PERFORMANCE APPRAISAL SYSTEM AT LPS BOSSARD

Project Report
Submitted to:
MAHARSHI DAYANAND UNIVERSITY, ROHTAK
For the degree of
In partial fulfillment of the award of
MASTER OF BUSINESS ADMINISTRATION
Submitted by
Under the Supervision of

Institute of Management Studies & Research

M.D. University, Haryana (India)

1
 RESEARCH DECLARATION

I hereby declared that the project entitled “Performance Appraisal System

at LPS Bossard“is prepared by me under the guidance of

I also declare that this project is towards the partial fulfillment of the
requirement for the degree of Master of Business Administration IMSAR of
Maharshi Dayanand University has been the result of my own efforts and
this project has not been formed a basis for the award of any other degree or
any other University.

2
 RESEARCH SUPERVISOR’S CERTIFICATE

Certified that the project report entitled “Performance Appraisal System at

LPS Bossard” has been prepared by Anjali Dhingra is partial fulfillment of
requirement for the award of M.B.A. degree in IMSAR from Maharshi
Dayanand University and has been carried out under my supervision and
guidance and no part has been submitted for the award of any other degree.

Signature

Preface

3
Since human resources are a unique and valuable source of competitive
advantage, organizations must ensure the most effective and efficient
utilization of these resources. It is also important to ensure the continued
viability of human resources in the face of technological growth and changes
in the nature of jobs. Employees should also have opportunities for growth
and development. Employee Performance appraisal system provides one
such mechanism for employee development as well as for making personnel
decisions.
My research deals with “Performance appraisal system at LPS Bossard Pvt.
Ltd.” in this research I have studied and evaluated the Performance appraisal
system carried out in the company.
The first section of my project includes company profile and Introduction of
topic. Company profile includes its activities and operations, organizational
structure and nature of its functioning. Introduction includes the methods,
sources, process followed in the company.
The second section includes statement of problem, research objectives and
its limitations.
The third section includes Research Methodology. It includes sample size,
research design, and selection of sample and data collection. For data
collection we have been filled questionnaires.
Fourth section states analysis of data and interpretation. For it diagrams and
pie charts have been used.
Last section consists of questionnaire that have been filled and bibliography
for references.

4
 ACKNOWLEDGEMENT

I am extremely grateful to Prof. Daleep Singh for giving me an opportunity

to do the Research Project and under whose guidance the project was
completed.

My special thanks to the Dr. H.J. Ghosh Roy for his supportive role, advice
and valuable suggestions which helped me.

I would like to express my deep gratitude and sincere thanks to faculty of

IMSAR for encouragement and guidance through the period of the study.

I would also like thanks to Ms. Neha Mendiratta (HR Manager, LPS
Bossard) who had helped me to complete my project.

Finally I thank all other faculty members of the Institute and parents, friends
for their constant support without which study could not be completed.

………………..

5
 Contents
Page No.

1. Chapter-1
 Statement of Problem 8
 Review of Literature 9-10
 Objectives of the study 11
 Limitations of the study 12

2. Chapter-2
 Company Profile 14-21
 Introduction to Topic 23-43

3. Chapter-3
 Research Methodology 45-46
 Research Design 45
 Survey Universe 45
 Survey Population 45
 Sample of the study 46
 Collection of data 46
 Analysis Pattern
46

4. Chapter-4
 Analysis & Interpretation 48-61

6
5. Chapter-5
 Findings 62
 Recommendations 63

APPENDICES
Appendix: A- Questionnaire 65-68
Appendix: B- References 69

7
 Statement of Problem

The research problem deals with “How Performance Appraisal System

carried out in LPS Bossard”. It states that what are the techniques and
methods, process, sources etc. followed in the company?

It includes what are the objectives for the study conducted? It states that
what are the reasons for the research conducted i.e. to know employee
atitude towards Performance appraisal system and effectiveness of
Performance appraisal system on employees.

It includes what are sources available for the data collected? It includes how
the data collected from primary and secondary sources?
What are the limits within which the study is to be studied?

The review of existing literature has focused on differences between

performance appraisal theory and practice. Researchers argue that
practitioners have not made the best use of recent advances in the area,
including cognitive processing of information, rater training, feedback, and
instrumentation. Practitioners, on the other hand, argue that much of the
recent research is directed to an audience of other researchers, whose
laboratory studies have become segmented and have little relevance to the
outside world. Much of this debate is healthy to the extent that it stimulates
researchers and practitioners to reevaluate their assumptions concerning the
measurement of employee performance.

8
 Review of literature

Performance appraisal continues to be a subject of interest and importance to

human resource specialists. For decades, performance appraisal has received
considerable attention in the literature, from both researchers and
practitioners alike. Many authors (Bernardin & Klatt, 1985; Hall, Posner, &
Hardner, 1989; Maroney & Buckley, 1992; Thomas & Bretz, 1994) maintain
that there is a considerable gap between theory and practice, and that human
resource specialists are not making full use of the psychometric tools
available. To support their claim, these authors cite surveys of practitioners
concerning current performance appraisal methods and use.

Nearly two decades ago, Taylor and Zawacki (1976) published the first of
two articles that documented trends in performance appraisal usage among
U.S. organizations. When comparing the results of two surveys taken five
years apart, the authors noted a remarkable shift away from what they called
collaborative approaches (e.g., MBO, BARS) and toward the more
traditional performance appraisal techniques (graphic rating scales). Taylor
and Zawacki (1984) hypothesized that managers, responding to the legal
constraints prevalent in the 1980s, preferred techniques that were defensible
in court. Accordingly, managers tended to be more satisfied with the
objective traditional approaches, whereas their subordinates seemed to prefer
the developmental collaborative methods.

Through the 1980s, researchers continued to document performance

appraisal practice. Bernardin and Klatt (1985) noted that small firms tended
to rely heavily on trait-based approaches, while larger firms relied on a
combination of trait, behavioral, and results-based techniques. They noted
that one in five organizations did not give employees the opportunity to
review the performance appraisal results. In another study, Locher and Teel
(1988) identified graphic rating scales (57.1%), the open-ended essay
(21.3%), and Management-by-Objectives (18.1%) as the most popular
performance appraisal techniques. Unlike Taylor and Zawacki (1984) before
them, Locher and Teel identified a trend toward the use of MBO as a
popular technique.

