Case Study of HRM in Kudremukh Iron Ore Company Limited

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Human Resource Management is a management function that helps Managers to Recruit, Select, Train and Develop members for an organization. Performance appraisal may be understood as the assessment of an Individual's performance being measured against such factors as job knowledge,

Quality and quantity of output, initiative, leadership abilities, supervision,

Dependability, co-operation, judgement, versatility, health and the like.

The Performance Appraisal System needs to be very transparent and

Helpful both to the employees and to the organization. The need is to get a

Feedback from appraisers and appraises, working in the organization, about the

Current state of the PAS. Only after analyzing the current state of PAS, the

Human resource managers can go to the next step of improvements in PAS. A

survey is therefore required.

The research is undertaken to ascertain the views/opinions of the Raters

and Rates working with the company and to suggest appropriate modifications

about the existing PAS

Structured questionnaire will be prepared and discussed personally with

the respondents to get their responses.

The sample size will be restricted to 50 employees chosen on random

sampling method. (Stratified)

The findings indicate that the employees in general, the raters and the

rates are very well aware of the appraisal system followed in the company.

The knowledge about the appraisal system is also found to be satisfactory.

But there exists a gap, about the problems encountered during the appraisal by

the raters. The ratees opine that the Performance evaluation is done in an

Unbiased manner. But the responses of the raters show that they encounter

problems like central tendency and halo effect. A suitable recommendation

needs to be provided in this front.

To conclude incorporating a suitable modification in the existing

performance appraisal system can reduce the problems faced by the raters.

Some of the options available for a better performance system are 360-degree

evaluation; Competency based assessment, and Skills Audit.

Human Resource Management is a management function that helps

managers to Recruit, Select, Train and Develop members for an organization.

HRM is concerned with the people's dimension in organizations.

HRM is a series of integrated decisions that form the employment

Relationship; their quality contributes to the ability of the organizations and the

Employees to achieve their objective. HRM is concerned with the people

Dimension in management. Since every organization is made up of people,

acquiring their services, developing their skills, motivating them to higher levels

of performance and ensuring that they continue to maintain their commitment to

the organizational objectives. This is true, regardless of the type of organizationgovernment,

business, education, health, recreation, or social action.

Thus, HRM refers to set of programmes; functions and activities designed

and carried out in order to maximize both employee as well as organizational

effectiveness.

The scope of HRM is indeed vast. It is summarized as shown below:

C:\Users\saheed\Desktop\strategic%20hrm.jpg

An organization's goals can be achieved only when people put in their

best efforts.

How to ascertain whether an employee has shown his or her best

performance on a given job? The answer is Performance appraisal. Employee

assessment is one of the fundamental jobs of HRM, but not an easy one though.

In simple terms, performance appraisal may be understood as the

assessment of an individual's performance being measured against such factors

as job knowledge, quality and quantity of output, initiative, leadership abilities,

supervision, dependability, co-operation, judgement, versatility, health and the

like. Assessment should not be confined to past performance alone. Potentials of

the employee for future performance must also be assessed.

The second definition includes employees' behaviour as part of the

assessment. Behaviour can be active or passive-do something or do nothing.

Either way, behaviour affects job results. The other terms used for performance

appraisal are: performance rating, employee assessment, employee

performance review, personnel appraisal, performance evaluation, employee

evaluation and (perhaps, the oldest of the terms used) merit rating. In a formal

sense, employee assessment is as old as mankind. Nor performance appraisal is

done in isolation. It is linked to job analysis as shown:

Job analysis sets out requirements, which are translated into performance

standards, which in turn form the basis for performance appraisal.

Data relating to performance assessment of employees are recorded,

stored, and used for several purposes. The main purposes of employee

assessment are:

To effect promotions based on competence and performance

To confirm the services of probationary employees upon their completing

the probationary period satisfactorily.

To assess the training and developmental needs of employees.

To decide upon a pay raise where (as in the unorganized sector) regular

pay scales have not been fixed.

To let the employees know where they stand in so far as their

performance is concerned and to assist them with constructive criticism

and guidance for the purpose of their development.

