PERFORMANCE MANAGEMENT SYSTEM AND APPRAISAL FOR

TECHNICAL STAFF
AT DREAM PLAST INDIA PVT.LTD

A PROJECT REPORT

Under Guidance of

Mr.Amit Mishra

Submitted by
Shilpa Harishchandra Walekar

in partial fulfillment o f the requirement

for the award of the degree

Of

MBA
IN

Human Resource Management

April- 2015

Acknowledgement

Our sincere thanks to Mr.Amit Mishra , I express our deep sense of

gratitude who has been a source of inspiration throughout the
course of this work with his inestimable advise and moral
encouragement

I would like to thank Plant Head and HR Head of M/s.Dream Plast

India Pvt Ltd who helped me completion of project.

BONAFIDE CERTIFICATE

Certified

that

this

project

report

titled

PERFORMANCE

MANAGEMENT SYSTEM AND APPRAISAL FOR TECHNICAL STAFF

AT

DREAM PLAST INDIA PVT.LTD is is the bonafide work of SHILPA

HARISHCHANDRA WALEKAR who carried out the project work
under my supervision.

Amit Mishra

Abstract/Executive Summary
o To study the existing Performance management system for associates at Dream Plast
India Pvt Ltd (DP)
o To design skills matrix for l Staff at DP
o To develop performance management system for the associates, at Dream Plast India
Pvt Ltd (DP)
o To study the overall effectiveness of the Performance Management system at DP
o To know the relationship between employees performance and organizational goals,
problem Statement Data Collection Judge the Performance Close monitoring of Work,
Working Hrs and Working Culture

LIST OF ABBREVATIONS
Sr.No
1.

GDP

Gross Domestic Product

2.

HACCP

Hazard Analysis Critical Control Point

3.

ISO

Indian Standard Organisation

4.

QC

Quality Control

5.

R&D

Research and Development

6.

HR

Human Resource

7.

BOD

Board Of Director

8.

MD

Managing Director

9.

VP

Vice President

10.

QMS

Quality Management System

11.

MBO

Management By Objective

12.

KRA

Key Result Area

13.

PA

Performance Appraisal

14.

PAS

Performance Appraisal System

15.

PAF

Performance Appraisal Format.

1.0 INTRODUCTION................................................................................................................3
2.0 COMPANY PROFILE.........................................................................................................6
3. THEORETICAL BACKGROUND OF STUDY.................................................................11
3.1 Need for the study of effectiveness of Performance Appraisal System.........................12
3.2 Performance Appraisal...................................................................................................13
3.3 Process of Performance Appraisal..................................................................................15
3.4 Performance tests & observations..................................................................................20
3.5 Rating Errors in Performance Appraisal........................................................................26
3.6 Benefits of performance appraisal system:-...................................................................28
3.7 PERFORMANCE APPRAISAL SYSTEM AT DREAM PLAST INDIA.....................30
4.0 OBJECTIVES OF THE STUDY.......................................................................................33
5.0 RESEARCH METHODOLOGY.......................................................................................35
5.1 RESEARCH DESIGN...................................................................................................37
5.3 DATA COLLECTION....................................................................................................39
6.0 DATA ANALYSIS AND INTERPRETATION..................................................................41
6.0 Findings from Questionnaire..............................................................................................57
7.0 SUGGESTIONS & CONCLUSIONS...............................................................................58
7.1 SUGGESTIONS............................................................................................................59
8.0 LIMITATIONS OF THE STUDY......................................................................................63
6

9.0 BIBLIOGRAPHY..............................................................................................................65

Ranjit Kumar; Research methodology: a step-by-step guide for beginners;No. 2 Vol

2005......................................................................................................................................65
ANNEXURE-I.........................................................................................................................67
ANNEXURE-II....................................................................................................................72

Table of Figures
Figure 1 Organization chart......................................................................................................10
Figure 2 SMART Significance.................................................................................................14
Figure 3 Flow chart..................................................................................................................15
Figure 4 Existing Performance Apprisal System.....................................................................43
Figure 5 Evaluation..................................................................................................................45
Figure 6 Evaluation of Performance........................................................................................45
Figure 7 Satisfaction Level......................................................................................................46
Figure 8 Satisfaction Level......................................................................................................46
Figure 9 Chance of Matching of Performance appraisal system.............................................48
Figure 10 Chance of Matching of Performance appraisal system...........................................48

LIST OF TABLES
Table No

Table Name

1.

Projected Growth Rate Table

2.

Performance Appraisal format

3.

Awareness of existing Performance Appraisal System

4.

Frequency Of Evaluating Performance

5.

Satisfaction level of employee with existing PAS

6.

Chances of matching existing performance appraisal system to

employee expectation

7.

Importance Of Performance Appraisal to Employees Performance

8.

Increments Based On Performance Of Employee

9.

Need of improvement in existing PAS

1.0 INTRODUCTION

Human Resource Management is the backbone of an organization. The increased scale of

business operation and growing competition has made the job of a management professional
more challenging than ever before. In todays highly competitive environment, as a student
must devote significant time, energy and resources for achieving the goals. Carrying out a
project is a chance to know about the organization and gain practical knowledge.

The performance appraisal of the employee in the organization should be effective tool for
measuring the employee performance. If the performance is not measured in real manner, it
will be a critical issue. A study on effectiveness of performance appraisal was undertaken to
study the reasons and ways to improve the condition. Performance appraisal is defined as the
process of accessing the performance and progress of an employee or a group of employees
on a given job and their potential for future development. It consists of all formal procedures
used in working organizations and potential of employees.

Performance appraisal system plays a significant role in every organization as it helps the
employee as well as organization to overcome the weaknesses and to improve over strengths.
Also it will contribute to the growth and development of the employee by creating a desirable
culture and tradition in the organization.
9

Thus the purpose of the project is to study the effectiveness of the performance appraisal
system of Dream Plast India by studying the existing appraisal system which helps to find the
gaps in it. This leads to define the effectiveness of the appraisal system in terms of goal
alignment, motivation, development/growth, performance assessment and reward for top
performance.

The descriptive design is used for the study of this project. The sampling technique adopted
for purpose of study is convenience sampling as it helps to select the particular unit of the
universe to constitute a sample. Findings were made based on the data collected from 40
employees with the help of questionnaire.

