Requirement Of Performance Management System Business Essay

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Joint Goal Setting: - It is the establishment of short- term performance targets between management and the subordinates in a conference between them. They decide about the goals through a discussion between them.

Set Check Post: - It is the establishment of major check posts to measure progress. However, as subordinate learns to establish objectives and direct activities toward the goals, the rate of control and amount of checking can be decreased gradually.

Performance Reviews: - Frequent performance meeting between the subordinate and management are fixed, for maximum effectiveness reviews should be made more than once a year.

Feedback : - Feedback is given in the end, as the employees who receive frequent feedback concerning their performance are highly motivated than those who do not receive feedback.


Reliability : - The foremost requirement of a sound system is reliability. In this contact it refers to consistency of judgement. For any given employee, appraisals made by raters working independently of one another should agree closely. But raters with different perspective (e.g. supervisors, peers, subordinates) may see the same individuals job performance very differently. To provide reliable data, each rater must have an adequate opportunity to observe what the employee has done and the condition under which he or she has done it. By making appraisal system relevant, sensitive and reliable we assume the resulting judgement are valid as well.

Acceptability: - In practice, acceptability is the most important requirement of all, for its is true that human resources program must have the support of those who will use them. Unfortunately, many organizations do not put much effort into garnering the front end support and participation of those who will use the appraisal system. Ultimately it is management's responsibility to define as clearly as possible the type and level of job behaviour desired of employees.

It is important to enlist the active support and cooperation of subordinates by making explicit what aspect of job performance they will be evaluated on.

Practicality: - This implies that appraisal instruments are easy for managers and employees to understand and to use.

For years, personnel specialists have searched for the 'Perfect' appraisal method as if it were some kind of miraculous cure for many pitfalls that plague organizations. Such a method does not exist. In tomorrow's world of work far more emphasis needs to be placed on process issues. Factors such as timing and frequency are no less important. In sum performance appraisal is a dialogue involving people and data. Both technical and human issues are involved. Neither can be overemphasized at the expense of the other.


The most fundamental requirement for any rater is that he or she has an adequate opportunity to observe the rates job performance over a reasonable period of time. This suggest several possible raters.

The immediate supervisor: - Generally appraisal is done by this person. He is probably the most familiar with the individual's performance and in most job has had the best opportunity to observe actual job performance. Further more, the immediate supervisor is probably best able to relate the individual's performing to department and organizations objectives.

Peers : - In some jobs such as outside sales, law enforcement and teaching, the immediate supervisor may observe a subordinate's actual job performance rarely (and indirectly thru written reports). Here judgement of peers play important role. However, there is a danger of potential bias.

Subordinates: - Appraisal by subordinates can be useful input to the immediate development. Subordinates know first hand the extent to which the supervisor actually delegates, how well he communicates, the type of leadership he has and the extent to which he or she plans and organizes.

Self appraisal: - On one hand it improves the rate's motivation and moral, on the other it tends to be more lenient, less variable and biased. The evidence on the accuracy of self assessment is fairly complex.

In industry it is seen that feed back/ input is taken from various sources - peers, subordinates, superiors etc. some companies have gone step ahead in taking feedback form the customers and integrating it into the performance management process.


The traditional approach:- 'The one dimensional model.'

The Job

Define what results have to be achieved

Performance contact

Define a set of key objectives against the accountabilities

Accountabilities i.e output

Review performance against the key objectives

In this model job expectations are defined in terms of what results have to be achieved. This model doesn't have a long term focus and can't be used for employees development and career path planning.

The mixed model

The Job

Define what results have to be achieved

Performance contract

Define a set of key objectives Define a set

Define how results have to be achieved


of behavioral objectives against key competence

Review performance against key objectives and key competence

The 3 dimensional model

The Job

Define how results have to be achieved

Define what results have to be achieved





Performance contract

Key Objectives


Key competencies

Review Performance against key objectives and key

A satisfactory performance implies doing a job effectively and efficiently, with a minimum degree of employee-created disruptions. Employees are performing well when they are productive. Yet productivity itself implies both concern for effectiveness and efficiency. Effectiveness refers to goal accomplishment. Efficiency evaluates the ratio of inputs consumed to outputs achieved. The greater the output of a given input, the more efficient the employees. Similarly, if output is a given, the lower input consumed to get the output results in greater efficiency.

