with the high turnover. Since a new employee has a period of adjustment, he won’t complete tasks as quickly as the person he replaces. Group projects that rely on the new team member may slow down, which effects experienced employees’ productivity levels. 4. 2 Cost for the companyEach employee that resigns cost the company, the cost for visa training them of the process and procedure. These employees were hired during the initial stages and they were exposed to the environment form the beginning and the hands on experience they have had was unique. When new employees are hired the earlier cost for recruitment, advertising need to be spent again. 4. 3 Time Managers and human resources staff spend time conducting exit interviews, advertising the job, recruiting candidates and interviewing. The new employees may take several months to fully learn the job and achieve competency in the position. 4. 4 Team dynamicsWhen the staff changes frequently, the employees who stay have a difficult time building a positive team dynamics. A group of employees learns to work together, only to have one or more members leave. Teams need to be rearranged regularly. 4. 5 Continuity High turnover rate affects the continuity of production, which will lead to production drops. Root cause of the issue When the issue is put through the ‘why why analysis’, the root cause was found to be that there was no proper performance management system, in order to measure and manage the performance of the individuals in order to motivate and increase the production.Cause : High employee turnover Why : Job dissatisfaction Why : Absenteeism Why : change of attitudes/ behaviour Why : No recondition / job se curity Why : salary / benefit packages Why : change of levels Why : No proper appraisal Why : No proper performance management The reasons for voluntary turnover can be grouped as follows; salary related reasons (salary, benefit packages, and staff levels). In order to gather more accurate information the analysis can be done by exit interviews and conduct a survey of former employees. The Human Resource issueThe high turnover was mainly from the employees that were recruited at the start of the company. There were no proper performance measurements and appraisals when Forman and Team leaders were allocated. The Line Managers choose the next career advancements from their teams, which created a unrest among the other employees. This creates a dissatisfaction of the job which in time leads to high employee turnover. The dissatisfaction of the job can be termed mainly because there was no proper appraisal done for the previous batches. The new employees were appraised in a month due t o visa purposes, but no proper system was in place.This creates unrest with the employees that the new batches get more benefits in terms of career levels and salary. There was no way of measuring the performance of each employee, this brings about indications of none reconditions of employees who learned and worked hard. When all the above were considered the main reason for the turnover was due to none recondition of employees who are skilled and knew the work as there was no proper performance management system. Impact on Human resource The human resources can provide a sustained competitive advantage when four basic requirements are met.They must add value to the company’s production process; levels of individual performance must matter. Second, the skills the company looks for matters. The performance plays a major role here. The third the combined human capital investments a company’s employees represent cannot be easily imitated. Human resources practises influe nce employee skills through the acquisition and development of a company’s human capital. Recruiting procedures that provide a large pool of qualified applicants, pared with a reliable and valid selection process, will have a substantial influence over the quality and type of skills new employee possess.Providing formal and informal training experience such as basic skills training, on-the-job experience, coaching, mentoring can further influence an employee’s development. The company’s human resource is important in the development and execution of its strategic business plan. Human resource management practices can help to create a source of sustained competitive advantage, especially when they are aligned with a firm’s competitive advantage. The impact on human resource indicating the high turnover of the employees is as follows; 7. 1 Low employee morale High turnover rate can result in low employee morale.This can result from overworked employees who had increased workloads and responsibilities due to lack of an active or trained workforce. New employees can also suffer from low morale as they struggle to learn new job duties and procedures. Continuation of this environment can cost the company. 7. 1 Loss of Trained workforce The training gained on the job from the beginning of the project is hard to teach. These employees are highly skilled and know the job better than the new recruits. Loss of these employees cost the company a lot, which leads to drop of production and trained workforce. . 