The overall analysis found that the performance appraisal system of Dream Plast India is not
effective as it is intensive. The average employee satisfaction and the rare employee
growth/development show that the current appraisal system is not effective. Also there is a
need of improvement in performance appraisal system. The performance gaps found in
existing performance appraisal system are related with the period, methodology and
standardization of the appraisal system. The organization is interested in improving the
efficiency and utility of performance appraisal system to succeed in todays dynamic
environment. So there is a need of improvement in existing performance appraisal system
which plays a catalytic role for the organization.

10

2.0 COMPANY PROFILE

11

We are one of the most trusted manufacturers, suppliers and exporters of a wide range of
Plastic Toys, Indoor Plastic Toys, Outdoor Plastic Toys. The product range includes a wide
gamut of Toys, which can be useful to the children of different age group. Manufactured from
high density polythene and tested as per the industry standardized guidelines lines, these Toys
are in compliance with international standard and are assured of being completely safe for
children.
Toys are the best ally of kids. Playing with their favourite toy is perhaps the happiest moment
for kids. To bring that competent smile in every kid' face, we, Dream Plast India, one of the
leading manufacturers and exporters, are offering a wide range of Plastic Toys like Plastic
Balls, Indoor Plastic Toy, Outdoor Plastic Toys, etc. In our wide range, there are almost every
types of Toys. Manufactured from industrially prescribed High Density Polythene, these Toys
are safe for children use. Further, these Toys are durable and come in proper packagings.
Besides, available in completive costings, these toys can be availed by one and all.

Our main objective is to offer our clients with a quality range of Plastic Toys. Hence, we
strive to bring more improvement in the quality standard of our products. Accordingly, we
keep ourselves abreast with the new technologies and innovations of the plastic industry.
Further, we possess a world class manufacturing facilities to support our production process.
Also, we have an advanced quality testing unit, designing unit, packaging unit and a
warehouse.

12

In achieving our present day market position, our mentor Mr. Amit Mishra has made a major
contribution. He has laid down such effective company policies, under which, we earn
maximum profit and also provide best products to our customers.

Why Us?

We are well known global brand of Plastic toys. Customers have highly appreciated the
product range for its quality and cost effectiveness. Some of the other highlighting aspects of
us are as follows.

Optimum quality and variety of products

Years of experienced

Team of expert professionals

Business Type
Primary Competitive Advantages

Exporter , Manufacturer , Supplier

State of the art infrastructure

Safe for children

Team of experts

Products with International standards

Commitment to 100% client

13

satisfaction
Sales Volume
No of Staff
Year of Establishment
Investment on Manufacturing
Equipment
No of Engineers
Monthly Production Capacity
Product Range

40 Lacs
15
2000
50 Lacs
1
5.5 Tons

Indoor Plastic Toys

Outdoor Plastic Toys

Plastic Balls

And all kind of Popular Plastic

Toys

Some of Our Products

14

Organization Chart

15

B
M
O
D
D

Figure 1 Organization chart

16

3. THEORETICAL
BACKGROUND OF
STUDY

17

3.1 Need for the study of effectiveness of Performance Appraisal System

Through Organizations Perspective:

To study the assessment of performance as well as potential for the development of

employee.
To make the improvement in the existing performance appraisal system.
To check the employee satisfaction level with current performance appraisal system.
To look after the needs of both employee as well as organization.
To generate the information for personnel development and organization planning.
To promote better understanding of employees role and clarity about his/her function.
To establish common ground between employee and supervisor, this helps to create

the efficient work environment.

To provide more objective basis for promotion and transfer decisions.
To facilitate decisions about incentives, merits and awards.
To identify training and development needs and facilitate improvement of skills and
knowledge.

Through Employees Perspective:-

18

To overcome his weaknesses, improve over his strengths, and thus enable him to
improve his performance and that of the department.

Contribute to the growth and development of the employee through helping him in
realistic goal setting.

To encourage high level of employee performance.

To motivate employee.

Generate significant, relevant, free, and valid information about employees.

3.2 Performance Appraisal

Performance Appraisal is defined as the process of assessing the performance and progress of
an employee or a group of employees on a given job and his / their potential for future
development. It consists of all formal procedures used in working organizations and potential
of employees. According to Flippo, Performance Appraisal is the systematic, periodic and
an important rating of an employees excellence in matters pertaining to his present job and
his potential for a better job. Performance appraisal system should evaluate, audit, motivate,
identify training needs, develop the individual and plan for future performance.

Performance appraisal is objective assessment of an individuals performance against well

defined benchmarks. Performance appraisal offers competitive advantage to a firm by
improving performance, helping to make correct decisions, ensuring legal compliance,
minimizing job dissatisfaction and employee turnover and ensuring consistency between
organizational strategy and behavior.
Performance Appraisal System should be base on following criteria:19

Figure 2 SMART Significance

Characteristics:1.

Performance Appraisal is a process.

2.

It is the systematic examination of the strengths and weakness of an employee in terms of

his/her job.
3.

It is scientific and objective study. Formal procedures are used in the study.

4.

It is an ongoing and continuous process wherein the evaluations are arranged periodically

according to a definite plan.

5.

The main purpose of Performance Appraisal is to secure information necessary for

making objective and correct decision of an employee.

3.3 Process of Performance Appraisal

The process of performance appraisal is as follows:

20

Figure 3 Flow chart

METHODS OF PERFORMANCE APPRAISAL:-

21

METHODS OF PERFORMANCE APPRAISAL

PAST ORIENTED METHODS
Rating scales

FUTURE ORIENTED METHODS

Management by objectives

Checklist

Psychological appraisals

Forced choice method

360 appraisals

Forced distribution method

Assessment centers

Critical incident method

Behaviorally anchored rating scale
Field review
Performance tests & observations
Confidential records
Essay method
Cost accounting method
Comparative evaluation approaches
Ranking method
Paired comparison method
Table 1 Appraisal System

Rating Scales
22

This is the simplest & most popular technique for appraising employee performance. The
typical rating scale system consist of several numerical scales, each representing a job related
performance criterion such as dependability, initiative, output, attendance, attitude
,cooperation etc. Each scale ranges from excellent to poor. The raters checks the appropriate
performance level on each criterion then computes the employees total numerical score. The
number of points scored may be linked to salary increases.
Advantages:

Adaptable

Easy to use

Low cost

Every type of job can be evaluated, the only requirement being that the jobperformance criteria should be changed.

