1

CHAPTER – 1

INTRODUCTION

A “performance appraisal” is a process of evaluating an employee’s performance of

a job in terms of its requirements. It as a “process of estimating or judging the value,
excellence, qualities or status of some object, person or thing”. Performance appraisal has
been considered as a most significant and indispensable tool for an organization, for the
information it provides is highly useful in making decisions regarding various personal aspects
such as promotions and merit increases.

McGregor says : “Formal performance appraisal plans are designed to meet three needs, one
of the organisation and the other two of the individual, namely;
(i) They provide systematic judgements to back up salary increases, transfers,
demotions or terminations.

(ii) They are means of telling a subordinate how he is performing, and

suggesting needed changes in his attitudes, skills or job knowledge. They
let him know “where he stands” with the boss.

(iii) They are used as a base for coaching and counseling the individual by the
superior.

On the basis of merit rating or appraisal procedures of various companies in India, the main
objectives of employee performance appraisal are:

(i) To enable an organization to maintain an inventory of the number and quality

of all managers and to identify and meet their training needs and aspirations;
(ii) To determine increments rewards and provide a reliable index for promotions
and transfers to positions of greater responsibility;
(iii) To maintain individual and group development by informing the employee of
his performance standard;
(iv) To suggest ways of improving the employee’s performance when he is not
found to be up to the mark during the review period.
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(v) To identify training and development needs and to evaluate effectiveness of
training and development programmes.
(vi) To plan career development, human resources planning based on
potentialities.

1.1 COMPANY PROFILE

The Lakshmi Vilas Bank Limited, Karur, came into being and was registered as a
Limited concern on 3rd November 1926.

The bank started functioning with a paid up share capital of Rs.71,000/- made up of
shares partly from the above promoters and largely from the public.

1/5th of the net profit declared every year was diverted towards reserve fund which
is steadily build up. The increasing volume of deposits year after year is a sure
indication of the bank’s place in the estimation of the investing public not only in
Karur but also at the places where the bank branches are functioning.

All transactions of the bank are being conducted in such a way that a trust and
confidence of both the borrowing and investing public have been completely
ensured. Mere profit alone is not the end aim of the this Bank. Service to the
public, creation of a feeling of trust and confidence in the depositors and selfless
and impartial management have been the ideals the bank has set before it.

The management was also very particular in adhering to the directives issued by
Reserve Bank of India from time to time on deposits and advances and other
matters.

Today the banks has 163 branches throughout Tamilnadu and also have extended
its activities to other States like Andhra, Karnataka, Kerala and Maharashtra.

The following banks were merged with this Bank:

S.No. Name of the Bank Date of Merger

1 The Karur Mercantile Bank Ltd. 19.10.1961
2 Kanniwadi Bank Pvt. Ltd. 19.11.1961
3 The Tiruchirappalli Vysya Bank Ltd. 21.08.1963
 3
4 The Tirukkattupalli Bank Ltd. 09.11.1963
5 The Salem Gugai Sri Krishna Bank Ltd. 13.07.1964
6 Sri Nadiambal Bank Pvt. Ltd. 27.11.1965
7 The Kattuputhur Bank Pvt. Ltd. 19.08.1965
8 Salem National Bank Ltd. 26.08.1965
9 The Salem Sri Ramasamy Bank 02.09.1965

HRD CHART

Chairman

Senior General Manager

General Manager

Asst. General Manager

Chief Manager

Manager

Officers

Clerk
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1.2 REVIEW OF LITERATURE

DEFINITION

According to Cummings, “the overall objective of performance appraisal is to improve

the efficiency of an enterprise by attempting to mobilize the best possible efforts from
individuals employed in it. Such appraisals achieve for objectives including the salary
reviews, the development and training of individuals, planning job rotation and assistance
promotions”.

METHODS OF APPRAISING EMPLOYEE PERFORMANCE

There are 2 methods of performance appraisal,

1. Behaviour oriented methods.

2. Results oriented methods.

In behaviour oriented methods there are 5 types they are :

a. Narrative essay.
b. Ranking and period comparison.
c. Forced distribution.
d. Behavioural check just.
e. Critical incidents.
f. Graphic rating scale.

Results oriented method includes

a. Management by objectives.
b. Work planning and review.

