Performance appraisal has been subject to many major changes in the last few decades. This has been mainly due to the large-scale organizational change rather than theoretical advancements in the study of performance appraisal. Particularly prominent here are the advent of downsizing, decentralization and delayering, flexibilisation of the workforce, teamwork, cultural changes and managerial initiatives such as total quality management, business process engineering, competency and in particular investors in people. Organizations that are recognized as investors in people are significantly more likely to have a performance appraisal scheme in use (Cully et al, 1999). Changes in the reward systems have also fuelled the growth and development of performance appraisal systems. In most cases performance appraisal is closely integrated with harmonization and the increased use of merit and performance based pay. Integrated reward systems are strongly associated with the growth of performance appraisal.
1.1 SCOPE AND BACKGROUND OF STUDY:
From the new organizational context, there are two implications surrounding the process of performance appraisal. First, it is not justifiable to expect those appraisal schemes operating decades ago to be effective in organization today. Second, the new developments have not put an end to the process but instead have enhanced its contribution to helping achieve organizational objectives and also have stimulated experimentation and innovation in its practice. In the current organizational context, performance appraisal has become more widespread. It has grown so much that even organizations that were previously not using it has come forward to use it. In particular, it has moved down organizational hierarchy to encompass blue collar, secretarial and administrative staff and from the private and public sector. New forms of appraisal have emerged and are seen to be ground breaking in the organizational context. However, it was the old forms that were dusted down and re-emerged in new forms.
1.2 ESSENCE OF APPRAISAL:
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The essence of appraisal lies on the purpose of its use as per the organizational requisites. Organizations use performance appraisal for a wide range of different purposes. The most commonly reported use of performance appraisal system is listed below;
Clarifying and defining performance expectations.
Identifying training and development needs.
Providing career counseling
Improving individual, team and corporate performance
Facilitating communication and involvement
Allocating financial rewards
Motivating and controlling employees
It was suggested that the more judgmental and 'harder' forms of performance appraisal are on the increase and that 'softer' largely developmental approaches are declining (Gill 1977; Long 1986; Armstrong and Baron 1998). Thus performance appraisal has shifted from career planning, identifying career potential, reward setting to a much broader context helping organizational performance. Here the arrival of flatter organizations has given rise to the need to uncouple, to some extent at least, performance appraisal and promotion while competitive pressure have emphasized the need to incentivize improvements in short term performance (Snape & Tom Redman 2006). However, there are both advantages and disadvantages to such broad demands upon performance appraisal systems. The main use or such a performance appraisal system is that, it enables to integrate various areas of HRM into a coherent package of practices. More effective HRM outcomes are possible by providing integration between performance and rewards and development needs and succession planning. There are also critiques surrounding performance appraisal systems that they are too ambitious in that managers expect them to be able to accommodate a very wide range of purposes. The breadth of use thus results in appraisal becoming a 'blunt instrument that tries too much'. Further, many purposes of appraisal are seen as being in conflict. However, appraisal is used as one element of a much broader performance management system.
The principle aim of the work is to carry out a detailed analysis of the employee appraisal methods and to determine its effectiveness in achieving high organizational performance. The base for the dissertation relies on the concept of achieving organizational performance through employee appraisal.
To study the performance management system within the organization and its effectiveness in improving organizational performances.
To identify how reward is related with performance in the appraisal process.
1.3 Significance of study:
In the growing countries like India there is a wide role of HR in top organizations which decide the country's economy. There is a great need to harness effective yield from all the employees in order to gain competitive edge towards the competing organizations. Infosys can be taken as an example. With its head quarters located in Mysore, India, It operates worldwide as a multinational company. At the current scenario there is a great need for the company to adopt a structured or right way of employee appraisal method to increase the employee's efficiency. This study will throw light into appraisal done in a true way and not by any means on wrong judgment accompanied by partiality or by social relationship towards the employee. In this case the employees and the organization have a mutual bond in competing towards its competencies.
1.4 Statement of problem:
Always on Time
Marked to Standard
This study focuses mainly on employee appraisal structural standard to boost the company's performance .Following questions arose during this scenario.
What performance appraisal techniques can be used to improve the management performance in an organization?
How can human resource team make effective use of all the employee's capabilities to the fullest through employee appraisal?
What sought of a reward process would be required to the employees in order to continue yielding high measures of performance through performance appraisal.
H1: Does structured and standard Employee appraisal has a positive and effective impact on the growth and competitive edge of the employee and organization as well.
Reward process motivates the employees to a very high level to perform very efficiently.
1.6 Scope and delimitation of study:
This scope is delimited to IT organizations which are deciding the growth of Indian economy and business overseas.
CHAPTER - 2 LITERATURE REVIEW:
The researcher has taken effort to go through a number of books, press release and online journals in order to support this research. The facts and the literature cited will bear its value until date. The literature review will contain a numerous amount of literature support from other Authors and researchers who had proved other facts in the human resource department.
