'The history of performance appraisal system is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human capital management.
As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago.
Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world's second oldest profession!'1
During the last 30 years, there are numerous evolutions, which have been published that address different aspects of performance appraisal.
2.2 Evolution of performance appraisal.
The formal performance appraisal system has a petite but considerable historical background. Grint (1993 ) traces evidence of performance appraisal system in the third-century Chinese practice. In this context, 'Imperial Raters' were employed by emperors of the Wei dynasty to rate the performance of the official family members. (Wiese and Buckley, 1998 )
Performance appraisal was seen in the industry in early 1800. In UK, Randell (1994) identified its use in Robert Owen's use of 'silent monitors' in the cotton mills of Scotland. Here, the Silent monitors were blocks of wood with different colours painted on each visible side and it was hung above each employee's work station. At the end of the day, the block was rotated so that a particular colour, representing a grade (rating) of the employee's performance, was facing the aisle for everyone to see. (Weise and Buckley, 1998) Anecdotal evidence indicates that this practice had a facilitating influence on subsequent behaviour.
In US the trend of performance was started in1813 in the US War department. Here , an Army General submitted an evaluation of each of his men. Using a global rating, with descriptions of his men such as 'a good-natured man' or 'a knave despised by all' (Bellows and Estep, 1954,Weise and Buckley,1998).
Thus, Performance appraisals today should be used as a vital tool to identify the work potential of an employee, instead of choosing the best individual in the organization. Performance appraisal goals needs to become more inclusive ' goals which are beneficial to both individual and organization. For example, instead of just assisting an organization make decisions concerning an individual, performance appraisals should be used to help an individual make personal decisions regarding his/her current performance and provide strategies for future development.(Weise and Buckley,1998)
Performance appraisal is regarded widely as a necessary attribute of management, part of an over-riding value set of efficiency, of being seen to succeed, to perform and to control.(Barlow,1989) Performance management forms a standard for setting the objectives and helps in giving a clear picture to employees and clearly explains, what is projected from them. Therefore, the question that arises is, whether performance appraisal system is meant only for completing the organizations objectives? Yes, performance appraisal does that, but at the same time it gives training and development to employees, proper pay benefit and right remuneration packages which help in inspiring motivating to the employees to produce the right output i.e. performance. Performance appraisal is a unique and significant managerial tool used to motivate and control workforce.
2.3 Linkage of HRM & Performance appraisal
Human resource forms an obligatory part of the organization. Hence, it is very important to examine the role of appraisal in the effective and efficient utilization of this resource. (Cummings and Swab, pg 56)
Fig : 1. The process of Human utilization
According to Bratton and Gold,(2003:7)," Human resource management (HRM) is a strategic approach to managing employment relations which emphasizes that leveraging peoples capabilities is critical to achieving competitive advantage, this being achieved through a distinctive set of integrated employment policies, programs and practices." HRM forms a core in understanding people's behavior towards their colleagues as well as their companies.
The model laid down by Fombrun, Tichy and Devanna (1984) of HRM gives a clear picture of the HRM process. (Bratton and Gold, 2003)
Fig 2. HRM Process
In this model-
Selecting the right candidate who would fulfil the organisational goals and objectives
The output of employee's abilities which add value to the organization
Human resource development:
Providing the necessary training session, this would help the employees to possess the relevant knowledge and skill to perform better in the organization. Due to this the employees would improve individual skills as well as advance in the organization.
Appraisal which depends largely upon the employee's capability to perform would then show the employee's competencies and talent. The modern human resource system may be divided into four parts acquisition of human resources (recruitment and selection), training and development, motivation and compensation. Performance appraisal is involved in all four parts and serves to tie them together by providing feedback information for all of the other parts.( Latham and wexley,1977 :griffin:604)
Performance appraisal therefore is known as the powerful tool for managing human resources. (Forbrum and Laud, 1983) Therefore, an HRM process forms an important element in the organizational structure. HRM department knows the objectives and function well of the organization. Therefore, it knows what kind of people the company needs and recruits in that way. It provides adequate training session to employees so that they know their tasks, well in advance and acts accordingly; it helps in encouraging and motivating employees and sees to it that, the employees do their duties well. When the employees know their task well, they would obviously perform well. But, still HRM has to do another important task is to check whether the performance of the employees is as per the standards or not. This is where a formal appraisal system comes into picture. Therefore, Huber, (1980) rightly puts it that in the context of human resource management, formal appraisal serves three purposes:
2. Development and
3. Employee protection.
Richard & Johnson (2004) suggest that organizations need to match HR framework and practices up to holistically corporate strategy in order to achieve superior performance in the organization.
2.3.1 Why is Performance Appraisal necessary?
Earlier, performance appraisal did not exist in the organization. Then WHY,
' Why did the need of performance appraisal arise?
' Why was it necessary to include performance appraisal system in an organization?
' Can't an organization run efficiently if there is no Performance Appraisal System?