Large number of employees can be evaluated in short time so time consuming.

Disadvantages:

The rater biases are likely to influence evaluation

Numerical scoring gives an illustration of precision that is really unfounded.

23

Checklist
This method describes a performance appraisal method where rater familiar with the jobs
being evaluated prepared a large list of descriptive statements about effective and ineffective
behavior on jobs. Thus the checklists of statements on the traits of the employee and his/her
job is prepared in 2 columns- viz. Yes/No.
Disadvantages:

Leads to the Halo effect.

Does not allow raters to give relative ratings.

Forced Choice Method

In this method the rater is forced to select statements which are readymade. Its advantage is
absence of personal bias in rating. The disadvantage is that the statements may not be
properly framed.

Forced distribution method

One of the error in rating is leniency- clustering a large number of employees around a high
point on rating scale. The forced distribution method seeks to overcome the problem by
compelling the rater to distribute the rates on all points on the rating scale. The method
operates under the assumption that the employee performance level conforms to normal
statistical distribution.

24

Critical incident method

The critical incident for performance appraisal is a method in which the manager writes down
positive and negative performance behavior of employees throughout the performance
period.

Advantages:

Evaluation is based on actual job behavior

Giving job related feedback to ratee is easy.

Behaviorally anchored rating scales

This method used to describe a performance rating that focused on specific behaviors or sets
as indicators of effective or ineffective performance. It is a combination of the rating scale
and critical incident techniques of employee performance evaluation. BARS are said to be
behaviorally anchored as the scales represent a range of descriptive statements of behavior
varying from the least to the most effective.

Field review
The field review is one of several techniques for doing this. A member of the personnel or
central administrative staff meets with small groups of raters from each supervisory unit and
goes over each employee's rating with them to (a) identify areas of inter-rater disagreement,

25

(b) help the group arrive at a consensus, and (c) determine that each rater conceives the
standards similarly.

3.4 Performance tests & observations

With the limited number of jobs, employee assessment may be based upon a test of
knowledge or skills. The test must be reliable and validated to be useful.

Confidential Records
Confidential records are maintained mostly in the government departments, though its
application in the industry is not ruled out. Justification is required for outstanding and poor
rating. Overall rating is given on 5 point rating scale. The confidential reports are highly
secretive.

Essay appraisal
In its simplest form, this technique asks the rater to write a paragraph or more covering an
individual's strengths, weaknesses, potential, and so on. In most selection situations,
particularly those involving professional, sales, or managerial positions, essay appraisals
from former employers, teachers, or associates carry significant weight.

Cost Accounting Method

This method evaluates performance from the monetary returns the employee yields to his or
her company. A relationship is established between the cost included in keeping the employee

26

and the benefits the firm drives from him/her. This method has vast potential as increasingly
firms are converting their training departments into profit centres.

Comparative Evaluation Approach

It compares one workers performance with his co-workers. These appraisals are usually
conducted by superiors. As this appraisal can result in a ranking from best to worst, they are
useful in deciding merit pay increases, promotions and organizational rewards. The usual
comparative forms used in this kind of evaluation are the ranking method and paired
comparison method.

27

Ranking methods
For comparative purposes, particularly when it is necessary to compare people who work for
different supervisors, individual statements, ratings, or appraisal forms are not particularly
useful. Instead, it is necessary to recognize that comparisons involve an overall subjective
judgment to which a host of additional facts and impressions must somehow be added.
The best approach appears to be a ranking technique involving pooled judgment. The two
most effective methods are alternation ranking and paired comparison ranking.

1.

Alternation ranking:

Ranking of employees from best to worst on a trait or traits is another method for evaluating
employees. Since it is usually easier to distinguish between the worst and the best employees
than to rank them, an alternation ranking method is most popular.

2. Paired-comparison ranking:
This technique is probably just as accurate as alternation ranking and might be more so. But
with large numbers of employees it becomes extremely time consuming and cumbersome.

Paired comparison method

Paired comparison analysis is a good way of weighing up the relative importance of options.
A range of plausible options is listed. Each option is compared against each of the other
options. The results are tallied and the option with the highest score is the preferred option.

Management by objectives

28

To avoid, or to deal with, the feeling that they are being judged by unfairly high standards,
employees in some organizations are being asked to set - or help set - their own performance
goals.

Psychological appraisals
Psychological appraisals focus on future potential and not actual performance. Industrial
psychologists are employed for conducting the appraisal. The appraisal normally consists of
in-depth interviews, psychological tests, discussions with supervisors and a review of other
evaluation. The psychologist then writes an evaluation of the employees intellectual,
emotional, motivational and related characteristics that suggest individual potential and may
predict future performance.

29

Assessment centers
An assessment center is a central location where managers may come together to have their
participation in job related exercises evaluated by trained observers. Mostly used for
executive hiring, evaluating executive or supervisory potential. Assessment centre refers to a
method to objectively observe and assess the people in action by experts or HR professionals
with the help of various assessment tools and instruments. Assessment centers simulate the
employees on-the-job environment and facilitate the assessment of their on-the-job
performance. An assessment centre typically involves the use of methods like social/informal
events, tests and exercises, assignments being given to a group of employees to assess their
competencies and on-the-job behavior and potential to take higher responsibilities in the
future. Generally, employees are given an assignment similar to the job they would be
expected to perform if promoted. The trained evaluators observe and evaluate employees as
they perform the assigned jobs and are evaluated on job related characteristics. It is costly
method.

360 Degree Feedback

Many firms have expanded the idea of upward feedback into what the call 360-degree
feedback. The feedback is generally used for training and development, rather than for pay
increases.

Most 360 Degree Feedback system contains several common features. Appropriate parties
peers, supervisors, subordinates and customers, for instance complete survey,
30

questionnaires on an individual. 360 degree feedback is also known as the multi-rater

feedback, whereby ratings are not given just by the next manager up in the organizational
hierarchy, but also by peers and subordinates. Appropriates customer ratings are also
included, along with the element of self appraisal. Once gathered in, the assessment from the
various quarters are compared with one another and the results communicated to the manager
concerned.