Thomas and Bretz (1994) report that performance information is most likely
to be used for employee development or to administer merit pay. They
identified the main developmental uses as improving work performance,

9
communicating expectations, determining employee potential and aiding
employee counseling. Other common administrative uses included
promotions, lay-offs, transfers, terminations, and validations of hiring
decisions. In addition, Hall, Posner, and Hardner (1989) identified common
objectives of performance appraisal as reviewing past performance,
rewarding past performance, goal setting for future performance, and
employee development. Cleveland, Murphy, and Williams (1989) warned
that organizations should exercise caution when using the same performance
appraisal methods for multiple applications (e.g., counseling vs. evaluation),
since different performance appraisal methods may yield different types of
data (e.g., qualitative vs. quantitative).

Cleveland, Murphy, and Williams (1989) suggest that performance

appraisal use can be grouped into four categories: between-individual,
within-individual, systems maintenance, and documentation. Between-
individual comparisons are critical for many administrative decisions such
as promotion, salary, retention, termination, layoffs and employee
recognition. Such decisions are frequently cited as the most common
performance appraisal outcome. Within-individual comparisons are tailored
toward employee training and development needs. Typical of this kind of
use are performance feedback, determination of transfers and assignments,
identifying strengths and weaknesses and training needs. Systems
maintenance uses refer to personnel planning, organizational training need
analysis, organizational goal identification and analysis, evaluation of
personnel systems, and identification of organizational development needs.
Finally, documentation uses are needed for validation research, legal
requirements, and to record personnel decisions.

The literature concerning performance appraisal feedback does suggest that

specific feedback gained from the job itself does affect performance (Bretz,
Milkovich, & Read 1992). If performance improvement is desired, perhaps
emphasis on job redesign is necessary. For example, production workers
whose job has been redesigned to include feedback concerning their own
quality are more likely to see improvement than those who receive feedback
from external sources such as quality control officers. Organizations should
rethink how they use performance appraisal and tailor the process to the
kinds of outcomes they desire.

10
 Objectives of the study

 To know how the Performance Appraisal system carried out in the

company.

 To know the employee attitude towards Performance appraisal system

at their company.

 To know the techniques and methods of Performance appraisal system

followed in the company.

 To know how Performance appraisal system affects the productivity

of employees.

 To provide suggestions and recommendations from the study

conducted.

11
 Limitations of the study

 The sample size selected resulting in biased results.

 Respondents were least interested in filling the questionnaire.

 As the questionnaire contains information related to their income,

people hesitate in giving this information.

 Some data provided by respondents are not reliable and vary from
facts.

 Further research could not be made possible due to limitation of time.

12
Company
Profile

13
 Company Profile
Company at a Glance

Company takes this opportunity to introduce themselves as a

joint venture between M/s Lakshmi Precision Screws Ltd., Rohtak
and Bossard AG, Switzerland. Incorporated in November 97, this joint
venture has been christened as LPS BOSSARD PVT LTD.

The company became operational in 1998 with specializing in

Industrial Assembly Technology and within a short span we are now a
90-member family serving to our customers all over India with sales
over Rs. 550 million with a steady growth.

Company has a range of more than 75,000 of fasteners in

Stainless steel, High tensile steel, MS, Brass, Copper, Aluminum,
Titanium Alloy, Inconel and Plastics. It’s range includes standard
items (as per DIN, ISO, JIS, NFE, and other National & International
Std.) and Multifunctional fasteners like, Self drilling screw, Thread
cutting, Thread Forming screws, EcoSyn, EcoFix and many more.
Apart from these it also develops and supply items as per customer
specifications.

Company has joined hands with many world repute companies

like Panduit Corp. for distribution of Cable ties and Wiring
Accessories, Recoil Fasteners Australia for Thread Damage Repair
Kits, Inserts and Insertion Tools, Fairchild Fasteners for Tension
Latches, ¼ Turn Fasteners, Push Button Fasteners, to cater to the
needs of customers for C items.

Aim

Company aim at providing the latest in Fastening Technology

and C parts management to our customers in India.

14
 In its main operational activity Fastening Technology, it is
headquartered in Rohtak, Haryana and has formed regional offices at
New Delhi, Bangalore & Pune. In an effort to be closer to it’s
customers it also has offices in Bangalore, Chennai, Hyderabad &
Mumbai etc

A word about Parent Companies

LPS Ltd.

Founded in March 1972, LPS is one of the leading

manufacturers and suppliers of high tensile fasteners such as Bolts,
Screws, Nuts and similar parts for Automobile and other Industrial
Sectors and has acquired the state of art technology. LPS is
Accredited in Mechanical and Chemical Testing since 1995 by A 2LA
(American Association for Laboratory Accreditation, USA) and
NABL (National Accreditation Board for Calibration & Testing
Laboratories) and is ISO certified since 1996. LPS also got QS 9000
in March 2000.

Bossard AG

Bossard a leading logistic-oriented group for fastening

technology was founded in 1831 in Zug, Switzerland and today is
managed by the seventh generation of the Bossard Family with
roughly 1600 employees. Bossard is the first company in this sector to
get an ISO 9001/9002 & 14001 certification (since 1986). Bossard has
its global presence with regional business units in Europe, United
States and Asia/Pacific and operations in over 76 countries having a
turnover of over US$ 400 Million.

Vision

“We want to be “the trusted expert Brand” providing assembly

technology solutions for our customers globally”

15
 Company’s Current business policy is in line with it’s
principals based on an overall medium-term entrepreneurial vision.
Company sees itself as an international logistic-oriented group for
Fastening Technology and C parts management. It has access to
worldwide procurement and engineering know-how.

Top priority in planning company development is given to

strengthening established activities and developing new markets. This
includes assuring an appropriate level of growth in order to remain
competitive as well as making targeted acquisitions. The latter, for
example might be projects in the C part management sector, which are
also of considerable interest to our fastening technology customers.

Furthermore, its vision includes clear views on flexibility as

well as transparency with regards to value added, both of which it
consider as important as it’s market targets.

Quality Policy

“We at LPS Bossard will provide reliable quality products

economically on time to the total customer satisfaction.”

In order to meet above policy it has clear objectives that “to

increase confidence of customer by providing quality products on
time” and “to reduce cost of customer product by providing technical
and logistics support”

“We are a leading OEM supplier offering global solutions for local
requirements.”

