INDEX

Serial No Chapter Name Page no.

1 Chapter 1.Introduction

Introduction Definition Formal v/s informal Different views About the report Chapter layout

1-2

3-5

6-7

2 Chapter 2.Profile of Procter and Gamble 8-15

3 Chapter 3.Theoretical view of Performance Appraisal 16-32

4 Chapter 4.Analysis and interpretation 33-36

5 Chapter 5.Conclusion 37

Bibliography 38

Annexures 39-40

CHAPTER 1

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INTRODUCTION

Performance Appraisal is an objective assessment of an individual’s performance against

well defined benchmarks. It is the assessment of an individual’s performance in a systematic

way. It is one of the fundamental functions of any organization.

DEFINITIONS:

According to Douglas, “Performance appraisal is a method of acquiring and

processing the information needed to improve an individual employee’s performance

and accomplishments.”

According to Newstrom, “Performance appraisal is the process of evaluating the

performance of employees, sharing that information with them and searching for

ways to improve their performance.”

The history can be dated back to the 20th century and then to the second world war when the

merit rating was used for the first time. An employer evaluating their employees is a very

old concept. It is an indispensable part of performance measurement.

Performance appraisal is necessary to measure the performance of the employees and the

organization to check the progress towards the desired goals and aims. 

Performance management refers to the process of appraising performances, giving feedback

to the employees, and offering rewards or punishments to them. It does not have any relation

on the employees’ personality characteristics. It helps to identify areas for performance

enhancement and to help promote professional growth. It helps an organization to determine

whether the employees’ performance is aligning with the organizational goal.

People differ in their abilities and their aptitudes. There is always some difference between

the quality and quantity of the same work on the same job being done by two different

people. Performance appraisals of Employees are necessary to understand each employee’s

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abilities, competencies and relative merit and worth for the organization. Performance

appraisal rates the employees in terms of their performance. 

FORMAL V/S INFORMAL

There are different views whether employees should be appraised formally or informally.

Formal appraisals usually occur at a specified time periods:

Half yearly

Annually

Informal appraisals can occur whenever the need arises.

Many organizations encourage a mixture of both formal and informal appraisals. The formal

appraisal is most often used as primary evaluation. However, the informal appraisal is very

helpful for more performance feedback. It should be taken care that informal appraisals do

not take place of formal appraisals.

Over the years, effective performance management has been proven to improve employee

loyalty, morale and general productivity. Due mainly to the highly competitive business

environment today, there is the need for firms to boost the morale and loyalty of their

employees in order to stand the heat of competition. Because of the high cost of selection,

recruitment, training and developing new employees, it is imperative for firms to motivate

and retain their high performing employees.

Performance appraisal includes various aspects of individual employees such as job

performance and productivity in relation to certain pre-established criteria and

organizational objectives, organizational citizenship behavior accomplishments; potential

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for future improvement, strengths and weaknesses, etc. this will help to improve the

employer-employee relationship which is very essential for the smooth working of any

organization.

Performance appraisals are employed to determine who needs what training, and who will

be promoted, demoted, retained, or fired. Hence performance appraisal should be the top

priority of any organization.

ABOUT THE REPORT

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TITLE OF THE STUDY:

The present study is titled as “A PROJECT REPORT ON PERFORMANCE APPRAISAL

OF PROCTER AND GAMBLE”

OBJECTIVES OF THE STUDY:

To gain in-depth knowledge about performance appraisal.

To study importance and benefits of performance appraisal in general.

To study the role of performance appraisal in organization.

RESEARCH METHODOLOGY:

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To define any research problem and give a suitable solution for any research, a sound

research plan is inevitable. Research methodology underlines the various steps involved by

the researcher in systematically solving the problem with the objective of determining

various facts.

Method of data collection:

For completing this project Secondary data collection data method as well as primary

data collection method was used.

Secondary data collection:

I collected my secondary data from various Human resource management books and from

the various websites of the company under study.

Primary data collection:

In this project the primary data collection was mainly through the questionnaires to

employees. I met the respondents personally. & requested them to answer my questions for

the requirement of my study

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CHAPTER LAYOUT

CHAPTER 1:

Information of the project and introduction of the title.

CHAPTER 2:

Profile of The Procter & Gamble Company (P&G).

CHAPTER 3:

Theoretical view of Performance Appraisal.

CHAPTER 4:

Analysis on Performance Appraisal with reference to Procter & Gamble Company (P&G).

CHAPTER 5:

Summary of the study.

CHAPTER 2

PROFILE OF THE COMPANY

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The Procter & Gamble Company (P&G) boasts a boatload of top household brands. The

world's largest maker of consumer packaged goods divides its business into two global

units: Beauty and Grooming and Household Care. The company also makes pet food and

water filters. About two dozen of P&G's brands are billion-dollar sellers, including Always,

Braun, Crest, Fusion, Gillette, Head & Shoulders, Mach3, Olay, Oral-B, Pantene,

and Wella in the beauty, grooming, health care, and snacks & pet care segments, as well as

Bounty, Charmin, Dawn, Downy, Duracell, Gain, Iams, Pampers, and Tide in the fabric &

home care and baby & family care segments. P&G's hundreds of brands are available in

more than 180 countries.