31

3.5 Rating Errors in Performance Appraisal

Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as
'rating errors'. These errors can seriously affect assessment results. Some of the most common
rating errors are: Leniency or severity: - Leniency or severity on the part of the rater makes the assessment
subjective. Subjective assessment defeats the very purpose of performance appraisal. Ratings
are lenient for the following reasons:
a)

The rater may feel that anyone under his or her jurisdiction who is rated unfavorably will

reflect poorly on his or her own worthiness.

b)

His/her may feel that a derogatory rating will be revealed to the rate to detriment the

relations between the rater and the ratee.

c)

She/he may rate leniently in order to win promotions for the subordinates and therefore,

indirectly increase his/her hold over him.

Central tendency: - This occurs when employees are incorrectly rated near the average or
middle of the scale. The attitude of the rater is to play safe. This safe playing attitude stems
from certain doubts and anxieties, which the raters have been assessing the rates.

Halo error: - A halo error takes place when one aspect of an individual's performance
influences the evaluation of the entire performance of the individual. The halo error occurs
when an employee who works late constantly might be rated high on productivity and quality
of output as well as on motivation. Similarly, an attractive or popular personality might be
given a high overall rating. Rating employees separately on each of the performance

32

measures and encouraging raters to guard against the halo effect are the two ways to reduce
the halo effect.

Rater effect: -This includes favoritism, stereotyping, and hostility. Extensively high or low
score are given only to certain individuals or groups based on the rater's attitude towards
them and not on actual outcomes or behaviors; sex, age, race and friendship biases are
examples of this type of error.

Primacy and Regency effects: - The rater's rating is heavily influenced either by behavior
exhibited by the ratee during his early stage of the review period (primacy) or by the
outcomes, or behavior exhibited by the ratee near the end of the review period (regency). For
example, if a salesperson captures an important contract/sale just before the completion of the
appraisal, the timing of the incident may inflate his or her standing, even though the overall
performance of the sales person may not have been encouraging.

Performance dimension order: - Two or more dimensions on a performance instrument

follow each other and both describe or rotate to a similar quality. The rater rates the first
dimensions accurately and then rates the second dimension to the first because of the
proximity. If the dimensions had been arranged in a significantly different order, the ratings
might have been different.

Spillover effect: - This refers to allowing past performance appraisal rating to unjustifiably
influence current ratings. Past ratings, good or bad, result in similar rating for current period
although the demonstrated behavior does not deserve the rating, good or bad.
33

3.6 Benefits of performance appraisal system:Motivation and satisfaction

Performance appraisal can have a profound effect on levels of employee motivation and
satisfaction - for better as well as for worse. Performance appraisal provides employees with
recognition for their work efforts. The power of social recognition as an incentive has been
long noted. If nothing else, the existence of an appraisal program indicates to an employee
that the organization is genuinely interested in their individual performance and development.
This alone can have a positive influence on the individual's sense of worth, commitment and
belonging. Absenteeism and turnover rates in some organizations might be greatly reduced if
more attention were paid to it.
Training and development
Performance appraisal offers an excellent opportunity - perhaps the best that will ever occur for a supervisor and subordinate to recognize and agree upon individual training and
development needs. Performance appraisal can make the need for training more pressing and
relevant by linking it clearly to performance outcomes and future career aspirations.

Recruitment and Induction

34

Appraisal data can be used to monitor the success of the organization's recruitment and
induction practices. For example, how well are the employees performing who were hired in
the past two years?
Appraisal data can also be used to monitor the effectiveness of changes in recruitment
strategies. By following the yearly data related to new hires (and given sufficient numbers on
which to base the analysis) it is possible to assess whether the general quality of the
workforce is improving, staying steady, or declining.
Employee Evaluation
Though often understated or even denied, evaluation is a legitimate and major objective of
performance appraisal. Performance appraisal is the process of examining and evaluating the
performance of an individual. There may be an acceptable middle ground, where the need to
evaluate employees objectively, and the need to encourage and develop them, can be
balanced.

35

3.7 PERFORMANCE APPRAISAL SYSTEM AT DREAM PLAST INDIA

The Performance Appraisal System at Dream Plast Indiais used for assessing the performance
and progress of employee on a given job responsibilities. At Dream Plast Indiathe appraisal is
done on the yearly basis e.g. from March 2009-April 2010. In this increments are given to the
employee on the basis of his/her performance. The performance appraisal system at Dream
Plast India is based on the Rating scale methodology.
The description of existing performance appraisal system is as follows:

HR/Personnel Department distributes performance appraisal format to all department.

The format has various parameters for which the employee is judge for performance

The HOD gives ratings for his team members.

Filled format are returned to HR department.

HR/Personnel department discuss the same with each other for final ratings. Final
decision is based on MD.

36

The format of performance appraisal form is as follows:-

Sr.no Name Of
Employee

Parameter

Parameter

Parameter

Parameter

Parameter

Total

(100)

(20)

(20)

(20)

(20)

1.
2.
3.
4.
5.
Table 2 Performance Apprisal Format

37

(20)

After the assessment of the performance of the employee according to above form the grades
are given to the employee and on the basis of that grade the respective increments are given
to the employee.
Total Marks
80-95 above
70-80
60-70
Below 60

Grades
*
A
B
C

38

Increments Given
% on basic is calculated for increment.
% on basic is calculated for increment
% on basic is calculated for increment
% on basic is calculated for increment

4.0 OBJECTIVES OF THE STUDY

The present study on the effectiveness of performance appraisal system is based on the
following:1. To study the existing performance appraisal system.
2. To identify the gaps in existing performance appraisal system.
3. To study the effectiveness of an existing performance appraisal system.

39

SIGNIFICANCE OF PROJECT WORK:-

The project is significant as it helps in:To the organisation:

Helps in the evaluation of performance appraisal system

Helps the organization in improving the existing performance appraisal system.
Reducing the biasing developed in the organization
Encouraging performance improvement
Determining compensation changes
Encouraging coaching and mentoring
Supporting manpower planning or succession planning
Improving overall organizational performance

To the employee:

Help them to get the efficient method of performance appraisal.

Contribute to the growth and development of the employee through helping him in
realistic goal setting.