2 Cost for new recruitment The cost of hiring a new employee is more than the salary; it all comes to a high cost in the process of recruitment alone. Advertisements, time cost for the initial recruiter, time cost for the line managers, time cost for conducting interviews, medical and other visa purpose and documentations, cost of travelling, cost of uniforms and tools. Also the cost of the time taken and the loss of production till the emp loyee are present at the work station. (Visa, documentation, travelling, induction) ConclusionThe effectiveness of even highly skilled employees will be limited if they are not motivated to perform, Human resource management practices can affect employee motivation by encouraging them to work both harder and smarter. One of the examples a company uses to direct and motivate employee behaviour include the use of performance appraisals that assess individual or work group performance, linking these appraisals tightly with incentives compensation systems, the use of internal promotion systems that focus on employee merit, and other forms of incentives intended to align the interests of the employees.Also the contribution of a highly skilled and motivated workforce will be limited if jobs are structured, or programmed in such a way that employees, who know their work better than anyone else, do not have the opportunity to use their skills and abilities to design new and better ways of p erforming their roles. In this instance Human resource management practices can influence company performance through structuring of the organization that encourages participation among employees and allow them to improve how their jobs are performed.Cross-functional teams, job rotation, and quality circles are all examples of such structures. These clearly suggests that the behaviour of employees within the organization has important implications for organizational performance and that human resources management practices can effect individual employee performance through their influence over employees’ skills and motivation and through organizational structure that allow employees to improve how their jobs are performed.If proper human resource practices in performance management is practised, it can directly have a control on employee turnover and productivity, which the employees have direct control. Lower turnover and greater productivity in turn enhance corporate financ ial performance. The performance management should be in place that the employee can evaluate his own performance at a frame of time, which the line manager can approve. Proper objectives can be in place as per the individual (job specific) and team objectives.These can be reviewed monthly, with one on one discussion with the line manager and the human resource team which can be recorded for the career advancements and increments. These proper systems will lead the employee to know where they stand and what needs to be improved to get to the next level in career. The proper system will help the line managers in choosing the team leaders with a more accurate indication that the person is capable and competent in the new role. A well developed performance management system will include the following; †¢ A statement outlining the organizational values A statement of the organization’s objectives (each teams can have differently according to the projects) †¢ Individual objectives which are linked to the organizational objectives †¢ Regular performance reviews throughout the year †¢ Performance related pay/ career advancements †¢ Training and counselling Appraisals should be used to review constructively individual’s performance in order to encourage them. Accurate assessments can only be achieved if appraisers and appraisees are both very clear about what criteria will be used in determining how strong or weak the performance is.The major purpose of performance appraisals are to; †¢ Define the specific job criteria against which performance will be measured †¢ Measure past job performance accurately †¢ Justify the rewards given to individuals and/or groups thereby, discriminating between high and low performers †¢ Define the development experiences that the person being appraised needs to enhance their performance in the present job, and to prepare them for future responsibilities References Academic of Ma nagement Journal 1995 Vol. 58The impact of human resources management practices on turnover, productivity, and cooperate financial performance. Mark A. Huselid (Rutgers University) Human Resource Management – Gaining a Competitive Advantage Noe, Hollenbeck, Gerhart and Wright (8th edition) Nakilat Damen Shipyards Qatar website http://www. ndsq. com. qa NDSQ company forms and data from internal documentation Studies in Economics and Business Human Resource Management – Rob Dransfield A. NDSQ Performance appraisal (iniciated in Nov 2012) [pic] [pic] Performance Appraisal Essay Example Performance Appraisal Essay A DISSERTATION PROJECT On â€Å"STUDY ON PERFORMANCE APPRAISAL SYSTEM AT WAY TO WEALTH† Submitted in partial fulfillment of the requirement for MBA Degree