Wiese and Buckley (1998) gave an answer to this. They said that, a formal performance appraisal system serves as an asset in conducting formal decision process within the organization .It also helps employees, in developing their career and increasing their commitment towards their organization. Murphy and Cleveland (1995) add that it is always advantageous to use a formal appraisal system in the organization. Performance appraisal provides information that is relevant for many personnel decisions, like increments in salaries, it introduces scope for promotion, transfers, and training and development programs, as well as for employee development and performance feedback (Jacobs, Kafry, & Zedeck,1980) Huber(1980) is also of the same opinion that millions of public and private employees have their performance appraised in order to determine salary, promotions, tenure, layoffs and development potential.
2.4 Purpose of performance appraisal
The most acknowledged purpose of performance appraisal is to improve performance of individuals. Performance appraisal has basically two important purposes, from an organizational point of view:
1. The maintenance of organizational control and
2. The measurement of the efficiency with which the organizations human resources are being utilized(Cummings and Shwab.1973 pg. 55)
But ,there are also a variety of other declared purposes and desired benefits for appraisal, including: Improving motivation and morale of the employees, clarifying the expectations and reducing the ambiguity about performance, determining rewards, identifying training and development opportunities, improving communication, selecting people for promotion, managing career growths, counseling, discipline, planning remedial actions and setting goals and targets.(Bratton and Gold,2003:284, Bowles and Coates,1993).
However, according to Armstrong and Baron, there is rise in more harder and judgmental forms of performance appraisal than softer and developmental approaches. Therefore there has been a shift in performance appraisal away from using it for career planning and identifying future potential and increased use of it for improving current performance and allocating rewards.(Redman and Wilkinson,2001: pg.60)
An important study in the field of employee's performance appraisal program was conducted by Redman et al (2000) on National Health Service Trust hospital (UK). In this study, they explained the effectiveness of performance appraisal in public sector. Their research was mainly to check in what context does performance appraisal hold an upper hand in proving its worth in the public sector. The results however were pretty surprising. The results obtained showed that performance appraisal was considered as 'organizational virus'.
Nelson (2000) adds that PA largely helps the employee to have a focused and fixed approach towards the target goal. He elaborates that appraisal system acts like a boosting factor for the employee to do his job well. It recognizes the employee's capabilities in order to achieve the given objective and function. It also helps in knowing the shortcomings of the employees and acts like an important element, for career development and planning.
Performance appraisal can be used as an operative effective tool to improve employees' job performance by classifying strengths and weaknesses of the employees and determining how their strengths can be best employed within the organization and overcome weakness over the period of time. The next question that comes into mind is that who gets more out of the appraisal process the organization or the employees? Who obtains more gain out of it? Both, i.e the organization and employees or any one of them.
The following published article shows the studies give us an explicit understanding of the different purposes of performance appraisal in the organizational context and highlights the different key features of performance appraisal. It also helps us to know who benefits from the appraisal system. Mc Gregor (1972) in his paper, "An uneasy look at performance appraisal" said that formal performance appraisal plans are designed to meet three needs, one of the organizations and one two for the individual: The following are his ideas about PA.
2.4.1 REVISED ARTICLE PUPLISHED ON 2010
'Performance measurement and management: a literature review and a research agenda' Measuring Business Excellence, by Taticchi et al., 2010;
The purpose of this paper is to review the literature in the field of performance measurement and management (PMM) for small and medium enterprises (SMEs) and large companies and propose a research agenda for the future.
This paper provides an update of Neely's work ''The evolution of performance measurement research'' The literature review has been carried out by using two different methodologies. Citation/co-citation analysis has been used to explore ''performance measurement'' (PM) literature, while a chronological review of main frameworks/models developed both for large and small companies is presented in order to highlight ''PMM'' literature.
The paper analyses the literature on the field and carries out the most cited works and the common characteristics of them based on the key words used. The results of the literature review reveal a certain maturity of the literature related to large companies and a significant lack of PMM literature for SMEs. Finally the paper argues the development and evolution of the research field that is now entering a phase of new directions. These new directions can be conceptualized in three ways ' by context, by theme and by challenge.
The research presented in the paper is limited to work that is referred directly with performance measurement and management. Related research ' such as literature on management control and accounting ' has not been considered, even if future researches could include it.
The paper extends Neely's work under two dimensions: the research field evolution from 2005 to 2008 and the investigation of the ''performance management'' dimension. The paper will be valuable to scholars working in the field of business performance measurement and management, interested in the literature evolution and in identifying future areas of research.
Performance measures, Performance management, Small to medium-sized enterprises, Literature
2.4.2 REGENT GLOBAL BUSINESS ARTICLE PUPLISHED ON AUGUST 2009
Employee appraisal aversion factors seemed to be existed in Bordian Technologies.
A - ISSUE : Aversion factors
1. Rating Bias
Employees dislike performance appraisal because managers do not always rate them on objective criteria. Experts call this problem rater bias.