Providing feedback to employees about their performance

Motivating superior performance
Setting and measuring goals
Counseling the poor performers

40

5.0 RESEARCH
METHODOLOGY

41

In order to accomplish the objectives of the study, it is essential to articulate the manner in
which it is to be conducted, i.e., the research process is to be carried-out in a certain
framework. The research methodology, which follows, is the backbone of the study.
Research is structured inquiry that utilises acceptable scientific methodology to solve
the problem and creates new knowledge that is generally applicable.

Characteristics of research:The research undertaken is to be

Controlled (includes cause and effect analysis)

Rigorous (Accurate)

Systematic (Regular)

Valid and verifiable

STATEMENT OF THE PROBLEM

The performance appraisal of the employees in the organization should be an effective tool
for measuring the employees performance. If the performance not measured in a real manner
it will be a critical issue. A study on effectiveness of performance appraisal was undertaken to
study the reasons and ways to improve the performance appraisal system of organization.

42

5.1 RESEARCH DESIGN

Research design aids the researcher in the allocation of limited resources by posing crucial
choices in methodology.

Research design is the plan and structure of investigation so conceived as to obtain answers
to research questions. The plan is the overall scheme or program of the research. It includes
an outline of what the investigator will do from writing hypothesis and their operational
implications to the final analysis of data.

RESEARCH DESIGN USED FOR THIS STUDY IS:-

Descriptive research design;The design for this study is descriptive research design. This design was chosen as it
describes accurately the characteristics of a particular system as well as the views held by
individuals about the system. The views and opinions of employees about the system help to
study the suitability of the system as well as the constraints that might restrict its
effectiveness. Thus this design is used as it helps to describe what is prevalent regarding
group of people, community, phenomenon, situation and outcome.

43

5.2 SCOPE OF THE STUDY

The scope of the project is fully dependent upon the objectives of the project.

This study can be helpful to the organisation for conducting any further research.

It is helpful in the study of existing performance appraisal system.

It is also helpful in finding out the effectiveness of the performance appraisal system.

This study also serves as a base for understanding the perception about the employees
regarding their performance appraisal.

With the results of the study the company can improve their standards of their
appraisal system

44

5.3 DATA COLLECTION

Data collection is a term used to describe a process of preparing and collecting data. The
purpose of data collection is to obtain information to keep on record, to make decisions about
important issues, to pass information on to others. Primarily, data is collected to provide
information regarding this topic.

SECONDARY SOURCE:
The secondary source of information is based on the various details retrieved from

Books
Websites
Project Reports

PRIMARY SOURCE:The primary source of collection of data is through Questionnaire & Interview.
The interview of HR is conducted to get the information of the existing performance
appraisal system and their policies for the improvement in it. The opinion on existing
Performance Appraisal practices and their affectivity were collected through questionnaire
which was circulated to all the employees at all levels and the results have been analyzed on
the basis of agree and disagree.

SAMPLING:-

45

The sampling technique adopted for the purpose of the study is convenience
sampling. As the name implies a convenience sample means selecting particular units of the
universe to constitute a sample.

SAMPLE SIZE:The sample size of the study is 40. This sample is considered as representative. The samples
are selected as the staff employee of ice-cream division.

TOOLS OF THE DATA COLLECTION

The tool used for collecting the data is through the Questionnaire.
The main reason for selecting the questionnaire method for the study is:

Respondents have adequate time to give well thought out answers.

The time of the study was also a limiting factor.

Another tool used for data collection is Interview.

The main reason for selecting this tool is to get the detail information about the existing
appraisal system by interviewing the HR of the organisation.

Statistical tools used

Statistical tools like Tabulation, Graphic Representations, and Percentage analysis are used in
the compilation and computation of data.

46

6.0 DATA ANALYSIS AND

INTERPRETATION

47

This chapter deals in tabular presentation results and their analysis. For the purpose of easy
reading the section has been divided into three parts.

Tabular form of Response

Findings
Remarks on each question

Q1. Are you aware of existing Performance Appraisal system in your organization?
Awareness of existing
performance appraisal
system
Yes
No
Total

No of
respondents
26
14
40

% Awareness Of
existing performance
appraisal system
65
35
100

Table 3 Performance Apprisal System

Awarness of existing performance appraisal system

No of respondents

70
60
50
40
30
20
10
0

65

35
26
14

Yes

No Of respondents
% Awarness Of
existing performance
appraisal system

No

Awarness of existing performance appraisal system

Figure 4 Existing Performance Apprisal System

48

FINDINGS:

The table 3 above shows that 65% of the respondents are aware of the existing

performance appraisal system of the organization.

While remaining 35% of the respondents are not aware of the existing system of
performance appraisal.

REMARKS:

The findings regarding the awareness for the existing appraisal system helps to

examine the percentage figure regarding the awareness of performance appraisal.

This reflects that the current need of organization is to create awareness of
performance appraisal system which can be made familiarize during the probation of
employee as well as by conducting the small workshop for the employee.

49

Q2. What should be the frequency of evaluating the performance?

(Periodically/ quarterly /half yearly/Yearly)

Frequency Of Evaluating
Performance

% importance of
Performance Appraisal To
Employee Performance

No of
Respondents

Periodically

Quarterly

Half Yearly

Yearly

40

100

Total

40

100

Figure 5 Evaluation

50

Frequency Of Evaluating Performance

120
100

100
80
No. Of Re sponde nts

60
40

40

No of Respondents
% importance of
Performance Appraisal To
Employee Performance

20
0

00
0 0Half0Yearly
0
Pe riodically

Fre que ncy Of Evaluating Pe rformance

Figure 6 Evaluation of Performance

FINDINGS:The table 4 of above shows that all respondent responded that the performance evaluation
should be conducted on yearly basis.

Q3.What is your satisfaction level with the existing performance appraisal system?

51

Satisfaction level with existing

performance appraisal system

No of
respondents

Very low

% Satisfaction level with existing

performance appraisal system
2

Low

14

35

Average

20

50

High

10

Very high

40

100

Total

Figure 7 Satisfaction Level

Satisfaction level of Employee with existing Performance Appraisal system

No of respondents

60
50
40
30
20
10
0

50
35
14
25

20
4

10
00

No of respondents
% Satisfaction level with
existing performance
appraisal system

Satisfaction level

Figure 8 Satisfaction Level

FINDINGS:The table 5 shows that 5% of the respondents have very low satisfaction level. While 35% of
the respondent have low satisfaction level,50% of the respondents are having average
satisfaction and the 10 % of the remaining respondents are highly satisfied from the existing
performance appraisal system.
52

REMARKS:The findings show that there is average satisfaction level for existing performance appraisal
system in the organization. So there is a need of re-examination existing performance
appraisal system .Thus the existing system will be improve which leads to better performance
of employee as well as organization.