of Bangalore University BY JYOTSNA Register Number 04XQCM6037 Under the guidance of Prof. S. Santhanam M. P. Birla Institute of Management Associate Bharatiya Vidya Bhavan Bangalore-560001 2004-2006 DECLARATION I hereby declare that the report titled â€Å" STUDY ON PERFORMANCE APPRAISAL AT WAY TO WEALTH†is prepared under the guidance of Prof. S. Santhanam in partial fulfillment of MBA degree of Bangalore University, and is my original work. This project does not form a part of any report submitted for degree or diploma of Bangalore University or any other university. Place: Bangalore Date: JYOTSNA M. P. Birla Institute Of Management 2 PRINCIPAL’S CERTIFICATE This is to certify that Ms JYOTSNA, bearing registration No: 04XQCM6037 has done a project and has prepared a report â€Å"STUDY ON PERFORMANCE APRAISAL SYSTEM AT WAY TO WEALTH â€Å"under the guidance of Prof. S. Santhanam, M. P. Birla Institute of Management, Bangalore. This has not formed a basis for the award of any degree/diploma for any other university. Place: Bangalore Date: Dr . NAGESH. S. We will write a custom essay sample on Performance Appraisal specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Performance Appraisal specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Performance Appraisal specifically for you FOR ONLY $16.38 $13.9/page Hire Writer MALLAVALLI PRINCIPAL MPBIM, Bangalore : M. P. Birla Institute Of Management 3 GUIDE’S CERTIFICATE This is to certify that Ms JYOTSNA, bearing registration No: 04XQCM6037 has done a project and has prepared a report â€Å"STUDY ON PERFORMANCE APPRAISAL SYSTEM AT WAY TO WEALTH â€Å"under my guidance. This has not formed a basis for the award of any degree/diploma for any other university. Place: Bangalore Date: Prof. S. Santhanam M. P. Birla Institute Of Management 4 ACKNOWLEDGEMENT I would like to take this opportunity to express my sincere gratitude to all those who guided me in the right direction to complete this report. I would like to thank Dr. Nagesh Malavalli ,principal for his support and also to thank my guide Prof. S. Santhanam, faculty member, for his guidance and support for making this project a success. I would also thank my family and my friends for supporting me during the project. Place: Bangalore Date: (JYOTSNA) M. P. Birla Institute Of Management 5 CONTENTS Sl. No Page No CONTENTS 1 2 3 4 5 6 7 8 9 10 ABSTRACT INTRODUCTION METHODOLOGY STATEMENT OF PROBLEM OBJECTIVES OF THE STUDY LIMITATIONS COMPANY PROFILE DATA ANALYSIS INTERPRETATION SUMMARY CONCLUSION BIBLIOGRAPHY 9 10 11 14 16 26 27 32 54 59 M. P. Birla Institute Of Management 2 LIST OF GRAPHS Sl. No 1 2 3 4 5 6 7 8 Graphs Graph showing whether PA is conducted every year in the company Graph showing whether job increments promotions are based on PA Graph showing whether PA objectives are clearly defined Graph showing the purpose of PA Graph showing Feedback on Pa is collected Graph showing the Opinion of the present PA system Graph showing whether PA system needs to be improved Graph showing methods that can be suggested for PA Page No 33 34 35 36 38 39 42 43 PA: Performance Appraisal M. P. Birla Institute Of Management 3 LIST OF TABLES Sl. No 1 2 3 4 5 6 7 8 9 10 11 Tables Table showing whether PA is conducted every year in the company Table showing job increments Promotions are based on PA Table showing whether PA objectives are clearly defined Table showing the purpose of PA Table showing Ranking of methods employed in PA Table showing whether Feedback on PA is collected Table showing the Opinion on present PA system Table showing factors covered in PA Table showing Improvements to be done in PA Table showing whether Pa system needs to be improved Table showing methods that can be suggested for PA Page No 33 34 35 36 37 38 39 40 41 42 43 PA: Performance Appraisal M. P. Birla Institute Of Management 4 ABSTRACT It is a well-established fact the people differ in their abilities and aptitudes. These differences are natural to a great extent and cannot be eliminated completely by giving them education and training. There will always be some difference in quality and quantity of work done by different employees. Therefore it is necessary for the management to know these differences so that it may develop certain programs in the organization for those employees who posses better potentials so that they may be developed to accept the challenges of higher jobs or wrong placement of employees may be rectified . The individual employee may also like to know his capability in terms of his performance on his capability in terms of his performance on the job qualitatively and quantitatively in comparison to his fellow employees so that he improve upon it. No firm has a choice as to whether or not it should appraise its personnel and their performance but the choice lies between the systematic and the unsystematic or casual appraisal. The system of appraising the man is not new but the systematic approach of evaluating the man is by any means a new development . The technique of appraising the man by supervisors or others is widely known as â€Å" Performance Appraisal† . It is also sometimes termed as