Performance Appraisal In The Corporate Sector Commerce Essay

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The corporate sector in India has been developing for over sixty years. However, the paradigm shift in the business scenario in the country came about in 1991, after the liberalisation of the economy, also known as LPG or liberalisation, privatisation and globalisation. Since the progress in corporate houses has been so prolific, the study of issues related to human resource management have gained paramount importance. Performance appraisal and management, as it is now being referred to, is an integral and critical part of every organisations think tank. In the succeeding paragraphs, the performance evaluation systems followed in various corporate companies have been brought out to draw upon their salient features and strengths.

HCL technologies is a leading global IT service company. In 2005, it introduced a radical new philosophy, called as "employee first, customer second (EFCS)". 1 The rationale behind the philosophy was that in the service industry, value gets created, not in the back office, but in face to face interaction with the employees and customers. Hence the need to empower the employee. If the employee is delighted, he would delight the customer. Among the various employee driven measures, performance appraisal was also transformed. The features are as follows: -

L4 Excel. A computerised employee performance portal, which transparently shares the rating and views of the appraiser with the employee. This includes a computerised career planning and development programme, which provides a framework for the employees to plan desired career path.

O2 System. A system designed to recognise high potential, which measures any outstanding performance for past two years.

Open 360 deg Feedbacks. This involves a survey of 20,000 people on the rating of managers on twenty aspects of their performance. What is unusual about this process is that the results of the survey are published online for every employee to look at. This 360 deg feedback is not counted towards the actual annual appraisal or to the compensation package. The aim is to encourage change towards positive behaviour in appraisees/employees.


Wipro is a well known IT company of India. Performance appraisal is a major part of its HR policy, 2 The salient features are as follows: -

Annual Appraisal. An Annual Appraisal system which aims to provide a feedback to its employees on their performance, identify the training needs and document criteria which is later used to allocate organisational rewards. It also forms the basis for personnel decisions on salaries, promotions etc. Further, it is also used for organisational diagnosis and development, facilitating communication, validating selection techniques and human resource policies.

360 deg feedback. 3 The important factors in 360 deg feedback used at Wipro are :-

(i) Mission and objective of feedback are clear.

(ii) Employees are involved early in the process.

(iii) Resources are dedicated to the process, including top management's time.

(iv) The organisation is committed and confidentiality is ensured.


The objective of performance appraisal at Dabur India Limited 4 is to evaluate performance, promote employees and arrange for various training programmes. The process followed is as follows: -

Mangement by objectives (MBO). Annual evaluation based on the goals set by the organisation. The reasons for failures, if any are also discussed with the employees. a standard value system is provided to the appraiser, based on which assessments are done in four categories, namely,




Below average,

There is no open appraisal or 360 deg feedback in the company. Also, there is only annual Feedback and discussion on reasons of failures.

In Dabur, positive leniency errors are more common, with most evaluators marking appraises high, due overestimation of targets achieved.

Based on survey of employees at Dabur, performance appraisal is satisfactory, not very good. The process needs to be integrated into the career planning of its employees in a more effective manner, with the appraisal outcome used more for the purpose of rewards. An open system with joint goals set by the appraisee and appraiser is desired.


Employees are appraised on the basis of performance. SPEED is an Internet-based performance management system which allows employees to adopt practices that they can retain. SPEED is easy to implement, as it is accessible through the Internet and the intranet. The earlier system required the filling in of a three-part booklet: what people had accomplished, what their supervisors said and the discussions that took place. It was too subjective. Now TCS has configured the system to plot a person's performance against the goals set, grading them on a scale from 1 to 5.

At the junior level, individual performances get a higher variable allowance, because a person has a limited scope to influence the big picture at the team-member level. At the senior level, how the project or sector is doing becomes a major factor. The focus at these levels is on the creation of economic value for the project and the organisation, not merely on improving individual performance. Total incentives are distributed in such a way that 50 per cent goes towards improvement in corporate performance, 30 per cent for business-unit performances and 20 per cent for individual performances.

Maruti Udyog

One company that has set itself on course to further democratising and opening up its employee evaluation process is car market leader Maruti Udyog. The company has introduced a unique 360-degree feedback system, starting with its senior leadership. The new system has been co-developed with Ernst & Young and has been put in place recently. Under the 360-degree feedback system, the employee is rated not just by his superiors, but also by his peers and subordinates. "We are starting the 360-degree feedback process with employees in the top management such as chief general managers and general managers, whose performance will now be assessed based on feedback from their peers and junior management employees within the same department. Till last year, their performance was being appraised only by the Directors and the Managing Director," says Maruti's Chief General Manager (HR), Mr S.Y. Siddiqui.

Ernst & Young, in consultation with Maruti, has listed a set of leadership competencies that are expected in a general manager. Based on that, it has prepared a questionnaire to which peers and subordinates can respond online. HR consultants feel that the critical issues in implementing such a system include assuring respondents that their feedback will remain confidential and convincing the person receiving the feedback that this is a development tool and not an appraisal tool. Maruti has handled this by getting E&Y and other consultants to make detailed presentations to the senior management personnel before the process got under way. The company has a committee of general managers, called Human Resource Inter Divisional Committee (HRIDC), which is consulted on all major HR issues. The initiative has been unveiled with an e-mail by Maruti's Managing Director, Mr Jagdish Khattar, asking people to support the online questionnaire process. The 360-degree feedback system will also include a self-appraisal by the general manager. At the end of the process, he can compare his self-appraisal with the assessment of his subordinates and peers.