The managers do not follow stated policies and procedures when they don't practice what is preached in the organization visible contradiction generates disappointment, distrust and cynicism among their subordinates. It reduces the employee motivation and organizational citizenship behaviors that contribute to vibrant, productive and healthy work environments.
3) Poor Informal Feedback
Research and practice demonstrate a consistent disconnect between employee and manager perspectives about the degree and nature of performance feedback. Employee surveys consistently show that employees are receiving poor informal feedback.
4) Poor Communication during Formal Feedback Sessions
The communication system was very poor during the feedback sessions. This type of rater behavior diminishes employee satisfaction with the appraisal process, creating the opposite effect of eroding the appraisal system's intended benefit of motivational and productivity improvement.
5) Rater Errors
Employees often realize when managers are not giving them accurate ratings. Many managers don't want to deal with conflict, so they often give employees undeserved high ratings (researchers call this leniency tendency). Another mistake managers make is to give employees average ratings (central tendency).
This was the problem in the company & the suggestions were made.
B - From Appraisal Aversion to Acceptance
A) Servant Leader Managerial Selection Practices
Effective performance appraisal begins by developing a servant leader culture by selecting managers that exhibit desirable character traits such as honesty, humility, forgiveness, transparency, commitment to excellence and accountability. From a managerial selection standpoint, this entails adopting a balanced portfolio assessment that includes performance appraisals, personality tests, assessment centers and character references, among others.
B) Performance Appraisal Ethics and Skills Training Elements
Training managers on the ethics of just and God-honoring performance appraisal stressing the moral obligation for honesty and truth telling is an essential trust building component. The foundational element is emphasizing that accurate performance appraisal is another manifestation of agape employee love that balances support and accountability in order to promote the best interests of the employee and the organization. An honest assessment of capabilities makes it less likely that employees will think more or less highly of themselves (in relation to their job performance) than they should. Both recognition and corrective feedback are necessary to the employee development process.
To develop appraisal skills, provide foundational and on-going training of managers in the basics of performance appraisal including identification of rating errors (halo, central tendency, harshness, etc.). Also, develop strategies for overcoming rater errors including coaching, performance feedback skill development, documentation tools (diaries, critical incident systems), employee input initiatives and interviewing skill development.
C) Employee Friendly Appraisal Attribute ' Participation
Research clearly demonstrates that a transparent and verifiable performance management system in which employees understand the criteria, standards and process is imperative. Vigorous and sustained employee participation in the development and administration of the appraisal system facilitates transparency. This only enhances employee acceptance and commitment to the appraisal process while lowering their stress and apprehension. Participation is promoted by self-appraisals, joint development of performance goals and standards, and active solicitation of employee input in performance appraisal counselling and interview sessions. Self-appraisals are themselves problematic, as employees do have a tendency to inflate performance, especially if used for administrative purposes, but they are critical for enhancing appraisal system acceptance and satisfaction given that they provide a means for interjecting employee voice into the appraisal process.
D) Employee Friendly Appraisal Attribute 'Coaching
Another key element is the adoption of a performance coaching model in which manager help employees develop present and future job skills and employ a joint problem solving approach to performance problems. A very powerful coaching tool is the adoption of a 360-degree appraisal system, which provides a balanced assessment of employee performance.
The use of multiple sources enhances reliability and reduces the negative influence of biased raters. Performance coaching entails ample formal and informal performance feedback that is specific, behavioural, timely and from an accepted and credible source. On-going communication is the key to successful appraisal.
E) Employee Friendly Appraisal Attribute ' Fair Treatment
To avoid discouraging employees, avoid penalizing employees for factors beyond their control by taking into consideration contextual factors that impede performance. Strive to encourage motivation, innovation and creativity, by avoiding penalizing employees for good faith mistakes and stressing the necessity of learning through trial and error. Another important element is to enable an independent appeals process to provide an avenue for addressing biased appraisals. Or, create a formal documentation process (e.g., a performance diary or critical incident system) to provide detailed information to support ratings.
2.5 Perception of PA in organization
It turns around if PA gives a positive impact or a negative impact to the employees. It shows whether the employees get motivated to perform better, if they receive a good feedback or do they get de-motivated and loose interest in their job. So far, we have come across the purpose, uses of PA in the organization, but the perception i.e. the understanding of PA is not taken into consideration in most cases which is important for the employee as well as the organization. If the employees don't recognize this, then they would suffer unnecessarily in the organization the reason being that, an employee has a certain level of expectation from his company when he joins it; he expects some kind of growth from it, also the organization expects a lot from him. But, a negative feedback of performance would largely hamper him mentally and make him loose his interest in his job. There would be change in his attitude, which would be problematic for him as well as the organization. He would be de motivated to achieve the organizational objectives.