There are basically three purposes to which performance appraisal can be put . First, it can be used as a basis for reward allocations. Decisions as to who gets salary increases, promotions, and other rewards are determined by their perform evaluation. Second, these appraisals can be use for identifying areas where development efforts are needed. Management needs to spot those individuals who have specific skill or knowledge deficiencies. The performance appraisal is a major tool for identifying these deficiencies. Finally, the performance appraisal can be used as a criterion against which selection devices and development programs are validated.



There are certain barriers, which work against the effective appraisal system. Identification of these barriers is essential, so that suitable measure may be adopted to reduce their impact to a possible minimum level. These barriers can be grouped in three categories, they are




FAULTY ASSUMPTIONS : - Because of the faulty assumptions of the parties concerned i.e the superior & the subordinate, the appraisal does not work properly and objectively. These assumptions are of the following types: -

Managers sometimes assume that personal opinions are beter than formal appraisal and they find little use of systematic procedure and review procedures.

Managers take a particular appraisal system and assume it as perfect and then they don't want to change it for any reason and want to continue it for ever.

PSYCHOLOGICAL BLOCK : - The utility of performance appraisal depends on the psychological characteristics of mangers no matter whatever method is used. There are certain psychological blocks, which work against the effectiveness of an appraisal system. These blocks are feeling of insecurity, to take appraisal as an extra burden, disliking of subordinate, feeling to treat their subordinate's failure as their deficiency and so on.

Thus due to these psychological blocks, mangers do not tend to become impartial and thereby defeating the basic purpose of appraisal.

TECHNICAL PITFALLS : - The design of performance appraisal forms has received the detailed attention from psychologists, but the problem of finding adequate criteria still exists. The main technical difficulties in appraisal fall in two categories; the criterion problem & distortions that reduce the validity of results.

CRITERION PROBLEM: - A criterion is the standard of performance the manger desires of his subordinates and against which he compares their actual performance. This is the weakest point in the appraisal procedure because criterions are hard to define in measurable or even in objective terms. Ambiguity, vagueness and generality of criteria are difficult hurdles for any process to overcome.

DISTORTIONS: - Distortions occur in the form of biases and error in making the evaluation. An appraisal system has folling possible distortions -

Halo Effect : - This distortion exists when the rater is influenced by ratee's one or two outstanding good or bad performance and he evaluates the entire performance accordingly. It is an effect, which is formed by the image of the rate in the rater's mind either of his good or bad performance in the past and the rater rates them accordingly.

Central Tendency : - This error occurs when the rater marks all or almost all his personnel as average. This may arise form the rater's lack of knowledge of individuals he is rating or from haste, indifference or carelessness.

Constant Errors : - There are easy raters and tough raters in all phases of life. Some raters habitually rate everyone high, while some others tend to rate low. In such a situation the result of two raters are hardly comparable.



ONGOING FEEDBACK :- To make appraisal system effective it should be backed by effective feedback system which is often a missing link in appraisal system. Employees often feel scared if the post appraisal feedback is not provided. It should not be taken as a faultfinding system but as a system for improving performance.

TRAINED APPRAISERS :- The appraisers should be well trained so that they may be able to rate the ratees in a more accurate and developed method rather than employing the old traditional and less accurate methods. They should also be trained to avoid errors such as halo-errors, constant rating and so on.

POST APPRAISAL INTERVIEW :- After the system of appraisal a post appraisal interview should be conducted to let the employees or the ratees know about their evaluation and they can know their shortcomings and can take measurers to improve them.

REWARDS FOR ACCURATE APPRAISERS :- Some rewards should be given to the appraisers who have done appraisals accurately. When the rewards will be given they would turn positive towards the appraisal system.

MULTIPLE RATERS :- Instead of only one rater or appraiser completing the appraisals, multiple raters should be involved in the appraisal system. Due to the presence of a group of raters ratings can be done more effectively. In the case of only one rater it would be difficult to avoid distortions whereas in the presence of a group they can be avoided to a greater extent.


Objective of the study

The project aims at studying the system of performance appraisal and its effectiveness in an organization. Performance appraisal is the most significant and indispensable tool for the management as it provide useful information for decision making in area of promotion and compensation reviews.

The broad objectives of the study includes:

To know the present system of performance appraisal

To know the extent of effectiveness of the appraisal system

To identify and know the area for improvement

To suggest certain measurers for further improvement in the current system.

To know the attitude of employees towards the performance Appraisal system.

To know the effectiveness of performance appraisal system being adopted by Dabur India Ltd.

