Performance appraisal process of Indian IT firms

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Research Topic

A critical analysis of performance appraisal process of Indian IT firms.


Human Resource Industry has gained importance in recent times. The managers and executives have started realizing that the employees are valuable assets. The IT companies have started investing more in Human Resource Management in order to find out a best fit through the recruitment and selection process and to retain those employees for long in their organization. Human Resource Management deals with recruitment, selection, employee retention and managing employee relations (Koontz and Weihrich, 2005). Performance appraisal, also known as employee appraisal, is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost and time). Performance appraisal is a part of career development.

Also, in recent times, a major problem that threatens the IT companies is employee turnover. There are various reasons for an employee leaving an organization. The reasons could be performance appraisal, better salary packages offered by a company's competitors and increasing career opportunities. Generally, the aims of a performance appraisal are to:

* Give feedback on performance to employees.

* Identify employee training needs.

* Document criteria used to allocate organizational rewards.

* Form a basis for personnel decisions: salary increases, promotions, disciplinary actions, etc.

* Provide the opportunity for organizational diagnosis and development.

* Facilitate communication between employee and administration

* Validate selection techniques and human resource policies to meet federal Equal Employment Opportunity requirements (Thomas F. Patterson 1987).

Majority of the IT companies have a separate Human Resource wing which comprises of specialists in the field to take care of the processes mentioned above. Thus, the main function of Human Resource Management is to help the organization to achieve its goals and objectives by identifying people with extraordinary skills and motivating them in order to achieve the organizational objectives. Human Resource Management also aims at controlling the various factors that affect performance appraisal processes (Koontz and Weihrich, 2005). In our research we will be focusing on the performance appraisal processes firms.

Research Aims and Objectives:

The aims and objectives of our research are as follows:

Research Aims:

The main aim of this study is to understand performance appraisal processes of IT firm in India. Performance appraisal processes may vary by nature of business, countries or may vary by organisational needs and employee needs. The purpose of this study is to understand different objectives, stages, advantages and disadvantages, problems and effect of performance appraisal process.

Research Objectives:

1. To critically analysis performance appraisal processes IT firm in India. This analysis will be carried out to find out effectiveness of performance appraisal process. The aim of this objective is to scrutinise different stage of process with the requirement of organisation and its employee. For instant, to determine whether stages of process meet the requirement of both organisation needs and its employee needs too. If it meets any either of them, what would be the effects on organisation and its employee.

2. To evaluate advantages and disadvantages of performance appraisal processes IT firm in India. The aim of this objective is to find out advantages and disadvantages of performance appraisal process to organisation and its employee. To find out how much effective and productive performance appraisal process of Indian IT firm

3. To investigate factors affecting performance appraisal processes in Indian IT industry. The aim of this objective is to find out factors affecting performance appraisal process and their consideration in performance appraisal process. What would be the effects on organisation and its employee if such factors are ignored in performance appraisal process?

The first and second objective can be achieved by developing relevant questions in order to capture the strategies used in various firms. Third objective can be achieved by using past records and figures.

Initial Review

Performance appraisal is one of the popular concepts among the multinational and local companies. The concept has been defined by DeVries et al., (1981) as the process which allows firms to measure and consequently evaluate an employee's achievements and behaviour over a certain period of time. In olden days, getting into a job is not an easy task. But in recent times, it is easy for talented individuals and the companies often look for skilled candidates and involve in performance appraisal processes regularly. In this competitive world, the success of a company often depends on the skills, capability and efficiency of an employee working in an organization. For the purpose of talent acquisition most of the IT companies involve in regular and periodic performance appraisal processes. According to Joyce Margulies (2004), a common approach to assessing performance is to use a numerical or scalar rating system whereby managers are asked to score an individual against a number of objectives/attributes. In some companies, employees receive assessments from their manager, peers, subordinates and customers while also performing a self assessment. This is known as 360° appraisal and it forms good communication pattern. The most popular methods that are being used as performance appraisal process are: Management by objectives, 360 degree appraisal, Behavioural Observation Scale, Behaviourally Anchored Rating Scale. According to 2009, Performance appraisal plays very important role in performance management. In itself it is not performance management, but it is just a one of the range of tools that can be used to manage performance. Because this task is most usually carried out by line managers rather than HR professionals, it should be kept in mind that they understand their role in performance management and how performance appraisal contributes to the overall aims of performance management.

Reason of this study: Why organisation need performance appraisal tool?

Performance appraisals provide the opportunity for employee and supervisor to communicate on a one-to-one basis. This interaction may occur on an informal level throughout the year, but it probably lacks consideration of any substantive issues. Committee functions and weekly business meetings can contribute to the overall communication process, but evaluations offer a more formal setting in which accomplishments, individual goals and objectives, and institutional goals and objectives can be addressed. Since so many aspects of the evaluation process are intricately connected to the decision-making process in organisation, it could vitally advisable that a forum should exists in which employee behaviour can be linked to the organization. Understanding that individual goals and objectives relate directly to institutional initiatives is imperative if partnerships are going to be developed within and outside the organisation. Because innovations in technology occur with such rapidity and impact the entire firm, the relationship between individual and institutional goals must be clearly articulated.

Besides serving as a conduit for mutual feedback between the supervisor and employee, performance appraisals can be an effective motivational tool. The degree to which performance appraisals are productive largely depends on the attitude maintained by both the evaluator and the person being evaluated. Individuals, who approach the process in a positive frame of mind and sincerely value the experience, normally have no problem modifying their behaviour (Lindsey, 1990). The end result is generally a more productive environment for the supervisor, employee, and institution.