Many employees have a kind of view that, their promotion or salary increments largely depends on their performance. Employees therefore are in a dilemma and consider this situation as 'survival of the fittest' .They know for a fact that, their performance is only taken into consideration at the end of the day, and in order to grow in the company they need to be pro-active towards their work. The feedback the employee receives from his superior, may simply describe the level of performance achieved.(Evans,1986)
Hence, it is important for the managers to conduct the appraisal process properly. Employees can only accept criticism if it is useful and relevant to them. Managers should know how to provide information regarding improvement in performance and how to present criticism as well. Managers feel that whenever they have to provide a negative feedback, the employee is most likely be dejected and de-motivated. Meyer et.al (1965) carried out a study in General Electric Company where certain points relating to performance feedback was highlighted. In this study, 92 appraises were appraised by their managers on two occasions over two weeks. The study was carried out by questionnaires, interviews and observation. The first interview, included performance and salary and the second performance included improvement. It was observed, that there was a lot criticism pointed out by the managers, which lead to defensive behaviour of the employee.
The conclusions from this study were that- Criticism leads to create a negative impact on the motivation and performance of the employees. Interviews designed to improve performance should not at the same time weigh salary and promotion issues. Participation by the employee in goal setting helps to produce favourable results. After this study, there were many studies which reflect upon employee's performance issues due to negative feedback. Ilgen et. al (1979) add that the appraisal has to be fair. Employees who believe that the appraisal system is under any kind of bias and misunderstanding between them and the managers are, most likely to be dissatisfied by their work and can also leave their jobs.
The extent to which employees are able to accept feedback will vary to a considerable degree between employees and managers will need to be able to cope with such variations .That is ,they will need to 'know' their people as individuals, and this itself will be a reflection of the development of managers.( Bratton and Gold,2000,p.286) One possible reason for the widespread dissatisfaction with performance appraisal in organization is that the systems used by organizations do not help them or their employees meet the desired goals.( Murphy and Cleveland.) It has been shown that individuals are motivated to seek feedback (if it is seen as a valuable resource) to reduce uncertainty and to provide information relevant to self-evaluations (Ashford, 1986).
2.6 How is Performance Appraisal conducted
Performance appraisal system should not merely be a checklist of 'do's and don'ts ',it should provide a wider perspective to the employees. Performance appraisal has to be designed in such a way that, both, the employee and the organization can obtain fruitful results from it. A performance appraisal system should be made in such a way that the organization can ensure proper accomplishment of goals; at the same time the employee can expect clear and concise work expectations. Knowing what is expected from them is the first step in helping one cope better with the stress usually associated with lack of clear divisions.(Baker,1984)
To make performance appraisal effective, our criteria need to be present. This are-
' Employees should be actively involved in the evaluation and development process
' Bosses need to enter performance appraisals with the constructive and helpful attitude.
' Realistic goals must be mutually set.
' Bosses must be aware, and have knowledge of the employee's job and performance. (Baker, 1984)
Cole (1988) presented the following appraisal process framework. This framework explains how the appraisal process is carried out. First, the appraisal form is completed by the manager/Team Leader and the employee then a formal interview is explained where a job improvement plan is established which gives three outcomes action agreed, promotion or transfer or salary review.
FIG. 3 PERFORMANCE APPRAISAL PROCESS
2.7 APPRAISAL METHODS:
2.7.1 Management by Objective
Management by objective (MBO) was introduced by Peter Drucker in 1954 which changed a manager role from being a judge to a helper. Management by objective is an approach where employees are evaluated by how well they accomplish their tasks and objectives which are important to be critical in the successful completion of their job. MBO is a process, which converts organizational objectives into individual objectives. It helps in goal setting, planning, self-review and performance review.
In goal setting, the organizational objectives are used as guidelines through which the individual objectives are set up. Goals are set up between the managers and the employees, which become the standards against which the employee's results will be evaluated. MBO is used in planning process i.e. making the action plan for carrying out the assigned goals. It includes identifying the proper activities necessary to accomplish the objectives. Self-control is another important step in MBO, where a systematic monitoring of performance is done by the individuals so that they get a clearer picture of their performance. (Rudman,2003) says that it is crucial to have very precise and well defined objectives, this will eradicate scenarios whereby the appraiser have to appraise performance based on unclear objectives which will in turn will affect motivation.
FIG. 4 : Management by Objective
The advantage of MBO lie in its result oriented emphasis. It assists the management for planning and control functions and is considered as a result oriented approach for performance appraisal ,because employees would know exactly what is expected of them and how they will be evaluated and how their evaluation will be based on their success in achieving their goal. MBO clearly defines an employee's goals and objectives to be achieved in the organization.
Although management by objectives has many positive features, its limitations need to be understood. The primary issue that needs to be addressed by the organization is the high level of management commitment and time required to reorient the thinking of employees (Patten, 1977,Weise and Buckey,1998).