Procter & Gamble Co. (P&G) is an American company based in Cincinnati, Ohio that

manufactures a wide range of consumer goods. In India Proctor & Gamble has two

subsidiaries: P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd. P&G

Hygiene and Health Care Limited is one of India's fastest growing Fast Moving Consumer

Goods Companies with a turnover of more than Rs. 500 crores. It has in its portfolio famous

brands like Vicks & Whisper. P&G Home Products Limited deals in Fabric Care segment

and Hair Care segment. It has in its kitty global brands such as Ariel and Tide in the Fabric

Care segment, and Head & Shoulders, Pantene, and Rejoice in the Hair Care segment.

Procter & Gamble's relationship with India started in 1951 when Vicks Product Inc. India, a

branch of Vicks Product Inc. USA entered Indian market. In 1964, a public limited

company, Richardson Hindustan Limited (RHL) was formed which obtained an Industrial

License to undertake manufacture of Menthol and de mentholised peppermint oil and

VICKS range of products such as Vicks VapoRub, Vicks Cough Drops and Vicks Inhaler.

In May 1967, RHL introduced Clearsil, then America's number one pimple cream in Indian

market. In 1979, RHL launches Vicks Action 500 and in 1984 it set up an Ayurvedic

Research Laboratory to address

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the common ailments of the people such as cough and cold. 

In October 1985, RHL became an affiliate of The Procter & Gamble Company, USA and its

name was changed to Procter & Gamble India. In 1989, Procter & Gamble India launched

Whisper - the breakthrough technology sanitary napkin. In 1991, P&G India launched Ariel

detergent. In 1992, The Procter & Gamble Company, US increased its stake in Procter &

Gamble India to 51% and then to 65%. In 1993, Procter & Gamble India divested the

Detergents business to Procter & Gamble Home Products and started marketing Old Spice

Brand of products. In 1999 Procter & Gamble India Limited changed the name of the

Company to Procter & Gamble Hygiene and Health Care Limited. 

P&G Home Products Limited was incorporated as 100% subsidiary of The Procter &

Gamble Company, USA in 1993 and it launched launches Ariel Super Soaker. In the same

year Procter & Gamble India divested the Detergents business to Procter & Gamble Home

Products. In 1995, Procter & Gamble Home Products entered the Haircare Category with the

launch of Pantene Pro-V shampoo. In 1997 Procter & Gamble Home Products launches

Head & Shoulders shampoo. In 2000, Procter & Gamble Home Products introduced Tide

Detergent Powder - the largest selling detergent in the world. In 2003, Procter & Gamble

Home Products Limited launched Pampers - world's number one selling diaper brand. 

Today, Proctor & Gamble is the second largest FMCG Company in India after Hindustan

Lever Limited.

History

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Procter & Gamble was started by brothers-in-law William Procter and James Gamble, a

candle maker and a soap maker, respectively, in 1837 in Cincinnati. Two decades later, the

company would reach $1 million in sales. The Civil War further boosted the company's

fortunes, when the Union Army awarded two contracts to P&G to supply soldiers with soap

and candles. It was an unwitting way to build brand loyalty -- after the war was over,

returning soldiers continued to buy P&G products.

Procter & Gamble headquarters in Downtown Cincinnati , Ohio.The company moved into

other countries, both in terms of manufacturing and product sales, becoming an international

corporation with its 1930 acquisition of the Thomas hedley company , based in Newcastle

upon tyne, England. Procter & Gamble maintained a strong link to the North East of

England after this acquisition. Numerous new products and brand names were introduced

over time, and Procter & Gamble began branching out into new areas. The company

introduced tide laundry detergent in 1946 and prell shampoo in 1947. In 1955, Procter &

Gamble began selling the first toothpaste to contain fluoride, known as crest .Branching out

once again in 1957; the company purchased charmin Paper Mills and began manufacturing

toilet paper and other paper products.

P&G scored another coup in brand building with the launch of Ivory soap in the 1890s. In

the years after, P&G would go on to invent and produce some of the most common products

in American homes. In 1911, Crisco was introduced. In 1946, it was the detergent Tide.

Pampers, the disposable diapers that changed the industry, debuted in 1961. The list of

successful products goes on and on.

Popular Brands:

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26 of P&G's brands have more than a billion dollars in net annual sales, according to the

2011 Annual Report and Procter and Gamble corporate news room.

Leadership Brands

Ace is a brand of laundry detergent/liquid available in numerous forms and scents.

Always is a brand of feminine care products.

Ariel is a brand of laundry detergent/liquid available in numerous forms and scents.

Bold is a brand of laundry detergent /liquid.

Bounce is a brand of laundry products sold in the United States and Canada.

