A PROJECT REPORT ON“EXECUTIVE PERFORMANCE APPRAISAL SYSTEM”

AT NALCO, BHUBANESWAR

Submitted for the partial fulfillment of MBA Degree under BPUT (2009-2011)

Under the guidance of Mr. Sambit K. Parida

Manager, HRD (NALCO)&

Ms. Bandana MishraFaculty, HRD (CEB)

Submitted by Payal KumariRegd No: 0906219051

College of Engineering, Bhubaneswar

CERTIFICATE

This is to certify that the dissertation entitled “EXECUTIVE PERFORMANCE APPRAISAL SYSTEM” at NALCO, BHUBANESWAR being submitted by Payal Kumari, a student of College of Engineering, Bhubaneswar; BPUT, Rourkela is a bonafied research work carried out by her under my guidance and supervision. This dissertation has not been submitted or published any where before.

Mr. Sambit K. Parida Manager, HRD NALCO, BHUBANESWAR

DECLARATION

I Payal Kumari, bearing Registration number 0906219051, a student of College of Engineering, Bhubaneswar, BPUT, Rourkela, do hereby declare that the project report entitled “EXECUTIVE PERFORMANCE APPRAISAL SYSTEM” is an original work done by me at NALCO, Bhubaneswar for the partial fulfillment of MBA Degree under BPUT (2009-2011). No part of this report has been submitted to anyone at time before.

Date: Payal Kumari

Place: Bhubaneswar Regd no: 0906219051

ACKNOWLEDGEMENT

I would like to express gratitude and sincere thanks to my guide Mr. Sambit K. Parida (Manager, HRD, NALCO, Bhubaneswar) for his constant guidance and inspiration in helping me to complete the project in a successful manner.

I am grateful to Ms. Bandana Mishra (HR Faculty Koustuv Groups of Institutions) for providing me their vast knowledge in the Human Resource Management which helped me to complete all the theoretical parts of this project.

Last but not the least I am thankful to all the Employees of NALCO Bhubaneswar, who continuously co-operated and helped me gathering information in relation with my research.

Payal Kumari

CONTENT

CHAPTER – 1

INTRODUCTION

CHAPTER – 2

PERFORMANCE APPRAISAL - THEORITICAL ASPECT

CHAPTER – 3

COMPANY PROFILE - NALCO

CHAPTER – 4

HUMAN RESOURCES AT NALCO

CHAPTER - 5

PERFORMANCE APPRAISAL AT NALCO

CHAPTER – 6

DATA ANALYSIS & RECOMMENDATIONS

ANNEXURE BIBILIOGRAPHY

CHAPTER – 1

INTRODUCTION

INTRODUCTION

Human Resource Management, in the sense of getting things done through people, is an

essential part of every manager’s responsibility, but many organizations find it

advantageous to establish a specialist division to provide an expert service dedicated to

ensuring that the human resource function is performed efficiently.

“People are our most valuable asset” is a cliché, which no member of any senior

management team would disagree with. Yet, the reality for many organizations are that

their people remain under valued, under trained and under utilized.

Performance Appraisal is 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 the working organizations to

evaluate personalities, contributions and potentials of employees.

AIMS & OBJECTIVES OF THE STUDY

Performance Appraisal is the important aspect in the organization to evaluate the

employee’s performance. Performance appraisal has been considered as most vital and

indispensable system for an organization. It helps in understanding the employees work

culture, involvement, and satisfaction. It helps the organization in deciding employee’s

promotion, transfer, incentives, and pay increase. It is an aid for creating and maintaining

satisfactory level of performance by employee on their present job.

The primary objective of the study is to

study about the existing performance appraisal system of NALCO. In the light of the

above objective the following are the various sub-objectives framed:

To find out the impact of “Performance Appraisal” on workforce and

management.

To find out whether present appraisal system is favourable and beneficial

to the employees.

To find out the methods followed by the organization in evaluating the

performance of their employees.

To find out whether the system brings uniformity in the increasing

productivity and welfare of the organization.

SCOPE OF THE STUDY

The study focuses on the existing performance appraisal system of NALCO. The study

encompasses the performance appraisal system for executives at corporate office

NALCO, Bhubaneswar. The views of the executives were taken through journals,

questionnaires, company records and other company publications.

METHODOLOGY OF THE RESEARCH

The data was collected through the “Random Sampling Method”. The questionnaire was

distributed personally among the respondents and was collected by an informal

discussion. In practice it is very difficult to collect information from all the executives in

a large organization like NALCO.