2.7.2 Graphic Rating Scale
GRS is considered as the most popular and oldest of the appraisal systems. GRS is used mainly in evaluating performance based on quantity and quality of work. In this the rating of an employee is done on some specific areas only. The rater has to mark the employee on the basis of certain scale which best describes the employees performance in the organization. GRS helps in analysing employees on a quantitative scale and can help to compare and contrast the employee's behaviour on this scale. There is greater standardization of items so comparability with other individuals in diverse job categories is possible. (Henderson, 1984, p.175)
2.7.3 BARS and BOS
Behaviorally Anchored Rating Scales (BARS) was introduced by Smith and Kendall. BARS development is a long and arduous process, involving many steps and many people. From this process, performance dimensions are more clearly defined and are based on more observable behaviors.(Weise and Buckley,1998) This system received special attention in the field of performance appraisal.
This method was useful in analyzing the performance on the basis of behavior. BARS, clearly highlights the definite, observable and measurable behaviors done in the job. Behaviorally Anchored Rating Scale was greatly accepted because it made use of specific behaviors which is derived for each job and which would produce relatively reliable and error-free ratings. Behavior observation scales were then introduced which were intended to improve BARS. (Latham and Wexley, 1977)
2.8 Motivation and Goal setting theory
Performance appraisal process and its outcome can affect an employee's motivation. Employee's performance is seen as most directly as a consequence of the employee's ability and his motivation to perform. (Cummings and Swabs, 1973, pp. 46)
In Organisational context, the performance is evaluated by examining the employee's abilities and capabilities to achieve the desired objectives.
Behaviour Maintenance Model
The BMM presented by Cummings and Swabs attempted to show how people become motivated to perform effectively in the organization. This model shows the importance of outcomes in the motivational process.
Fig 5 Behavior Maintenance Model
In the framework, Goal aspirations lead to goal attainment and motivation. When goal aspirations leads to goal attainment which when achieved by the employee give a sense of job satisfaction him. When an employee is satisfied then he ultimately becomes motivated to work more efficiently in the organization.
Evans(1986) also presented a model of motivation in which a goal ie a starting point is set up by the supervisor or the individual and it is then accepted by them. This goal largely influences the employee's persistence, attention effort and the approach or the strategy which he adopts to complete the goal.
Fig 6 Evans Model of Motivation
These factors and the constraints of performance determine the actual performance. When this task has been accomplished then this actual performance is compared with the original Locke( 1968) introduced the Goal setting theory whereby the employee gets motivated to work for his organization when he has a goal to achieve. Locke's Goal setting theory is summarized as follows-
a. hard goals produce a higher level of performance than easy goals,
b. some specific hard goals produce higher level of output;
c. behavioral intentions regulate choice behavior.
Feedback about the effectiveness of an individual's behavior has long been recognized as essential for learning and for motivation in performance-oriented organizations.( Ilgen et al 1979) Feedback is considered as an important tool in performance appraisal process. Feedback can be a useful tool for development, especially if it is specific and behaviorally oriented, as well as both problem-oriented and solution-oriented (Murphy and Cleveland, 1995)
One of the basic purposes of formal appraisal process is the provision of clear and performance based feedback to employees.( Carroll and Scheiner,1982) Some organizations use feedback as a development tool ,while in some organizations it is used for merit evaluation and compensation adjustment.(McEvoy and Buller,1987; London ,Wohlers and Gallagher,1990) Feedback is very essential for the employees because it forms a baseline for the employees which help them to get a review of their past performance and chance to improve their skills for the future.(Ashford,1986) says that when feedback is considered as a valuable resource, then only the individuals feel motivated to seek it, which helps in reducing uncertainty and provides information relevant to self-evaluations. There is also evidence that performance feedback (if given appropriately) can lead to substantial improvements in future performance (Guzzo et al., 1985; Kopelman, 1986; Landy et al., 1982)
3.1 360 degree feedback
The 360 Degree appraisal is used to describe a comprehensive nature of feedback which is received by an individual through everyone in the job. It is also referred to as 'multisource feedback' or 'multi-rater feedback'(Kettley,1997) adds that when an individual receives feedback from different sources of the organization, including peers, subordinate staff ,customers and themselves, i.e. When a feedback is received from 'all-round' a job, then the process is known as 360 degree appraisal or feedback.
Nearly all the Fortune 300 companies are adopting 360 degree appraisal process.(London and Smither, 1995). The demand of 360 degree, in UK is increasing rapidly.(Handy et al, 1996, Geake et. al, 1998) There hasn't been a lot of empirical evidence on the 360 degree appraisal system. (Fletcher and Baldry 1999 : pg63) say that-'The actual amount of empirical evidence on the impact of 360 degree feedback is disappointingly small considering its extent of its use; widespread adoption seems to have reflected faith rather than proven validity'. Even though 360 degree, is not widespread enough it is been used for a lot of purposes. Research has shown that 360 degree is used for the following purposes-(Fletcher and Bailey 2003) state that 360 degree feedback gives a great scope to commend and criticize on their sub ordinates performance. It also helps in building up the competency of the organizations framework and objective. It aids in increasing self awareness as self-assessment corresponds to subordinates perception.