Guiding Principles for it’s activities

Customer Focus
Company focus on the real needs of it’s customers.
It understands their problems and can solve them. That’s why it
develops custom-tailored products and services for every
customer.

16
 Value Added
Not all products and services add value – but they all lead to
costs. Key for the customer is the perceived value. That’s why
it cannot be inexpensive but, instead, offer the best value.

Quality
All it’s stakeholders can rest assured that it invariably deliver
what it promise. That’s why it can offer it’s customers security,
convenience and cost-effectiveness.

People
Company relies on highly motivated employees, empower them
to contribute to the group’s success and let them participate in
it. That’s why it is having teams to coordinate the activities.

“Our employees are our greatest assets.”

Independence
Company has always put it’s trust in creativity, innovation and
unconventional thinking.

The Yardstick for it’s Activities

“Engineering and logistics lead to a cost saving of 30 percent

and more”

Company has developed a three-fold approach to adding

customer value. This allows industrial enterprises to exploit
rationalization potential in fastening technology both within and
outside their companies. Along the entire procurement and value
added chain whole cost pools can be turned into a competitive
advantage. Customer benefit is it’s yardstick.

core Competencies

17
 Main Service
Company is at home in the market for fastening elements
worldwide and know how and where to manufacture and
develop such elements.

Engineering
Company is familiar with customer-specific problems in
fastening technology and knows how to solve them.

Logistics
Company is accustomed to customer-specific supply
requirements and has the necessary systems and solutions in
place.

Communication
Company is aware of the availability needs of it’s customers
and know how to develop and support inter-company
procurement systems.

Product and Service Package

“Your Cost saving potential lies with us”

Basic Product

As Company’s basic product it offers a variety of fasteners to

the diversified needs of market. Providing reliable quality
products on time is its main or basic service. Functional
products must be available in sufficient number and at an
acceptable price. To this end it maintains a worldwide
manufacturing, development and procurement network with
several linked warehouse locations.

Its product documentation, available in catalogue form,

comprises 50,000 items. 97 percent are always available
from stock.

18
Product support

In fastening technology, there is more to fully exploiting the

rationalization potential than global product availability. That is
why company offer product support to help it’s customers
manufacture a better product and to lower production costs.
This engineering service can improve the product through
identifying the most suitable

materials, enhancing the quality of the fastening or providing

greater protection against corrosion or loosening. Lower
production costs can be achieved by reducing the number of
different parts through using multifunctional parts and through
introducing simpler assembly techniques.

The earlier it’s specialists are involved in the construction

process, the greater their contribution will be.

Business Support

Company’s major strength is business support. Its starting point

here is the high availability of it’s products and the assumption
that C parts accounts for 50 percent of the total procurement
costs, but only for 5 percent of the value of the products.

It has developed, and repeatedly implemented, proven logistic

systems that can reduce costs for procurement, warehousing
and assembly by 30 percent or more. Such logistic systems
have considerable savings potential because only some 15
percent of the total in-place costs are related to the actual
fastening element. Numerous companies are not yet using
saving potential.

Currently we can offer our Two-Bin, Kanban Card,

Kanban Barcode, Edifact and SmartBin systems.

C Parts management

19
 There is a clear trend worldwide towards procuring C parts
from a single source and towards overall C part management.
The single source competencies acquired through its three
service levels make it an experienced and reliable supplier of
comprehensive C part management.

Strength

Globally the group has a specialization in handling the needs of many

industries like:

Air Conditioner Home Appliances Aero Space Wind

Mill

Medical Equipment Instrumentation Energy Meter

Locomotive

Automobile Electrical & ElectronicsHydro Power

Defense

Accredited worldwide

Within the first year of our operations we have been certified as an

ISO 9002 certified by UL USA.
We have been rated as best suppliers by many of our customers and
this is the biggest certificate we have, and will always achieve.

“We deliver what we promise”

Our Major customers

Asea Brown Boveri Bombardier All BHEL

All Bharat Electronics Ltd.

20
Amtrex Hitachi Enercon India Crompton Greaves

MICO Behr India ISRO VSSC

DRDL DLW TATA’s

Dhananjay ltd.

Tecumseh Secure Meters GE BE

Wipro GE

SIEMENS Alstom JCB Vatech

Hydro

“We believe in long lasting business relationship”

Our Presence in India

Managing Director : Mr. Rajesh Jain

General Manager : Mr. Vineet Talwar

21
Introduction
To
Topic

22
 Performance Appraisal

Performance Appraisal is the process of obtaining, analyzing and recording

information about the relative worth of an employee. The focus of the
performance appraisal is measuring and improving the actual performance
of the employee and also the future potential of the employee. Its aim is to
measure what an employee does at his job or does not at his job.
"Performance appraisal is the systematic, periodic and an impartial rating of
an employee’s excellence in the matters pertaining to his present job and his
potential for a better job." Performance appraisal is a systematic way of
reviewing and assessing the performance of an employee during a given
period of time and planning for his future.

It is a powerful tool to calibrate, refine and reward the performance of the

employee. It helps to analyze his achievements and evaluate his contribution
towards the achievements of the overall organizational goals.

It is the process of obtaining, analyzing, and recording information about the

relative worth of an employee to the organization. Performance appraisal is
an analysis of an employee's recent successes and failures, personal
strengths and weaknesses, and suitability for promotion or further training. It
is also the judgment of an employee's performance in a job based on
considerations other than productivity alone.

23
 Objectives of Performance appraisal

 To review the performance of the employees over a given period of

time.

 To judge the gap between the actual and the desired performance.

 Helps to strengthen the relationship and communication between

superior – subordinates and management – employees.

 To diagnose the strengths and weaknesses of the individuals so as to

identify the training and development needs of the future.

 To provide feedback to the employees regarding their past

performance.

 Provide information to assist in the other personal decisions in the

organization.

 Provide clarity of the expectations and responsibilities of the functions

to be performed by the employees.

24
 To judge the effectiveness of the other human resource functions of
the organization such as recruitment, selection, training and
development.

Process of Performance Appraisal

Specify organizational objectives

Identify dimensions of job performance

Define and communicate performance standards

Determine who will conduct appraisal

Choose appropriate methods of performance appraisal

Communicate appraisals to employees

25
 Specify organizational objectives: - The performance appraisal
system should be aligned with organizational objectives. Therefore,
the long term as short term objectives of the firm should be identified
first. This will help determine the type of jobs, skills and nature of
employee performance that the organization will require to achieve its
objectives. This becomes the basis for specifying performance
measures against which employee performance will be assessed.

