Performance Appraisal At Lucky Cement Limited Commerce Essay

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Lucky cement is focusing mainly on exporting loose cement due to which they have installed a new line in Karachi Plant without packing plant and the cement they manufacture in that line goes straight to bulkers and from there it goes to silo which is built at Karachi port and from there the cement directly goes to ships. This is more profit making, time saving and state of the art concept and adopted by a few companies in the whole world. Current total market share of lucky cement in 19% and their export market share is 34% in Pakistan. (Luckycement.2009)

Business Strategy

Lucky cement is focusing greatly on becoming cement exporting hub from Pakistan for the regional countries and for that they are consistently exploring new markets. The main objective behind this is the hunger to become a leading global producer of cement and to attract investments from outside Pakistan which will result in bringing foreign exchange in the country. (Luckycement.2009)

Focusing on export, lucky cement has also installed the state of the art silo facility at Karachi Port and due to that loose cement will get directly shipped into vessels without having the trouble of packing. This is a latest concept which is normally used in countries like Germany and is also extremely cost effective. (Luckycement.2009)

Over the years lucky cement has successfully established its brand in a lot of export markets such as Middle East, India, Sri Lanka, East and South African countries. Due to their concept and hunger of becoming leading global producer of cement they are further planning to set up factories in other countries of the world. (Luckycement.2009)

Waste Heat Recovery

Lucky cement is completely aware of the issues which the world is facing now a day such as global warming and GHG. Therefore, the company has decided to play its part for creating an environmental friendly atmosphere and to reduce global warming. Lucky cement is the first company is Pakistan who has taken this step to play its part in the Global effort to control carbon emission.

At the moment, lucky cement is installing a state of the art waste heat recovery system which will utilize the waste heat generated during the production of clinker into electrical power with zero emission of carbon and it will also be fuel efficient. This is perhaps a very expensive option, but looking at the conditions lucky cement believes it is a very important decision and also the base country of Lucky cement is currently going through major electricity crisis and this effort will ease the crisis and on top of that will also serve a global cause by reducing the danger of global warming. (Luckycement.2009)

Organ gram of Lucky Cement Limited

Lucky cement limited is managed by a team of dedicated professionals and their main aim is to fulfil the mission and vision of the organisation. Lucky cement has two production factories and around seven marketing offices throughout Pakistan which are managed by 1800 permanent employees. The organ gram given below will help you to understand the position of senior management. (luckycement.2009)






Performance Appraisal


Performance appraisal is defined by various authors in following ways;

''A systematic approach to improving individual and team performance in order to achieve organizational goals''. (Corbridge & Pilbeam 1998:201)

''A fundamental managerial activity that formalises the everyday processes of feedback between managers and employees''. (McKenna & Beech 2002:172)

''A vehicle for the continues improvement of business performance via a coordinated programme of people management processes''. (Martin & Jacksons 1997:108)

Relationship of Performance Appraisal and Job Analysis







Describes work and personnel requirements of a particular job.

Describe the job relevant strength and weaknesses of each individual.

Translate job requirements into levels of acceptable or unacceptable performance.

Objectives of Performance Appraisal

To analyse individual's performance for promotion purposes.

To assess development and training needs of employees.

To make decision on pay scale if regular pay scale is not fixed.

To help employees understand where they are standing, what is expected from them and how they can improve their performance?

Performance appraisal is a platform of communication and helps to increase understanding between senior management and employees.

Performance appraisal also helps senior management to analyse the effectiveness of HR policies regarding training, selection and transfer.

Another key objective of performance appraisal is that it reaffirms management control.

It helps organisations to review the potential of its employees and it also increases their motivation. (

Performance Appraisal Process at a Glance

Objectives of Performance Appraisal

Establish Job Expectations

Design an Appraisal Programme

Appraise Performance

Performance Interview

Use Appraisal Data for Appropriate Purpose

Challenges of Performance Appraisal

Streamlines organisational objectives to employee's aspirations.

Provides clear growth plans for brilliant employees.

Provide new tasks to refresh careers that have reached the area of stability stages.

Provide employees with culture of excellence that inspires them to learn new techniques and helps them to move forward in life.

Empower individuals to make decisions without the fear of making things worse.