3.2 Summary of Literature Review
Performance appraisal was evolved in the third century in China in the Wei dynasty. (Weise and Buckley, 1998) PA was seen in industry in the early 1800. In UK, Randell (1994) observed it in Robert Owens 'silent monitors'. In US, an Army General introduced it in for evaluation of his army men. Earlier, PA was used only for administrative purposes like retention, discharges, promotion and salary administration.
The linkage of human resource management and performance appraisal is shown in the research. Huber (1980) rightly puts it that in the context of human resource management, formal appraisal serves three main purposes:
3. Employee protection
Richard & Johnson (2004) also suggest in this context that organizations need to match up with the HR framework, objectives and practices up to holistically corporate strategy in order to achieve superior performance in the organization.
The research explained why a formal performance appraisal was necessary in the organization. Performance Appraisal gives an employee a proper understanding of his duties and tasks towards his organization. It helps the organization to evaluate employees on a common ground and gives scope for retention, salary decisions, promotions, training and development programs etc. (Jacobs, Kafry & Zedeck,1980 ) Studies by McGregor, Murphy et al, Bowles and Coates etc explained the various purposes of performance appraisal. About 61% of organization adopted Performance appraisal by 1950. Performance appraisal developed on the basis of objectives and goal function, thus MBO was evolved. MBO was helpful in setting up goals, which became the standard against which the employee's performance was compared.
However, MBO was ineffective performance was measured in units. Therefore, behaviorally monitored performance review was introduced. Thus, Behaviorally Anchored Rating System (BARS) was introduced. BARS was designed by Smith and Kendall in 1963.BARS was found to give more accurate rating of performance. Behavior observation scales were then introduced which were intended to improve BARS. (Latham and Wexley, 1977) It was seen that performance appraisal can be used as a motivational tool. The Behavior Maintenance Model presented by Cummings and Swab in 1973, which explained how people become motivated to perform effectively in the organization.
Similarly, Evans (1986) also presented a model which explained how individual and manager decide a goal and how this goal largely influences the individual's persistence, attention and the strategy he/she adopts to complete the goal. These factors determine his actual performance. When the individual's tasks are achieved then this actual performance is compared with the original goal. Goal setting theory is summarized as follows-
a. hard goals produce a higher level of performance than easy goals,
b. some specific hard goals produce higher level of output;
c. behavioural intentions regulate choice behaviour.
Feedback is another important element in the field of performance appraisal. The feedback which an individual receives is the report of the performance achieved by him/her.360 degree feedback was introduced which refers to feedback received by an individual through everyone in the organization.360 degree feedback includes feedback from peers, sub-ordinates and customers. It is also known as 'multi-source feedback'.
Chapter III : RESEARCH METHODOLOGY
Research methodology is a science dealing with the study of how a research is done scientifically & how it does systematically solves the research problems. This section would help understand and explain the reasons behind the choice of the methodology I have adapted for this research The choosing of research methodology depends on the nature of study topic (Creswell, 1994 ).
3.2 Research objectives
The research objective was to understand the effectiveness of an appraisal process on the employees at Ceridian Mauritius Ltd. The main purpose of this dissertation was, to study the IT Engineers ability to perform well in the team and to check the impact of performance feedback over their job.
3.3 Comparison: Quantitative Vs Qualitative.
Qualitative research, Denzin and Lincoln ( 2000 ) say that, generates the socially constructed nature of reality, the intimate relationship between the researcher and what is studied, and the situational constraints that shape inquiry. They seek answers to questions that stress how social experience is created and given meaning. In constrant, quantitative studies emphasize the measurement and analysis of casual relationships between variables, and not processes. (pg 8) Qualitative research thus has a humanistic element to it, whereas
Quantitative research is grounded in mathematical and statistical knowledge.(Gephart,2004) Qualitative research is a representation of peoples mind and, it is interpretative and highly inductive. (Van Maanen, 1998)
Another interesting difference between the two methods is, that quantitative techniques require the researcher to produce and verify hypothesis and reduce entities into simple variables for the benefit of understanding and generalizing. Also, it assumes that all occurrences are independent events that have no connection to the surrounding environment.
On the other hand, qualitative research attempts to prove and understand phenomena rather than explaining the cause and effect relationship. Further, it believes that all occurrences are linked in some way to the surrounding environment. (Easterby smith et al, 2002)
3.4 Why qualitative?
The goal of qualitative research is to understand the research topic more explicitly, from the perspective of the interviewee, and to understand how and why they have arrived at this perspective. (Gephart, 2004) adds that, qualitative research methodology largely depends on recounting, understanding and explaining complex or interrelated phenomena, namely, the methodology is to understand multi-dimensional, dynamic picture of a subject of study.
Qualitative research method was ideal for this project, because it gave a deeper understanding of the, given theories and helped in obtaining an edge in knowing the concepts well. As the data obtained through qualitative is the interviewees own responses, it helps in gaining a broader perspective about the topic. The exact responses pertaining to the literature review helps in linking the data well.