 Identify dimensions of job performance: - Before conducting any

appraisal, the important elements in a given job, that is, the
dimensions of job performance should be identified. These are the
factors for which the employee is paid by the organization. Some
performance dimensions are common to most jobs, for example,
quantity of output. Beyond these general dimensions there are other
dimensions of job performance too. For example, important
evaluation criteria in a college professor’s job are- teaching and
research. A college professor is paid to do research and teaching and
therefore, the performance of college professors on these job criteria
should be measured. It is quite possible for an individual to
demonstrate better performance on some job criterion than others. A
college professor may be a good researcher but not a good teacher or
vice versa. It is also possible that some criteria are considered more
important than others by the organization. One department of a
university may consider teaching to be a more important job criterion
when compared to research. Another department may place higher
value on research as a job criterion. By assigning weightages to
different job criteria, it is possible to show the relative importance of
several criteria in one job.

 Define and communicate performance standards: - Performance

standards define the expected levels of performance, goals or targets.

26
 The performance standard with respect to the research publication
criterion for college teachers may be defined as, ‘publish two research
papers in referred journals in a year’. Thus performance standards,
define what constitutes satisfactory job performance. Performance
standards should be determined before the work is performed and
communicated to the employees. This ensures that employees know
what level of performance is expected from them.

 Determine who will conduct appraisal: - In performing the job, an

employee has to interact with several other individuals in the
organization. These include peers, subordinates, superiors, customers
and employees from other departments. The nature of interaction of
an employee with each of these people differs. Therefore, it is
unrealistic to assume that one person can observe and evaluate all
aspects of an employee’s performance. The performance of an
employee can be evaluated by anyone who is familiar with his/her
work. The sources of information about employee performance may
include superior, subordinate, peers, team members, customers and
self. Each of these sources provides unique information about the
performance of an employee.

 Choose appropriate methods of performance appraisal: - when

designing a performance appraisal system, an important strategic
decision relates to the choice of appraisal methods. There are mainly
three types of performance appraisal methods. These are

1. Trait-based methods:-These methods are designed to measure

the extent to which an employee possesses certain
characteristics that are important for performing the job
successfully. For e.g. Graphing rating scale, Essay method,
ranking method and Forced distribution method.

2. Behaviour-based methods: - These methods obtain

descriptions of employee behaviour and place them along a
scale. This helps identify those actions which need to be

27
 improved. For e.g. critical incident method, Checklists and
Behaviourally anchored rating scales.

3. Result based methods: - These methods focus on the

accomplishments of the employees, that is, the results they
achieve through their work. For e.g. Productivity measures and
Management by objectives.

 Communicate appraisals to employees: - A good performance

appraisal system is one that allows the employee to participate and
contribute in his/her own performance evaluation, in partnership
with manager. Once the information about an employee’s
performance has been obtained, it is the responsibility of the
manager to communicate the evaluation to the employee. This is
done by holding an evaluation or appraisal interview with each
subordinate. Appraisal interviews are of three types. These are-

1. One way communication: - The supervisor is in a dominant

position and communicates the appraisal as well as the action
plan foe improvements to the subordinates. The subordinate
must accept both the appraisal and the development plan.

2. Two way communication: - The supervisor communicates

appraisals and developmental plans to the employee. The
subordinate has the opportunity to express his/her feelings
about the information provided.

3. Mutual problem solving: - Subordinate performance is

defined as a mutual problem. The subordinate plays an active
role in appraising his/her own performance as well as in
developing action plans for performance improvements. The
supervisor assumes the role of a helper and encourages the
subordinate in reaching a realistic evaluation of self
performance by asking exploratory questions.

28
 Methods of Performance Appraisal

1. Trait based methods: -

These methods are designed to measure the extent to which an
employee possesses certain characteristics that are important for
performing the job successfully.

 Graphic rating scales: -

The rating scale allows the rater to indicate the degree to which an
employee possesses a particular trait, characteristics or demonstrate
a type of performance, by circling the point on the scale that best
describes the employee being evaluated.

 Essay method:-
The appraiser is required to write an essay or a brief narrative that
best describes the performance of employee being appraised.
Appraiser provides feedback to the employees and suggests
performance improvement plans.

 Ranking method:-
It requires the manager to rank or list all employees from highest to
lowest on a trait or dimension of performance. The employee who
will get the highest rank he will be demonstrated highest quality of
performance.

 Forced distribution method:-

The rater is required to assign employees in the work group to a
limited number of categories so as to approximate a normal
frequency distribution. A predetermined percentage of employees
are placed in each performance category.

29
 2. Behaviour Based methods:-
These methods obtain descriptions of employee behaviour and
place them along a scale. This helps identify those actions which
need to be improved.
.

 Critical incident method:-

The HR manager prepares a list of critical incidents. He observes
the employee at work and keeps a written record of both highly
effective and ineffective actions demonstrated by the employee
when performing the job.

 Checklists:-
A checklist is a set of descriptive statements. Each statement
describes job related behaviour. The rater is required to check those
statements that are most representative of the characteristics or
performance of employees.

 Behaviourally anchored rating scales(BARS):-

A BARS rating form consists of a certain number of dimensions
relevant to job performance, usually six to ten. Each BARS is
typically a seven or nine point vertical scale. Point one on the scale
represents unfavourable job performance and the highest scale
point represents favourable job performance.

30
3. Result Based methods:-
These methods focus on the accomplishments of the employees, that
is, the results they achieve through their work.

 Productivity measures:-
A number of results based measures are available that can be the
basis foe performance evaluation. Foe example, sales people are
evaluated on the basis of volume or value of sales and production
workers are evaluated for the number of units produced.

 Management by objectives:-
It requires employees to establish objectives for themselves. It
involves developing a cascading set of objectives beginning with
the organization, then for departments, individual managers and
employees. Objectives are time bound and set by employees in
consultation with their superiors. Frequent reviews are conducted to
assess the progress towards objectives and to make any
modifications in the original objectives.

An objective based performance appraisal system results in higher

commitment and motivation on the part of employees due to the
following reasons:

1. Employees participate in setting goals for themselves rather

than having objectives determined for them by the
organization.