Set in team work in all operational processes.

Helps HR department to understand employees needs which results in outstanding company growth. (

Legal Issues with Performance Appraisal

Appraisal system normally tends to take shape of legal dispute between companies and employees relating charges of injustice and favouritism.

Appraisal system should always be legally defensible and the basis of all HR decisions should be made on standardised performance appraisal system.

Contents of performance appraisal should always be bases on job analysis.

Appraisals based on traits should always be avoided.

Documentation of performance appraisal should always be legally defensible and all records must be kept in written form all the way from first verbal warning to termination of employees.

The ratters' of performance appraisal should be professionally trained on how to use an appraisal system. (

Performance Appraisal criteria at Lucky Cement Limited

Performance appraisals are done in Lucky cement limited to serve four major purposes.

Developmental purposes.

Administrative decisions.

Organizational objectives.

Documentation purposes.

These are explained in more detail in the table below.

General Applications

Specific Reasons

Developmental Purposes

Understanding of employee needs.

Shaping transfers and job assignments.

Performance pointer.

Identification of individual's strengths and development needs.

Administrative decisions





Recognition of employee's performance.

Identification of poor performance.


Organisational objectives

HR planning.

Determining organisational training needs.

Evaluation of organisational goals and achievements.

Information for goal identifications.

Evaluation of HR systems.

Reinforcement of organisational development needs.


Criteria for validation research.

Documentation for HR decisions.

Understanding legal requirements.


Performance Appraisal and Competitive Benefits in Lucky Cement Limited


PerformanceThe objectives of performance appraisal explain the point why this procedure needs to be done. What needs prominence is that performance appraisal contributes to lucky cement's aggressive strengths. This evaluation system helps identify employees with potential, determine employee's requirements for training. On top of that, performance appraisal has helped lucky cement limited gain competitive advantage in the following ways:

Making correct


Strategy and Behaviour

Competitive Advantage

Values and


Ensuring Legal


Minimizing Dissatisfaction and Turnover

(Marchington & Wilkinson,2008)

Number of Appraisals

Lucky cement conducts two appraisals.

At the end of each year.

At the end of each project.

At lucky cement appraisals are based on balanced score card approach, which tracks the achievements of individual on the basis of four target levels. Which were



Learning and growth


The customer standpoint looks at the differentiating value proposition offered by the employee.

The internal standpoint explains the employee's contribution in creating and satisfying value.

The learning and growth are self illustrative.

The financial stand point quantifies the employee's contribution in terms of revenue growth, cost efficiency, improved asset operation etc.

On the basis of employee's achievements, employees are rated on the scale of 1 to 5 (5 represents the highest rating). If any individual is consistent in getting low rating in more than two appraisals then the possibilities of giving warning to that employee goes up. If the low performer keeps getting low ratings than the possibility of termination of that employee goes up.

Due to this procedure lucky cement has overcome the trend of continuous decline in performance. What they realized is if an employee works in same department for more than one year he/she will normally start losing their interest in job and that use to result in decline in performance.

To overcome that, lucky cement started to shuffle their employees between different departments to help them learn new things in their job and this also worked in motivating employees. The simple concept that lucky cement learned was ''performance drops if motivation drops''.

At the end of the day employees only want recognition and appreciation of their work. Lucky cement limited performance appraisal system emphasizes greatly on objectivity and it is a system which is based on the mandates of performance evaluation against pre-determined criteria.

The most important part is the way senior management takes part in suggesting guide lines for performance appraisal process. The whole process guarantees satisfaction of employees because the guide lines for performance system and its conversion into rewards, money and promotions is not entirely based on human resource decision but it is decided by the mutual consensus of cross functional teams and those teams are based on people from all levels.

The performance appraisal system of lucky cement limited is supported by an oracle developer 2000 based tool and it is called the Human Resource Management system. This means that the performance history of each and every single employee is available at the click of a button and the system maintains that information for almost 1800 employees who works in factories, warehouses, area offices and in head office. When an employee joins lucky cement limited, during his probationary period they receive monthly feedback of their performance but after three months when they become permanent employees then they start to receive two formal feed backs in each year. Lucky cement limited also encourage informal feedback discussions among Team members and Project Leaders and the good thing is this concept in finding overwhelming appeal among the employees.