Human resources as we know are the most important aspect of any organization and thereby it is not only important to acquire appropriate and quality people but also to manage the employees. It is necessary to ensure the development of skills and competencies and also to achieve consistency in performances, with the achievement of organizational objectives. I understand it is necessary for every employee to not only know his or her duties and responsibilities but also their required standards of performance. Performance management is a holistic approach which combines and communicates organizational aims, team and individual objectives, effective processes for measurement and assessment, rewards and performances, positive feedback and support for employees to enhance their skills needed to contribute towards organizational success.
2.2 Related Literature:
Definitions of performance management include;
A process which contributes to the effective management of individuals and teams, in order to achieve high levels of organizational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing which will ensure that it is achieved (Armstrong and Baron, 2004).
A systematic approach to improving individuals and team performance in order to achieve organizational goals â€¦ the approach taken depends on the organization: its culture, its relationship with employees and the types of job that they do (Hendry et al., 1997).
To improve strategic focus and organizational effectiveness through continuously securing improvements in the performance of individuals and teams. ( Philpott and Sheppard,1992 ).
Although, these above said definitions recognizes performance management process as a design developed and implemented within the context of organizational structure and culture. Bones (1996) has given an interesting different view point, whereby he mentions that performance does not need managing but requires encouraging, developing, supporting and sustaining. Guest D (2000) says that it's very important to achieve employee commitment for the achievement of positive organizational outcomes.
In recent years due to the effect the performance management and appraisal in achieving high performance by the organization, many organizations have started to develop an integrated performance management system (PMS). Survey evidences cites that discussing and appraising performance is one of the main uses of competencies (Strebler et al, 1997). A person's work can be defined in performance terms, measuring over agreed periods of time that also take into account the constraints within the situation of performance (Furnham, 2004). The information obtained is thereby used for the appraisal which results in improving performance and efficiency, identifying the places for improvement, managing careers and providing rewards. It is argued that measurement of performance is an indication of an organizations culture and the strategic thinking of managers (Pun and White, 2005). All organizations have some means of measuring performance, and whichever methods of measurement are chosen, they are considered to have a key role in the efficient and effective management of the organization (Kenneley and Neely, 2002).
2.3 PURPOSE OF PERFORMANCE MANAGEMENT:
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Now or then, there has always been pressure on organizations to show themselves to be organized and systematic in their approach to the management of employee performance. In the traditional context, appraisal and assessment were mostly done in isolation and were not able to demonstrate their value to organizational performance. During the early 90's interest towards performance management increased as it was seen as vital to an organization's concerns, with performance improvement and competitive advantage (Armstrong and Baron, 2004). Organizations normally adopt performance management system (PMS) as a step towards achieving strategic integration of HRM processes. Walters (1998) saw performance management as being concerned with 'directing and supporting employees to work as effectively and efficiently as possible in line with the needs of the organization.
It's the strategic focus that makes performance management distinct in human resource management. In 2005 survey of charted institute of personnel and development, it was found that out of 500 companies in the United Kingdom; eighty seven percent operated a performance management system. The key factor of PMS found in the survey reported sixty five percent individual annual appraisal, 27 percent biannual appraisal and 10 percent rolling appraisal. A total of 14 percent used 360 degree appraisal, 30 percent included self-appraisal; 62 percent sought to ensure objective setting and personnel development plans, with 36 percent providing coaching and mentoring. In addition to this it was found that 31 percent used appraisal to determine performance related pay. Although there are wide variations in activities featured in a PMS, there is still the crucial issue of how goals and targets are translated and incorporated into the processes of Human Resource Management.
From my understanding, key feature of a performance management system is the attempt to provide an integration of all levels of an organization through goals, critical success factors and performance measures. Thus organizational goals are split into sector goals, departmental goals, manager goals, employee goals and team goals. Furthermore, in response to the dynamic conditions of globalization and technical change, there is need to review and reset goals and targets through the year (Rose, 2000). Performance management system not only provides direction for performance but is also useful in finding out the development needs and coaching as and when required. The attitudes of top level management in any organization are necessary for the success of PMS as they are the key actors. The integrated nature of PMS can be understood from the flowchart.
Performance Management System:
PERFORMANCE AND DEVELOPMENT PLAN
YEAR END REVIEW INCLUDING APPRAISAL
Fig 1 PERFORMANCE MANAGEMENT SYSTEM (Redman T, Wilkinson A, 2006)
2.4 PERFORMANCE MANAGEMENT PROCESS:
It is a flexible process that is normally carried out in stages. Initially, organizational goals to support the makeup of unit, team and individual objectives has to be clearly mentioned. Secondly, there should be measure of training and development to make sure the objectives are met. Thirdly, an appraisal process to find out if the objectives had been met or haven't been met and in some cases been exceeded. Then comes along the feedback to make sure that the employees understand where they stand in achieving organizational objectives. Monetary and non- monetary rewards for performances serves as an encouraging and motivating factor for the employees. The process can be said as complete when the individuals are encouraged to develop individual career plans with account of long term plans of the organization as well as the employee.