1. BEHAVIOUR ORIENTED METHODS

a. Narrative essay
Good for individual feedback and development.

b. Banking and period comparison

Good for making comparison across employees. It provides little basis for individual
feedback and development.
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c. Forced distribution
It faces rates to make distinctions among employees, may be unfair and inaccurate if a
gap of employees as a group is either very effective or ineffective.

d. Behavioural checklists
Easy to use, provides a direct link between job analysis and performance appraisal can
be numerically scored, and facilitates comparison across employees. However, the
meaning of response categories may be interpreted differently by different raters.

e. Critical incidence
Focuses directly on job behaviors, emphasizes what employees did that was effective
or ineffective, but can be very time consuming to develop.

f. Graphic rating scale

Easy to use, very helpful for providing feedback for individuals development and
facilitates comparisons across employees.

2. BEHAVIOR ORIENTED METHODS

a. Management by objectives
Focuses on results and on identifying each employees contribution to the success of
the unit or organisation.

b. Work planning and review

In contrast to MBO emphasizes over outcomes requires frequent supervisors,
subordinate review of work plans. Is time consuming to implement properly and does
not facilitate comparison across employees.

A Study had been conducted in CAREER BANK,

Dick Grote, president of Grote Consulting Corporation in Dallas and author of "The
Complete Guide to Performance Appraisal.

He discovered during his research that best-practice companies use their performance
management process to:
• Replace a "best-effort" culture with a results-driven one.
• Establish and reinforce the importance of core competencies.
• Target poor performers for termination.
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DIVULGING SECRETS
Came away with the following tips:

Tip 1: Hold the performance appraisal form in the left hand and your company's mission
statement in the right hand and compare them to see if they share the same words and
philosophy. That's where so many organizations miss the boat. They have performance
appraisals, and they have mission statements, but they don't link the two. The whole purpose
of the performance appraisal is to see if employees are achieving the corporate mission. If a
company wants to have an immediate impact on the corporate culture, all it must do is to
weak the performance appraisal form just a little bit, so that the words in the mission
statement also turn up in the appraisal. That makes it much easier to see if the employee is
actually supporting the company's direction. It also makes it easier for the employee to
understand the connection and perform accordingly.

Tip 2: At the very beginning of the performance appraisal cycle, spend at least an hour with
each of the employee to talk about that person's plans for the next 12 months. During that
meeting, have a blank copy of the performance appraisal form to refer to, and let the
employee take notes on that form about what the discussion is about. At the end of the
meeting, ask the employee to keep the original and make you a copy of those notes. That
form becomes the charter for the employee to operate from for the coming 12 months and it
helps the employee to know where he did a good job and where he didn't deliver.

Tip 3: A week or so before your scheduled performance appraisal with the employee, tell the
employee it is coming up and ask the employee to make list of all the things done in the last
12 months that the employee is really proud of. It doesn't have to be a formal list, and it only
has to contain the good stuff. This immediately puts a positive spin on the entire process, and
it also protects from the possibility of managerial embarrassment.

Tip 4: Instead, give the performance appraisal apart to me it the employee a few hours before
and ask the employee to look over it and make comments on it. Performance appraisals
should be a business discussion, so let the sunshine in on it.

Tip 5: There is a very simple way to determine the final rating for each section of the
performance appraisal. Most of these forms are in a three-tier fashion: The employee either
"fails to meet expectations," "fully meets expectations," or "exceeds expectations." Deciding
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whether an individual is at the high end of "fully meets expectations" or is actually over the
line into "exceeds expectations" can be a very tough call for a manager.

CHAPTER – 2

OBJECTIVES OF THE STUDY

 To find out the satisfaction level for the performance appraisal system of the Lakshmi Vilas
Bank.

 To analyse the level of achievement of the objectives of performance appraisal system to

estimate the benefit of the performance appraisal system to the organization and to the
individual.

CHAPTER – 3

RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

The study adopted is descriptive research method. The major purpose of this
study is description of the state of affairs as it exist at present. The survey enables only to
report what has happened or what is happening. The method of research utilized in
descriptive research are survey method of all kinds, to make a critical evaluation of the
material.

3.2 OURCES OF DATA

The sources are both primary and secondary sources. Primary data were collected
by means of administered questionnaire. The questionnaire consists of particulars like
recognition, opportunity, training, communication, etc.
A great deal of primary data were collected through direct survey. The survey
method includes personal interview with questionnaire.
Secondary data were collected through internal records and internal sources.

Internal Records

• Employee data
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• Employee feedback report
• Annual report

External Sources

• Trade Associations annual reports

• Internet

Rating Scale Technique

This is the most commonly used method of performance appraisal. Under it, a printed form,
one for each person to be rated. The factors are: employee characteristics and employee
contribution. The traits are then evaluated on a continuous scale, wherein the other places a
mark discontinuous or multiple type of scale is used, one factor is used along a discontinuous
scale.