Personnel Performance Evaluation, Merit Rating. Thus main objective of the project is to study the Performance Appraisal process being practiced in WAY 2 WEALTH and evaluate its effectiveness. This project aimed at finding out effectiveness in terms of familiarity, and satisfaction level of performance appraisal among the employees WAY 2 WEALTH. The project also focuses on finding out how performance appraisal is matching in meeting the company’s goals and objectives. M. P. Birla Institute Of Management 5 METHODOLOGY The research methodology used in the project is the descriptive approach and it is done among 200 employees . The main sources through which data is collected are 1. Primary data 2. Secondary data The data collected for this research is through primary data collection method. The instrument used for collecting primary data is structured questionnaire filled up by the employees Statistical tools were used to find inferences between the variables and analyzing the results. The following are the tools used. 1) 2) 3) Kalmograv Smirnov Test Chi – Square test (? 2) Spearman’s Rank Correlation M. P. Birla Institute Of Management 6 M. P. Birla Institute Of Management 7 INTRODUCTION An organization’s goals can be achieved only when people put in their best efforts . How to ascertain whether an employee has shown his or her best performance on a given job?. The answer is Performance Appraisal. Employee assessment is the fundamental job of HRM, but not easy one though. Thus â€Å"Performance Appraisal† is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development . The performance is being measured against such factors as Job Knowledge, quality, initiative, leadership abilities, supervision, co-operation, versatility etc. It is systematic in that it evaluates all performance in the same manner utilizing the same approach so that the ratings obtained to separate personnel are comparable. It is undertaken periodically according to plan . The essential purpose is the accurate measurement of human performance It attempts to reduce, if not eliminate human bias and prejudice, by means of a system that is subject to impartial review and check. Often such personnel performance appraisal are labeled as ratings where an individual employee, after comparison with another, is rated or ranked as â€Å"Excellent, normal or average† and are commonly used for determining an employees eligibility for promotion or transfer and widely being used for the development of the individual. Any appraisal program will involve time and money . The wise manager should plan up a program with the minimum cost to give maximum benefit . The rationale for using any particular method should be determined by the size ,financial resources ,and philosophy of the organization . M. P. Birla Institute Of Management 8 Appraisal can be made by one or more superiors or subordinates or by the peers . There can also be committee of members from various related departments to appraise an employee. There may even be a system of self –appraisal in which each employee evaluates his own performance and potential. M. P. Birla Institute Of Management 9 STATEMENT OF THE PROBLEM To evaluate is to assess the worth or value. In social life, we generally evaluate or appraise the behavior of others in relations to our own needs or goals. Appraisals are judgments of the characteristics ,traits and performance of others. On the basis of these judgments, we assess the worth or value of others, and identify what is good and bad. In industry, performance appraisal is a systematic evaluation of personnel by supervisors or others familiar with their performance because employers are interested in knowing about employee performance. Employees also wish to know their position in the organization. Appraisals are essential for making many administrative decisions: selection, training ,promotion ,transfer ,wage and salary administration ,etc . Besides ,they aid personnel research . Performance appraisal thus is a systematic and objective way of judging the relative worth or ability of an employee in performing his task . Performance ppraisal helps to identify those who are performing their assigned tasks well and those who are not and the reasons for such performance . Differentiating between individuals is easy provided one knows what aspects to take into account. Identifying performance measures is easy if job is clearly defined but difficult if it is broad. At the lower levels of an organization, there are specif ic jobs and certain tangible and objective standards of performance can be identified. Further up in the hierarchy, jobs become more complex and clear–cut, tangible standards of performance are difficult to specify. Irrespective of the level by and large, most companies use various parameters for measuring the performance like quality of work, quantity of work, job Knowledge, meeting the job requirements, initiative, team working, communicative etc. And they would be rated in accordingly quarterly, half yearly or annually depending on company’s policies. M. P. Birla Institute Of Management 10 Many companies would have a standard