Tuesday 8 January 2019

Analyzing Performance Appraisal System

Appraisal is a continuous process and done annually as a formal exercise before completion of the financial year. Appraisal has tremendous motivational impact on people through meaningful feedback and is a powerful tool for recognition. This project explains performance appraisal system and tries to find out how efficiently Performance Appraisal is conducted. And if performance appraisal doesn’t meet its objective then, what are the factors causing failure.


In the business world investment is made in machinery, equipment and services. Quite naturally time and money is spent ensuring that they provide what their suppliers claim. In other words, the performance is constantly appraised against the results expected.

When it comes to one of the most expensive resources companies invest in, namely people, the job appraising performance against results is often carried out with the same objectivity. Each individual has a role to play and management has to ensure that the individual’s objectives translate into overall corporate objectives of the company. Performance Management includes the performance appraisal process which in turn helps identifying the training needs and provides a direction for career and succession planning.

What is Performance?

Performance is synonymous with behavior; it is what people actually do. Performance includes those actions that are relevant to the organizational growth and can be measured in terms of each individual’s proficiency (level of contribution). Effectiveness Performance refers to the evaluation of results of performance that is beyond the influence or control of the individual.

How is Performance managed?

Good performance by the employees creates a culture of excellence, which benefits the organization in the long run. The activity includes evaluation of jobs and people both, managing gender bias, career planning, and devising methods of employee satisfaction etc. the efforts are to make to generate the individual’s aspirations with the objectives of the organization. Organization has to clear the way of career advancements for talented and hardworking people. Fear of any kind from the minds of the employees should be removed so that they give best to their organization. Allow free flow of information. Communication network should be designed in such a way no one should be allowed to become a hurdle. This enables the managers to take correct decisions and that too quickly.

Why Performance Appraisal?

Today’s working climate demands a great deal of commitment and effort from employees, who in turn naturally expect a great deal more from their employers.  Performance appraisal is designed to maximize effectiveness by bringing participation to more individual level in that it provides a forum for consultation about standards of work, potential, aspirations and concerns.  It is an opportunity for employees to have significantly greater influence upon the quality of their working lives.  In these times of emphasis on “quality”, there is a natural equation: better quality goods and services from employees who enjoy better quality “goods and services” from their employers.

Performance appraisal must be seen as an intrinsic part of a manager’s responsibility and not an unwelcome and time-consuming addition to them.  It is about improving performance and ultimate effectiveness.

Performance appraisal is a systematic means of ensuring that managers and their staff meet regularly to discuss post and present performance issues and to agree what future is appropriate on both sides.

This meeting should be based on clear and mutual understanding of the job in question and the standards and outcomes, which are a part of it.  In normal circumstances, employees should be appraised by their immediate managers on one to one basis. Often the distinction between performance and appraising is not made.  Assessment concerns itself only with the past and the present.  The staff is being appraised when they are encouraged to look ahead to improve effectiveness, utilize strengths, redress weaknesses and examine how potentials and aspirations should match up.

It should also be understood that pushing a previously prepared report across and desk cursorily inviting comments, and expecting it to be neatly signed by the employee is not appraisal - this is merely a form filling exercise which achieves little in terms of giving staff any positive guidance and motivation.


  • Improving the ability of the jobholder;

  • Identifying obstacles which are restricting performance

  • Agreeing a plan of action, that will lead to improved performance.

It is widely accepted that the most important factor in organization effectiveness is the effectiveness of the individuals who make up the organization. If every individual in the organization becomes more effective, then the organization itself will become more effective. The task of reviewing situations and improving individual performance must therefore be a key task for all managers.

For appraisal to be effective, which means producing results for the company, each manager has to develop and apply the skills of appraisal.

These are: -

  • Setting standards on the performance required, which will contribute to the achievement of specific objectives

  • Monitoring performance in a cost –effective manner, to ensure that previously agreed performance standards are actually being achieved on an ongoing basis

  • Analyzing any differences between the actual performance and the required performance to establish the real cause of a shortfall rather than assume the fault to be in the jot holder.

  • Interviewing having a discussion with the jobholder to verify the true cause of a shortfall, a developing a plan of action, which will provide the performance, required

Appraisal can then become a way of life, not concerned simply with the regulation of rewards and the identification of potential, but concerned with improving the performance of the company. The benefits of appraisal in these terms are immediate and accrue to the appraising manager, the subordinate manager/employee, and to the company as a whole


Statement of the Problem:

Performance appraisal is a process of assessing, summarizing and developing the work performance of an employee. In order to be effective and constructive, the performance manager should make every effort to obtain as much objective information about the employee's performance as possible. Low performance can push the organization back in today’s tough competition scenario. The project is aimed at analyzing the performance appraisal in companies.