3.5 Research Tactics
The tactics used for data collection for the research are classified as follows:
3.5.1 Primary Research
It is direct from the investigation through questionnaire, face to face communications, and feedback information.
18.104.22.168 Design of Survey question:
Questionnaire method - A questionnaire is a research instrument consisting of a series of questions and other prompts for the purpose of gathering information from respondents. Questionnaires are also sharply limited by the fact that respondents must be able to read the questions and respond to them. A distinction is made between open-ended and closed-ended questions. An open-ended question asks the respondent to formulate his own answer, whereas a closed-ended question has the respondent pick an answer from a given number of options.
22.214.171.124 Data analysis:
For the data collected in this research through interviews, a framework given by Bryman and Bell (2003) was used. The framework is known as Theoretical sampling which is explained as follows.
126.96.36.199 Theoretical Sampling:
It is a process of data collection for generating theory where the researcher collects and analyzes data and decides what data to collect next and where to find it, in order to develop his theory as it emerges (Bryman and Bell, 2003. Thus, data was collected from various sources until there was a theoretical saturation. The same content leads to descriptive content analysis which is discussed in detail in the next section (Bryman and Bell, 2003, p.330).
Fig 7 - Theoretical sampling
3.5.2 Secondary research
This has been provided through the available research and various reports. This was done by accessing the company brochures, web publications, magazines and internet extensively.
188.8.131.52 Limitations of secondary research:
The big problem with qualitative data is how to condense highly complex and context-bound information into a format which tells a story in a way that is fully convinced to the reader."(Cassell and Symon, 2004) Qualitative research methods are descriptive. Also, they are subjective in nature which always leads to a kind of research bias. Sometimes, the interviewees were not willing to open up much, towards some question. This would either lead to incomplete information or incorrect information. Another important limitation was time constraint. Due to time constraint, the researcher was not able to take many interviews.
3.6 SAMPLE DESIGN
3.6.1 GEOGRAPHICAL AREA
This project is carried out in Ceridian Mauritius Ltd.
3.6.2 PERIOD OF STUDY
The period of study is about three months.
3.6.3 SAMPLE UNIT
The project deals with the level 2 employees working in Ceridian Mauritius Ltd
3.6.4 POPULATION SIZE
The population size in the company is 250.
3.6.5 SAMPLE SIZE
The sample size of the study is 50.
3.7 Employee Performance Annual Appraisal System.
Here at Ceridian Mauritius Ltd they follow the method of E-paas which means Employee Performance Annual Appraisal System.
3.7.1 Elements of E ' paas
The appraisal system is adapted to fit the unique culture of the organization.
184.108.40.206 Scheduled periodic reviews
The Team Leader establishes a scheduled review period (i.e., first review after 90 days; thereafter, every 12 months). It is important that this period should not be deemed the only time to give employees feedback, but should serve as the guideline for the maximum time that will elapse between performance appraisals. The review is in writing and conveyed during a face-to-face meeting between the manager and subordinate.
220.127.116.11 Consistency among "like" employees
Employees in the same job category are measured similarly. Depending on the structure of the organization, separate review formats is developed for managerial and support staff, technical and non-technical employees, etc.
18.104.22.168 Clear identification of standards by which performance will be measured
If the employer prepares job descriptions for each position, the responsibilities listed in these documents can serve as good starting points for the review. If job descriptions are not available, the evaluation form can provide space for the manager to list the most critical elements of successful performance of the individual job. In addition, there are many standards that are applicable to all positions, such as timeliness and accuracy of work, ability to prioritize, positive attitude, etc.
22.214.171.124 Objective measurement regarding whether the employee is meeting performance standards
Performance is measured in a numerical system & the employer chooses descriptions such as "excellent," "good," "fair," and "unacceptable," corresponding to the numeric & the evaluation form will clearly specify which ratings constitute acceptable performance, and which indicate performance below company standards.
126.96.36.199 Future action plan
The evaluation provides an opportunity for the supervisor and employee to jointly develop a plan for future growth and development. This may include further training for the employee to improve his/her skills or acquire new ones, or opportunities for the employee to take on new responsibilities during the coming months.
188.8.131.52 Opportunity for the employee to respond to the evaluation
The evaluation is an interactive process, giving the employee the chance to participate, ask questions, respond to feedback, and offer suggestions for further career development. The employee may not always agree with all comments in the review, but he is given the opportunity to express concerns and request clarification although the meeting is not allowed to disintegrate into a complaint session.
In Ceridian Mauritius Ltd, they have adopted the concept of Management by objective to carry out their employee performance appraisal. The concept of Management by Objective has been already discussed. As far as this organization is concerned, the concept related details are as follows.
These are the objectives of the key result areas on which the employee's performance will be analyzed.
3.8 Management by Objectives
Objective 1 - Customer Satisfaction
Major Focus Area ' Details Smart Objective
Improve the quality of work Reduce Rework, reduce wait customer.