2. Employees discuss important organizational goals and

clearly perceive how they contribute to these goals.

31
 Developments in Performance Appraisal

1. Team or work group Appraisal

A team consists of individuals who work collaboratively and take

the responsibility for the performance of the team rather than just
their own individual performance. Members of the team are
assigned a specific role depending on their skills for the benefit of
the team performance. A team has following distinctive
characteristics.
 Teams have a common purpose.
 They have agreed norms and values that regulate behaviour.
 Team members have interdependent functions.
 Each member has a team identity.
 Members possess complementary skills.

There are different types of teams like temporary or permanent team,

intact or virtual team, team on the basis of type of skills required of
members. Different types of teams possess different characteristics.
It is important to ensure that the performance appraisal
characteristics built into the performance management system are
appropriate to the specific type of team. Designing effective
performance appraisal systems for teams requires careful
consideration of differences in team characteristics such as team
membership configuration, team task complexity and the nature of
the interdependencies among the team and external groups.

Dimensions of team characteristics

 Membership configuration

32
 It refers expected tenure of a team, stability of its membership
and allocation of work team of team members. It varies from
static to dynamic. Static teams have full time team members,
constant membership throughout the existence of a team.
Dynamic teams have shorter tenure and floating membership
since members come and go depending on the task demands.

 Task complexity
It refers to the fact that organizational teams engage in a wide
variety of work that varies from the routine to the non routine.
Routine tasks are those that are well defined, the required time
needed to finish one complete unit of work are specified in
advance. Non routine tasks are not well defined. The outcome
and the means to accomplish these are not defined in advance.

 External interdependencies
Interdependencies exist when a team is dependent on
contributions and non members to complete tasks and goals. It
may range from high to low. High interdependencies exist when
teams are dependent on several outsiders for information and
support. Low interdependencies imply that teams are dependent
on only a few outsiders.

33
2. Assessment Centres

It is an independent approach designed for exclusively assessing

employee potential. It requires the participants to complete a range
of tests and exercise which stimulate the activities they might
encounter in the target job. Each assessment center consists of
approximately six to twelve participants .Participants engage in a
combination of group and individual exercises over a period of two
or three days spent away from the job. These exercises may include
case discussions, in-basket exercises, group discussions,
psychological tests, management games, role play, etc.

Assessment centres are simulations because the exercises used

represent situations that require the use of managerial skills and
behaviours that the participants will actually need for performing the
job assigned to them.

The fundamental idea behind the assessment center approach is that

the best way to predict future job performance is to get the
individual to actually perform the set of tasks which sample and
resemble those required in the job. A team of trained assessors
observe the employees as they participate and engage in various
situational tests and activities. Assessors are usually experienced line
managers from the organization who have volunteered to be
observers and have been specially trained for observation and
evaluation of employees. They are usually at a higher level in the
organization than the candidates being assessed. Assessors can also
be independent consultants or outsiders who have been trained to
conduct assessment. Each assessor compiles judgments from all the
exercises to form a summary evaluation report for each candidate or
participant of the assessment centre. All the assessors pool their
evaluations and assign a rating to each participant.

Assessment centres provide information about a variety of job-

related skills, such as planning, as well as, more generalized

34
 skills in dealing with others (for example, oral communication),
in addition to information about values and preferences of
examinees. Assessment centres evaluate individuals along a
number of dimensions, such as personal style, ability to handle
stress, decision-making, flexibility, leadership potential, etc.
Assessment centres serve the purposes of
 Determining management potential of employees
 Assessing promotability of employees
 Identify training and development needs for improving employee
job performance

Assessment centres help an organization arrive at an informed

decision on the strengths and weaknesses of its employees in
relation to specific jobs for determining employee suitability as
well as for employees’ career development. Assessment centres
vary across organizations with respect to the length of the
assessment process, the ratio of assessors to those being assessed,
the number and the type of assessment instruments and exercises
that are used for assessing participants. One of the exercises
commonly used in assessment centres is the leaderless group
discussion which is used to evaluate an individual’s emergent
leadership and social skills. In this activity, participants first
consider an issue individually and make specific recommendations.
Subsequently, they assemble together in a group to discuss the issue
or assigned topic. No one is designated as the leader of the group.
However, a leader usually emerges in the course of the group
interaction. The participants are given no instructions on how to
approach the topic or what discussion to reach. Two or more
assessors observe the group as members attempt to reach the
consensus. Participants are evaluated on leadership skills, initiative,
communication and ability to work in a group.

35
3. 360 Degree Appraisal
It is a process that implies that an employee is appraised and
receives feedback from supervisors, subordinates, peers or
customers. One of the main purposes served by the 360 degree
appraisal system is to obtain information about an employees’
performance in multiple roles and from different perspectives.

The 360 degree feedback approach seeks to provide employees with

as accurate a view of their performance as possible by obtaining
feedback from all angles- supervisors, subordinates, peers or
customers. Feedback from multiple sources may reinforce and
support the feedback provided from the supervisor, thus making it
harder to discount negative feedback from the supervisor as one
person’s feedback that is perhaps biased.

Any firm that seeks to implement the 360 degree system should
follow certain guidelines, such as
 Determine the potential cost of the programme
 Focus feedback on specific goals
 Train employees giving and receiving feedback
 Ensure that the feedback is productive, unbiased and
development oriented

An important aspect of 360 degree appraisals relates to the

‘acceptability’ of the system, that is, what factors influence whether
people are willing to participate and use 360 degree feedback data?
Acceptability is defined as the willingness to provide unbiased
feedback by raters or to receive and utilize 360 data by the
appraisee. When the purpose of 360 degree feedback is development
and when the feedback is shared only with the appraisee, the
appraise may have little interest in using the feedback for self
improvement. Since pay and promotions don’t get affected, the
appraisee may also perceive little accountability for using the
results. When the appraiser feels that the appraisee or the
organization will not make use of the appraisals, there will be little
incentive to take time do the appraisal or to provide accurate or

36
 complete information. Thus, acceptability is an important factor in
the effective implementation of 360 degree appraisals.
Factors impacting 360 degree appraisal

 Organizational cynicism: - when employees in an organization hold

the common belief that potentially fixable problems cannot be
resolved due to factors beyond the control of the employees, it results
in ‘organizational cynicism’. To manage cynicism, it is important to
first implement 360 degree as a pilot project and allow organization
members to experience the process.