The various objectives of our research are as follows:

  1. Examine why an appraisal system is important.

  2. To study existing appraisal system in various organizations across sectors like BPO, IT & Telecom.

  3. Find the expectation of appraiser and appraise

  4. To determine the satisfaction level of the appraise

  5. Reveal the various loopholes in the appraisal system if any

  6. Find the consequences of an inappropriately conducted appraisal system

Research Methodology:

  • Data source: Primary as well as Secondary.

  • The research approach: Survey Method.

  • Research instrument: Questionnaire.

  • The respondents: The Managers & Employees of various organizations.

The primary data was collected with the help of survey information. A concise questionnaire was prepared keeping in mind the information specifications.


Findings from Appraise Survey

Expectations from Appraisal System :

Respondents were asked to rank the various options according to their preference. (Rank 1 being most preferred and rank 6 being least preferred). Then scoring was given on the basis of ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on.

ParticularScoreOverall Rank
Salary Administration and Benefits871
Determination of promotion or transfer1092
Assistance in goal2283
Guideline for training plan2544
An insight into your strengths and weakness3125
Decision to layoff3546

From the above table it can be seen that employees expect “Salary Administration and Benefits” to be the main reason for conducting a Performance Appraisal. “Decision to layoff” is of least importance as per the appraise.

Awareness about Responsibilities:

From the graph it can be seen that majority of employees are aware about their responsibilities, which implies that the appraisers have efficiently communicated to the appraises all the parameters that will be taken into account during appraisal.

From the graph it can be seen that majority of employees are aware about their responsibilities, which implies that the appraisers have efficiently communicated to the appraisers all the parameters that will be taken into account during appraisal.

Satisfaction Level among appraise regarding Appraisal System:

From graph it can be seen that majority of the respondents are satisfied with the appraisal system. Only a meager 30% were dissatisfied with the Performance Appraisal programs.

Awareness about performance ratings:


This clearly shows that majority of the employees are not aware about the performance ratings that are taken into account while conducting a performance appraisal.

Allowing self ratings

Self rating performance management


From graph it can be seen that majority of respondents want self rating to be a method of conducting the appraisals .

Chance to rate your own performance

chance to rate your own performance


From the graph we can see that majority of the employees are not given a chance to rate their own performance in the organization.

Timing of Appraisals

timing of Appraisals[


This shows that most of the organisations conduct their Performance Appraisal programs annually. A very small percentage of the organisations conduct Performance Appraisals on a half yearly basis. The share of the quarterly and monthly appraisals are extremely minimal.

Credibility of Appraiser

This shows that according to the employees/appraisers the credibility of the appraiser is extremely important and it has an effect on the overall Performance appraisal program.

Complaint channel for employees

This shows that there is no proper complaint channel existing in the organisations for the employees who are dissatisfied with the performance appraisal system.

Findings from Appraiser Survey

Purpose of Appraisal

purpose of Appraisal system


Respondents were asked to rank the various options according to their preference. (Rank 1 being most preferred and rank 6 being least preferred). Then scoring was done on basis of these ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on. Then the total score for each purpose was calculated and overall ranking was given.

ParticularScoreOverall Rank
Determination of promotion or transfer 241
Salary Administration and Benefits272
Decision to layoff 423
Guideline for training plan694
Assistance in goal 725
An insight into your strengths and weakness816

From table it can be seen that appraiser considers “Determination of promotion or transfer” & “Salary administration and Benefits” as two important factors for conducting an Appraisal.

Appraisal System

Appraisal System


In this question appraiser was asked to rate how helpful the appraisal system is, from the graph it can be seen that majority of appraisers have rated 5,4 & 3 which implies that Performance Appraisal system is very helpful in Planning their work. Also most of the appraisers are satisfied with the appraisal system.

Support from subordinate

This question was asked to find out how helpful appraisal system is in communicating the support that appraiser needs from appraise. From results it is seen that the performance appraisal system is very helpful in communicating the support and help needed by  the appraiser from the appraiser.

Type of Appraisal System

From results its clear that majority of companies prefer to use “360 degree feedback” system for Performance Appraisal. As 360 degree feedback gives feedback of appraisee from everyone interacting with him, it is more reliable and hence most preferred.

Performance Appraisal criteria

Performance Appraisal criteria
Performance Appraisal criteria


From results we can see that Qualitative Process is considered as the most important criteria for which the Performance appraisal programs are carried out,  which shows that companies consider Qualitiy of product & service and Customer satisfaction as most important factors.

Timing of Appraisals

Timing of Appraisals
Timing of Appraisals

From graphs we can see that most of companies conduct appraisals on annual basis. Some companies conduct quarterly also.