Issues Related To Performance Appraisal System of Lucky Cement Limited

These are some major issues I have found with the performance appraisal system of lucky cement limited and the reason was i am aware of them is because i have experienced them.

Judgmental Errors

First impressions of an employee always use to count a lot in Lucky cement limited. If the first impression is not correct or due to any reason if employee is not in good books of evaluator then he/she use to get bad remarks on their appraisal.

If an employee is coming to work in good dress code and is also punctual but at the same time not very excellent in his work, that employee use to get more points compare to those who are really good in their job but don't have good dress code sense.

Raters normally use to look at the negative qualities of employees and based on that they use to rate them very harshly. For example, if an employee is not smiling in his performance evaluation interview the raters usually use to say that he cannot get along with people very well so give him less marks which means that they have completely neglected all his strengths.

Leniency is also a major issue in lucky cement. Bad employees use to get really high scores if the appraiser is in the good mood.

Most of the time, appraisers use to use the central tendency approach and they use to give average marks to every single employee.

Stereotyping is also a major area of concern as appraisers always use to rate people based on their sex, age and caste. Due to this they normally over look the fact that whether the person is good and sincere with his job or not.

Regency effect was also very much experienced by employees over the years. It means that raters use to overlook an employee's past performance of seven to eight months in case if the employee is not performing well from last two to three weeks before the start of performance appraisal date. (openlearningworld)

Poor Appraisal Forms

The rating scale was not really clear to employees.

Rating form use to greatly ignore the key aspects of job and as stated above high marks was based on the personal disliking of appraisers.

The rating form contains irrelevant performance dimensions.

Rating form uses to be really long and use to contain irrelevant questions such as personal information of employees. (openlearningworld)

Lack of Appraiser's Preparedness

The biggest issue is and always have been is the fact that employees use to get rated by people who are not professionally trained and they did not use to have proper knowledge of the specialized field. What I mean is a person who has done MBA in human resource he is not in a position to do the appraisal of a person who is working in the technical department or of a person who is working in a senior position for finance department. Sometimes appraisers were unable to complete the appraisal because of their poor self image and lack of self confidence. (Marchington & Wilkinson,2008)

Ineffective Organisational Policies and Practices

Most of the time, the senior management use to completely over look the appraisers comments about an employee's performance which results in appraiser's motivation level going down. (Marchington & Wilkinson,2008)

No Reward and Recognition

The moral and motivation level of lucky cement's employees are going down because of the policies adopted by senior management. The management does not give value to its outstanding team. Management wants appraisal do be done on time but management does not offer increments, promotions and rewards based on those appraisals. Increments, promotions and rewards are all based on personal liking of senior management. As a result highly skilled employees of company are losing their interest in job and they are always looking for options so they can switch to another company. (Marchington & Wilkinson,2008)

Conclusion and Recommendations

As per my observation, lucky cement limited is a very good company and future looks very bright for this company. But one thing that this senior management must realise is that this company is doing well only because of its employees.

The way company has developed its performance appraisal system and the objectives they want to achieve from their system are remarkable but for some reason they are not doing anything to achieve those objectives. From senior management point of view doing appraisal is important but follow up of that appraisal is not important for them. It seems that they are just fulfilling a requirement by doing the appraisal.

The biggest problem is that they have a team of professionals who are dedicated and committed for growth of company but company is not committed in keeping them. Every year performance appraisals are done but then nothing happens. Mostly employees end up getting pretty average scores due to which they lose their motivation and interest in the job. If few employees get high scores they don't get any reward or they don't receive any acknowledgement from the company.

The final verdict is, lucky cement has to realize that its employees are its biggest asset. Company needs to start giving value to them this is the only way Lucky cement will be able to keep its employees because the bottom line goes when an employee from switch from one company to another it also takes all the secrets and future planning of the company with him and this is extremely bad for the future of any company. Furthermore, they need to make changes in their performance appraisal system, company needs to make it more up to date, senior management needs to start taking interest in this practice because only through this way they will be able to follow up on appraisal system and all this will lead to satisfaction of employees and this will result in growth of the organisation.