 Purpose of appraisal: - Employees who are evaluated by peers and

subordinates all prefer that feedback from 360 degree appraisals
should be used solely for development and feedback. Those who
appraise may find the 360 degree appraisal system more acceptable
when ratings are used for evaluative purposes. The latter would like
to use 360 degree for only developmental feedback.

 Anonymity: - 360 degree appraisals incorporate upward appraisals,

that is, appraisals of employees by those who are lower than them in
the organizational hierarchy. This may result in power differentials
and hence it is important that appraisals are anonymous. This is to
protect subordinates who provide appraisals from backlash from the
superiors whom they appraise.

 Competency of appraisers: - Appraisers may find it difficult to

accept ratings or feedback when they perceive that the appraiser does
not have the competence to appraise and hence any ratings provided
them will be perceived as biased or unfair. Appraisees may perceive
the appraiser to be lacking in competence when

1. The appraiser is not familiar with the work of the appraisee.

Appraisees may also believe that the appraisers do not observe
their performance frequently enough and hence are not
competent to rate them.

37
 2. appraisees are unwilling to be appraised by those who they
believe cannot themselves perform the task.

Effective 360 degree appraisals

 Provide training to employees to enhance self-awareness. This

minimizes inflation in ratings and also results in more accurate self
ratings.

 Provide orientation to all employees about the implementation of the

360 degree appraisal process.

 Assess degree of organizational cynicism among employees prior to

implementing 360 degree appraisal. Take steps to reduce cynicism to
make employees more inclined to embrace feedback and personal
change.

 Follow-up negative feedback with encouragement and coaching.

 Integrate 360 degree feedback with other training and development

efforts. Providing feedback to suggest changes, without providing
training or assistance, will result in lower motivation on the part of
recipients of feedback.

 Institutionalize 360 degree appraisal as part of the organizational

culture. This requires multiple administrations before the results will
be fully realized. Over time, employees adapt to the process and
organizations tailor the process to fit their needs.

38
 Sources of Appraisal Information

 Customer Appraisal: - Internal and external customer appraisals

are used as a source of performance appraisal information. In
internal customer appraisals managers establish performance
measures related to customer service and specify goals for the
employee. These individual goals are linked with company goals.
For example, one performance dimension is to treat customers with
courtesy and promptness. A questionnaire survey is conducted on
customers. The survey items reflect various performance measures
related to customer service. The feedback obtained from customers
becomes part of employee effectiveness and organizational
performance. Internal customers are employees within the
organization who depend on the work output of the employee
being evaluated. For instance, for the human resource department
of a firm, employees belonging to other departments are its internal
customers. These employees depend on the HR department for
their training and therefore evaluate the training services provided
by the HR department.

 Subordinate appraisal: - It involves performance appraisal of a

superior by his/her subordinate. Performance dimensions that are
considered most appropriate for subordinate appraisals include
leadership, oral communication, delegation of authority, etc. These
appraisals serve the purpose of giving feedback to managers on
how they are perceived by their subordinates. These are, therefore,
appropriate for development purposes rather than for
administrative purposes.

 Peer appraisals: - Peers are individuals who work together and

are of equal rank. Peer appraisal is an employees’ appraisal done
by fellow employees. Peers see different dimensions of

39
 performance of their co-workers, such as leadership skills,
interpersonal skills and their strengths and weaknesses. Peers
appraisals are better used for developmental rather than for
evaluative purposes.

 Self-appraisal:- Most organizations require employees to evaluate

themselves on the performance appraisal from prior to the
performance interview. This leads to the greater involvement of the
employee in his/her own performance. The employee is also
encouraged to think about his/her strengths and weaknesses as well
as the barriers to effective performance. Self appraisals are best
used for development purposes rather than evaluative purposes.
Used with other sources of appraisal, self appraisals provide
important performance related information.

 Supervisor appraisal: - The immediate superior has the legitimate

authority as well as the responsibility to evaluate the performance
of employees and to communicate this assessment of performance
to the employee concerned.

 Team appraisal: - Such an appraisal is an extension of peer

appraisal. While peers are individuals in the same rank, they may
not be working together very closely. A team consists of
employees who work together in pursuit of a specific task or
project assigned to the team. In a team it is difficult to isolate the
individual contribution of an employee. Team performance is
usually linked with team incentives or group variable pay.

40
 Effective Performance Appraisal Systems

1. Separate evaluation and development appraisals: - Problems are

likely to emerge when the same performance appraisal is used for
making evaluative decisions as well as for identifying development
needs. Problems of defensiveness and avoidance can be minimized by
having two separate formal performance appraisals in a year-one that
focuses on evaluation and the other that focuses on development.
Decisions about pay increase, rewards and promotions should be
scheduled at a different time of the year rather than in the meeting that
engages the subordinate in a dialogue for identifying performance
problems and developing plans for performance improvement. The
performance appraisal should not require the manager to be
simultaneously a judge as well as a helper.

2. Use job related performance criteria: - To ensure that the criteria

used in performance appraisal is job related, it should be determined
through job analysis. Even subjective criteria such as loyalty,
initiative etc. should be used only when they can be clearly shown to
be related to the job.

3. Specifying Performance Standards: - It is important to specify

performance standards for each criteria of performance. These
performance standards or expectations must be mutually agreed upon
by managers and subordinates before the beginning pf the appraisal
period. If subordinates do not know what they are supposed to
accomplish on the job, they are not likely to get there.

4. Use Appropriate performance data: - Appraisals that use

behavioural data result in greater acceptance on the part of the
subordinate of his/her performance evaluation. For instance, rating a
person low on ‘customer orientation’ is likely to send the subordinate

41
 on the defensive. However, presenting the subordinate with specific
instances of behaviour that suggest a lack of customer orientation is
likely to be accepted more readily by him/her. This feedback also
helps the subordinates in improving their performance. Performance
appraisal methods such as BARS and critical incidents methods use
behaviour based performance measures.

5. Improving supervisor-subordinate relationship: - The outcomes

and quality of appraisal process depends on the ongoing supervisor-
subordinate relationship. If the relationship is good the supervisor will
provide feedback and coaching to the subordinates on an informal
ongoing basis. The formal appraisal interview in this situation will
only be a review of issues already discussed. There will be no
surprises in store for the subordinate. Moreover, the subordinate will
not be defensive and will be more open to discussing performance
problems.