Bounty is a brand of paper towel sold in the United States and Canada.

Braun is a small-appliances manufacturer specializing in electric shavers, epilators,

hair care appliances and blenders.

Cascade is a brand of dishwashing products.

Charmin is a brand of toilet paper sold in the United States, Canada, and Mexico.

Covergirl is a brand of women's cosmetics.

Cest oral b is a brand of toothpaste and teeth-whitening products.

Dash is a brand of laundry detergent liquid.

Dawn/fairy is a brand of dishwashing detergent.

Dolce and Gabbana is an Italian fashion house.

Downy/Lenor is a brand of fabric softener.

Duracell is a brand of batteries and flashlights.

Eukanuba is a brand of pet food.

Febreze/Ambi pur is a brand of air fresheners.

Fixodent is a brand of air denture adhesives.

Fusion is a brand of men’s wet shaves razors.

Gain is a brand of laundry detergent, fabric softeners and liquid dish soap.

Gillete is a brand of safety razor and male grooming products.

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Head and shoulder is a brand of anti-dandruff shampoo and conditioners.

Herbal essence is a brand of shampoo and conditioners.

Hugo boss is a brand of fine fragrances.

Iams is a brand of pet food.

Luvs is a brand of baby diapers.

Mach3 is a brand of safety razor and male grooming products.

Max Factor is a brand of women's cosmetics.

Mister Clean is a brand of multi-purpose cleaner sold in the United States and Great

Britain.

Olay is a brand of women's skin care products.

Old Spice is a brand of men's grooming products.

Oral –B is a brand of toothbrush, and oral care products.

Pampers is a brand of disposable diaper and other baby care products.

Pantene is a brand of hair care products (conditioners/styling aids).

Prestora/blue is a brand of safety razor and male grooming products.

Prilosec is an over-the-counter drug.

A puff is a brand of facial care..

Rejoice/Pert is a brand of hair care products (conditioners/styling aids).

Safeguard is a brand of soaps.

Secret is a female anti-perspirant brand.

SK-II is a brand of women's and men's skin care products.

Swiffer is a brand of house-cleaning products.

Tampax is a brand of feminine care products.

Tide is a brand of laundry detergent.

Venus is a brand female hair-removal products.

Vicks is an over the counter medication.

Wella is a brand name of hair care products (shampoo, conditioner, styling, hair

color).

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Most of these brands—including Bounty, Crest and Tide—are global products available on

several continents. Procter & Gamble products are available in North America, Latin

America, Europe, the Middle East, Africa, Asia, Australia and New Zealand.

PRODUCTION

The P&G production logo used from early 1985 to 2007 Procter & Gamble produced and

sponsored the first radio soap operas in the 1930s (Procter & Gamble's being known for

detergents—soaps—was the genesis of the term "soap opera") . When the medium switched

to television in the 1950s and 1960s, most of the new serials were sponsored and produced

by the company. The serial The Young And The Restless is currently broadcast on CBS and

is still partially sponsored by Procter & Gamble. When As The World Turns left the air on

September 17, 2010, The Young And The Restless became the only soap left that is partially

sponsored by Procter & Gamble.

Procter & Gamble produced and sponsored the first radio soap operas in the 1930s (Procter

& Gamble's being known for detergents—soaps—was the genesis of the term "soap opera")

When the medium switched to television in the 1950s and 1960s, most of the new serials

were sponsored and produced by the company. The serial The Young And The Restless is

currently broadcast on CBS and is still partially sponsored by Procter & Gamble. When As

The World Turns left left the air on September 17, 2010, The Young And The Restless ,

became the only soap left that is partially sponsored by Procter & Gamble.

Procter & Gamble also was the first company to produce and sponsor a prime-time show, a

1965 spinoff of the daytime soap opera As the World Turns called Our Private World In

1979; PGP produced Shirley, a prime-time NBC series starring Shirley Jones which lasted

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thirteen episodes. They also produced TBS' first original comedy series, Down To Earth,

which ran from 1984 to 1987 (110 episodes were produced). They also distributed the

syndicated comedy series Throb. Procter & Gamble Productions originally co-produced

Dawson’s Creek with Sony Pictures Television but withdrew before the series premiere due

to early press reviews. It also produced the 1991 TV movie A Triumph of the Heart: The

Ricky Bell Story, which was co-produced by The Landsburgs’.

In addition to self-produced items, Procter & Gamble also supports many Spanish-language

novellas through advertising on networks such as Univision, Telemundo,Telefutura, and

Azteca America. Procter & Gamble was one of the first mainstream advertisers on Spanish-

language TV during the mid-1980s. In 2000, the company's self care Being Girl website was

launched. In 2008, P&G expanded into music sponsorship when it joined Island Def Jam to

create Tag Records, named after a body spray that P&G acquired from Gillette. In April

2010, after the cancellation of As the World Turns, PGP announced they were officially

phasing out of the soap industry, and expanding into more family appropriate programming.