Another reason for conducting performance appraisals in companies is to ensure that staff training occurs on a regular basis. Because of the need for more efficient service and greater productivity, staffs are often asked to change their work habits or modify their behaviour. Such issues as downsizing and restricted budgets are directly responsible for these demands. These aspects are especially prevalent in today's electronically-oriented work environment. Too often technological advancements are implemented without the necessary amount of technical training. Instead of creating a more productive workplace, employees begin to produce less and develop both the psychological and physical effects of techno stress. The mental stress that emerges can be very problematic not only for the individual, but for the organization as well. Effective and regularly scheduled performance appraisals can detect these potential problems before they arise (Brinkerhoff and Kanter, 1980). By providing adequate training, employees become more productive. These same individuals also realize that the company administration is sensitive to both their environmental needs and psychological ones as well.

According to Taylor, S et al 2009, the effective management of employee turnover has long been a crucial issue for organizations. Not only are the economic costs of turnover very high, but unmanaged departure of employees interrupt social and communication structures and decreases cohesion and commitment among those employees who stay. Thus, it is hardly surprising that employee retention continues to be of great interest both to practicing managers and organizational researchers. The questions that challenge researchers and practitioners, therefore, are “Why do people leave?” and “Why do they stay?” By appraising their performance or establishing communication we may get answers for above questions. Leaving aside the issue of whether these are conceptually distinct questions, over the years researchers at best have developed only partial answers to them (Mitchell et al., 2001).

The current thinking is that people stay if they are satisfied with their jobs and committed to their organizations, but leave if they are not. However, work and job-related attitudes play only a relatively small role in employee retention and leaving (Griffet et al., 2000). Consequently, factors other than job satisfaction and organizational commitment are important for understanding turnover. A relatively new approach to this issue has been offered by Mitchel et al. (2001). These researchers argue that job embeddedness is a direct antecedent both of intent to quit and voluntary turnover. A number of studies have followed this research direction and found that job embeddedness explained significant incremental variance in turnover beyond that explained by job satisfaction and organizational commitment (Lee et al., 2004; Holtom and O'Neill, 2004; Besich, 2005; Holtom and Inderrieden, 2006). However how job embeddedness is developed or what factors cause employees embedded in their jobs to keep them from leaving the organization still requires investigation.

Method of Approach

This study is a qualitative research Researchers have to decide what type of approach they want to use to collect and to analyze their data. In other words how they are going to tackle the empirical side of their research. There are two approaches of research methodology – qualitative and quantitative approach.

This research falls under an interpretive approach. An interpretive approach aims at understanding and working on the problem in hand (Hughes and Hayhoe, 2007). Aim in this study is to understand performance appraisal processes of IT firm in India research and final conclusion of this study helps in future studies in performance appraisal. A request to participate into study has been sent to four IT firms in India. Researcher is waiting for their reply so it not possible at this time to reveal participant firm name

Funding and budget:

Personal face to face interview will be conducted with manager of participants IT firms. It will give chance to understand concept from both the sides which would help to increase reliability of study. To arrange face to face personal interview I have to visit India for approximately 4-6 weeks. The estimate cost and budget of this research is give below:



Flight charges to India (return)


Telephone calls to employees for interview


Transportation for visiting firm for personal interview with managers


Printing and filing






Work plan & tasks

The research design chosen for our research is exploratory research design, since our research aims at exploring the performance appraisal processes of IT firm in India. The aim of an exploratory research design is to discover new ideas. This design allows the researcher to change his direction of focus during the course of the study, as this research design provides built in flexibility to the researcher. This research design allows the research participants to express their views freely (Hester, 1995).

The data collection tool used in our research is telephone interview. A set of questions will be developed and these questions will be asked to the research participants over telephone and their responses will be recorded. The main reason for using telephone interviews for collecting data is that telephone interviews save time and cost. Personal face to face interview will be conducted with manager of participants IT firms. It will give chance to understand concept from both the sides which would help to increase reliability of study. The interviews are scheduled based on participant's availability. (Zulawski and Douglas, 2001).

Since the data collection tool used in our research is telephonic interview, the data should be analyzed qualitatively. A qualitative data is expressed in the form of words, rather than quantitative measures. The researcher analyzes the data by interpreting the meanings of words. In telephone interviews, the researcher develops a questionnaire which contains the questions to be asked to a participant. The responses given by the participants are in the form of words or sentences and the interviewer will analyze the data by interpreting the meanings of words (Zulawski and Douglas, 2001).

Project Validity and limitation:

The studies in which the data are collected for a long time, reliability and validity issues are more common but in our research we are using telephone interviews for collecting data. Since the time taken for telephone interviews is very less compared to face – face interviews, the chances for misleading information given by the respondents due to irritation is less. Moreover, addressing the reliability issues depends on the researcher's objectivity, his ability to record the responses provided by the participants clearly and the ability of the researcher to develop clear and relevant questions. In telephone interviews, the research participant will not be able to see the facial expressions of the interviewer and the interviewer will not be able to see the expressions of the participants. Validity is related to the accuracy of the data over time. The validity of the data could be ensured by framing relevant questions that will enable the participant to provide exact answer. The order of questions will also be controlled and the questions will be asked to the participant at the right time which will ensure a high degree of validity.

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