 

CHAPTER – 2

PERFORMANCE APPRAISAL - THEORITICAL

ASPECT

PERFORMANCE APPRAISAL - THEORITICAL ASPECT

HUMAN RESOURCE MANAGEMENT – BRIEF INTRODUCTION

Human Resource Management is a process of bringing people and organizations together

so that the goals of each are met. It may be defined as the art of procuring, developing

and maintaining competent workforce to achieve the goals of an organization in an

effective and efficient manner. The role of human resource management in organisations

has been evolving dramatically in recent times. The days of Personnel Department

performing clerical duties such as record keeping, paper pushing and file maintenance are

over. HR is increasingly receiving attention as a critical strategic partner, far reaching

transformational roles and responsibilities.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT

Following are the various functions of Human Resource Management that are essential

for the effective functioning of the organization:

1.    Recruitment

2.    Selection

3.    Induction

4.    Performance Appraisal

5.    Training & Development

We will discuss Performance Appraisal in detail.

WHAT IS “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 employee’s excellence in matters

pertaining to his present job and his potential for a better job.”

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 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 an employee.

PROCESS

1. Establishing performance standards

2. Communicating the Standards

3. Measuring Performance

4. Comparing the actual with the standards

5. Discussing the appraisal

6. Taking Corrective Action

LIMITATIONS

1. Errors in Rating

2. Lack of reliability

3. Negative approach

4. Multiple objectives

5. Lack of knowledge

METHODS OF PERFORMANCE APPRAISAL

The foregoing list of major program pitfalls represents a formidable challenge, even

considering the available battery of appraisal techniques. But attempting to avoid these

pitfalls by doing away with appraisals themselves is like trying to solve the problems of

life by committing suicide. The more logical task is to identify those appraisal practices

that are (a) most likely to achieve a particular objective and (b) least vulnerable to the

obstacles already discussed.

Before relating the specific techniques to the goals of performance appraisal stated at the

outset of the article, I shall briefly review each, taking them more or less in an order of

increasing complexity.

The best-known techniques will be treated most briefly.

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.

GRAPHIC RATING SCALE

This technique may not yield the depth of an essay appraisal, but it is more consistent and

reliable. Typically, a graphic scale assesses a person on the quality and quantity of his

work (is he outstanding, above average, average, or unsatisfactory?) and on a variety of

other factors that vary with the job but usually include personal traits like reliability and

cooperation. It may also include specific performance items like oral and written

communication.

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

conceives the standards similarly. .

FORCED-CHOICE RATING

Like the field review, this technique was developed to reduce bias and establish objective

standards of comparison between individuals, but it does not involve the intervention of a

third party.

MANAGEMENT BY OBJECTIVES

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. Within the past five or six years, MBO has become something of

a fad and is so familiar to most managers that I will not dwell on it here.

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. There is no single form or way to do this.

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. Here

subordinates to be rated are listed and the names of those not well enough to rank are

crossed. Then on a form as shown below, the employee who is highest on the

characteristic being measured and the one who is the lowest are indicated. Then chose the

next highest and the next lowest, alternating between highest and lowest until all the

employees to be rated have been ranked.

2. “Paired-comparison ranking”:

 This technique is probably just as accurate as alternation ranking and might be more so.

But with large numbers of employees it becomes extremely time consuming and

cumbersome.

Both ranking techniques, particularly when combined with multiple rankings (i.e., when

two or more people are asked to make independent rankings of the same work group and

their lists are averaged), are among the best available for generating valid order-of-merit

rankings for salary administration purposes.

ASSESSMENT CENTERS

So far, we have been talking about assessing past performance. What about the

assessment of future performance or potential? In any placement decision and even more

so in promotion decisions, some prediction of future performance is necessary. How can

this kind of prediction be made most validly and most fairly?

360 DEGREE FEEDBACK

Many firms have expanded the idea of upward feedback into what the call 360-degree

feedback. The feedback is generally used for training and development, rather than for

pay increases.

Most 360 Degree Feedback system contains several common features. Appropriate

parties – peers, supervisors, subordinates and customers, for instance – complete survey,

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

feedback, whereby ratings are not given just by the next manager up in the organizational

hierarchy, but also by peers and subordinates. Appropriates customer ratings are also

included, along with the element of self appraisal. Once gathered in, the assessment from

the various quarters are compared with one another and the results communicated to the

manager concerned.

