i

A diagnostic study of performance appraisal system at

sapphire textile mills limited

SUBMITTED BY:
Samira Masood 14026048001
Maha Ali 14026048008
Sabreen Naseer 14026048018
Iqra Baig 14026048003
Ammara Sarwar 14026048019

SUPERVISOR
Aleena Shuja

School of Professional Advancement

University of Management and Technology
Lahore
Session 2017
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“A Diagnostic study of Performance Appraisal System at Sapphire

Textile Mills Limited”

A project submitted in partial fulfillment of the requirement for the degree of Master in
Human Resources Management (MHRM) at School of Professional Advancement,
University of Management and Technology.

Submitted by:

Maha Ali 14026048008

Iqra Baig 14026048003
Ammara Sarwar 14026048019
Samira Masood 14026048001
Sabreen Naseer 14026048018

Supervisor: Ma’am Aleena Shuja

Signature: _________________
Dated:

School of Professional Advancement

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ACKNOWLEGEMENT
We would like to thanks to ALLAH Almighty for giving us the strength to complete this project.
We would also like to thanks to our staff of department SPA (School of Professional
Advancement) for giving us this opportunity to get learn more. Yes, the main person behind all
this our most favorite and most helpful advisor & teacher as well who has always been there to
help us in our project. Thank you, Ma’am Aleena, for all your moral support, advice and
encouragement overall and trusting over our capabilities.
We would also like to express our gratitude to Sir Talha Zubair for his support, attention and
insightful comments which motivated us a lot. We would like to thanks to the HR Manager Umer
Has not of Sapphire Textile Industry for their excellence co-operations and give us access to the
company’s documents details and we hope our project findings would help them great fully to
motivate their employee in the future and enhance their market position.
In the end, we are thankful to our Institute UNIVERSITY of MANAGEMENT and
TECHNOLOGY and SPA department for providing us all the resources and means of necessary
to conduct this project.
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Contents
Abbreviations .......................................................................................................................................... vi
Abstract/Executive Summary ................................................................................................................ vii
CHAPTER: 1 ........................................................................................................................................... 1
Introduction. ............................................................................................................................................. 1
Pakistan Textile Industry: An Overview .............................................................................................. 1
Performance Management System...................................................... Error! Bookmark not defined.
Problem Identification ........................................................................ Error! Bookmark not defined.
Scope of the study (diagnosis of the root causes behind ineffective PAS at SMTL)Error! Bookmark not defi
Objectivities of the Study.................................................................... Error! Bookmark not defined.
Objectives of Study ......................................................................... Error! Bookmark not defined.
Limitations .......................................................................................... Error! Bookmark not defined.
Chapter 2: ................................................................................................ Error! Bookmark not defined.
Company profile ............................................................................. Error! Bookmark not defined.
Mission & Values of STML: .......................................................... Error! Bookmark not defined.
Vision: ............................................................................................. Error! Bookmark not defined.
Group Companies: .......................................................................... Error! Bookmark not defined.
Organization structure ......................................................................... Error! Bookmark not defined.
Board of directors: .......................................................................... Error! Bookmark not defined.
Competitor Analysis ............................................................................... Error! Bookmark not defined.
Nishat Textile ...................................................................................... Error! Bookmark not defined.
Company Profile ............................................................................. Error! Bookmark not defined.
Mission: .......................................................................................... Error! Bookmark not defined.
Vision: ............................................................................................. Error! Bookmark not defined.
The Group: ...................................................................................... Error! Bookmark not defined.
Related Companies- Listed ............................................................. Error! Bookmark not defined.
Profile of Directors: ........................................................................ Error! Bookmark not defined.
Audit Committee:............................................................................ Error! Bookmark not defined.
HR & R Committee: ....................................................................... Error! Bookmark not defined.
Environmental Scanning ..................................................................... Error! Bookmark not defined.
SWOT Analysis: ............................................................................. Error! Bookmark not defined.
Pest Analysis of STML: .................................................................. Error! Bookmark not defined.
Chapter 3: Benchmark Studies................................................................ Error! Bookmark not defined.
Literature Review................................................................................ Error! Bookmark not defined.
Chapter 4: Research Design .................................................................... Error! Bookmark not defined.
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Research Methodology: ...................................................................... Error! Bookmark not defined.

Sampling: ............................................................................................ Error! Bookmark not defined.
Unit of Analysis: ................................................................................. Error! Bookmark not defined.
Measuring Instrument: ........................................................................ Error! Bookmark not defined.
Procedures:.......................................................................................... Error! Bookmark not defined.
Data Collection Method (Primary Data) ............................................. Error! Bookmark not defined.
Data Analysis: ..................................................................................... Error! Bookmark not defined.
Data Interpretations:............................................................................ Error! Bookmark not defined.
Content Analysis ............................................................................. Error! Bookmark not defined.
CLOUD ........................................................................................... Error! Bookmark not defined.
Conceptual Analysis ....................................................................... Error! Bookmark not defined.
Data Interpretations SPSS ................................................................... Error! Bookmark not defined.
Discussion ....................................................................................... Error! Bookmark not defined.
Recommendations ................................................................................... Error! Bookmark not defined.
References:.............................................................................................. Error! Bookmark not defined.
APPENDEX............................................................................................ Error! Bookmark not defined.
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Abbreviations

STML Sapphire Textile Mills Limited

PMS Performance Management System

NML Nishat Mills Limited

PAS Performance Appraisal System

HOD Head of Department.