Procter & Gamble also gave a $100,000 contract to the winners of Cycle 1 through 3 of

Canada’s Next Top Model, wherein Andrea Muizelaar, Rebecca Hardy and Meaghan Waller

won the prize.

VISION

A v i s i o n m u s t b e r e a l i s t i c i n n a t u r e a n d m u s t h a v e s o m e

m e a n i n g f o r t h e c o m p a n y . I t m u s t b e c o n v i n c i n g t o t h e

p e o p l e .   M a i n l y , t o t h e w o r k e r s a n d members of the company. If

employees of P&G do not think vision is credible then they can’t work to full

potential. If the vision of P&G is to inspire and motivate the workforce in the company then

it must be attractive. Vision should be like this that more and more People want to be part of

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the company. The vision is not for the present, it is mainly for the future. In this

respect, the image of the leader seeing off into the distance to create a vision may” A

vision is not where you are now, it's where you want to be in the future”

The products made by P&G touch the life of about 1.75 billion customer every day. For

example they use various visions for their different products. For products they say rough

feels good because they have got shiny hair and nice smile or keep our homes fresh and

clean or b most common and famous line “enjoy a great cup of tea, satisfying meal or

healthy snack”.

P&G always try to make a healthier future for customer. P&G t r i e s t o make

consumer s   f e e l good , g ive t he impre s s ion o f   be ing good and more out

of life with their products and services. P&G will always try to increase new ideas of

undertaking company with the goal of increasing-up the range of organization and will try to

reduce other outside environmental impact.

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Chapter 3

Theoretical view

Meaning of Performance Appraisal

Performance Appraisal is the systematic evaluation of the performance of employees and to

understand the abilities of a person for further growth and development. Performance

appraisal is generally done in systematic ways which are as follows:

1. The supervisors measure the pay of employees and compare it with targets and plans.

2. The supervisor analyses the factors behind work performances of employees.

The employers are in position to guide the employees for a better performance. In other

words, Performance performance is the assessment of an individual’s performance in a

systematic way, the performance being measured such factors as job knowledge, quality and

quantity of output, initiative, leadership abilities, supervision, dependability, co-operation,

judgement, versatility, health, and the like. Assessmant should not be confined to past

performance alone. Potentials of the employee for future performance should also be

assessed.

The other terms used for performance appraisal are: performance rating, employee

assessment, employee performance review, personnel appraisal, performance evaluation and

also merit rating. Performance appraisal is closely related to job analysis.

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Need of performance appraisals:

There are many opinions on doing performance appraisals and unfortunately the reasons

don’t always support a productive work setting.  Some organizations do performance

appraisals because they feel obligated to do them.  Some organizations do performance

appraisals to make sure they have a piece of paper in the employee’s file. But successful

organizations understand the importance of incorporating performance appraisals into their

performance management strategy.

Objectives of Performance Appraisal:

To effect promotions based on competence and performance.

To confirm the services of probationary employees upon their completing their

probationary period satisfactorily.

To assess the training and development needs of employees.

To decide upon a pay rise where (as in unorganized sector) regular pay scales

have not been fixed.

To let the employees know where they stand in so far as their performance is

concerned and to assist them with consistive criticism and guidance for the purpose

of their development.

To improve communication. Performance appraisal provides a format for

dialogue between the superior and the subordinate, and improves understanding of

personal goals and concerns. This can have the effect of increasing the trust between

the rater and the ratee.

Finally the performance appraisal can be used to determine whether HR

programmes such as selection, training and transfers have been effective or not.

Mainly performance appraisal serves four objectives:

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General Application Specific Purpose

Developmental uses Identification of individual needs

Performance Feedback

Determining transfers and job assignments

Identification of individual strengths and

developmental needs

Administrative Uses/Decisions Salary

Promotion

Retention or termination

Recognition of individual performance

Lay-offs

Identification of poor performers

Organisational Maintenance/Objectives HR planning

Determining organization training needs

Evaluation of organizational goal

achievement

Information for goal identification

Evaluation of HR systems

Reinforcement of organizational

developmental needs

Documentation Criteria for validation research

Documentation for HR decisions

Helping to meet legal requirements.

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Performance Appraisal and Competitive Advantage:

Performance appraisal offers competitive advantage to a firm by improving performance,

helping make correct decisions, ensuring legal compliance, minimizing job dissatisfaction

and employee turnover and ensuring consistency between organizational strategy and

behavior.

Improving performance: An effective appraisal system can contribute to

competitive advantage by improving employee job performance on two ways –

by directing employee behavior towards organizational goals and by monitoring that

behavior to ensure that the goals are met.

Make Correct Decisions: Appraisal is a critical input in making decisions on

such issues as pay raise, promotion, transfer, training, discharges and completion of

probationary periods. Right decision on each of these can contribute to competitive

strength of a firm. If promotion, for example, is made on performance, the promote

feels motivated to enhance his or performance.