Another technique that is useful for coaching purposes is, of course, MBO. Like the

critical incident method, it focuses on actual behavior and actual results, which can be

discussed objectively and constructively, with little or no need for a supervisor to "play

God."

Advantages

Instead of assuming traits, the MBO method concentrates on actual outcomes. If the

employee meets or exceeds the set objectives, then he or she has demonstrated an

acceptable level of job performance. Employees are judged according to real outcomes,

and not on their potential for success, or on someone's subjective opinion of their

abilities.

The guiding principle of the MBO approach is that direct results can be observed easily.

The MBO method recognizes the fact that it is difficult to neatly dissect all the complex

and varied elements that go to make up employee performance.

MBO advocates claim that the performance of employees cannot be broken up into so

many constituent parts, but to put all the parts together and the performance may be

directly observed and measured.

Disadvantages

This approach can lead to unrealistic expectations about what can and cannot be

reasonably accomplished. Supervisors and subordinates must have very good "reality

checking" skills to use MBO appraisal methods. They will need these skills during the

initial stage of objective setting, and for the purposes of self-auditing and self-monitoring.

Variable objectives may cause employee confusion. It is also possible that fluid

objectives may be distorted to disguise or justify failures in performance.

BENEFITS OF PERFORMANCE APPRAISALS

Measures an employee’s performance.

Helps in clarifying, defining, redefining priorities and objectives.

Motivates the employee through achievement and feedback.

Facilitates assessment and agreement of training needs.

Helps in identification of personal strengths and weaknesses.

Plays an important role in Personal career and succession planning.

Clarifies team roles and facilitates team building.

Plays major role in organizational training needs assessment and analysis.

Improves understanding and relationship between the employee and the reporting

manager and also helps in resolving confusions and misunderstandings.

Plays an important tool for communicating the organization’s philosophies,

values, aims, strategies, priorities, etc among its employees.

Helps in counseling and feedback.

Rating Errors in Performance Appraisals

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)    He/She may feel that a derogatory rating will be revealed to the rate to

detriment the relations between the rater and the ratee.

c)     He/She 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 ax on motivation. Similarly, an attractive or popular

personality might be given a high overall rating. Rating employees separately on each of

the performance 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.

One way of guarding against such an error is to ask the rater to consider the composite

performance of the rate and not to be influenced by one incident or an achievement.

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 lo allowing past performance appraisal rating lo

unjustifiably influence current ratings. Past ratings, good or bad, result in similar rating

for current period although the demonstrated behavior docs not deserve the rating, good

or bad.

CHAPTER – 3

COMPANY PROFILE - NALCO

NALCO : OVERVIEW

Nalco was founded as National Aluminate Corporation in 1928 through a merger of

Chicago Chemical Company and Aluminate Sales Corporation, two Chicago-based

companies selling sodium aluminate to treat water. Chicago Chemical Company sold

mainly to municipalities and industrial plants for boiler feedwater treatment. Aluminate

Sales Corporation sold to the railroads to condition water used in steam locomotives.

National Aluminium Company Ltd. (Nalco) is considered to be a turning point in the

history of Indian Aluminium Industry. In a major leap forward, Nalco has not only

addressed the need for self-sufficiency in aluminium, but also given the country a

technological edge in producing this strategic metal to the best of world standards. Nalco

was incorporated in 1981 in the Public Sector, to exploit a part of the large deposits

of bauxite discovered in the East Coast.

Incorporated in 1981, as a public sector enterprise of the Government of India, National

Aluminum Company Limited (Nalco) is Asia's largest integrated aluminium complex,

encompassing bauxite mining, alumina refining, aluminium smelting and casting, power

generation, rail and port operations. Commissioned during 1985-87, Nalco has emerged

to be a star performer in production, export of alumina and aluminium, and more

significantly, in propelling a self-sustained growth.

NALCO : OUR MISSION AND VISION

Our mission is to lead the industry in creating value for customers and Nalco through

differentiated services and technologies that save water and energy, enhance production

and improve air quality while reducing total costs of operation.

Our vision is to earn customers for life and enhance the lives of our employees while

protecting the planet.

NALCO : OUR VALUES

Each day, Nalco people deliver results that help our customers succeed by living our core

values:

Safety

At Nalco, we make safety personal, with a goal of zero injuries. We assess risk

and put safety first before beginning any action.