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Abstract

Appraisal system is considered as one of the key motivational factors for an employee, a powerful
tool for employees’ performance evaluation. Current study involves a diagnostic study intending
to identify and apprehend the key motives behind ineffective performance appraisal system at
Sapphire Textile Mill Limited using mixed method approach that is executing both quantitative
and qualitative techniques research to appropriately determine the factors responsible for
unproductive Performance Appraisal System at the company. Since employees feel discriminated
in terms of their performance evaluation and compensation in accordance with their appraisal
results. SMTL currently employs rating scale method for performance appraisal of the employees
and aims to improve the current system. This research actively analyzes multiple issues that can
be linked as factors behind the ineffectiveness of performance appraisal system at the company. It
has helped us improve the current system of SMTL and assist in enhancing the effectiveness of
the company through demonstrating fair and unbiased evaluation of employee performance
through the provision of an action plan in the form of practical recommendations to the human
resource management department of the company. The scope of this project encompasses
determining the grey areas and then purpose new PAS at Sapphire Textile Mills Limited in order
to overcome currently face evaluation challenges and make employees performance effective and
efficient. The Appraisal System helps the employees understand the clear crystal goals of the
individuals by aligning them with the organizations expectations. It will also help to develop a
strong relationship between employees and the supervisors through completing the feedback loop
and the importance of implementing an effective PAS and how it helps employees to establish
their objectives towards meeting the organizational goals through open and transparent feedback
and clear communication. Based on mixed method approach, both structured interviews and
questionnaire based surveys were conducted. Questionnaire based data were collected from
managers of production department, while interviews were conducted from managers of HR
department using purposive random sampling technique. Study findings suggest that the appraisal
system is executed fiscally at Sapphire Textile Mills limited, which is not enough. Performance is
rated by Supervisors only. HR department of STML uses Rating Scale method for the evaluation
of the employees. 360 degree appraisal system is not used because it is time consuming process.
From the questionnaire, we concluded that most of the employees were not completely aware of
the appraisal or did not have understanding about the Appraisal System. According to them,
performance appraisal system incurred a negative impact on the motivation and commitment of
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employees. Employees use to feel demotivated due to discriminated performance evaluation and
rewards to employees with same level of performance. Moreover, it has been found that
employees are also not much clear about the goals they need to achieve even after the meetings
with supervisor. Results showed a mixed view about performance appraisal system’s supports to
organization’s strategy showing gaps which need to be filled in linking performance standards
with the long-term intent of the organization. Employees declared that they did not get chance to
assess and appraise their own performance outcomes which also demotivated them. Appraisal
system did not support in winning the cooperation and teamwork making them unclear whether
this performance system helped them to work as a team and confused whether appraisal system
even helped to share burden of each other in department. Key performance areas were not aligned
with the rewards each employee was supposed to achieve. Promotions were not based on the
basis of their performance outcomes hence causing high level job dissatisfaction among
employees. Performance appraisal system had failed to change behaviour of the employees in
positive manner. There exists a huge gap between top level management and employees, which
also can be reason of demotivation of the employees and become a cause of biasness between the
supervisor and team. The results from interviews highlighted many negative points of the
appraisal form and its negative effects on the employees of the Sapphire Textile Mills Limited.
The process of the performance appraisal is weak at some points like, key result areas are not
linked with the compensation and rewards which directly demotivate the employees after the
evaluation. Meetings are done to communicate the information of performance appraisal but still
employees are not clarified because reason of running this process are not explained properly to
them that’s why the employees don’t take it as significant for the progress of the organization.
According to the interviewee’s they are not satisfied with the appraisal form and they think that it
need to be developed to cover all the aspects of the employees’ performance for the evaluation.
After identifying and diagnosing the inefficiencies in performance appraisal system at SMTL, the
research study has proposed an improved version of the appraisal form keeping in view the need
to overcome the ineffectiveness that occurred before for ensuring bias free employee evaluation
and increased motivation of employees.
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CHAPTER: 1

Introduction

Pakistan Textile Industry: An Overview:

Pakistan is Asia’s 8th biggest textile yields and products exporter and holds a central position in
exports of the country. Pakistan’s textile sector industry shares 8.5 percent of contribution to total
Gross Domestic Production The sector employs around 15 million individuals that is 30 % of the
total workforce in Pakistan. Considering the statistics at global level the volume of trade
accounted for textile sector makes up USD 18 trillion per annum. The growth rate of 2.5% is
consistently maintained on annual basis. In order to increase this share and growth rate in trades,
economists and industrialists have started putting increased emphasis upon development of
manufacturing concerns and technology advanced industrialization. Textile sector is considered
as the back of our country, since it provides opportunities for employment to more than 40% of
industrialized labor based work force, holds 40% of banking credit and has share of around 60%
in national level exports (JCR-VIS Credit Rating Company Limited, 2016).