Minimizing Job Dissatisfaction and Turnover: Employees tend to become

emotional and frustrated if they perceive that the ratings they get are unfair and

inaccurate. Such employees find that the efforts they had put in became futile and

obviously get demotivated. Hence ratings should be accurate. An organization

having satisfied and motivated employees will have an edge over its competitors.

Ensuring legal compliance: Promotions made on basis of factors other than

performance might land up a firm in a legal battle, thus diverting its focus on non

productive areas. Companies can minimize costly performance-related litigation by

using appraisal systems that give fair and accurate ratings.

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CAREER PLANNING:

Career planning is a corporate organizational issue. After appraisals, it is always found out

that most employees are working in departments they have little or no flair for. This

generally affects their individual as well as general corporate performance.

Performance appraisal results help in planning and repositioning employee’s career. It

should be noted that performance appraisal is a very important aspect of organization future

growth and positioning as such it should be carried out with all seriousness and sincerity.

The Human resources person should be able to advice all supervisors and managers before

every appraisal exercise to avoid getting a biased result, which will ultimately affect the

general productivity of the firm.

BENEFITS TO THE ORGANIZATION

Create, execute and analyze an automated, effortless and efficient performance appraisal

process. At-a-glance goal-setting to align individual goals to the organization's vision.

BENEFITS TO HR:

Flexibility to choose from KRA, competence or Balance Scorecard method based

performance management systems. Track deviations in performance at a macro level and

plan course Correction Save HR time by executing a paperless appraisal process:

Benefits to Employees and Managers

Ensures confidentiality of the appraisal process

File appraisal forms and get review results online

Keep track of career growth for better planning

Get easy access to KRAs to keep performance on track

PROCESS OF ESTABLISHING PERFORMANCE STANDARDS:

The first step in the process of performance appraisal is the setting up of the standards which

will be used to as the base to compare the actual performance of the employees. This step

requires setting the criteria to judge the performance of the employees as successful or

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unsuccessful and the degrees of their contribution to the organizational goals and objectives.

The standards set should be clear, easily understandable and in measurable terms. In case the

performance of the employee cannot be measured, great care should be taken to describe the

standards.

COMMUNICATING THE STANDARDS:

Once set, it is the responsibility of the management to communicate the standards to all the

employees of the organization. The employees should be informed and the standards should

be clearly explained to them.

This will help them to understand their roles and to know what exactly is expected from

them. The standards should also be communicated to the appraisers or the evaluators and if

required, the standards can also be modified at this stage itself according to the relevant

feedback from the employees or the evaluators.

MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is measuring the actual

performance of the employees that is the work done by the employees during the specified

period of time. It is a continuous process which involves monitoring the performance

throughout the year. This stage requires the careful selection of the appropriate techniques of

measurement, taking care that personal bias does not affect the outcome of the process and

providing assistance rather than interfering in an employees work.

COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE:

The actual performance is compared with the desired or the standard performance. The

comparison tells the deviations in the performance of the employees from the standards set.

The result can show the actual performance being more than the desired performance or, the

actual performance being less than the desired performance depicting a negative deviation in

the organizational performance. It includes recalling, evaluating and analysis of data related

to the employees’ performance.

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DISCUSSING RESULTS

The result of the appraisal is communicated and discussed with the employees on one-to-one

basis. The focus of this discussion is on communication and listening. The results, the

problems and the possible solutions are discussed with the aim of problem solving and

reaching consensus. The feedback should be given with a positive attitude as this can have

an effect on the employees’ future performance. The purpose of the meeting should be to

solve the problems faced and motivate the employees to perform better.

DECISION MAKING

The last step of the process is to take decisions which can be taken either to improve the

performance of the employees, take the required corrective actions, or the related HR

decisions like rewards, promotions, demotions, transfers etc.

METHODS OF PERFORMANCE APPRAISAL

Traditional Methods of Performance Appraisal

Essay appraisal method: This traditional form of

appraisal, also known as Free form method. It involves a description of

the performance of an employee by his superior. The description is an

evaluation of the performance of any individual based on the facts and

often includes examples and evidences to support the information. A

major drawback of the method is the inseparability of the bias of the

evaluator.

Straight ranking method: This is one of the oldest and simplest

techniques of performance appraisal. In this method, the appraiser

ranks the employees from the best to the poorest on the basis of their

overall performance. It is quite useful for a comparative evaluation.

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Paired comparison: A better technique of comparison

than the straight ranking method, this method compares each

employee with all others in the group, one at a time. After all the

comparisons on the basis of the overall comparisons, the employees

are given the final rankings.

Critical incident method: In this method of performance

appraisal the evaluator rates the emp loyee on the basis of critical

events and how the employee behaved during those incidents. It

includes both negative and positive points. The drawback of this

method is that the supervisor has to note down the critical incidents

and the employee behavior as and when they occur.

Field review method: In this method, a senior member

of the HR department or a training officer discusses and interviews

the supervisors to evaluate and rate their respective subordinates. A

major drawback of this method is that it is a very time consuming

method. But this method helps to reduce the superiors’ personal bias.