Organizational values, beliefs and vision are never going to be successful unless and until they are made known to every individual within. Organizations vision is an important part of the corporate strategy in communicating to the employees and customers, what actually drives the business growth. People can just not stop at the development of a vision statement but has to be communicated effectively and its enactment is critical as the individual acceptance is fundamental to the development of involvement and commitment. A vision of fine words will fail for sure. The corporate strategy rallies around the values, beliefs and vision and reflects the point to reach for the organization. It is an activity that has to be constantly reviewed and adjusted in accordance with the global changes, stage in economic cycle, product and labor markets and the ever changing technology.
Development of HR strategy is very essential and contributes to the employee understanding of the culture, the standards expected and the support available to achieve peaks of performances. Research by Institute of Employment Studies (Strebler et al, 2001) questioned the effectiveness of traditional performance management processes and also raised doubts whether it actually supported business needs in practice. However, the research also highlighted the importance of continuously reviewing the performance management process to ensure that they fit with the business needs.
Objectives can be defined at business units, team or at individual levels. Objectives at Business Unit Level (BUL) are much alike the organizational goals which define targets to be achieved. At team or individual level it mainly defines the contributions that are expected of from the individuals in achieving organizational goals. The objective setting was expected to be developed with fairness and equity in mind. The objectives being SMART was agreed initially-smart-measurable, A-agreed, R-realistic, T-time related. Ross (2000) examined the continuing role of SMART objectives and explained that,
SMART objectives assume that organizations operate within a stable environment, but changes in technology and increased globalization create a world in which winning organizations are those that can lead change, or can at least respond rapidly to market changes. The losers are those that are still driven by year old objectives.
Ross (2000) kept on insisting how continuous improvement would be more suited to organizations. Basis of continuous improvement rallies around identifying key performance indicators and working closely on them to achieve business objectives rather than setting targets which are based on past performances. This makes the organization look more forward looking and a much flexible performance management process. CASE objectives overcame the rigidity of SMART objectives in the later part of 2000. CASE objectives are; C-conditions, A-action, S-standards, E-evaluation. It reviews the environment in which the organization operates and the objectives are changed if there is a change in the environment. Actions are taken as to find what the employee or the team should do and by the levels expected defined by the standards. Objectives are constantly reviewed and adjusted accordingly.
Performance appraisal is a critical element in the performance management process. It is a part of performance management that relates to the formal process of assessing and measuring employee performances against agreed objectives. Performance appraisal is explained in depth in the preceding part of the dissertation. In my personal experience, reward has always been a motivator for better performances and is a mostly agreed subject. Although, there are mixed emotions from people on performance related pay systems. Monetary and non-monetary rewards such as the provision of opportunities for self development and the reinforcement of a sense of achievement through positive feedback from the managers have an important role in relating rewards to performance. Lack of skills will always be a barrier to effective performances. Training and development needs are normally analyzed within the framework of objectives and learning plans put in place for the acquisition of the skills needed to achieve the required performance.
Performance Management Process:
VALUES, BELIEFS AND VISIONS
HUMAN RESOURCE STRATEGY
UNIT, TEAM AND INDIVIDUAL OBJECTIVES
SUPPORT AND MEASURE PERFORMANCE
Performance related rewards
Training and development
FIG 2 PERFORMANCE MANAGEMENT PROCESS (Tom Redman, 2006)
PM acts as a catalyst to analyze and identify needs and plan the appropriate training and development activity for the organization and the individual. Coaching and mentoring are helpful in promoting learning and performance improvement which is evident in the CIPD (2005) definition of coaching "developing a person's skills and knowledge so that their job performance improves, leading to the achievement of organizational objectives; it targets high performance and improvement at work".
Needed amount of literature has been looked up by the researcher in order to support his taught which covers a wide area in the human resource management. At most effort has been taken to cover most of the performance appraisal types and structures. This will encourage the utility of the paper to any HR section.
CHAPTER-3 RESEARCH METHODOLOGY:
As the previous phase of the dissertation discussed the relevant literature relating to the issues corresponding to performance management and the roots of performance appraisal, and how it is related to achieving organizational excellence. The corresponding phase of the dissertation provides a detailed and descriptive essay on the methods and techniques used for data collection, and how the conceptual framework in accordance with the overall objectives forms the basis of the chosen research questions. Potential limitations of the chosen research methodology approach are also discussed.