To improve communication. Performance appraisal provides a format for

dialogue between the Superior and the subordinate, and improves

understanding of personal goals and concerns. This can also have the

effect of increasing the trust between the rater and the ratee.

Finally, performance appraisal can be used to determine whether HR

programmes such, as selection, training and transfers have been effective

or not.

1. Developmental uses

2. Administrative uses/decisions

3. Organizational maintenance/objectives and

4. Documentation purposes.

Performance appraisals are subject to a wide variety of inaccuracies and

biases referred to as 'rating errors'. These errors occur in the rater's

observations, judgement, and information processing, and can seriously affect

assessment results. The most common rating errors are

Leniency or severity

Central tendency

Halo effect

Rater effect

Primacy and Recency effects

Perceptual set

Performance dimension behaviour

Spill over effect

Status effect

Solving raters problems

The best way to overcome these problems is to providing training to the raters.

From a practical point of view, several factors, including the extent to which pay

is related to performance ratings, union pressure, turnover rates, time constraints

and the need to justify ratings may be more important than training, influencing

the ratings that raters actually give. This means that improving rating systems

involves not just training the raters but rectifying outside factors such as union

pressure. And it means that a rater training, to be effective, should also address

real-life problems such as the fact that union representatives will try to influence

supervisors to rate everyone high.

Training helps to improve the appraisal system by overcoming distortion that

occurs due to the raters' errors such as halo, leniency, central tendency and bias.

Training of raters must help strengthen the factors that tend to improve accuracy

Kudremukh Iron Ore Company Limited

M.P.Birla Institute of Management

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of ratings and weaken those that lower the accuracy of the performance

measurement.

What should be rated?

One of the steps in designing an appraisal programme is to determine the

evaluation criteria. It is obvious that the criteria should be related to the job. The

six criteria for assessing performance are:

Quality

Quantity

Timeliness

Cost effectiveness

Need for supervision

Interpersonal impact

These criteria relate to past performance and behaviour of an employee.

The first four - quality, quantity, timeliness and cost effectiveness are objective in

nature. The last two - need for supervision and interpersonal impact are

subjective. Objective measures are quantifiable and are therefore highly useful in

measuring the performance of an employee. But performance of employees

should not always be evaluated against quantifiable measures. Subjective

measures are dependent upon human judgement. They are prone to different

kind of errors stated earlier such as leniency or severity, central tendency, halo

and the like. To be useful, subjective measures must be based on a careful

analysis of the behaviour viewed as necessary and important for effective job

performance.

Kudremukh Iron Ore Company Limited

M.P.Birla Institute of Management

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Timing of Evaluation

How often should an employee be assessed? The general trend is to

evaluate once in three months, or six months, or once in a year. 70% of the

organizations conduct performance appraisal once a year, according to a survey

conducted in 1997 by Arthur Anderson. Newly hired employees are rated more

frequently than the older ones. Frequent assessment is better than phased

evaluation. Feedback in the latter is delayed and the advantage of timely

remedial measures by the employee is lost. Frequent evaluation gives constant

feedback to the ratee, thus enabling him/her to improve performance if there is

any deficiency. The performance of trainees and probationers should be

evaluated at the end of respective programmes.

Methods of appraisals

The last to be addressed in the process of designing an appraisal

programme is to determine method(s) of evaluation. Numerous methods have

been devised to measure the quantity and quality of employee's job

performance. Each of the methods discussed could be effective for some

purposes, for some organizations. None should be dismissed or accepted as

appropriate except as they relate to particular type of employees. Broadly all

approaches can be classified into

Past -oriented methods and

Future oriented methods

Each group has several techniques. Some of them are explained in the

following section.

Behavioral Anchored Rating Scales - The term used to describe a

performance rating that focuses on specific behaviors or sets as indicators of

Kudremukh Iron Ore Company Limited

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26

effective or ineffective performance, rather than on broadly stated adjectives

such as "average, above average, or below average". Other variations are:

Behavioral observation scales

Behavioral expectations scales

Numerically anchored rating scales

Checklists - The term used to define a set of adjectives or descriptive

statements. If the rater believes the employee possessed a trait listed, the rater

checks the item; if not, the rater leaves the item blank. Rating score from the

checklist equals the number of checks.