The rating scale method is easy to understand and easy to use and permits a statistical
tabulation of scores. A ready comparison of scores among the employees is possible. These
scores indicate the worth of every individual. It is the most common evaluation tools in use
today. Besides, when ratings are objectively given they can provide useful feedback.

Questionnaire
The questionnaire includes closed ended questions with multiple choice.
Multiple choice questions are easier to respond. To tabulate and to analyse.

Census Survey
The survey had been conducted with managerial grade employees in the Lakshmi Vilas Bank
Limited.

3.3 DATA COLLECTION METHOD

Data was collected by personal interviewing method with individual employees.

Fieldwork is actual data collection operation. Data is collected through administered
questionnaire. The respondents were asked to reveal their opinion regarding the satisfaction
level performance appraisal methods provided by the bank.

3.4 TOOLS OF THE ANALYSIS

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Simple percentage calculation and chi-square method are the statistical tools used for the
analysis.

3.5 LIMITATIONS OF THE STUDY

 Non-response errors due to refusals or inaccuracy in response. Employees

refuses to respond or co-operate during the survey. They feel survey to be
invasion of privacy.

 Time pressure These respondents who initially were relevant to participate

because they were busy become anxious about the time that seems to be
required.

 Interviewee and Respondent bias decrease the accurate response rate.

 Survey cost depend on multitude of factors, the amount of professional time

required to design the questionnaire length, availability and interest of the
respondents increases the cost of the survey.

 The survey is limited to Regional office alone and the study cannot be
generalized to other branches.

CHAPTER - 4

DATA ANALYSIS AND INTERPRETATION

4.1 ANALYSIS OF DATA

TABLE 4.1.1

DESIGNATION OF THE EMPLOYEES

S.No. Designation No. of Respondents Percentage

(%)
1 Manager 8 7.9
2 Officer 93 92.1
Total 101 100.0
INFERENCE
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It is found from the above table that 92.1% of the respondents were officer grade and
7.9% of the respondents were manager grade.

TABLE 4.1.2

DEPARTMENT OF THE EMPLOYEES

S.No. Department No. of Respondents Percentage (%)

1 Accounts 28 27.7
2 Audit & Inspection 17 16.8
3 Bank Assurance 3 3.0
4 HRD 10 9.9
5 ITD 30 29.7
6 P&D 8 7.9
7 Research 5 5.0
Total 101 100.0

INFERENCE
It is found from the above table that 29.7% of the respondents have been working in
ITD department, 27.7% of the respondents have been working in Accounts department,
16.8% of the respondents have been working in Audit and inspection department, 9.9% of the
respondents have been working in HRD department, 7.9% of the respondents have been
working in P&D department, 5.0% of the respondents have been working in Research
department and 3.0% of the respondents have been working in Bank Assurance department.

TABLE 4.1.3

AGE LEVEL OF THE EMPLOYEES

S.No. Age level No. of Respondents Percentage

(%)
1 Below 35 years 35 34.7
2 36 – 45 years 35 34.7
3 Above 45 years 31 30.6
Total 101 100.0

INFERENCE

It is identified from the above table that 34.7% of the respondents belongs to below 35
years and 36-45 years of age level, 30.6% of the respondents belongs to above 45 years of
age level.
TABLE 4.1.4
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GENDER OF THE EMPLOYEES

S.No. Gender No. of Respondents Percentage (%)

1 Male 99 98.0
2 Female 2 2.0
Total 101 100.0

INFERENCE
From the above table it is inferred that 98.0% of the respondents are male employees
and 2.0% of the respondents are female respondents.

TABLE 4.1.5

EXPERIENCE OF THE EMPLOYEES

Experience Percentage
S.No. No. of Respondents
(in years) (%)
1 Upto 5 years 29 28.7
2 6-10 years 27 26.7
3 Above 10 years 45 44.6
Total 101 100.0

INFERENCE

From the above table it is found that 44.6% of the respondents have above 10
years of experience, 28.7% of the respondents have upto 5 years of experience and 26.7% of
the respondents have 6-10 years of experience.

TABLE 4.1.6

EDUCATIONAL QUALIFICATION OF THE EMPLOYEES

Educational Percentage
S.No. No. of Respondents
qualification (%)
1 UG Level 40 39.6
2 PG Level 61 60.4
Total 101 100.0

INFERENCE
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From the above table it is found that 60.4% of the respondents have qualified in PG
level and 39.6% of the respondents have qualified in UG level.