Checklist method: The rate is given a checklist of the

descriptions of the behavior of the employees on job. The checklist

contains a list of statements on the basis of which the rater describes

the on the job performance of the employees.

Graphic Rating Scale: In this method, an employee’s

quality and quantity of work is assessed in a graphic scale indicating

different degrees of a particular trait. The factors taken into

consideration include both the personal characteristics and

characteristics related to the on the job performance of the employees.

For example a trait like Job Knowledge may be judged on the range

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of average, above average, outstanding or unsatisfactory.

Modern methods of performance appraisals

Assessment centers –

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 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.

The major competencies that are judged in assessment centers are

interpersonal skills, intellectual capability, planning and organizing

capabilities, motivation, career orientation etc. assessment centers are also

an effective way to determine the training and development needs of the

targeted employees.

Behaviorally Anchored Rating Scales (BARS) is a relatively new

technique which combines the graphic rating scale and critical incidents

method. It consists of predetermined critical areas of job performance or sets

of behavioral statements describing important job performance qualities as

good or bad (for e.g.: the qualities like inter personal relationships,

adaptability and reliability, job knowledge etc). These statements are

developed from critical incidents.

In this method, an employee’s actual job behavior is judged against the

desired behavior by recording and comparing the behavior with BARS.

Developing and practicing BARS requires expert knowledge.

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Humanresourceaccountingmethods:

Human resources are valuable assets for every organization. Human resource

accounting method tries to find the relative worth of these assets in the terms

of money. In this method the Performance appraisal of the employees is

judged in terms of cost and contribution of the employees.

The cost of employees include all the expenses incurred on them like their

compensation, recruitment and selection costs, induction and training costs etc

whereas their contribution includes the total value added (in monetary terms). The

difference between the cost and the contribution will be the performance of the

employees. Ideally, the contribution of the employees should be greater than the cost

incurred on them.

360 degree feedback

360 degree feedback, also known as 'multi-rater feedback', is the most

comprehensive appraisal where the feedback about the employees’ performance

comes from all the sources that come in contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e.

superior), subordinates, team members, customers, suppliers/ vendors - anyone

who comes into contact with the employee and can provide valuable insights and

information or feedback regarding the "on-the-job" performance of the

employee.

360 degree feedback has four components:

1. Self appraisal

2. Superior’s appraisal

3. Subordinate’s appraisal

4. Peer appraisal

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MBO

The concept of ‘Management by Objectives’ (MBO) was first given by Peter

Drucker in 1954. It can be defined as a process whereby the employees and the

superiors come together to identify common goals, the employees set their goals

to be achieved, the standards to be taken as the criteria for measurement of their

performance and contribution and deciding the course of action to be followed.

The essence of MBO is participative goal setting, choosing course of actions and

decision making. An important part of the MBO is the measurement and the

comparison of the employee’s actual performance with the standards set. Ideally,

when employees themselves have been involved with the goal setting and the

choosing the course of action to be followed by them, they are more likely

to fulfill their responsibilities.

Benefits of Appraisal

Perhaps the most significant benefit of appraisal is that, in the rush and bustle of daily

working life, it offers a rare chance for a supervisor and subordinate to have "time out" for a

one-on-one discussion of important work issues that might not otherwise be addressed.

Almost universally, where performance appraisal is conducted properly, both supervisors

and subordinates have reported the experience as beneficial and positive. Appraisal offers a

valuable opportunity to focus on work activities and goals, to identify and correct existing

problems, and to encourage better future performance. Thus the performance of the whole

organization is enhanced.

For many employees, an "official" appraisal interview may be the only time they get to have

exclusive, uninterrupted access to their supervisor. Said one employee of a large

organization after his first formal performance appraisal, "In twenty years of work, that's the

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first time anyone has ever bothered to sit down and tell me how I'm doing." The value of this

intense and purposeful interaction between a supervisors and subordinate should not be

underestimated.

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. In fact, there is evidence that human beings will

even prefer negative recognition in preference to no recognition at all.

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. The strength and prevalence of this natural

human desire for individual recognition should not be overlooked. Absenteeism and

turnover rates in some organizations might be greatly reduced if more attention were

paid to it. Regular performance appraisal, at least, is a good start.

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. During the discussion of an employee's work

performance, the presence or absence of work skills can become very obvious -

even to those who habitually reject the idea of training for them.

Performance appraisal can make the need for training more pressing and relevant by

linking it clearly to performance outcomes and future career aspirations. From the

point of view of the organization as a whole, consolidated appraisal data can form a

picture of the overall demand for training. This data may be analyzed by variables

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such as gender, department, etc. In this respect, performance appraisal can provide a

regular and efficient training needs audit for the entire organization.

Recruitment and Induction

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. But the need to evaluate (i.e., to judge) is also an

ongoing source of tension, since evaluative and developmental priorities appear to

frequently clash. Yet at its most basic level, performance appraisal is the process of

examining and evaluating the performance of an individual.

