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MMS DIV A SEM II (2013-15)

Project report on

PERFORMANCE MANAGEMENT &
APRAISAL
Indian Oil Tanks (IOT)


SUBMITTED TO: - SUBMITTED BY:-
DR. FARIDA VIRANI RUCHITA BADRUKA (07)
JAYESH BHATIA (08)
KAUSTUBH BARVE (11)
SANKET BORHADE (23)
UPENDRA GANDHE (42)
NEHA JAGARE (60)


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Index

1. Introduction: 03
1.1 Performance Management 03
1.2 Performance Appraisal 04
1.3 Objectives Of Performance Appraisal 05
2. Company Overview: 06
2.1 About Indian Oil Tanks (IOT) 06
2.2 Culture Diverse & Active 06
3. Steps In Appraising Performances 08
4. The Supervisors Role 09
5. Appraisal Interview 11
6. Methods Of Performance Appraisal 12
6.1 Traditional Methods 12
6.2 Modern Methods 14
7. Problems Faced In Appraisals 16
8. Ethical Issues In Performance Appraisals 17
9. Performance Management And Appraisal At IOT 18
9.1 The Process 18
9.2 Ethical Issues Involved 19
10. Global Trends 20
11. Conclusion 21
12. Bibliography 22

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1. Introduction:
1.1 Performance Management:
Human resources are typically one of the few options available to create a sustainable
competitive advantage for the firm. So it is needed to be ensured that the human resources
perform at the highest possible level. In a knowledge economy, organizations rely heavily on
their intangible assets to build value. Consequently, performance management at the individual
employee level is essential.

At this stage of human resource management (HRM), when there are employees in the
organization who can do the work, they have been given at least some initial training, and they
are now doing their individual jobs, the next issue needed to be figured out is how to manage
their performance over time to ensure that they remain productive, and become even more
capable, as they progress in their careers.

Performance management is a holistic process bringing together many of the elements
which go to make up the successful practice of people management, including in particular
learning and development. But for this very reason, it is complex and capable of being
misunderstood. It is not achievable unless there are effective processes of continuous
development. This addresses the core competencies of the organisation and the capabilities of
individuals and teams.

Performance management is the process of identifying, measuring, managing, and
developing the performance of the human resources in an organization. We are trying to
figure out how well employees perform and then to improve that performance level. When used
correctly, performance management is a systematic analysis and measurement of worker
performance (including communication of that assessment to the individual) that we use to
improve performance over time. It includes activities which ensure that goals are consistently
being met in an effective and efficient manner. It can focus on the performance of an
organization, a department, employee, or even the processes to build a product of service, as well
as many other areas. It is also known as a process by which organizations align their resources,
systems and employees to strategic objectives and priorities.
Performance management originated as a broad term coined by Dr. Aubrey Daniels in
the late 1970s to describe a technology for managing both behavior and results, two critical
elements of what is known as performance.

A formal definition of performance management,
according to Daniels' is "a scientifically based, data-oriented management system. It consists of
three primary elements-measurement, feedback and positive reinforcement."
Human resource management (HRM) conducts performance management. Performance
management systems consist of the activities and/or processes embraced by an organization in
anticipation of improving employee performance, and therefore, organizational performance.


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Consequently, performance management is conducted at the organizational level and the
individual level. At the organizational level, performance management oversees organizational
performance and compares present performance with organizational performance goals.

The
achievement of these organizational performance goals depends on the performance of the
individual organizational members. Therefore, measuring individual employee performance can
prove to be a valuable performance management process for the purposes of HRM and for the
organization.

The performance management process begins with leadership within the organization
creating a performance management policy.

Primarily, management governs performance by
influencing employee performance input (e.g. training programs) and by providing feedback via
output (i.e. performance assessment and appraisal).

The ultimate objective of a performance
management process is to align individual performance with organizational performance.

A
very common and central process of performance management systems is performance appraisal
(PA).

The PA process should be able to inform employees about the organization's goals,
priorities, and expectations and how well they are contributing to them.
Performance appraisal is one element of performance management which involves
different measurements throughout the organisation. Performance appraisal is the most important
if the organisations are to take the advantage of their most important asset, employees, and gain
human capital advantage.


1.2 Performance Appraisal:
Performance appraisal has increasingly become part of a more strategic approach of
integrating HR activities and business policies and may now be seen as a generic term covering a
variety of activities through which organizations seek to assess employees and develop their
competence, enhance performance and distribute rewards. The efforts of employees can
determine the success and survival of an organization and appraisal is potentially one way in
which those efforts can be aligned with the aims of an organization, employees can be motivated
and their performance managed. Performance appraisal is among the most important human
resource (HR) practices and one of the more heavily researched topics in work psychology, a
subject of research for over 70 years.

In simple terms a performance appraisal (PA), is a method by which the job
performance of an employee is assessed in a systematic way. Performance appraisals are a
part of career development and consist of regular reviews of employee performance
within organizations. The various aspects of individual employees that are considered include,
organizational citizenship behavior, accomplishments, potential for future improvement,
strengths and weaknesses, leadership abilities, supervision, cooperation, judgment, health and the
like.