TABLE 4.1.7

MONTHLY INCOME LEVEL OF THE EMPLOYEES

S.No. Monthly Income No. of Respondents Percentage

(%)
1 Upto Rs. 12000 26 25.7
2 Rs.12001-Rs.15000 28 27.8
3 Above Rs. 15000 47 46.5
Total 101 100.0

INFERENCE
It is found from the above table that 46.5% of the respondents have their monthly
income of above Rs. 15000, 25.7% of the respondents have their monthly income of upto Rs.
12000 and 27.8% of the respondents have their income in the range of Rs. 12001 – Rs.
15000.
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TABLE 4.1.8

LEVEL OF EFFECTIVENESS OF PERFORMANCE APPRAISAL

Level of Percentage
S.No. No. of Respondents
Effectiveness (%)
1 Low 32 31.7
2 Medium 34 33.7
3 High 35 34.7
Total 101 100.0

INFERENCE
It is observed from the above table that 34.7% of the respondents have high level of
effectiveness, 33.7% of the respondents have medium level of effectiveness and 31.7% of the
respondents have low level of effectiveness, with respect to performance appraisal.

4.2 HYPOTHESIS TESTING

TABLE 4.2.1
AGE AND LEVEL OF EFFECTIVENESS OF PERFORMANCE APPRAISAL (TWO-WAY
TABLE)

Level of Effectiveness
Age Total
Low Medium High
Below 35 years 12 17 6 35
36-45 years 10 7 18 35
Above 45 years 10 10 11 31
Total 32 34 35 101

Null Hypothesis (H0) : There is no significant relationship between age and level of
effectiveness of performance appraisal.

Alternative Hypothesis (H1): There is close significant relationship between age and
level of effectiveness of performance appraisal.

CHI - SQUARE TEST

Calculated χ 2
value = 10.400
Degree of Freedom = 4
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Table value = 9.488
Result = Significant at 5% level

INFERENCE
It is found from the above table that calculated value is greater than the table value
at 4 degree of freedom. So, Null hypothesis (H0) rejected. Hence it is concluded that there is
close significant relationship between age and level of effectiveness of performance appraisal.

TABLE 4.2.2

DESIGNATION AND LEVEL OF EFFECTIVENESS OF PERFORMANCE APPRAISAL

(TWO-WAY TABLE)

Level of Effectiveness
Designation Total
Low Medium High
Manager 1 1 6 8
Officer 31 33 29 93
Total 32 34 35 101

Null Hypothesis (H0) : There is no significant relationship between Designation

and level of effectiveness of performance appraisal.

Alternative Hypothesis (H1): There is close significant relationship between Designation

and level of effectiveness of performance appraisal.

CHI - SQUARE TEST

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Calculated χ 2
value = 6.246
Degree of Freedom = 2
Table value = 5.991
Result = Significant at 5% level

INFERENCE

It is found from the above table that calculated value is greater than the table value
at 2 degree of freedom. So, Null hypothesis (H0) rejected. Hence it is concluded that there is
close significant relationship between Designation and level of effectiveness of performance
appraisal.

TABLE 4.2.3

EDUCATIONAL QUALIFICATION AND LEVEL OF EFFECTIVENESS OF PERFORMANCE

APPRAISAL (TWO-WAY TABLE)
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Educational Level of Effectiveness
Total
qualification Low Medium High
UG Level 10 10 20 40
PG Level 22 24 15 61
Total 32 34 35 101

Null Hypothesis (H0) : There is no significant relationship between educational

qualification and level of effectiveness of performance
appraisal.

Alternative Hypothesis (H1): There is close significant relationship between educational

qualification and level of effectiveness of performance
appraisal.

CHI - SQUARE TEST

Calculated χ 2
value = 6.911
Degree of Freedom = 2
Table value = 5.991
Result = Significant at 5% level
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INFERENCE

It is found from the above table that calculated value is greater than the table value
at 2 degree of freedom. So, Null hypothesis (H0) rejected. Hence it is concluded that there is
close significant relationship between educational qualification and level of effectiveness of
performance appraisal.

TABLE 4.2.4

MONTHLY INCOME AND LEVEL OF EFFECTIVENESS OF

PERFORMANCE APPRAISAL (TWO-WAY TABLE)

Level of Effectiveness
Monthly Income Total
Low Medium High
Upto Rs.12000 8 12 6 26
Rs.12000-Rs.15000 14 7 7 28
Above Rs. 15000 10 15 22 47
Total 32 34 35 101
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Null Hypothesis (H0) : There is no significant relationship between monthly income

and level of effectiveness of performance appraisal.

Alternative Hypothesis (H1): There is close significant relationship between monthly

income and level of effectiveness of performance appraisal.