Integrity

At Nalco, we believe there is no right way to do something that is wrong. We

create an environment of trust where our actions mirror our words.

Expertise

At Nalco, we are always learning, always leading sustainable solutions.  We

deliver and document customer value, using all of our global resources to create,

sell and deliver the total solution.

Innovation

At Nalco, we are motivated to go beyond the status quo. We take risks,

challenging the norm and improving business processes and technology.

Collaboration

We bring the best of Nalco everywhere, every time.

Accountability

At Nalco, we take responsibility by setting measurable goals and monitoring

performance with discipline.

TECHNICAL FEATURES

01. Bauxite Mine

Panchpatmali, Orissa,

48,00,000 TPA

o Fully mechanised open cast mines with computerized mine planning.

o 370 million Tonnes deposit estimated.

o 14.6 Kms - long single - flight multi corve

o 1 800 tph capacity computerised conveyor system for transportation of

Ore.

02. Alumina Plant

Damanjodi, Orissa,

15, 75, 000 TPA

o Atmospheric pressure digestion process

o Energy efficient fludised bed calciners

o Co-generation of 3 X 18.5 MW power by back pressure turbines from

process steam.

o Integrated facilities for manufacturing Alumina, Hydrates and Zeolite.

03. Aluminium Plant,

Angul, Orissa,

3, 45, 000 tpa

o Advanced 1 80 KA Cell Technology

o Micro - Processor based Pot-Regulation System

o Fume ireaimeni wiih dry-scrubbing system

o Integrated annode making , aluminium casting and rolling facilities

04. Power Plant,

Angul, Orissa,

960 MW

o Micro-processor based burner management.

o Automatic turbine run up system

o Specially designed high pressure boilers

o Advanced electrostatic precipitators.

05. Port Facilities,

Vizag,

Andhra Pradesh.

o For export of Alumina and Import of Caustic Soda.

o Mechanised storage facility of 3 x 25, 000 T capacity

o Mechanised Mobile Ship loader of 2200 tph capacity.

o Capacity to handle ships up to 35000 DWT

MAJOR ACHIEVEMENTS:

First mines safety award: March 1998 CAPEXIL export award: 1988 to 1999

(12 times ) LME registration: May 1989 STAR TRADING HOUSE status: January 1992 ISO 9002 certification:

Alumina refinery: November 1994 Smelter plant: February 1995 Captive power plant: December 1995 Bauxite mines: January 1996

CITD special gold award: September 1994

Best exporter’s award: November 1994 Safety award for eco-friendly factory: March

1995 Rajiv Gandhi memorial national award: July 1996 Indira priyadarshini vrikshamitra award: September

1996 Environment management certification to ISO:

September 1996 Engineering export promotion council(EEPC)award:

December 1996 Environment management certification to ISO: February

1997 Best annual report prize by public sector public relation

forum: August 1999 Prestigious IIC India limited award: December 1999 Shram Vir Award received by Sri Dolu Patra senior

technician of NALCO from former prime minister Shri Atal Bihari Vajpayee: February 2000

Technologists of NALCO received united nations intellectual property organization (WIPO) gold medal for development of process technology for manufacturing detergent grade Zeolite: May 2000

Fuel conservation award for M&R complex by CII eastern region: June 1997

First dispatch of special grade alumina from SGA pilot plant: July 1997

Independence day award 97 to NALCO scientists for the process invention by National Research Development Corporation(NRDC): August 1997

FICCI award on environment conservation and pollution control for the year 1996-97:

Nov 1997 Indian institution of industrial engineering award for

performance excellence 1996-97:Nov 1997

Environment protection award by institute of ecology & environment, New Delhi: Dec

1997 Environment management certification to ISO-14001:

Dec 1997 Best occupational service award to Damanjodi unit:

March 1998 All India industrial promotion INDEPENDENCE GAURAV

AWARD: May 1998 Selected for GEM granite environment award for the year

1997-98 by the Federation of Indian mineral industries(FIMI):

July 1998 Selected for Rungta Social service award for the year

1997-98: July 1998 Honoured with United Nations world intellectual property

organization.

CHAPTER – 4

HUMAN RESOURCES AT

NALCO

HUMAN RESOURCES:

NALCO is truly youthful organization with the average age of the employees

being below 40yrs.Starting with a core group of 262 employees in 1982, the progressive

growth in manpower has taken place in a planned manner matching the needs of the

different stages of the project.