format for appraising the performance. Ironically many of the employees would not know the norms of the appraisal and to the surprise many of them may not be fully familiar with contents of the appraisal form. This would be great hazel for the company as well as to the employees because if the employee is not aware of what basis he is appraised, he may not put up all his efforts for better improvement which indirectly effects the companies profits by not meeting the companies objectives and targets. Thus this project â€Å" A Study On Effectiveness of Performance System† aims at complete study on performance appraisal system and finding out effectiveness of the system in terms of familiarity and satisfaction level of the employees in WAY 2 WEALTH, Chennai M. P. Birla Institute Of Management 11 OBJECTIVES OF THE STUDY PRIMARY OBJECTIVES ? To find out the effectiveness of PA system in way-2-wealth ? To Know employee satisfaction on PA system in way-2-wealth ? To suggest the way-2-wealth improve the employee satisfaction on PA system SECONDARY OBJECTIVES ? To find the opinion of employees on various factors involved in PA system ? To find out the openness of personal department in PA ? To find out the scope of critical attributes and other factor coverage of PA system ? To know post appraisal measures taken b way-2-wealth M. P. Birla Institute Of Management 12 REVIEW OF LITERATURE 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 to remedy them. A â€Å"Performance Appraisal† is a process of evaluating an employee’s performance of a job in terms of its requirements. It is the process of evaluating the performance and qualifications of the employees in terms of the requirements of the job for which he is employed, for purposes of administration including placement, selection for promotion, providing financial rewards and other actions which require different treatment among the members of a group as distinguished from actions affecting all members equally. _ Heyel Performance Appraisal seeks to provide an adequate feedback to each individual for his or her performance. It purports to serve as a basis for improving or changing behavior toward some more effective working habits . It also aims aat providing data to managers with which they may judge future job assignments and compensation -Levinson M. P. Birla Institute Of Management 13 Performance Appraisal determines who shall receive merit increases; counsels employees on their improvement ,determines training needs ,determines promo ability, identifies those who should be transferred -Ronald Benjamin PURPOSE OF APPRAISAL It can serve as a basis for job change or promotion ? By identifying the strengths and weakness of an employee it serves as a guide for ? formulating a suitable training and development program It serves as a feedback to the employee ? It serves as an important incentive to all employees ? The existence of regular appraisal system tends to make the supervisors and ? executives more observant of their subordinates Performance appraisal often provides the rational foundation for payment of ? salaries and bonus M. P. Birla Institute Of Management 14 ESSENTIALS OF GOOD APPRAISAL SYSTEM It must be easily understandable ? An appraisal plan must be integrated into the organization so as to have clear cut ? relationships between the appraisal plan and organization policies relating to performance of the employees. It must have the support of all line people who administer it ? The system should fit the organizations operations and structure ? The system should be both valid and reliable ? The system should have built in incentives that is a reward should follow satisfactory ? performance The system should periodically evaluated to be sure that it is continuing to meet its ? goals What should be Rated? The seven criteria for assessing performance are: 1. Quality 2. Quantity 3. Timeliness 4. Cost Effectiveness 5. Need for supervision 6. Interpersonal impact 7. Training M. P. Birla Institute Of Management 15 Trends in employee Appraisal ITEM Terminology Purpose FORMER EMPASIS Merit Rating Determine qualifications for wage increase, transfer, promotion, lay- off Application For hourly –paid workers Heavy emphasis on personal traits Techniques Rating scales, Statistical manipulation of data for comparison purpose PRESENT EMPHASIS Performance Appraisal Development of the individual, improved performance on the job, and provide emotional security For technical, professional and managerial employees Factors Related Results, accomplishments, performance Mutual goal–setting, critical incidents, group appraisal, performance standards, less quantitative Post Appraisal Interview Superior communication his rating to employees and tries to sell his evaluation to him; seeks to have employee conform to his view Superior stimulates employee to analyze himself and set own objectives in line with job requirements superior is helper and councilor M. P. Birla Institute Of Management 16 Approa ches to Performance Appraisal: 1. A casual ,unsystematic and haphazard appraisal: This method was commonly used in the past . The basis of this method