Critical Incident Technique - The term used to describe a method of

performance appraisal that makes lists of statements of very effective and very

ineffective behavior for employees. The lists are combined into categories, which

vary with the job. Once the categories are developed and statements of effective

and ineffective behavior provided, the evaluator prepares a log for each

employee. During the evaluation period, the evaluator records examples of

critical behaviors in each of the categories, and the log is used to evaluate the

employee at the end of the evaluation period.

Forced Choice Method - This appraisal method has been developed to prevent

evaluators from rating employees to high. Using this method, the evaluator has to

select from a set of descriptive statements, statements that apply to the

employee. The statements are weighted and summed to at, effectiveness index.

Forced Distribution - The term used to describe an appraisal system similar to

grading on a curve. The evaluators are asked to rate employees in some fixed

distribution of categories. One way to do this is to type the name of each

employee on a card and ask the evaluators to sort the cards into piles

corresponding to rating.

Kudremukh Iron Ore Company Limited

M.P.Birla Institute of Management

Graphic Rating Scale - The term used to define the oldest and most widely

used performance appraisal method. The evaluators are given a graph and

asked to rate the employees on each of the characteristics. The number of

characteristics can vary from one to one hundred. The rating can be a matrix of

boxes for the evaluator to check off or a bar graph where the evaluator checks off

a location relative to the evaluators rating.

Narrative or Essay Evaluation - This appraisal method asks the evaluator to

describe strengths and weaknesses of an employee's behavior. Some

companies still use this method exclusively, whereas in others, the method has

been combined with the graphic rating scale.

Management by Objectives - The management by objectives performance

appraisal method has the supervisor and employee get together to set objectives

in quantifiable terms. The appraisal method is worked to eliminate

communication problems by the establishment of regular meetings, emphasizing

results, and by being an ongoing process where new objectives have been

established and old objectives are modified as necessary in light of changed

conditions.

Paired Comparison - The term used to describe an appraisal method for

ranking employees. First, the names of the employees to be evaluated are

placed on separate sheets in a pre-determined order, so that each person is

compared with all other employees to be evaluated. The evaluator then checks

the person he or she feels has been the better of the two on the criterion for each

comparison. Typically the criterion is the employees over all ability to do the

present job. The number of times a person is preferred is tallied, and the tally

developed is an index of the number of preferences compared to the number

being evaluated.

Kudremukh Iron Ore Company Limited

M.P.Birla Institute of Management

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Ranking - The term ranking has been used to describe an alternative method of

performance appraisal where the supervisor has been asked to order his or her

employees in terms of performance from highest to lowest.

Weighted Checklist - The term used to describe a performance appraisal

method where supervisors or personnel specialists familiar with the jobs being

evaluated prepared a large list of descriptive statements about effective and

ineffective behavior on jobs.

Performance Interview

Performance Interview is another step in the appraisal process. Once the

Appraisal has been made of employees, the raters should discuss and review the

performance with the ratees, so that they will receive feedback about where they

stand in the eyes of the superiors. Feedback is necessary to effect improvement

in performance, especially when it is adequate. Specifically Performance

Interview has three goals

To change behaviour of employees whose performance does not meet

organizational requirements or their own personal goals.

To maintain the behaviour of employees who perform in an acceptable

manner, and

To recognize superior performance behaviour so that they will be

continued

Use of appraisal data

The final step in the evaluation process is the use of evaluation data. The

HR department must use the data and information generated through

performance evaluation. In one way or the other, data and information outputs of

a performance appraisal programme can critically influence employer-employee

reward opportunities. Specifically the data and information will be useful in the

following areas of HRM

Kudremukh Iron Ore Company Limited

M.P.

Remuneration administration

Validation of selection programmes

Employee training and development programmes

Promotion, transfer and lay-off decisions

Grievance and discipline programmes

HR planning

Employees have become cynical about the performance management

process.

The management can

Reinforce Positive Behaviors: "Reinforcing positive behavior will

increase the probability of that behavior."

Uncouple Employee Development and Compensation Discussions:

Salary reviews should occur separately on an annual basis.