The categories of manpower in NALCO are executives and non-executives.

NON-EXECUTIVES:

HIGHLY SKILLED:

The employees who are technically / professionally educated and trained generally hold

supervisory positions. Diploma engineers get direct entry in to supervisory positions and

other employees enter supervisory positions through the departmental promotion

channels.

Employees’ grade codes for highly skilled are:

S0, S1, S2, S3, S4, T3, T4, T5, T6, T7, P4, P5, P6, P7, M3, M4, M5, M6, M7

SKILLED:

These are mostly the employees with graduation/ITI/paramedical qualifications.

T0, T1, T2, M0, M1, M2 group of workers are coming under this category.

SEMI-SKILLED AND UNSKILLED:

These are the employees normally having below matriculation level or non ITI

qualifications or even illiterates. The grade codes of W1, W2, W3, W4, W5,W6 come

under this category.

EXECUTIVES:

These categories of employees are usually qualified with degree in engineering/medical

or with professional qualification like MBA, CA, AICWA or other management degrees.

Diploma engineers, post graduate degree, general degree holders also occupy lower

management positions by way of departmental promotions. Employees with grade codes

E0 to E9 come under this category.

MANPOWER POSITION OF NALCO AS ON 31 MARCH 2007.

SL NO CATEGORY TOTAL NUMBER OF EMPLOYEES

1 EXECUTIVES 1745

2 SUPERVISORS 892

3 SKILLED/HIGHLY

SKILLED WORKMEN

2405

4 UNSKILLED/SEMISKILLED

WORKMEN

1145

5 TOTAL 7426

HUMAN RESOURCES IMPORTANCE:

To attract competent personnel with growth potential and develop their skills and

capabilities in a congenial work and social environment opportunities for training,

recognition, career advancement through and other incentives.

To develop and nurture favourable attitudes among the employees and to obtain

their best contributions to the organization by providing stable employment, safe

working conditions, job satisfaction, quick re-dressal of grievances and through

good pay and welfare amenities commensurate with the Company's capacity to

spend and the Government's guidelines.

To foster fellowship and sense of belongingness among all and by encouraging

healthy trade union practices.

PERSONNEL POLICY OF NALCO: Policy means “plan of action”. A policy is manmade rule of

predetermined course of action that is established to guide the performance of work

towards org objectives.

HR SUBSYSTEMS:

TRAINING/DEVELOPMENT: NALCO believes that it is a continuous process

throughout the career of every employee with a view to develop his technical, human,

conceptual skills as required for his future career growth.

WAGE/SALARY ADMINISTRATION: The (HRD&A) department carries out it as

negotiated by the recognized trade union and management. In case of executives the

government guidelines and corporate office are the authorities for salary fixation. But in

case of non-executives, the wage is fixed by corporate office after negotiation with trade

unions. NALCO has adopted the IDA pattern pay scales both for executives and

nonexecutives.

HR POLICIES

Human Resource Policy provides a frame work within which decisions can be taken

without further reference to higher authorities. Policies are broad guidelines as to how the

objectives of a business are to be achieved. While objective the ends. A policy is

designed to guide the organisational members to deal with a particular situation in a

particular manner. A policy is a predetermined and accepted provide the vends which a

manager should try to achieve, policies provide the guidelines which he should keep in

view while achieving course of thought and action to serve as a guide towards certain

accepted objectives, Policies lay down the decision making criteria in line with the

overall purpose of the organisation in the area of Human Resources Management. These

policies are developed by Top management to assist the managers at various levels to

deal with the people at work. Thus, policies can be interpreted as the recognised

intentions of top management with respect to efficient management of work force. A

policy is a guide for repetitive action in major areas of business. It is a statement of

commonly accepted understanding of decision-making criteria.

BENEFITS OF POLICIES:

By making policy decisions on frequently recurring problems, the top

management provides guidelines to the lower level managers.

Policies help managers at various levels to act with confidence without the need

for consulting the superiors every time.

Policies facilitate better administrative control as they provide the rational basis

for evaluating the results.

By setting up policies, the management ensures that decisions made will be

consistent and in tune with the objectives and interests of the enterprise.

Policies secure coordination and integration of efforts in accomplishing the

organisational objectives.