Though organizations have a clear right - some would say a duty - to conduct such

evaluations of performance, many still recoil from the idea. To them, the explicit

process of judgment can be dehumanizing and demoralizing and a source of anxiety

and distress to employees. It is been said by some that appraisal cannot serve the

needs of evaluation and development at the same time; it must be one or the other.

But 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.

Pitfalls of performance appraisal:

Performance appraisals are probably the one aspect of a job that employees, supervisors and

managers universally dread. There are, however, ways to improve the process and outcome

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by avoiding common pitfalls. Some pitfalls of performance appraisals include supervisor

bias, rushed and ill-prepared evaluations and lack of communication in the appraisal

process.

The Problem of Recency Bias:

A performance appraisal evaluates an employee's work and habits over a set period

of time -- 12 full months for an annual appraisal -- yet some supervisors and

managers consider, or remember, only the employee's most recent work. Human

resource professionals refer to this pitfall as recency error or recency bias. To

prevent recency error, give employees feedback throughout the year and

consistently document informal feedback and commendations, as well as

disciplinary warnings and corrective action.

The performance appraisal is just one aspect of fostering a productive work

environment; however some managers tend to overlook the importance of year-

round feedback because the primary focus is on the annual or periodic evaluation.

It's the year-round feedback that helps you compile information that will help you

prepare for your employee's performance appraisal.

Poor Preparation

Supervisors must prepare well in advance for the formal appraisal meeting with an

employee. A performance appraisal can directly impact an employee's career,

lifestyle and job satisfaction; therefore supervisors must spend the time and effort to

prepare a well thought out and accurate review.

Preparing for the appraisal meeting includes reviewing the employee's job

description, personnel file and anything else related to the employee's work history

and performance. Supervisors who do not adequately prepare for performance

appraisals are doing a disservice to employees and the employer if problems

subsequently persist and stellar achievements fail to be rewarded.

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Communication Problems

A common pitfall of performance appraisals is lack of supervisor-employee

communication, especially if both parties are nervous or uneasy during the process.

A supervisor who is uncomfortable giving feedback in a positive and constructive

manner may need additional training to improve her communication and leadership

skills. A supervisor must know how to encourage two-way communication during

the appraisal meeting or risk turning a potentially productive experience into one that

leaves the employee frustrated and unappreciated.

Challenges of Performance Appraisal

An organization comes across various problems and challenges Of Performance Appraisal in

order to make a performance appraisal system effective and successful. The main

Performance Appraisal challenges involved in the performance appraisal process are:

Determining the evaluation criteria

Identification of the appraisal criteria is one of the biggest problems faced by the top

management. The performance data to be considered for evaluation should be

carefully selected. For the purpose of evaluation, the criteria selected should be in

quantifiable or measurable terms

Create a rating instrument

The purpose of the Performance appraisal process is to judge the performance of the

employees rather than the employee. The focus of the system should be on the

development of the employees of the organization.

Lack of competence

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Top management should choose the raters or the evaluators carefully. They should

have the required expertise and the knowledge to decide the criteria accurately. They

should have the experience and the necessary training to carry out the appraisal

process objectively.

Errors in rating and evaluation

Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait

influencing the evaluator’s rating for all other traits) etc. may creep in the appraisal

process. Therefore the rater should exercise objectivity and fairness in evaluating and

rating the performance of the employees.

Resistance

The appraisal process may face resistance from the employees and the trade unions

for the fear of negative ratings. Therefore, the employees should be communicated

and clearly explained the purpose as well the process of appraisal. The standards

should be clearly communicated and every employee should be made aware that

what exactly is expected from him/her.

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POST PERFORMANCE INTERVIEW:

The performance appraisal of an employee should be supplemented by an interview which

serve as a feedback to him .It is called performance interview or post- appraisal interview. It

is the most critical part of the entire appraisal process .It is also the most fruitful part of it.

For this, the post- appraisal interview should be arranged soon after the appraisal process is

over as the interview will be less effective if the time gap between the two is more.

The participants in this interview are the concerned employee and his supervisor. The

purpose of such interview is to give details of the appraisal made and also to motivate and

guide the employee for self- improvement and self-development.

This interview should be arranged soon after the completion of appraisal work so that the

feedback supplied to the employee will be fresh and also useful to him. If such interview is

not arranged the appraisal will serve only administrative purpose but the more important

purpose of self- improvement of the employee will be neglected. This suggests the

importance of post appraisal interview hitch need to be conducted in a proper atmosphere

and also in the sprite of cooperation and understanding. It should not be a mere

formality.

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Chapter 4

Analysis and Interpretation

Procter and Gamble Company give utmost importance to performance appraisal. They think

that even if performance appraisal is a time consuming process it should be implemented.

They are of this opinion because this enhances the employee-employer relationship in the

organization to a great extent and helps in the retention of the employees.

The company involves all the employees in appraisal process of the organization. The

company adopts 360 degree performance appraisal system. This involves self appraisal,

appraisal of peers, superior’s appraisal and subordinate’s appraisal. The appraisal process

takes place half yearly.