Paul D.Leedy(1980) has defined research as the manner in which we attempt to solve problems in a systematic effort to push back the frontiers of human ignorance or to detail the validity of the solution to problems others have presumably resolved. Accumulated facts are always there, but in order to make it more meaningful and gain insights into unsolved problems, research is necessary, and can also be useful for the revelation of new meanings. It is systematic in the sense that they are not just bore ideas of human beings but instead they are facts and figures. However, the process involves appropriate data analysis and interpretation through a proper framework relating to the context. Research methodology refers to the procedural framework within which the research is conducted (Remenyi et al, 1998). Research methodology is merely an operational framework within which the facts are placed so that their meaning may be seen more clearly (Paul D. Leedy, 1989). According to Welman and Kruger (2001), the scope of research methodology is wider than the research methods (which in turn are wider than the scope of research techniques), which forms a part of the research methodology (where the logic behind the methods that are used is considered and explained). According to Saunders et al. (2003), the literature on the research process is dominated by three views. They are positivism, interpretivism and realism. Positivism is a research process that deals working with observable social reality and the end product of such research can be low like generalizations often produced by physical and natural scientists (Remenyi et al., 1998). Interpretivism on the other hand is a theoretical point of view that advocates the study of direct experience taken at face value and one which sees behavior as determined by the phenomena of experience rather than by external objective and physically described reality (Cohen and Manion, 1987). Realism is based on the belief that reality exists and it is independent of human thoughts and beliefs (Saunders et al., 2003). In this case, the positivism approach would be more suitable to study the extent of employee appraisal process in achieving organizational appraisal.
3.2 RESEARCH SCENARIO:
The behavioral existence of an organization can be studied by the quantitative approach. In the quantitative research there is the flexibility of treating data in terms of comparative analysis, statistical analysis and repeatability of data collection in order to verify reliability. It also provides us with the collection of longitudinal data in order to enhance validity. It is seen that quantitative methodologies also do have strengths for research. They are summarized as follows:
Quantitative methodologies are appropriate to measure overt behavior.
They are also strong in measuring descriptive aspects, such as the composition of the organization.
They also allow comparison and replication.
Reliability and validity may be determined more objectively.
Although the use of a single methodology has been advocated by a number of authors, many of the supporting statements and arguments are decidedly pragmatic, such as time constraints, the need to limit the scope of the study, and the difficulty of publishing the findings (Creswell, 1994). The justification of using a mixed methodology research design can be provided by the strengths and weaknesses of both processes. The combination of methodologies can be useful when the relevant strengths are focused. Blending of qualitative and quantitative methods in correct proportions can produce a final product, which can highlight the significant contributions of both (Nav, 1995). Qualitative data can support and explicate the meaning of quantitative research. Qualitative methods will help in developing the overall picture of the investigation which is the initial phase of the research. Quantitative analysis will help in assessing the behavioral or descriptive components of people. Quantitative analysis will complement the findings of the qualitative methods by indicating their extent within the population.
3.3 CUSTOM ADOPTED FOR DATA COLLECTION:
The collection of data is the crucial part of any research process. This process is done in order to accumulate the material necessary for the research. The rationale of the method of data collection is to understand the effect of employee appraisal in achieving organizational appraisal.
There are mainly two methods of data collection:
Primary data. 2) Secondary data
Project co-coordinators and human resource managers will be interviewed in order to collect valuable data.
All the IT employees will be questioned to understand in-depth understanding of his/her belief towards appraisal.
Mid level employees will taken into account as well.
Top level managers will be handed over the questionnaire and interviewed.
Secondary data will be collected on the basis of past research done on appraisal process.
Performance and endurance of the organization will be understood from the questionnaire.
As said in the limitation the research will take place in Infosys Ltd, India.
4.0 RESEARCH SITE: The study is limited to Infosys Ltd, India.
5.0 STATISTICAL TREATMENT:
Weighted Mean will be calculated from the data collected from employees , project managers , Human resource management.
One side tail test will be done to check that the performance of each individual and the organization increases to a peak level during standard structured appraisal.(t-test)
Analysis of variance (ANOVA). Analysis of Variance will be used to establish whether there is any structured appraisal process which provides right judgment on the employees.
The appraisal techniques and how to do a proper appraisal over the employees will be research at the most accurate manner. The researcher will put effort to collect more data in order to decide on a clear weighed mean. There is not much satisfaction about the appraisal systems currently in use and instead there is huge amount of frustration and dissatisfaction with existing methods of formal employee performance management and appraisal (EPMA). Regardless of whether the approach is based on rating scales, competency assessments, objectives, key performance indicators, or other performance standards, rankings, 360-degree feedback, or the balanced scorecard, the problem appears to be the same. They all look so capable at paper and in forms of theories but its effectiveness in the real world is a question, and in most cases tend to fail in practice. There fore this study will show a way and vitalize the use of performance appraisal in the right way.