6. Provide ongoing feedback: - All employees like to know how well

they are performing their jobs. Principles of learning suggest that
immediate feedback is more effective than delayed feedback. When
delayed, the subordinate may not be able to associate the feedback
with a specific behaviour. Hence, regular performance discussions
conducted on an informal basis provide the subordinate with an
opportunity to improve performance before the scheduled formal
appraisal. Ongoing feedback is inherent to the MBO approach.

7. Upward appraisals: - One factor that contributes to subordinate

defensiveness in performance appraisal is that the supervisor has
authority and controls rewards such as promotions. This results in
submissiveness on the part of the subordinate in order to gain rewards.
Moreover, subordinates are reluctant to discuss performance problems
with superiors who have the power to decide their career. In order to
manage this unequal power distribution between the managers and
their subordinates, the latter may be asked to appraise their supervisor.
This brings power into a more favorable balance and results in higher
participation of the subordinate in the appraisal process.

42
8. Use multiple raters: - To manage rater errors and biases in the
appraisal process, multiple raters should be used. Use of multiple
raters involves obtaining ratings on the same individual from more
than one rater, such as peers, customers, superiors and self. When
multiple raters are used to evaluate an individual’s performance, it is
called the 360 degree appraisal or multiple source feedback.

9. Train appraisers: - By extending training to raters, it is possible to

minimize errors such as halo, leniency, strictness, etc. if not eliminate
them entirely. A poor appraisal is worse than no appraisal since it can
demoralize employees, leading to reduced productivity. Training
should focus on areas such as how to conduct appraisal interviews,
how to rate, purposes of performance appraisal, etc.

10.Appeal process: - Each organization should ensure that subordinates

get an opportunity to appeal against appraisal results if they see them
as inaccurate or unfair.

43
 Research
Methodology

44
 RESEARCH METHODOLOGY

(1)Research Design:-
The research design is Descriptive because the research focuses on:
-

 Describing the characteristics of a particular individual or a

group
 Formulating the objective of study
 Designing the methods of data collection.
 Selecting the sample
 Collecting the data
 Processing and analyzing the data
 Reporting the findings

(2) Survey Universe:-

Survey universe is LPS Bossard.

(3) Survey Population:-

Survey population is employees of the company. We have selected
50 respondents from them.

45
(4) Sources of Data:-
Secondary Data-
In this research secondary data collected from
 Books
 Internet

Primary Data-
In this research the primary data collected through questionnaire.
We have been filled questionnaire from respondents.

(5) Sample of the study:-

Sample of the study is Non-probality because the items for the
sample selected deliberately and the elements have not specifiable
chance of included.
Under Non-probability sampling the sample is Convenience Sample
because the respondents or the sampling units are contracted on the
convenience of researcher, keeping in view the general representative
ness of the population in question.

(6)Analysis Pattern:-
For analysis the data Pie charts have been made on the basis of
responses given by respondents.

46
 Analysis
&
Interpretation

47
 Part-A

(1) Performance appraisal system is needed in organization.

Agree 12
Strongly Agree 30
Disagree 6
Strongly Disagree 2

12% 4% 24% Agree

Strongly agree
Disagree
60% Strongly disagree

Interpretation: - It shows that most of the respondents say 60% strongly

agree with the need of Performance appraisal system in their organization.
24% of respondents agree, 12% disagree and 4% of respondents are strongly
disagreeing with the need of Performance appraisal system in their
organization.

48
 (2)Performance appraisal leads to identification of hidden
potential.

Agree 16
Strongly Agree 28
Disagree 4
Strongly Disagree 2

8% 4% Agree
32%
Stongly agree
Disagree
56% Strongly Disagree

Interpretation: - Most of the respondents say 56% are strongly agree, 32%
are agree, 8% are disagree and 4% are strongly Disagree that Performance
Appraisal leads to identification of hidden potential.

49
2. Performance appraisal is helpful in reducing grievances among
employees.

Agree 30
Strongly Agree 15
Disagree 3
Strongly Disagree 2

6% 4% Agree
Stongly agree
30% Disagree
60%
Strongly Disagree

Interpretation: - It shows that 60% respondents agree that Performance

Appraisal is helpful in reducing grievances among employees. Only 30%
are strongly with it. It means that most of the respondents are not believe
that Performance Appraisal is helpful in reducing grievances among
employees.

50
(4) Performance appraisal is helpful for employees’ personal
improvement.

Agree 15
Strongly Agree 28
Disagree 4
Strongly Disagree 3

8% 6% Agree
30%
Stongly agree
Disagree
56% Strongly Disagree

Interpretation: - It shows that most of the respondents say 56% believe that
Performance appraisal is helpful for employees’ personal improvement. 30%
agree with it and other respondents not much believe in it. 8% Disagree and
6% strongly disagree with it.

(5) Performance appraisal helps to identify strengths and

weaknesses of employees.

51
 Agree 12
Strongly Agree 35
Disagree 2
Strongly Disagree 1

4%2% 24% Agree

Stongly agree
Disagree
70% Strongly Disagree

Interpretation: - 70% respondents strongly agree that Performance

appraisal helps to identify strengths and weaknesses of employees. It means
that most of the respondents believe in it and 24% only agree with it. Only
few respondents not agree with it.

52
(6) Promotion is purely based on Performance appraisal.

Agree 30
Strongly Agree 12
Disagree 6
Strongly Disagree 2

12% 4%
Agree
Stongly agree
Disagree
24% 60%
Strongly Disagree

Interpretation: - It shows that 60%respondents only agree that Promotion is

purely based on Performance appraisal. It means that most employees don’t
much believe in it. Only 24% respondents strongly agree with it. 12%
Disagree and 4% strongly disagree with it.

53
 (7) Performance appraisal data helps in identifying employees’
career planning and development.

Agree 12
Strongly Agree 32
Disagree 3
Strongly Disagree 3

6% 6%
24%
Agree
Stongly agree
Disagree
Strongly Disagree
64%

Interpretation: - Most of the respondents say 64% strongly agree that

performance ratings should do periodically. 24% respondents only agree
with it. Other respondents don’t agree with it.

54
(8) Management fixes salary through Performance ratings.