are seniority or quantitative measures quantity and quality of output for the rank and file personnel 2. The traditional and highly systematic measurement: This measures the employees characteristic and employee contributions or both. It evaluates all the performances in the same manner ,utilizing the same approach so that the ratings obtained of separate personnel are comparable 3. The behavioral approach ,emphasizing mutual goal setting: here emphasizes has been laid upon providing mutual goal setting and appraisal of progress by both the appraiser and the appraise . This approach is based on the behavioral value of fundamental trust in the goodness ,capability and responsibility of human beings. The Evaluating Process The process of performance appraisal follows a set pattern viz, a man’s performance is periodically appraised by his superiors. Questions are raised . Is his potential the greatest as a manager or as a staff specialist? What are his strengths and weakness? Where can he make his great contribution? Next sometimes in consultation with the man himself, tentative decisions are made on what might be done to advance his development. M. P. Birla Institute Of Management 17 Thus the process would involve following steps ESTABLISH PERFORMANCE STANDARDS COMMUNICATE PERFORMANCE EXPECTATIONS TO EMPLOYEES MEASURE ACTUAL PERFORMANCE COMPARE ACTUAL PERFORMANCE WITH STANDARDS DISCUSS THE APPRAISAL WITH THE EMPLOYEE IF NECESSARY, INITIATE CORRECTIVE ACTION M. P. Birla Institute Of Management 18 TOOLS/METHODS FOR APPRAISING PERFORMANCE: Several methods and techniques of appraisal are available for the measurement of the performance of the employee . The methods and scales differ for obvious reasons 1. They differ in the sources of traits or qualities to be appraised. 2. The variations may be caused by the degree of precision attempted in an evaluation. 3. They may differ because of the methods used to obtain weightings for various traits. M. P. Birla Institute Of Management 19 Methods of Performance appraisal Traditional Methods ? Straight Ranking ? Man-to-man Comparison ? Grading ? Force choice Description ? Graphic Rating Scales ? Forced distribution Method ? Check Lists ? Free Form Essay Method ? Critical Incidents ? Group Appraisal ? Field Review Method y Modern Methods Assessment Centres Behaviorally Anchored Rating Scale M. P. Birla Institute Of Management 20 COMPONENTS OF APPRAISAL EVALUATION ? â€Å"Who† of the Appraisal ? â€Å"What† of Appraisal ? ? ? Common Pitfalls in Appraisal: ? There is often tendency to rate not only the employee but also the job ? Errors are introduced in the appraisal because of a defect or bias in the person conducting the appraisal ? As Appraisal are in fact opinions ,it is difficult to remove from the subjective element whilst making the judgment ? Performance appraisal do require a lot from the supervisor as they require periodic observation of subordinates performance by them which becomes difficult in case of a first line superior have a large number of subordinates ? There is often a large variations in the standards and ratings because some raters are tough where as others are lenient ? There is often lack of communication where by the employee does not know how he is rated ? Often Superiors are reluctant to give a low rating to ineffective subordinate and gives him an average rating ? Sometimes communication of the rating of the employee if done properly would be taken as criticism and may even result in his performing more poorly The â€Å"Why† of Appraisal The â€Å"When† of Appraisal The â€Å"where† of Appreciation M. P. Birla Institute Of Management 21 LIMITATIONS OF THE STUDY The researcher has made efforts for an errorless study but the following limitations were occurred ? The survey was restricted to only in Way 2 Wealth and the sample size was 200 ? There may be some changes if the sample size and the geographical segmentation were increased ? Time was a handicap for a detailed study ? A few respondents might have been given biased information, which may affect the reliability of the results ? Unwillingness and inability of the respondent to provide information M. P. Birla Institute Of Management 22 COMPANY PROFILE Way2Wealth is a premier Investment Consultancy Firm that has been launched with the aim of making investing simpler, more understandable and profitable for the investors. Way2Wealth brings a wide range of product offerings from Fixed Income Securities, Life Insurance and Mutual Funds to Equity and Derivatives (on the National Stock Exchange) for the convenience and benefit of it customers. Way2Wealth has over 40 easily accessible Investment Outlets spread across 20 major towns and cities in the country. Mission Way2Wealth is a premier Investment Consultancy Firm, launched with the ission â€Å"to be the pre-eminent destination for personalised financial solutions helping individuals create wealth†. Philosophy We believe that â€Å"our knowledge combined with our investors trust and involvement will lead to the growth of wealth and make it an exciting exp erienc Sivan Securities started in 1984, has a long and illustrious track