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ANALYSIS ACCORDING TO QUESTIONNAIRE:

Tenure in the organization

75% of the employees have been in the organization have been working for more than 5

years. 20% of the employees have been working for around 3 to 5 years while only 5%

people worked for less than 3 years.

Working Environment

65% of the employees think that the working environment of the company is excellent while

25% think that it’s satisfactory whereas 10% find it dissatisfactory.

Satisfaction with Management Policies:

80% of the employees are satisfied with the company’s management policies whereas 20%

are not satisfied.

Genuinity of Appraisals:

80% of the employees responded positively with regards to genuinity of appraisals while

20% thin that appraisals are not genuine.

Duration of Appraisals:

Appraisals are conducted semiannually/ half- yearly in the organization.

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Involvement of employees in appraisal process:

All the employees agree that they are involved in the appraisal process in the organization.

Right of appraising superiors:

80% of the employees agree that they are given the right to appraise their superiors while

20% do not agree.

Bias in appraisals:

90% of the employees do not think that their superiors are biased towards them in appraisals

while 10% think otherwise.

Method of appraisal:

90% employees think that 360 degree appraisal method which the company adopts is

appropriate while 10% do not think so.

Contribution to the organizational success:

90% employees think that they are able to contribute to the organizational success through

their participation in the performance appraisal.

Post performance interviews:

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The organization conducts post performance interviews which the employees agree is

beneficial to them.

Findings:

It is found that majority of employees have been working in the organization for

more than 5 years and fair amount for 3-5 years as they think that the working

environment there is excellent.

It is found that majority of employees are satisfied with the company’s

management policies. The others find it dissatisfactory because the policies are not

communicated to them clearly and hence they find the working environment also

dissatisfactory.

The majority employees agree that the appraisals are genuinely conducted in the

organization. The others who do not agree think so because the standards of

performance appraisal i.e its criteria is not communicated clearly. Hence they do not

know their exact roles and expectation from the company.

The appraisals are conducted once in every six months in the organization.

The company adopts 360 degree performance appraisal in the organization.

Hence all the employees are involved in the appraisal process.

Majority employees are of the view that the 360 degree appraisal is the

appropriate method of appraising as the chances of favoritism are less in this method.

The remaining employees think that this method is not wholly fool proof.

Most of the employees are satisfied as they think they are able to contribute to

the organizational success in some way or other through their participation in the

appraisal process in the organization. The others disagree because they think the

appraisals which they do are not valued or considered.

The post performance interviews are conducted to guide employees the

suggestion to improve his or her performance.

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Chapter 5

Conclusion

Performance Appraisal is implemented so that the employees identify themselves with the

job and organization and this leads to improved motivation and enhanced task performance.

Participation in the appraisal process leads to reduced conflicts and stress, more commitment

to goals, better acceptance of results, and improved communication. It is not difficult to

explain why participation in the appraisal process motivates. It is almost a matter of

commonsense that human beings will take greater pride and pleasure in their work if they

are allowed participatory freedom in appraising their superiors and peers and will assure

them that are considered as assets in the organization.

Recommendations:

Management policies should be clearly communicated to the employees. The

policies should not clash with the plans of the company as it might cause role

confusion to the employees.

The performance standards should be clear to the employees. In this way they will

perform better in the anticipation of the further appraisals. This will be beneficial for

both employees and company in the long run.

After the standards are communicated the factors on which the employees will be

rated should also be clearly stated to the employees. This will prevent them from

being apprehensive of the raters.

The employees must be convinced that their decisions are valuable and they are also

an important part of the company.

The raters should also be given sufficient training.

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Lastly in post performance interviews along with suggestions, the employees should

also be made aware why they were appraised so. This will make the employees feel

secured in the organization.

BIBLIOGRAPHY:

The concepts were referred from:

Human Resource Management-Text And Cases

By K ASWATHAPPA.

Human Resource management

By P SUBBA RAO.

WEBILIOGRAPHY

www.hrm guide.com

www.hr-topics.com

www.spendloversearch.org .

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ANNEXURES

QUESTIONNAIRE

How long have you been working in the organization?

Less than 3 years

3-5 years

More than 5 years

How do you rate the working environment of the organization?

Excellent

Satisfactory

Dissatisfactory

Are you satisfied with the management policy of the company?

Yes

No

Do you think your appraisals are done genuinely?

Yes

No

What is the duration of appraisals in your company?

Quarterly

Half yearly

Annually

Are you involved in the appraisal process in the organization?

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Yes

No

Are you provided with the right of appraising your superiors?

Yes

No

Do you think the superiors are biased towards you while appraising your

performance?

Yes

No

Do you the 360 degree appraisal method adopted by your company appropriate?

Yes

No

Do you think that you are able to contribute to the organizational success through

your participation in the performance process?

Yes

No

Are post performance interviews conducted in the organization?

Yes

No

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