Q4.How often does the current performance assessment match to your expectation?

Chances of matching existing

% of chance of matching
performance appraisal
No of
existing performance
system to employee
Respondents
appraisal system to employee
expectation
expectation
Never
0
0
53
Rarely
20
50
Often
4
10
Sometime
14
35
Everytime
2
5
Total
100
Figure 9 Chance of Matching40
of Performance appraisal system

Chance Of matching existing Performance Appraisal System To Employee Expectation

60
50

50
40

35

30
No of RespondentsAxis

20

20

10
4

10
0

14
2

No of Respondents
% of chance of matching
existing performance
appraisal system to
employee expectation

00

Employee expectation

Figure 10 Chance of Matching of Performance appraisal system

FINDINGS:The table 6 above shows that

There are rare chances to match the existing performance appraisal system to

expectation of 50% of respondents.

Existing performance appraisal system often matches to the expectation of 10% of

respondent.
Also the existing performance appraisal system sometimes matches to the expectation

of 35% of respondent.
While existing performance appraisal system matches to the expectation of remaining
5% of respondent.

54

REMARKS:The findings show that there is rare chance of matching the existing performance appraisal
system to the employee expectation. So there is a need to improve the existing performance
appraisal system by taking the feedback from the employee as well as by conducting the
performance appraisal interview.

Q5.How important do you think is the performance appraisal to your performance?

TABLE 7
Importance Of Performance
Appraisal to Employees
Performance

% importance of Performance
Appraisal To Employee
Performance

No of
Respondents

Not Important

Important

20

Very Important

20

50

Most Important

12

30

Total

40

100

55

Importance Of Performance Appraisal To Employee Performance

60
50

50
40

30

30

No Of Respondents

20

20

12

10
0

20

No of Respondents
% importance of
Performance Appraisal To
Employee Performance

00

Importance Of Performance Appraisal To Employee Performance

FINDINGS:The table 7 above shows that 20% of the respondents believe that the performance appraisal
system is important to their performance. While 50% of the respondents believe that the
performance appraisal system is very important to their performance and remaining 30% of
respondent believe that the performance appraisal is most important to their performance.

REMARKS:The findings show that every employee of the organization feels the need of the performance
appraisal to their performance to know their current level of performance as well as for the
sake of increments and promotions.
56

Q6. Is Increments based on performance of the Employee? (Yes/No)

TABLE 8

Increments Based On
Performance Of Employee

% Of Employee Responded
On Increments

No Of respondents

Yes

40

100

No

40

100

Total

57

Increments Based On Performance Of Empolyee

120
100
80
No Of Re sponde nts

No Of re sponde nts
% Of Employe e
Re sponde d On
Incre me nts

60
40

40

20
0

Yes
100

0No0

Incre me nts Base d On Pe rformance Of Empolye e

FINDINGS:The table 8 of above shows that all the respondents know that their increments are based on
performance appraisal of the employee.
REMARKS:

The above findings conclude that the increments are given to the employee on the

basis of the performance.

As the increments are based on performance, the work effectiveness is maintained

which leads to positive outcome to the organization in the form of profits etc.
Importance of performance appraisal linked to increment can be observed.

58

59

Q7. Is there any need of improvement in existing performance appraisal system?

(Yes/No)
TABLE 9

Need for improvement in

performance appraisal
system

No Of
respondent
s

Need of improvement in
existing performance appraisal
system

Yes

40

100

No

40

100

Total

Need for improvement in existing performance appraisal system

120
100

100
80
No of Respomdents

No Of respondents
Need of improvement in
existing performance
appraisal system

60
40

40

20
0

Yes

0 No 0

need for improvement in existing PAS

FINDINGS:The table 9 of above shows that all the respondents feels the need of improvement in the
existing performance appraisal system.

60

FINDINGS
Findings from Interview: Dream Plast Indiauses the rating scale method for its performance appraisal.(Ref:
Annexure -1 Q3)
The appraisal system is implemented for the staff employees.(Ref: Annexure -1 Q2)
There is a need to improve the performance appraisal system of the organization as it
doesnt follow the systematic approach and is not standardised.(Ref: Annexure -1
Q5,Q6)
There is a need to sort the existing performance appraisal system gradewise.(Ref:
Annexure -1 Q7,Q8)
Performance appraisal is evaluated on yearly basis. But it is found that there is need
to assessed the performance of employee quarterly. So there is a need of improvement
of period in existing performance appraisal system.(Ref: Annexure -1 Q9,Q10)
The performance appraisal format of the existing performance appraisal system is
different for different departments. But organization feels the need of unique format
for all departments with the consideration of the KRA as well as general attributes.
(Ref: Annexure -1 Q11,Q12,Q13)
Managers are given training regarding the performance evaluation.(Ref: Annexure -1
Q15)

61

 Performance of employee is being accessed by the Superior but there is a need of self
rating to reduce the biasing in the appraisal process.(Ref: Annexure -1 Q14,Q16)
The appraisal ratings are needed to be communicated. .(Ref: Annexure -1 Q17,Q18)
The appraisal interviews are not conducted so there is a need to conduct it for analysis
of employee and taking their feedback. Thus the appraisal interview is a tool that
helps for improving the performance appraisal system.(Ref: Annexure -1 Q20)
There is average satisfaction level with existing performance appraisal system which
shows that it is not effective. (Ref: Annexure -1 Q22)
The employee gets the increments on the basis of the performance appraisal.(Ref:
Annexure -1 Q23)
There is need to count the promotion, demotion and transfer on the basis of the
performance. (Ref: Annexure -1 Q24)
There is a need of reward recognition system on the basis of the performance which
helps to motivate the employee.(Ref: Annexure -1 Q25,Q26)
Performance appraisal system should be objective.(Ref: Annexure -1 Q31)