Make Certain that the Performance Standards are Clear and

Achievable: Performance measures must be made crystal clear. Use

quantitative rather than qualitative measures whenever possible.

Make Sure the Performance Measures are Relevant: Each

performance measure should be relevant to each particular employee.

Provide Team and Customer Feedback: Performance feedback from

team members and customers is often much more useful than supervisory

feedback.

In summary, most employees find their performance reviews useless, but

there are many steps that management can take to make them much more

meaningful.

Kudremukh Iron Ore Company Limited

M.P.Birla Institute of Management

Title: How to Improve the Effectiveness of Performance Management and

Appraisal by Overcoming the Root Cause of the Problem

Author: Julie Freeman

Website referred: www.hrmguide.com

This article explores why existing formal and informal approaches to

Employee Performance Management and Appraisal (EPMA) tend to work well

enough in theory, but fail to meet expectations in practice.

Organizations encourage, even urge, their managers to talk informally with

their employees about their performance on an ongoing basis. However, this

rarely happens. Moreover, even when managers do talk to their employees, the

communication often falls short of having the desired effect on their morale,

motivation, and productivity. Despite our best efforts to date, managers still report

that they are uncomfortable giving feedback and discussing performance with

their employees, especially if poor performance is a factor. It identifies the root

cause of the problems associated with giving and discussing. Performancerelated

information in formal and informal settings and presents a solution to

overcome them. Various suggestions for how the solution can be applied to meet

differing individual or corporate needs are also outlined.

Only about 10 per cent of the managerial population has a natural ability

to discuss performance with their employees in an effective way.

According to the author, the root cause of the problem does not appear to

lie in a lack of ability within the managerial population to honestly and accurately

assess and evaluate an employee's performance and potential. Actually most

managers can do this very well. The root cause of the problem is that, to a

greater or lesser extent, the vast majority of managers cannot actually translate

what they know about that performance into useful information and then

communicate it to the employee in an effective and practical way regardless of

the method they are asked to use. The proposed solution for such a problem

according to the author does not lie in trying to improve the technical elements of

any given approach.

The Performance Appraisal involves 4 persons in a typical evaluation

The employee (referred as Appraisee)

Reporting officer

First Reviewing officer

Second Reviewing officer

Kudremukh Iron Ore Company Limited

M.P.Birla Institute of Management

31

The Employee is the person whose performance is to be rated.

Reporting Officer is the immediate Supervisor or the head under which the

employee works.

First Reporting officer and Second Reporting officer are the officers in the

subsequent levels of hierarchy in the organization (refer annexure).

The appraisal system is divided into two parts:

A. Self Appraisal:

To be filled by the appraisee. It gives an opportunity for reporting his/her

normal job responsibilities, special tasks handled, shortcomings in performance,

aptitude etc. It carries a maximum of 5 credit points.

B.Performance Appraisal:

a) The appraisal is in respect of 12 traits, which encompasses all

essential areas of work. Evaluation of each trait is intended to

reflect the potential in the individual and his performance in different

spheres of work.

b) Each trait has been given a weightage and is to be assessed on a

5opint Rating Factor (RF). The relevant RF is to be multiplied by

the weightage points by respective RF tick [Â¥@_PDUNHG_ E\_ WKH_

Reporting officer, First Reviewing officer and Second reviewing

officer.

c) Wherever an employee is assigned a RF of 1 or 5, the appraiser

should substantiate his rating with additional details. Where an

employee has been assigned a RF of 1 or 2, the appraiser should

indicate the efforts made by them to remove the deficiency during

that year. (Separate sheet to be attached if necessary.)

d) For the purposes of promotion, the total credit points given by

Reporting Officer, First Reviewing Officer and Second Reviewing

Officer will be given weightage @ 20%, 40% and 40% respectively.

e) The maximum credit points that can be earned by an Appraisee is

125 and the categorization at different credit points is as under:

101 and above credit points = Outstanding

76 to 100 credit points = Very Good

51 to 75 credit points = Good

26 to 50 credit points = Average

Less than 26 credit points = Poor

Kudremukh Iron Ore Company Limited

M.P.

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