Effective Communication/follow-ups Understand the issue at one shot. Resolve it at one go
Faster Resolution Increase the TAT (Turn Around Time). Add more value to business
Take the extra mile Value added support going beyond the expectations
Objective 2 - New Business Growth
Competency building in other areas Willingness to learn new technology/modules
Identifying service offering opportunities Identify pain points, unmet needs, opportunities
Participate in Business Development initiatives Proposal generation / Estimates
Improve billable hours Multi-skilled across products and Modules
Objective 3 - Productivity of existing process
Seat capacity utilization Efficient functioning - Cost effective and more billing
Calls resolution estimation Successful Call closure and deliverables within budget/estimate
Passion/Commitment/Duty execution Aggressive to take new roles and move forward
Improve the no of calls / resource / average time Resolve more calls/deliver programs
Objective 4 - Business continuity
Documentation Strict documentation, register approvals on emails
Knowledge transfer Dependence on Peers. Backing up one another
Enabling fresher to billable mode TAT Mentoring and Training peers/Juniors
Upgrading with new releases/processes Well versed with Product evolution and keep up to it
Objective 5 - Compliance
Adherence to Audit Pass Internal and External Audit checks
HR policies Strictly follow - leave , claims and other code of conduct
Timesheets/Reports on remote work hours Strictly follow on time reporting to Managers/Partners
3.8.1 Set Objective Percentage
Based on these objectives an employee is analyzed and will be rated according to the performance he has achieved during the particular period of time. The percentage allotted for these objectives are given below.
Major Focus Areas (SMART Objectives) Performance Indicators (Targets) Weight age
Self Billable Utilization 80% Actively Involved in all Technical and Application calls across customers, provided efficient and remarkable output. Appreciated by peer groups and customers. Worked for all On Demand customers and solved calls successfully within SLA and acting as a backup for On Demand as and when required. 50%
Mentoring of 3 employee son skills. As a Role Model for others in the area Professionalism, Discipline & Punctuality. Behavioral Attributes and Capabilities Shared knowledge with team members on any new skills learned and in solving tricky problems on both application and technical calls 5%
Get trained on DBA skills Attended training conducted and able to finish the tasks assigned on time with perfection. Attended online training on jobs setting. Going through the learning materials available and also through websites. Getting prepared to take over new opportunities for technical calls with customers. 30%
Develop Networking and Relationship ( With Peers, Other Departments in Ceridian Mauritius Ltd) Helped team members in solving critical issues. Developed good and professional relationship with all team members of Ceridian Mauritius Ltd 5%
100% SLA(Service level agreement) compliance of AMS- Application maintenance system process ( Includes Support UI Updates, Report Generation etc) Adhered to SLA for all severity calls in call handling, responding, solving, follow up and call closure process. 10%
3.9 STATISTICAL TOOLS USED
STATISTICAL TOOLS FOR ANALYSIS
The tools used for statistical analysis are as follows
Simple percentage analysis
Chi ' square test
3.9.1 Simple Percentage Analysis
It is the simplest ways of analyzing inter related characteristics of data. In this, the data is converted into percentages and finally represented by means of bar charts & pie charts. The chart & diagram facilitate quick & accurate comparison of collected data as well as aid analytical thinking & investigation
Percentage = Number of respondents * 100
Total number of respondents
2.9.2 CHI ' SQUARE TEST
The X2 Test (Chi square test) is one of the simplest and most widely used non parametric tests in statistical work. This test is generally employed to find out whether there is a significant difference between the level of attitude and independent variables at a specified level of significance.
i) Chi square formula
X2 = (O-E)* (O-E)
O - Observed frequency (the actual count in a given cell)
E - Expected frequency (a theoretical count for that cell)
The more O differs from E, the larger x is. When x exceeds the appropriate critical value, it is declared significant & it is tested using null hypothesis.
ii) Degrees of freedom
Degrees of freedom = ( r ' 1 ) (c ' 1 )
r ' No of Rows
c ' No of Columns
2.9.3 RANK CORRELATION
Correlation analysis studies the joint variation of two or more variables so as to determine the amount of correlation between two or more variables. Rank correlation is applied to find out which pair of respondent groups has the nearest approach to the concerned aspect.
Spearman's rank correlation is given by the formula
R = 1 - 6 ' D2
N3 ' N
R - Spearman's rank correlation coefficient
D - Difference of rank between paired items in two series
N - Number of pairs of observation
Summary of Research methods:
The research method was done keeping the research objective in mind. The research method adopted for this research was Qualitative research method. Qualitative research method helps to understand multi-dimensional, dynamic picture of a subject of study. The research tactics adopted for the research were done in the form of primary data source and secondary data source. Primary data was obtained in the form of Survey Questionnaires. The questions designed for these interviews were closed ended. The secondary data was obtained in the form of accessing the company brochures, web publications, magazines and internet extensively, etc. A theoretical sampling method of Bryman and Bell (2003) was adopted for data analysis method.
Source: ChinaStones - http://china-stones.info/free-essays/business/performance-appraisal-system.php
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