EMERGENCE OF A NEW ERA:

Towards the end of 1994, the HRD strategy of NALCO underwent a sea change. The

revolutionizing concepts of open forum, “SAHITYA”, data based appraisal methods,

reward schemes for house keeping, “SARJANA” for creativity, best attendance, safety

awards etc. brought in a new cleansing wave, which changed the perception of the

employees about the functioning of the HRD group. The name of the personnel

department was changed to human resource development department.

The new HRD STRATEGIES were:

New data based performance appraisal system.

Career planning and succession planning through Training Job rotations.

Man power evaluation &re-allocations.

Decentralization of skill development trining and monitoring for the newcomers.

Multi-skilling of the employees.

Emphasis on communication.

Structured departmental & inter-departmental meetings.

Informal grievance handling.

Improved production incentive scheme.

Group & individual reward schemes.

CHAPTER – 5

PERFORMANCE APPRAISAL AT

NALCO

PERFORMANCE APPRAISAL AT NALCO:

There are two different types of appraisal system existing in NALCO for the

executives and non-executives. The OBJECTIVES of the target based performance

appraisal system for executives are:

To evaluate the extent of achievement vs target by the individual executive during

the year.

To plan for better performance.

To understand the gaps in knowledge and skill with a view to providing guidance

and training.

To identify the potential of the individual so that a dependable management

succession plan can be built up.

MAIN FEATURES:

Joint identification of key performance areas and key tasks by the Appraiser

and the Appraisee.

Joint setting of annual targets / dates in the key tasks.

Specification of job requirements / helps needed.

Quarterly joint review of targets / performance.

Joint annual review of performance / scoring.

Indexed method of attributes/skills/abilities testing.

Joint training need assessment.

Moderation of extra ordinary scores by high level moderation committee.

Training /workshops on the system.

ANNUAL PERFORMANCE APPRAISAL OF EXECUTIVES IN NALCO:

It has been decided to modify the system of Annual Appraisals in respect of Executives

Employees w.e.f. 1st April' 1995 in order to achieve the following objectives:

1. To integrate individual goals and organizational goals through a system of

performance assessment.

2. To ensure an objective assessment of executive and fix mutually agreed targets

will in advance.

3. To provide individual executives with continuous and periodic feedback on

their performance and identify their development needs.

4. To identify and develop the potential of executive for enhanced performance

against performance.

5. To build a database and to enable quick and effective administrative decision in

respect of career planning, promotion, job rotation and job enrichment. Appraisal is not a

fault finding process. It is developmental in essence.

NALCO practiced the following performance appraisal for executives :-

01. Pre-Appraisal target setting: The reporting officer is required to set targets and

tasks against a time Schedule and as far as possible in quantitative terms in consultation

with the executives whose performance he is required to evaluate. This exercise is

undertaken at the beginning of the year.

02. Self-Appraisal: Where you are required to furnish data on your achievement of

targets / objectives, perceived shortfalls with reasons and your own training and

development needs.

03. Review Discussion: Reporting Officer holds a session of discussion every

quarter with the appraise to discuss the performance against targets, shortfalls,

shortcomings.

04. Weight-age Factors: In evaluating technical, conceptual and human relation

skills of an executive, different weight-age factors are assigned depending on the level of

the executive.

05. Time-Bound: The period of appraisal or the appraisal year coincides with the

financial year. The Reporting Officer must complete appraisal writing by 20th April

every year then through time bound stages the completed report must reach corporate

HRD Department on or before 15th May.

06. Wider Participation in Appraisal Exercise: Apart from Report and Reviewing

Officer each executive appraisal report is seen, commented upon and countersigned by

principle HOD and Heads of the units.

07. Training / Development: The last page of the report containing

recommendations on functional and developmental training is detached from the report

and sent to HRD Department for suitable action. The Executive Performance Appraisal

System under the revised system will relate to a financial year.

THE APPRAISAL FORM CONSISTS OF FOLLOWING PARTS:

FORM DESCRIPTION OF APPRAISAL PROCESS

A PERFORMANCE TARGET SETTING EXERCISE

B Task and Target Assigned for the Year

C1 & C2 Performance Review

D1 Annual Target Achievement Appraisal

D1 & D2 Managerial Skill Appraisal (Performance & Potential factors)

E Final Assessment

F Moderation Committee

EXECUTIVE PERFORMANCE APPRAISAL SYSTEM: THE CYCLE

1. Reporting Officer informs concerned Appraisee of Department/Section target,

hands over Form A.

2. Appraisee makes own plans in Form A; lists key tasks of the year with time frame

and relative weightages in Form A.