CHI - SQUARE TEST

Calculated χ 2
value = 10.213
Degree of Freedom = 4
Table value = 9.488
Result = Significant at 5% level

INFERENCE

It is found from the above table that calculated value is greater than the table value
at 4 degree of freedom. So, Null hypothesis (H0) rejected. Hence it is concluded that there is
close significant relationship between monthly income and level of effectiveness of
performance appraisal.
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TABLE 4.2.5

EXPERIENCE AND LEVEL OF EFFECTIVENESS OF PERFORMANCE APPRAISAL

(TWO-WAY TABLE)

Level of Effectiveness
Experience Total
Low Medium High
Upto 5 years 13 7 9 29
6-10 years 11 11 5 27
Above 10 years 8 16 21 45
Total 32 34 35 101

Null Hypothesis (H0) : There is no significant relationship between experience and

level of effectiveness of performance appraisal.

Alternative Hypothesis (H1): There is close significant relationship between experience

and level of effectiveness of performance appraisal.
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CHI - SQUARE TEST

Calculated χ 2
value = 10.270
Degree of Freedom = 4
Table value = 9.488
Result = Significant at 5% level

INFERENCE

It is found from the above table that calculated value is greater than the table value
at 4 degree of freedom. So, Null hypothesis (H0) rejected. Hence it is concluded that there is
close significant relationship between experience and level of effectiveness of performance
appraisal.
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CHAPTER – V

FINDINGS

 Most (92.1%) of the respondents were officer grade.

 Maximum (29.7%) of the respondents have been working in ITD department.

 Most (34.7%) of the respondents belongs to below 35 years and 36-45 years of age level.

 Majority (98.0%) of the respondents are male employees.

 Maximum (44.6%) of the respondents have above 10 years of experience.

 Most (60.4%) of the respondents have qualified in PG level.

 Most (46.5%) of the respondents have their monthly income of above Rs. 15000.

 Maximum (34.7%) of the respondents have high level effectiveness of performance

appraisal.

CHAPTER – VI

SUGGESTIONS AND RECOMMENDATIONS

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 Maximum of respondents are not satisfied with their performance appraisal
system.

 It is suggested to consider the current appraisal system and there is a need for
improvement.

 Consistent and equitable system of rewards can be formulated.

 Opportunities for promotions and advancement must be adequately provided for

further upliftment of employees.

 Due recognition should be given to the employees by top management.

CHAPTER – VII

CONCLUSION

In every organization, job satisfaction plays a vital role. Employees tend to satisfy if
they meet their needs, wants, requirements and most of all job recognition and
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encouragement from the top management is expected so their work has to be appreciated by
a method of performance appraisal. So by enhancing these appraisal techniques, it helps in
level of job satisfaction and healthy work atmosphere.

Thereby effective performance appraisal method encourages employees in work

and it also helps in improving their individual responsibility which in turn effects profitability of
the organization.
 APPENDIX

QUESTIONNAIRE

Name :

Designation :

Department :

Age :

Gender of the respondents : Male / Female

Service in years :

Educational Qualification:

Monthly Income :

Please tick which ever is applicable

Agree : A

Some what agree : SWA

Disagree : DA

Somewhat disagree : SWD

Neither agree nor disagree : NAD

Sl. Questions A SWA DA SWDA NAD
No.
1. I’m always punctual in my work
2. My pay is reasonable
3. I’m interested in my job
4. Opportunities for promotions &
advancement are adequate
5. Adequate job changes or rotations
are provided
6. There is a consistent & equitable
system of rewards
7. System of employee evaluation is
perfect
8. Current performance appraisal
process followed in the bank is
effective
9. Positive recognition by your
immediate supervisors
10. Required opportunities given to
analyses your strength and
weakness on different works
11. Training given to me are relevant to
my requirements
12. Communication of the training
packages available to you for your
department function
13. Professional learning and growth
opportunities are available
14. Career advancement information is
known
15. I’m having additional compensation
facilities viz., Medical aid, insurance
coverage, etc.
Sl. Questions A SWA DA SWDA NAD
No.
16. Overall satisfaction is there in job
performance
17. I respond quickly and courteously
to fulfill the instruction of my
superior
18. The overall quality of service that I
provide is good and upto my mark
19. I’m encouraged to take the initiative
in determining my own career
development
20. I have a good idea about the career
opportunities open to me at bank
21. Overall I’m satisfied with career
development in bank
22. In my work I find it easy to apply
the training I have received
23. I feel good about interpersonal
relationship
24. Work efficiency is recognized
through rewards, promotions and
incentives
25. Adequate opportunities available
for me to develop new skills

Thanks for your kind co-operation.

Text: 1-16,18,20,22,24,26,28,30,32-47