The existing performance appraisal system is intensive as it only considers the

increments but not the feedback for the employee. This leads to the stagnant growth of
the employee and reduces the effectiveness of existing appraisal system. Thus there is
a need to give the feedback to the employee which makes them aware regarding their
areas of improvement.(Ref: Annexure -1 Q29,Q30,Q31)
62

The organization needs to implement the phenomenon like Job Rotation, Job
Enrichment, Job Engineering and Job Enlargement for making the appraisal system
more effective.(Ref: Annexure -1 Q31)

6.0 Findings from Questionnaire

65% of the respondents are aware of the existing performance appraisal system of the
organization. (Ref: table 3 )

All respondents responded that there is a performance appraisal on yearly basis. (Ref:
table 4 )
50% of the respondents are having average satisfaction level from the existing
performance appraisal system. It shows that the performance appraisal system is not
effective and needs the improvement. (Ref: table 5 )
There are rare chances to match the existing performance appraisal system to the
expectation of 50% of the respondent. So it is a need to improve the appraisal system.
(Ref: table 6 )
50% of respondents think that the performance appraisal system is very important to

their performance. (Ref: table 7 )

All respondents responded that in existing performance appraisal system increments

are to be based on performance. (Ref: table 8 )

All the respondents feels the need of improvement in performance appraisal system.
(Ref: table 9 )

63

7.0 SUGGESTIONS &

CONCLUSIONS

64

7.1 SUGGESTIONS

The current need of organization is to create awareness of performance appraisal

system which can be made familiarize during the probation period of the employee or

by conducting an awareness programs.

The performance appraisal system should be based on quarterly evaluation which

helps to fill the performance gap as well as to achieve the targets.

Thus the organization should implement the unique (measurable) performance
appraisal format which is accessed both by self as well as superior including the KRA
as well as general attributes which helps to increase the effectiveness with the

increment in the productivity.

Appraisal ratings need to be communicated to the employees which lead to prevent

bias in the appraisal system.

Once an employee is evaluated, he/she has to be informed about their strengths and
weaknesses. An employee should aware of the above, he/she will improve their
strengths and weaknesses and also it helps to increase the productivity of the

organization. This helps to increase effectiveness of appraisal system.

The performance appraisal system should be based on objective basis as it helps to
take the decision regarding the incentives, merits & awards. This all helps to reduce

the bias in the appraisal system.

Also there is need of reward recognition system as it helps to motivate the employee

towards their work.

There is need to introduce the feedback mechanism for employees which helps in

development/ growth of employee and leads to an effective appraisal system.

The organization should implement the phenomenon like Job Rotation, Job
Enlargement, Job Engineering and Job Enrichment which helps in increasing the
effectiveness of the appraisal system.

65

The effectiveness of performance appraisal system depends on employee satisfaction

level as well as employee growth. Thus, to make the performance appraisal system
more effective the organization should consider the following:1. Goal Alignment
2. Motivation
3. Standardized Performance Assessment
4. Reward for Top Performance

7.2 CONCLUSION
1. This study shows a major amount of work towards developing an effective and
efficient performance appraisal system has not been accomplished to the fullest.
66

2. It seems that the organization is striving to improve the efficiency and utility of
performance appraisal system to succeed in todays dynamic environment.
3. To make improvement in performance appraisal system there is a need to consider the
following:Outward Orientation of Performance Appraisal System
The appraisal system should be more sensitive and responsive to current competitive
environment. This is possible through making the organization.

Quality conscious in products and services to match international standards.

Customer oriented (internally as well as externally)

Cost effective

Technology oriented

Focused towards collaboration and teamwork

People oriented

Focused towards performance standards

In achieving the above, the performance appraisal system has a catalytic role to play.

Periodic Performance Review and Planning:

67

There should be some aspect in the PA forms, which deals with the effect of Internal
Influences, organizational influences and external influences on performance of employee to
make the PA system more sensitive to changes.

Increase awareness of company goals in order to integrate company and individual

expectations.

Conducting training workshops for appraisers to remove biases and errors in appraisal.

Increasing transparency and open communication and minimizing confidentiality in

performance review discussions.

The work done towards modifying and developing performance appraisal systems, time to
time should be continued.
Linkage with Rewards
Good performers should be recognized and rewarded, whereas weak performers need to be
encouraged to become better performers. PA systems when liked with individual rewards and
promotions create more problems than they help in motivating people. They encourage fewer
employees and discourage more. They do not develop the team spirit but rather enhance
interpersonal comparisons and power politics. The focus should be shifted from rewarding
the performance of few to development of performance of many.
However there is also a need for recognition and rewarding good work. Alternative systems
of rewarding with multiple reward/recognition mechanism are needed. But these systems
should be separated from other systems (like career planning).

68

69

8.0 LIMITATIONS OF THE

STUDY

70

The respondents are limited to Staff Employees of Ice-cream Division .

The respondents were selected inside the organization only. So it cannot be generalized
as a whole.

The human behavior is dynamic and hence the results may not hold good for a long time.

The results of the survey are totally dependent on the accuracy and authenticity of the
information provided by the respondents.

71

72

9.0 BIBLIOGRAPHY

73

a) Books:

Aswathappa K; Human Resource management; No.5 Vol.2008; pp 243-272

Ranjit Kumar; Research methodology: a step-by-step guide for beginners;No. 2

Vol 2005

b) Internet sites:

<http://www.citehr.com/33173-performance-appraisal-performance management-

system.html >
<http://performance-appraisals.org/faq/difpapm.htm
<http://performance-appraisals.org/faq/whatispm.htm >
<http://performance-appraisals.org/faq/whatcomponents.htm >
<http://performance-appraisals.org/faq/performancereview.htm>
<http://www.allprojectreports.com/Performance%20Appraisal%20system%20at
%20bsnl/performance%20Appraisal%20system%20at%20bsnl.htm>
<http://changingminds.org/explanations/research/sampling/convenience_samplin

g.htm >
<http://www.humanresources.hrvinet.com/what-are-key-result-areas-

kra/#comment-4490 >
<http://www.Indian Agricultural Resources - Dairy Milk Products.htm >
<http://www.performance appraisals and sample appraisal form templates and
360 degree appraisals free tips, performance evaluation, employee evaluation

tips.htm >
<http://www.fao.org/docrep/w7505e/w7505e06.htm#TopOfPage.htm>

<http://www.performance-appraisal.com/intro.htm>
<http://www.performance-appraisal.com/benefits.htm>
<http://performance-appraisals.org/faq/stplan.htm
>
appraisals.org/faq/performancepurpose.htm>

appraisals.org/faq/legal.htm >
<http://performance-appraisals.org/faq/failure.htm >
<http://performance-appraisals.org/faq/communication.htm>
74