3. Both Reporting Officer & Appraisee mutually agree to a set of targets with time

frame in form B. Reviewing Officer finally accepts & signs From B.

4. Both Appraisee & Reporting Officer review key tasks on mid-term basis in Form

C1 & C2.

5. Annual target achievement appraisal is done by Reporting & Reviewing Officer

in Form D1.

a. Reporting Officer & Reviewing officer will independently rate the

concerned appraisee on achievement of key tasks. Percentage of

achievement & comments of the Reporting Officer are to be shown to the

concerned Appraisee in From D1.

6. Annual appraisal (Managerial skills-performance factors & potential factors) is

done by Reporting Officer & Reporting officers (F) & Reviewing officer in Form

D2 and D3.

a. Reporting Officer & Reporting officers (F) & Reviewing officer will

independently rate the managerial skills.

7. Appraisal Form is routed through Higher Authority & Accepting Authority for

their observations.

8. Final overall score & grade is calculated after moderation.

Sl. No. Level of Appraisee Level of Accepting Authority

1 E7 and above CMD

2 E5 & E6 Director

3 E3 & E4 Executive Director

4 E0, E1 & E2 General Manager

For the executives reporting to CMD, ratings given by CMD, will be final & carry 100%

weightage.

Some points to be noted in the EPA at NALCO are is:

- Each appraisal activity follows a particular calendar and it has to be performed by

a fixed date to carry on the next steps smoothly and on time.

- In case of transfer of Appraisee or Reporting Officer, the Performance Appraisal

Booklet is to be handed over to the HoD under intimation of the Appraisal cell,

Corporate Office.

- For Form C1 & C2, Performance is to be reviewed against targets with reasons

for variance, if any. In case of any difference of opinion, the same is to be

resolved by the Reviewing Officer.

- All calculations are computed in Appraisal cell, Corporate Office.

- The following table lists the details for overall GRADE.

Score Rating Overall Grade

Above 90% Outstanding A+

Above 80% & upto 90% Excellent A

Above 70% & upto 80% Very Good B+

Above 60% & upto 70% Good B

Above 50% & upto 60% Fair C+

Below 50% Poor C

- The Head Unit HRD, Department and Officer-in-Charge of Appraisal Cell is

responsible for the continuous follow up to ensure timely completion of the activities in

EPA.

CHAPTER – 6

DATA ANALYSIS &

RECOMMENDATIONS

To carry out the study at Nalco, following objectives were framed:

1. Identification of the technique of performance appraisal followed in NALCO.

2. Employee attitude towards the present appraisal system.

3. Review of the current appraisal system in order to

    - Enhance productivity

- Attain global standards

4. To provide suggestions & recommendations from the study conducted.

RESEARCH METHODOLOGY

RESEARCH DESIGN:

Research Design refers to "framework or plan for a study that guides the collection and

analysis of data". A typical research design of a company basically tries to resolve the

following issues:

a) Determining Data Collection Design

                b) Determining Data Methods

c) Determining Data Sources

d) Determining Primary Data Collection Methods

e) Developing Questionnaires

f) Determining Sampling Plan

(1) Explorative Research Design:

Explorative studies are undertaken with a view to know more about the problem. These

studies help in a proper definition of the problem, and development of specific hypothesis

is to be tested later by more conclusive research designs. Its basic purpose is to identify

factors underlying a problem and to determine which one of them need to be further

researched by using rigorous conclusive research designs.

(2) Conclusive Research Design:

Conclusive Research Studies are more formal in nature and are conducted with a view to

eliciting more precise information for purpose of making marketing decisions.

These studies can be either:

a) Descriptive or

b) Experimental   

Thus, it was mix of both the tools of Research Design that is, Explorative as well as

Conclusive.

SAMPLING PLAN:

Sample Size = 50 Employees

Duration = One Month.