Agree 25
Strongly Agree 15
Disagree 8
Strongly Disagree 2

4%
16%
Agree
Stongly agree
50% Disagree
Strongly Disagree
30%

Interpretation: - It shows that half of the respondents agree that

management fixes salary through Performance ratings. Only 30%
respondents strongly agree with it. 16% disagree and 4% strongly disagree
with it.

55
(9) Performance ratings help to fix increment.

Agree 28
Strongly Agree 18
Disagree 3
Strongly Disagree 1

6% 2%
Agree
Stongly agree
36% Disagree
56%
Strongly Disagree

Interpretation: - Most respondents say 56% agree that Performance ratings

help to fix increment. Only 36% strongly agree with it. 6% disagree and 2%
strongly disagree with it. It means that nearly half of the respondents believe
in that Performance ratings help to fix increment.

56
(10) Performance rating is helpful for management to provide
employee counseling.

Agree 27
Strongly Agree 15
Disagree 5
Strongly Disagree 3

10% 6%
Agree
Stongly agree

54% Disagree
30% Strongly Disagree

Interpretation: - It shows that nearly half of the respondents say 54% agree
that Performance rating is helpful for management to provide employee
counseling. Only few employees say 30% strongly agree with it. 10%
disagree and 6% strongly disagree with it.

57
 Part-B

(1) What should be the method of Performance Appraisal?

360 Degree Appraisal 8

Rating Method 32
Team Appraisal 4
Assessment Centres 6

12% 16%
8% 360 Degree Appraisal
Rating Method
Team Appraisal
Assessment Centres
64%

Interpretation: - Most of the respondents say 64% prefer the Rating

method. They believe that only this method is suitable for their appraisals.
Some respondents prefer 360 degree appraisal, some prefer team appraisal
and other prefer assessment centres.

58
(2) How Performance appraisal affects the productivity of
employees?

Motivated 15
Indifferent 25
Demotivated 8
Can’t say 2

4%
16%
30%
Motivated
Indifferent
Demotivated
Can't say
50%

Interpretation: - It shows that half of the respondents say that Performance

appraisal is indifferent with the employees. 30% say that Performance
appraisal motivated them. 16% believe that Performance appraisal
demotivated them.

59
(3) Who should do the Performance appraisal?

Immediate Superior 30
Subordinate 15
Self Appraisal 3
Consultant 2

4%
16% 30% Immediate Superior
Subordinate
Self Appraisal
Consultant
50%

Interpretation: - It shows that half of the respondents say that subordinate

should do the Performance appraisal. 30% prefer immediate superior. 16%
prefer self appraisal and 4% prefer consultant.

60
(4) The time period of conducting Performance appraisal should be

Yearly 32
Half Yearly 12
Quarterly 3
Monthly 3

6% 6%

Yearly
24% Half Yearly
Quarterly
64% Monthly

Interpretation: - Most respondents say 64% prefer that the time period of
conducting Performance appraisal should be yearly. 24% prefer half yearly,
6% prefer quarterly and 6% prefer monthly.

61
 Findings

 Performance appraisal system carried out in the company improves

the productivity and personal improvements of employees.

 The company adopts Rating method of Performance appraisal which

is a good method for the employee’s appraisal.

 The performance data in the company diagnose the strengths and

weaknesses of the individuals that identify their training and
development needs of the future.

 The time period of conducting appraisal in the company is annually.

62
 Recommendations

 Employees’ salary and their increment should be purely based on their

performance ratings.

 Sometimes employees should give the chance of self-appraisal so that

the employee will encourage thinking about his/her strengths and
weaknesses as well as the barriers to effective performance.

 The time period of Performance appraisal should be on a continuous

basis like monthly or quarterly so that the employees can improve
themselves continuously.

 Management should try to maintain internal employees’ relations

through their performance data.

 Management should also provide feedback and communicate the

appraisal data to their employees on a regular basis.

63
Appendices

64
 Questionnaire

I am a student of MBA, doing the project on “Performance Appraisal

System at LPS Bossard” for the fulfillment of my course. For this, I need
your cooperation. I ensure you that all the information will keep safe and the
same will not be used for any other purpose.

Personal details:-

1. Name - ________________________

2. Age - (a) Below 25 (b) 25-40 (c) Above 40

3. Sex - (a) Male (b) Female

4. Income level- (a) up to 10000 (b) 10000-20000

(c) 20000-30000 (d) Above 30000

5. Contact No.- ______________

6. Email ID - ________________________

65
 Part A

1) A- Agree
2) SA- Strongly Agree
3) D- Disagree
4) SD- Strongly Disagree

1. Performance Appraisal System is needed in organization.

(a) A (b) SA (c) D (d) SD

2. Performance Appraisal leads to identification of hidden potential.

(a) A (b) SA (c) D (d) SD

3. Performance Appraisal is helpful in reducing

grievances among employees.

(a) A (b) SA (c) D (d) SD

4. Performance Appraisal is helpful for employees’ personal

improvement.

(a) A (b) SA (c) D (d) SD

5. Performance appraisal helps to identify strengths and weaknesses of

employees.

(a) A (b) SA (c) D (d) SD

66
6. Promotion is purely based on Performance appraisal.

(a) A (b) SA (c) D (d) SD

7. Performance appraisal data helps in identifying employees’ career

planning and development.

(a) A (b) SA (c) D (d) SD

8. Management fixes salary through Performance ratings.

(a) A (b) SA (c) D (d) SD

9. Performance ratings help to fix increment.

(a) A (b) SA (c) D (d) SD

10. Performance rating is helpful for management to provide employee

counseling.

(a) A (b) SA (c) D (d) SD

67
 Part B

1. What should be the method of Performance Appraisal?

(a) 360degree appraisal (b) Rating Method

(c) Team Appraisal (d) Assessment Centres

2. How Performance appraisal affects the productivity of employees?

(a) Motivated (b) Indifferent

(c) Demotivated (d) Can’t say

3. Who should do the Performance appraisal?

(a) Immediate superior (b) Subordinate

(c) Self appraisal (d) Consultant

4. The time period of conducting Performance appraisal should be

(a) Yearly (b) Half yearly

(c) Quarterly (d) Monthly

68
 References

 Agarwala, Tanuja, Strategic Human Resource Management, Oxford

University Press, New Delhi, pp 443-487.

 Kothari, C.R., Research Methodology, New Delhi, New Age

International Pvt. Ltd., Publishers, 2005

 <http:// www.google.co.in/>

 <http:// www.bossard.com/>

69
70