record of being amongst the premier Financial Intermediaries in the country as well as being an incubator for IT start-up firms. The Venture Capital division came to be known as Global Technology Ventures (GTV has provided venture capital to companies such as Kshema Technologies, MindTree, Ivega etc. ) and the Financial Intermediary Division was spun off as Way2Wealth in the year 2000. M. P. Birla Institute Of Management 23 Way2Wealth is promoted by Sivan Securities and Global Technology Ventures Ltd. Prudential ICICI AMC provides further strength to Way2Wealth as strategic equity partner. Over the years, Sivan has developed a strong reputation for navigating its investors through all the ups and downs in the market. Way2Wealth has inherited these same values in addition to a base of 75,000 individual customers, over 300 corporate/institutional clients. Other companies in the group include Amalgamated Bean Coffee Trading Company Ltd. (one of the largest Coffee Exporters in India) and Cafe Coffee Day, a chain of youth hangout coffee parlors. Way2Wealth has very credible management teams, who have well over 100 man-years of experience amongst themselves Way2Wealth Investment outlets are designed to be places where retail investors can come in touch with Investment opportunities in an atmosphere of convenience and comfort. The look and feel of the offices across India project a consistent branch image for the company. The features that enable a unique facility for retailing financial services include among others: ? Most branches are located in the ground floor sporting huge glass frontage promoting easy accessibility and reflecting our attitude of complete transparency. ? The major portion of the branch area dedicated for customer use. The furniture is in CKD formats to add flexibility in using the branch for Investors purposes. ? ? Connectivity to NSE for trading facilities. TV and other electronic mediums to facilitate real time update and dissemination of information to our customers. ? Each branch comprises of trained and qualified Investment advisors to take care of the needs of the customers. M. P. Birla Institute Of Management 24 The Way2Wealth Research Desk Research is at the core of the advice. It believes that sound investment decisions are made on sound analysis of facts, past performance and credible market information. The research cell focuses on providing data and analysis to help customers make sound investment decisions. The Research cell is managed by a highly qualified team that is handpicked and trained extensively in the proprietary Way2Wealth Investment Philosophy centered on finding the best investment solutions for our customers. Based in the commercial capital enables the team to have a pulse of the trends allowing dissemination of the most up-to-date and latest information. ? Personalised Investment Solutions: All the customers receive individual attention ? Full choice of Investments: Mutual funds, Life Insurance, Fixed Income Instruments, Equity and Derivatives ? Processing support: take care of all the paper work and provide service at the doorstep. ? Investor eligibility criteria: Customers with a minimum investment amount as low as Rs. 2500 per month can avail of the services. This unique Way2Wealth concept can be easily experienced through the innovative and customer friendly network of Investment outlets that spans 20 major towns and cities in the country. M. P. Birla Institute Of Management 25 RESEARCH METHODOLOGY The following points are considered in carrying out the research. A. RESEARCH METHODOLOGY: A research design is purely ad simply the framework a plan for a study that guides the collection and analysis of the data. Descriptive Research Here the research is been done on 200 members through a media of questionnaire B. DATA COLLECTION METHOD: The main sources through which data is collected are 1. Primary data 2. Secondary data The data collected for this research is hrough primary data collection method. The instrument used for collecting primary data is questionnaire from the employees. M. P. Birla Institute Of Management 26 E. SAMPLING TECHNIQUE Non – probability (non random ) sampling method is used in this project. F. STATISTICAL TOOL S USED: Statistical tools were used to find inferences between the variables and analyzing the results. The following are the tools used. 1)spearman’s rank Correlation 2) Kalmograv Smirnov Test 3) Chi – Square test (? 2) M. P. Birla Institute Of Management 27 M. P. Birla Institute Of Management 28 DATA ANALYSIS INTERPRETATION TABLE 1 TABLE SHOWING WHETHER PA IS CONDUCTED EVERY YEAR IN THE COMPANY S. NO 1 2 YES NO TOTAL OPINION NO OF RESPONDENTS 60 0 60 PERCENTAGE (%) 100 0 100 100 80 60 40 20 0 YES NO INFERENCE: All the respondents feel that PA is conducted every year in the company. M. P. Birla Institute Of Management 29 TABLE 2 TABLE SHOWING WHETHER JOB INCREMENTS AND PROMOTIONS ARE STRICTLY BASED ON PA S. NO 1. 