Effect of poor Appraisal System

It can be seen from results that most of the employees get De-motivated because of a poorly conduct appraisal. To some extent employees don't coordinate with their team members. Thus resulting in reduction of output.

Communication between top management and staff

All appraisers totally agree that performance appraisal helps in communicating the top management plans and business goals to staff at lower level.


From the survey results its evident that both the appraisee’s and appraisers expectation from Performance appraisal system are the same i.e. “Determination of Promotion or Transfer” and “Salary Administration and Benefits”.  Hence a single performance appraisal system can satisfy needs of both the Appraiser and appraisee.

Therefore the Performance appraisal program would be design in such a way that the appraiser would be able to analyse the contribution of the employee to the organisation periodically and all the employees who have been performing well would be reward suitably either by an increase in the salary or a promotion.
Through this the appraiser can also motivate the employees who felt that they had no growth in the organisation.

And serves the purpose of employee development.Thus performance appraisals can be use as a significant tool foe career planning.

Analyzing ones own strengths and weaknesses is the best way of identifying the potentials available, rather than the other person telling. Self-appraisal is a tool to analyze oneself. One of the most important findings was that almost all the employees want self-rating to be a part of performance appraisal program carry out by the organisation. From the responses of the appraiser we can also see that Self rating is not encourage by the organisations.

This could therefore be an important factor which leads to dissatisfaction among the appraisers.

At the end of the year of the appraisal period the appraisal process should begin with self-appraisal by every employee.  To appraise ones own self on key performing targets and qualities, the appraisee would go through a process of reflection and review.  It is an establish fact that change is faster when it is self initiate.  If any employee has to improve or do better, he must first feel the need to do so.  Reflection and review is a process that enables him to feel the need and improve more upon his strengths and weaknesses

Another point to be noticed is that even in the other forms of Performance Appraisal also the employees expect that they should be given a chance to rate their own performance. This can allow the employee to analyze ones own performance which gives new insights on how one is performing and what are the critical points where he has to put his best and improve upon
The existence of a proper complain channel was also of utmost importance to the appraisees.

They should be given a chance to convey their grievances to the top management.

The appraisees also expect that their comments and suggestions should be taken in to account while conducting the appraisals. This expectation is not fulfill as the appraisers do not take their comments and suggestions into consideration. Therefore they should look into this matter before it leads to dissatisfaction among the employees.

The results also indicate that the there is no communication of top management plans and business goal to the appraisee. The appraisers on the other hand feel that the goals and plans have been clearly communicate to the appraisees. Communication is very essential for any system to function efficiently. Therefore the appraisers should look into this matter and see to it that the goals and plans are communicate effectively.
The findings suggest that for success of Appraisal system the credibility of appraiser is of utmost importance.

As per the Appraiser, a poorly conduct appraisal system would lead to demotivate and ineffective teamwork which will result in inefficient functioning and low productivity in the organization. Therefore, if at all they feel there is dissatisfaction among the appraiser's they should motivate them. Achievement, recognition, involvement, job satisfaction and development can motivate the employees to a large extent. Along with this satisfactory working conditions and appropriate awards also play an important role.

Also a majority of employees were satisfy with the current appraisal system although they requested for some changes.
Most of the employees were also not clear about the criteria on which ratings were given to each employee while conducting the performance appraisal. Instead of secrecy there should be openness.

Because of lack of communication, employees may not know how they are rated. The standards by which employees think they are being judge are sometimes different from those their superiors actually use. Proper communication of these ratings can help the employers achieve the level of acceptability and commitment which is require from the employ.

From the survey we can also derive that the appraisee’s expect a post appraisal interview to be conduct wherein they are given a proper feedback on their performance and they can also put forward their complaints if any. The appraisal should also be follow up with a session of counseling which is often neglect in many organizations. Counseling involves helping an employee to identify his strengths and weaknesses to contribute to his growth and development. Purpose is to help an employee improve his performance level, maintain his morale, guide him to identify and develop his strong points, overcome his weak points, develop new capabilities to handle more responsibilities, identify his training needs.


With rewards being directly link to achievement of objectives, goal setting. The Performance Appraisal assumes utmost importance. The Performance Appraisal System has been professionally design and it is monitor by HRD. The implementation is the responsibility of each and every employee along with their supervisor. There should be adequate training to the evaluate that will go a long way in answering the quality of Performance Appraisal. In conclusion, a Performance Appraisal is a very important tool use to influence employees. A formal Performance review is important as it gives an opportunity to get an overall view of job performance and staff development. It encourages systematic and regular joint-stocking and planning for the future. Good performance reviews therefore don’t just summarize the past they help determine future performance.

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