DATA COLLECTION:

            Data Sources:

(i) Secondary Data through Internet

(ii) Primary Data through Questionnaire

(iii) Contact Method

(iv) Personal Interaction

FINDINGS AND ANALYSIS

1. Employees’ Opinion as to the Purpose of Performance Appraisal

Performance standards / yardsticks

 

Options Response

Yes 84

No 16

 

2. Awareness of technique of Performance Appraisal being followed at NALCO

among Employees

 

Options Response

Yes 72

No 28

3. Number of Employees being appraised during their service period

Options Response

Yes 68

No 32

 4. Employees’ opinion as to the present appraisal system

 

Options Responses (in %)

Fully Satisfied 2

Satisfied 24

Can’t Say 44

Dissatisfied 30

5. Employee perception as to the frequency of appraisal

 

 

Options Response (in %)

Once During The Service Period

2

Continuous 92

Never 0

Can’t Say 6

6. If continuous appraisal – what should be the gap between two appraisal period

 

  

Options Response (in %)

Quarterly 20

Half Yearly 44

Yearly 36

7. How Performance Appraisal affects the productivity of the employees

 

  Motivated Indifferent Demotivated

+ Feedback

 

 

38

 

12

 

-

-  Feedback

 

 

12

 

10

 

28

 

Neutral

 

 

24

 

21

 

5

 

 

 

8. Who should do the appraisal?

 

Options Response ( in % )

Superior 24

Peer 0

Subordinate 0

Self Appraisal 8

Consultant 4

All of the above 48

Superior + Peer 16

 

 

9. Does appraisal help in polishing skills and performance area?

 

Options Response ( in % )

 Yes 74

 No 10

 Somewhat 16

If the process of appraisal does not lead to the improvement of the skills and

proficiency of the employees, the very purpose of appraisal becomes illogical. In

the survey conducted it was observed that nearly 74 % of the respondents agree

that Performance Appraisal does leads to polishing the skills of the employees.

Nearly 10 % of the respondents view that it does not serve this purpose and

around 16 % were not able to respond as to whether it serve any such purposes or

not.

10. Does personal bias creeps-in while appraising an employee

 

Options Response ( in % )

    Yes 82

    No 18

 

In the process of appraising, both the parties are human being, that is, the one who

is being apprised and the other who is appraising. Thus, there bound to be

subjectivity involved, be it an objective way of appraising.

Thus, when asked from among the sample size of 50 respondents, as huge as 82%

responded that personal bias do creep in while appraising an individual. Hence, it

is inevitable to say that personal likings do not come in the process of appraisal. It

is the extent to which the appraiser manages it so that it does not become very

partial and bias.

RECOMMENDATIONS

1. An atmosphere of mutual trust and confidence should be created. Such atmosphere is

necessary for frank discussion of appraisal. It also helps to obtain the faith of employees

in the appraisal system.

2. Well-defined performance factors and criteria should be developed and standardised.

This will help to ensure uniformity and comparisons of ratings.

3. The raters should be required to justify their ratings. Documentation will encourage

evaluators to make conscious efforts to minimize personal bias.

4. While designing the appraisal system individual differences in organization should be

recognized as organizers differs in size, nature, and environment, therefore the appraisal

system should be adaptable.

5. After appraisal an interview with the employees should be arranged. It is necessary to

know the difficulties under which the employees work and to identify their training

needs.

6. A mechanism for review of ratings should be provided. The review may be a

committee consisting of line executives and personnel experts. The committee will see

whether the raters are unusually lenient or strict.

CONCLUSION

To describe the term impact of performance appraisal on work culture is very much large.

Proper training and well development of each and every employee is needed for overall

customer orientation and customer satisfaction.

Performance appraisal is the blood and bone of an organization, without which the entire

organization collapses and is ruined, and it is very vital to maintain it in this present

scenario. To bridge up the gap between present and future, performance appraisal is a

systematic tool, but very often we find that sometimes people in the organization are

hesitate to involve themselves in the process of change or we can say that they are not

interested to change the work culture and organization environment at large due to

various organization politics and fear i.e. loss of job, fear of replacement etc. In this

situation proper moralization is essential to make the total system a success.

A proper performance appraisal system not helps the organization to make in a right path

but also prepare the organization to face the future changes. So to adopt the process of

change the proper training and development is very much needed.

Therefore, here we conclude that performance appraisal is an important weapon to

modify the work culture and has great impact to develop the society. Thus, performance

appraisal is the most significant element of the information and control system in any

firm. It can be put to several uses concerning the entire spectrum of Human Resource

Management Functions.

ANNEXTURE &

BIBLIOGRAPHY

BIBLIOGRAPHY

BOOKS & JOURNALS

HUMAN RESOURCE MANAGEMENT BY V S P RAO

PARICHAYA, ‘MONTHLY MAGAZINE OF NALCO’, BHUBANESWAR

WEBSITES

www.nalco.com

www.google.com