2. YES NO OPINION NO OF RESPONDENTS 41 19 PERCENTAGE (%) 68 32 100 TOTAL 60 70 60 50 40 30 20 10 0 YES NO INFERENCE: Majority of the respondents feel that job increments and promotions are strictly based on PA is 68%and whereas few of them feel that it is not strictly based on PA 32%. M. P. Birla Institute Of Management 30 TABLE 3 TABLE SHOWING WHETHER PA OBJECTIVES ARE CLEARLY INFORMED S. NO 1. 2. 3. CHOICE CLEARLY INFORMED PARTIALLY INFORMED NOT INFORMED AT ALL TOTAL NO OF RESPONDENTS 22 28 10 60 PERCENTAGE (%) 36 46 18 100 50 40 30 20 10 0 PERCENTAGE CLEARLY INFORMED PARTIALLY INFORMED NOTINFORMED AT ALL INFERENCE: Majority of the respondents feel that PA objectives are partially informed, some of them feel it is clearly informed and whereas few of them feel that it is not informed at all. M. P. Birla Institute Of Management 31 TABLE 4 TABLE SHOWING PURPOSE OF PA S. NO 1 2 3 4 CHOICE SALARY INCREASE PROMOTION TRAINING AND DEVELOPMENT FEEDBACK TOTAL NO OF RESPONDENTS 18 22 14 6 120 PERCENTAGE (%) 30 36 24 10 100 40 35 30 25 20 15 10 5 0 PERCENTAGE SALARY INCREASE PROMOTION TRAINING AND DEVELOPMENT FEEDBACK INFERENCE: Majority of the respondents feel that purpose of PA is for promotion, some of them feel it is for salary increase and whereas few of them feel it is for training and development. M. P. Birla Institute Of Management 32 TABLE 5 RANKING OF METHODS EMPLOYED IN PA NO OF RESPONDENTS FACTORS 1 GRADING RANKING METHOD CHECKLIST METHOD FORCED CHOICE METHOD 15 22 13 11 2 18 17 16 10 3 12 16 20 13 4 15 6 11 26 INFERENCE: From the table it is seen that the ranking of methods employed in PA is give below: FACTORS GRADING RANKING METHOD CHECKLIST METHOD FORCED CHOICE METHOD RANK II I III IV M. P. Birla Institute Of Management 33 TABLE 6 TABLE SHOWING WHETHER FEEDBACK ON PA IS COLLECTED S. NO 1. 2. YES NO OPINION NO OF RESPONDENTS 25 35 60 PERCENTAGE (%) 42 58 100 TOTAL 60 50 40 30 20 10 0 PERCENTAGE YES NO INFERENCE: 58% of the respondent feel that feedback on PA is not collected ad whereas some of them feel that feedback on PA is collected. M. P. Birla Institute Of Management 34 TABLE 7 TABLE SHOWING OPINION ON PRESENT PA SYSTEM IN THE COMPANY S. NO 1. 2. 3. 4. OPTIONS VERY GOOD GOOD AVERAGE POOR TOTAL NO OF RESPONDENTS 6 24 18 12 60 PERCENTAGE (%) 10 40 30 20 100 40 35 30 25 20 15 10 5 0 PERCENTAGE VERY GOOD GOOD AVERAGE POOR INFERENCE: Majority of the respondents opinion regarding present PA system in the company is good, some of the respondents opinion is average and whereas few of the respondents opinion is poor. M. P. Birla Institute Of Management 35 TABLE 8 TABLE SHOWING OPINION ON THE FOLLOWING FACTORS COVERED IN PA FACTORS Job knowledge Quality of work Quantity of work Ability of work Hard work Manner obedience VERY GOOD 6 7 6 7 10 10 GOOD 21 29 14 24 26 24 AVERAGE 22 13 18 16 12 14 POOR 9 6 12 8 7 9 VERY POOR 2 5 10 5 5 3 INFERENCE: Majority of the respondent’s opinion regarding the factors covered in PA is good, some of them feel it is average and whereas few of them feel it is poor. M. P. Birla Institute Of Management 36 TABLE 9 TABLE SHOWING IMPROVEMENTS TO BE MADE IN PA FACTORS Strongly agree 12 9 10 5 6 7 11 Neither Agree Agree nor disagree 27 25 24 22 20 24 25 11 14 8 14 18 13 14 6 7 11 13 11 11 6 Disagree Strongly disagree 4 5 7 6 6 5 4 Confidentiality Critical attributes Role related attributes Post appraisal actions Introducing bars in PA Feedback on PA White paper on PA after PA INFERENCE: Majority of the respondents agree that improvements has to be made in PA, some of them neither agree nor disagree ad whereas few of them disagree that improvements has to be made in PA M. P. Birla Institute Of Management 37 TABLE 10 TABLE SHOWING WHETHER PRESENT PA SYSTEM IS TO BE IMPROVED S. NO 1. 2. 3. 4. 5. OPTIONS STRONGLY AGREE AGREE NEITHER AGREE NOR DISAGREE DISAGREE STRONGLY DISAGREE TOTAL NO OF RESPONDENTS 11 20 15 9 5 60 PERCENTAGE (%) 18 34 24 16 8 100 35 30 25 20 18 15 10 5 0 PERCENTAGE 34 24 16 8 STRONGLY AGREE AGREE NEITHER AGREE NOR DISAGREE DISAGREE STRONGLY DISAGREE INFERENCE: Majority of the respondents agree that present PA system is to improved, some of them neither agree nor disagree ad whereas few of them disagree. M. P. Birla Institute Of Management 38 TABLE 11 TABLE SHOWING METHODS THAT CAN BE SUGGESTED FOR PA S. NO 1. 2. 3. 4. 5. OPTIONS ESSAY METHOD FIELD REVIEW METHOD BARS APPRAISAL BY RESULTS 360 DEGREE APPRAISAL TOTAL NO OF RESPONDENTS 9 8 11 14 18 60 PERCENTAGE (%) 16 12 18 24 30 100 30 25 20 15 10 5 0 PERCENTAGE ESSAY METHOD FIELD REVIEW METHOD ARS APPRAISAL BY RESLTS 360 DEGREE APPRAISAL INFERENCE: Majority of the respondents suggest 360 degree appraisal for PA, some of them suggest appraisal by result and whereas few of them suggest essay method. M. P. Birla Institute Of Management 39 TOOLS USED FOR ANALYSIS KALMOGROV SMIRNOV TEST The Kalmogrov Smirnov Test (KS – Test) tries to determine if two data sets significantly. The KS – test has the advantage of making no assumption about the distribution of data. (Technically speaking it is nonparametric and distribution free). It is a goodness of fit used to examine the distribution function of the random variable (X). Test statistics T = = Sup | F (x) – S (x) | Supremum of the absolute value of the difference between F (x) and S (X) H0 is rejected if T exceeds the 1 – a quant