One of the benefits that Maruti is hoping to get out of the 360-degree feedback process is the sense of empowerment and importance felt by subordinates, when they are asked to offer their feedback about their superiors. Maruti currently has over 4,000 employees on its rolls. 360-Degree Feedback is also known as full-circle feedback, multi-rater feedback, multi-level feedback, upward appraisal, and peer review.


Infosys Technologies, a leading software company based in India, was voted the best employer in the country in many HR surveys in the recent years. The company was well known for its employee friendly HR practices. The first step toward carrying out performance appraisal at Infosys was the evaluation of personal skills for the tasks assigned to an employee during the period of appraisal. To evaluate the performance, different criteria like timeliness, quality of work carried out by the employee, customer satisfaction, peer satisfaction and business potential were considered. The personal skills of the employees were also evaluated based on their learning and analytical ability, communication skills, decision making, change management, and planning and organizing skills. Each of these criteria was measured on a scale of 1 to 5 (with 1 signifying above the expected performance level and 5 below the expected performance level).

Infosys has now hired global HR consultant Mercer to work on the overhaul its Performance Appraisal system. "Our current performance management system does not meet the requirements of a 100,000-plus organisation. The new system is undergoing evaluation by Mercer,'' TV Mohandas Pai, Infosys' director for HR, education, research and administration .

The key aspects being looked at in the new system include sharper focus on technology, condensing the number of roles while increasing span of control. The new system will seek to define roles more clearly and try to more carefully match roles to employee aspirations.

"All programmers may not want to become managers. As we grow and move up the value chain there will be more opportunities for engineers to either go deeper into technology areas or take up senior managerial roles. The overhaul will provide us with room to create more options and multiple career streams for employees," Mr Pai added, while declining to share specific details on the overhaul.


20. The executive performance appraisal at SAIL is done in four steps:-EXECUTIVE PERFORMANCE APPRAISAL SYSTEM

Self Appraisal & Performance Review & Planning. The appraisee writes his view over the actual achievement for the Key performance area / Task and Targets assigned to him for the year, including special jobs, other than those assigned. Comments on fulfilment of KPA / Task and Target are written by the Reporting Officer, taking account of time frame.

(b) Performance Review Discussion. Both appraisee and reporting officer sit together and comments over strengths, weaknesses and areas for development are written which is undersigned by both. The appraisee can help the reporting officer by giving examples which shows his strength or weakness. He can also specify the training he wants to undergo.

(c) Performance Assessment. Ratings between 1 to 5 are given to the appraisee by the Reporting Officer and Reviewing Officer individually on the basis of Performance Factors (like quantity, quality of output, cost control, job knowledge, skills, team spirit ,discipline etc) and Potential Factors (eg Communication, Initiative, Commitment and sense of Responsibility, Problem Analysis and Decision making etc). Different weight age are given to each factor and the Final scores are calculated by multiplying rating and weight age. By adding these, Total Factor Score is calculated. Comments on Overall Performance and Potential are written by both Reporting and Reviewing Officers individually.

(d) Suggestions for Job Rotation and Job Enrichment. Both reporting and reviewing officers write their suggestions whether the appraisee should be transferred to other departments. Either a good employee is transferred so that he can acquire knowledge of all the departments, or the worst performing employee is transferred so as to improve his performance.

Final Assessment. Total Factor Score by both Reporting and Reviewing officers is written and average is calculated. Final Grading between O / A / B / C is given

Honeywell Performance and Development Process 7

23. Honeywell performance and development is an online system for its employees, which is annual, with a midyear and end year feedback. The approved goals are decided on 31st Dec every year for the next year and are defined as smart and specific. It can be divided into the following cyclic steps: -

(a) Goal management Goal Management is a continuous process carried throughout the year. It involves managers, employees, and matrix managers. The goals are Specific; Measurable; Achievable; Relevant & Timed (SMART). Goal alignment involves judgement on Five Initiatives. There are various organizational / functional goals and strategies and the department and manager goals are specified. Goal Management ensures a standard based assessment and feedback.

(b) Midyear update. This is a focused opportunity for the manager to document mid-year feedback in three areas:

Progress against goals.

Demonstration of behaviours.

Development actions.

24. Role of the Manager. The manager throughout the year ensures employees keep their current year goals up-to-date; provide ongoing feedback on performance and support the development planning process. In mid year, he initiates a Mid-Year discussion and provides feedback to employees. In November or early December, he ensures employees update progress against current year goals. In Dec-Jan, he guides the employees to establish new goals and reviews and approves them.

25. The 360 deg feedback in Honeywell involves feedback from peers, other managers and supervisors. There are 12 behaviours, based on which the rating is done. The system is reviewed every two years by the HRD team, and is open for suggestions and changes online. There is a dedicated team for digitisation of the software.


1. Vineet Nayar, CEO HCL Technologies.

2. ICBM, School of Business Excellence, Hyderabad.

3. Mr Prateek Kumar, Corporate Vice President Wipro Technologies Ltd.

4. Project Reports AICTE.

5. The HINDU 04 Dec 08.

6. Project report on Performance Appraisal of SAIL employees;; Personnel - Human Resource Mgmt, By David A Decenzo

7. Presentation on HPD at Honeywell; Pune