To Know the different methods of performance appraisal being practiced by Dabur India Ltd.

Research Methodology

Meaning of research :- A research comprises defining and redefining problems, formulating hypothesis or suggested solutions, collecting, organizing and evaluating data; making deductions and reaching conclusions; at last carefully testing the conclusion to determine whether they fit the formulating hypothesis.

Research Design:- A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure.

Step in research design:

The study is about the effectiveness of the performance appraisal system conducted at Dabur India Limited.

The study is made to know the pulse of the employees insight about appraisal.

The is conducted at Dabur India.

The required data are :

Secondary data

Personal views of the employees


The data can be found from various department in the company.

The study will take at least one months to cover.

The sample design would be 2-3 members form each department concerned.

Techniques of data collection ;


Personal interviews

The data can be analysed statistically by forming percentage weightage, average, graphs.

The report will consist of :

Logical analysis of the subject matter

Preparation of the final outline

Preparation of rough draft

Rewriting and polishing

Preparation of the final bibliography

Writing the final draft

Sample Design :- A sample design is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting items for the sample. Sample design may as well lay down the number of items to be included in the sample i.e the size of the sample.

Sample size:- The total of 100 managers and supervisors at Dabur Indian Ltd. 2-3 members from different department were selected.

Different Department:


Marketing and distribution



Material \ Purchase



R & D


IT Center



Data collection Method: -

Questionnaire :- A questionnaire of a number of questions printed or typed in a definite order on a form or a set of forms. A general form of a questionnaire is concerned, it consist of either structured or unstructured questionnaire.

Structured questionnaire are those questionnaire in which there is definite, concrete and pre-determine questions.

The form of the question may be either closed (i.e of the yes or no type ) or open (i.e inviting free responses) It may also have fixed alternative questions in which responses of the informants are limited to the stated alternatives (ie. Multiple choice question).

Response to Questionnaire

In all 96 questionnaire were given to employees falling in the category of supervisors and above. Out of which 48 could be collected back duly completed. The researcher individually contacted the employees to get response on the questionnaire.

Data entry and analysis

It has been an uphill task to enter the enormous data received through the questionnaire which consisted nearly 27 questions. Response to the descriptive question though very few but was valuable for the purpose of study. Hence these were further structured in time with the system adopted for compilation and data analysis.


Many employees gave guarded answers to some crucial questions.

Some of them did not fill the questionnaire due to lack of time

Response could not be collected form the total sample selected.

Some of the questionnaire could not be completed due to reasons other than time factor.

The confidentiality of the system created some problem in getting information.

Personal Interview: - Personal interviews requires the interviewer asking questions generally in a face to face contact to the other person or persons.

Certain guidelines for interview :

Interviewer must plan in advance and should know the problem under consideration.

Interviewer approach must be friendly and informal.

Effort should be made to establish proper rapport with the interviewee.

Free-flowing interview and the questions must be well phrased in order to have full cooperation of the interviewee.

Secondary Data : - The data which is published beforehand. Such as company profile, Hand book for managers.

Internet :- Through the internet, related information about company and performance appraisal was sort out

Magazines and Newspapers : - Such as Business Today and Hindustan Times for the detailed findings of the topic.

Data Analysis

Use of statistical methods such as tabulation, average, Graphs.

Designing of Performance Appraisal in the Organization:

The personnel department may attempt to obtain the maximum agreement of the line management in respect of needs and objectives of the programme.

The personnel of department has to examine the plans of the other organizations as well as the relevant literature applicable in the field to formulate the most suitable plan for the appraisal programme.

Attempt should be made of obtain the cooperation of the supervisors in devising the appraisal form and to discuss with them different factors to be incorporated, weights and points to be given to each factor and descriptions and instruction to be indicated in the form.

The personnel manager should tend to explain the purpose and nature of the programme to all superior and subordinates to be involved and affected by it. Care should be taken to take into confidence trade union representatives of the company.

Attempt should be made to provide intensive training to all the supervisors with a view to obtain unbiased and uniform appraisal of the subordinates.

Care should be taken to acquire line and staff coordination and mutual checking of appraisal to obtain intra department and inter departmental consistency and uniformity.

There should be arrangement for periodic discussion for appraisal by the superior with each of the subordinates where attempts can be made to stress good points, indicate difficulties and encourage improve performance.

As soon as the appraisal has been duly discussed attempt may be made to recommend for salary increases and promotion.