<http://performance<http://performance-

75

ANNEXURE-I
INTERVIEW OF MANAGER
Q1. Do you have implemented the Performance Appraisal System for Dream Plast India?
Ans:- Yes.
Q2. Who are the Part of the performance Appraisal?(Staff employee/Workers)
Ans:- Staff Employee.
Q3. Which method of performance appraisal is being used in Dream Plast India?
Ans:- Rating Scale Method.
Q4. Do you feel that there is a need to change the method of performance appraisal Ans:- No.
Q5. Do you feel that there should be any need to change or improve the Performance
Appraisal System of the Dream Plast India?
Ans:- Yes, it is needed to improve the system.
Q6. Why there is need to change or improve the Performance Appraisal System of Dream
Plast India?
Ans:- As in Dream Plast India the performance appraisal system which is implemented does
not follow the formal approach for performance appraisal. Thus there is a need of
standardised performance appraisal system.
Q7. Is the existing performance appraisal system based on grades?
Ans:- No.
Q8.Do you feel that there is need to sort the PAS gradewise?
Ans:- Yes.
Q9. What should be the frequency of evaluating the performance of employee?
76

Ans:- The performance of employee is evaluated on the yearly basis.

Q10. Do you feel that there is a need to change the frequency of evaluating the performance
of employee?
Ans:-Yes , it need to be change from yearly to quarterly basis.
Q11. Is Performance Appraisal Format same for all departments?
Ans:- No. As the parameters for the Performance Appraisal are different for different
departments.
Q12. Do you feel that there is a need to improve the performance appraisal format?
Ans:- Yes, we are on the way of improving the format for performance appraisal which is
unique for all the departments.

Q13. What kind of improvements you actually going to make in the existing performance
appraisal Format?
Ans:

Implement the unique format for all the departments.

Performance Appraisal format should be based on the KRA.

Performance Appraisal Format should consider some general attributes also.

Q14. How should performance of the employee is being accessed?(Self/Superior)

Ans:- The performance of employee is being accessed by the Superior. The HOD of each
department can appraise the employee of respective department. Finally the appraisal is
recommended by the Managing Director.
Q15. Are managers given training in the rating of performance appraisal?
Ans:- Yes.

77

Q16. Is there any need to count the self rating in the performance appraisal system of Dream
Plast India?
Ans:- Yes . As it helps to reduce the biasing developed in the performance appraisal.
Q17. Are appraisal ratings communicated to the employees?
Ans:- No

Q18. Do you feel that there is a need to communicate the appraisal ratings to the employee?
Ans:- Yes, it is the need if self rating is implemented.
Q19. Are appraisal interviews being conducted?
Ans:- No.
Q20. Is there any need to conduct the appraisal interview for improving the performance
appraisal system?
Ans:- Yes,it is needed. Because it helps in the analysis of the employee against the various
parameters and take their feedback regarding the appraisal.
Q21. Is target achievement be the only criteria for performance appraisal?
Ans:- No.
Q22. What is your satisfaction level with existing performance appraisal system?
Ans:- Average.
Q23. How the performance appraisal system of Dream Plast India is beneficial to the
employees?
Ans:- The employee gets the increments on the basis of the performance appraisal.

Q24.Do you feel that there is a need to count the promotion, demotion and transfers on the
basis of the performance of the employee?
78

Ans:- Yes, it is needed.

Q25. Is there any reward recognition system on the basis of performance appraisal?
Ans:- No.
Q26. Do you feel that there is need to implement the reward recognition system in your
organization on the basis of performance?
Ans:- Yes, it is needed as it helps to motivate the employee .
Q27. Is training to be given on the basis of performance appraisal?
Ans:- No.
Q28. Do you feel that there is a need to give the training on the basis of performance
appraisal?
Ans:- No ,there is no any need. As the organization has not able to invest on the training cost.
This links with the cost control.
Q 29. Is current appraisal system gives feedback to the employee regarding his/her
performance?
Ans:- No.
Q30. Do you feel that there is a need to implement the feedback mechanisam in current
appraisal system?
Ans:- Yes, it is needed. As employees are unaware of the areas of the improvement which
leads to the stagnant growth of the employee. This leads to the stagnant growth of the
employees and reduces organizational effectiveness.
Q31. What kind of improvement you are looking for in the existing appraisal system?
Ans:

It should be objective.

79

Performance Appraisal System should facilitate decisions about incentives, merits and
awards.

The performance appraisal system should help in the improving the work
environment.

The existing appraisal system is intensive as it only considers increments on the basis
of performance. But there is a need of performance appraisal system which helps to
give feedback to the employee for improvement in performance.

Also organization needs to implement the concepts like Job Rotation, Job Enrichment,
Job Engineering and Job Enlargement for making it more effective.

80

ANNEXURE-II
QUESTIONNAIRE FOR STAFF EMPLOYEES

Dear Respondent,
It would be grateful for me if you share your views regarding the performance appraisal
system. Information provided by you will be kept confidential.
Q1. Are you aware of existing Performance Appraisal system in your organization?
Yes

No

Q2. What should be the frequency of evaluating the performance?

(Periodically/ quarterly /half yearly/Yearly)
Ans:Periodically

Quarterly

Half Yearly

Yearly

Q3.What is your satisfaction level with the existing performance appraisal system?
Ans:Very Low

Low

Average

High

Very High

Q4.How often does the current performance assessment match to your expectation?
Ans:Never

Rarely

Often
81

Sometime

Every time

Q5.How important do you think is the performance appraisal to your performance?

Ans:Not Important

As Important

Very Important

Most Important

Q6. Is Increments based on performance of the Employee? (Yes/No)

Ans:Yes

No

Q7. Is there any need of improvement in existing performance appraisal system?

(Yes/No)
Ans:Yes

No

82