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The other terms used for performance appraisal are performance review, performance
evaluation, (career) development discussion,

employee appraisal, performance rating, employee
assessment, employee performance review and merit rating.

1.3 Objectives of Performance Appraisal:
1. Increase motivation and productivity:
Performance appraisal helps employees to set plan work and identify skills in order to
achieve them. Employee is motivated as there is clarity of what he is required to do in a given
period. Increased clarity brings greater focus on job related activities, which in turns facilitates
better performance, efficiency and commitment. This increases the productivity of the individual
employees and the organization stands benefited out of improved performance of employees.

2. Enhance transparency:
Setting of performance targets /objectives, agreement on measurement criteria and
organizations expectations of desired performance level brings to transparency to the appraisal
process.

3. Talent retention:
Meritorious employees are rewarded better with increased compensation, promotions,
leadership grooming opportunities, job rotations, etc. and help retain top talents in the
organization by satisfying their growth and development needs.

4. Increase commitment:
Employees involvement in planning of work and identification of skills helps to bring
greater self-awareness and increases his commitment to the objectives of performance appraisal
activities. Performance appraisal provides an opportunity to communicate performance feedback,
review the job description, plan upcoming goals and objectives and develop an individual
development plan.

5. Employee development:
Performance appraisal accord an opportunity to develop an employee through the
identification of gaps in skills and competencies. Once deficiencies in skills and competencies
has identified, suitable training and development programmes can be established for rectifying
the gaps/deficiency. This results in personal and professional development of employees.






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2. Company Overview

2.1 About Indian Oil Tanks (IOT):
Indian Oil Tanks (IOT), Infrastructure & Energy Services Limited is a professional,
technical and logistics solution provider with domain expertise in Engineering Procurement
and Construction (EPC), Terminalling, Upstream Services and Renewable Energy. Since
their inception in 1997, they have combined the strength and reputation of their parent
companies Indian Oil Corporation Limited (IOC), India and Oil tanking GmbH, Germany
to provide customers with unparalleled logistics services and technical solutions in the Oil and
Gas industry.
Their businesses have made them a high growth, high profit company, which has seen an
above-average 60% CAGR (Compounded Annual Growth Rate) since inception. Today they
have created a strong base and are poised for a quantum leap in India and across the world. Their
emphasis on global safety and environment practices through a strong Health, Safety, Security
and Environment (HSSE) program has ensured that their stakeholders are aware of their
commitment to safety and environment that they leave behind for future generations.
They are a professionally managed organization having a strong, stable and entrepreneurial
management team with domestic and international experience across businesses. They have
domain knowledge and experience contributing to their understanding of the business sectors.
They focus on achieving project completion within time and cost. They have built their
businesses on the firm foundation of innovation, quick implementation and continuous
improvement to ensure that as a global company with the knowledge of the pulse of local
markets making them truly Glocally Entrepreneurial.

2.2 Culture - Diverse and Active
IOTs deep domain expertise in its businesses stems from its people. They encourage and
empower their workforce to enable a creative and collaborative environment that encourages the
spirit of entrepreneurship. A young organization, 80% of their workforce is below the age of 40
and they offer global exposure to their talent through their international training programs and
projects.
At IOT, effective leadership is essential at every level to infuse an organization with
strategic direction, values, morale and energy. Their training programs aim to bring out these
qualities in their people. They have joined hands with globally recognized management institutes
in India and abroad to help their people get an edge over others in their everyday work-life.



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They encourage a lean structure of reporting and transparency in appraisals. Their
performance measures thus provide a focus that enables each employee to know how they
actually contribute to the success of the company against mutually agreed quantified targets.
They believe that every engineer is capable of being a manager. This belief helps them allow
their people to take initiatives and see them through at all levels.























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3. Steps In Appraising Performances:
The performance appraisal process should begin before the employee's performance is
appraised. In an effective performance appraisal system, employees know what is expected of
them and against what standards they will be judged. The following is an outline of performance
appraisal steps:
1. Define the job and performance standards:
The job should be well defined so that the employee knows what tasks are critical.
Standards of acceptable performance also should be determined for each taskfor example,
quantity produced, quality of work, and timeliness of task completion. Standards should be the
same for all employees in that particular job.

2. Plan for performance:
In this stage, the supervisor and employee develop a plan for the rating period that guides
the subordinate's work. During planning, the employee must understand the key tasks of the job,
the results and conduct required in the job, and the standards of performance.

3. Monitor performance:
Both the employee and the employer should be actively involved in monitoring the
employee's performance during the rating period. Throughout the rating, the supervisor should
provide feedback to the employee, reinforcing good performance and correcting poor
performance. The employee should be encouraged to discuss both performance successes and
problems throughout the rating period.

4. Appraisal interview and feedback:
The supervisor completes a performance appraisal form and conducts a performance
appraisal interview with each employee. Employees should be told how well they are doing, why
they are doing well or poorly, and what they can do to improve or maintain their performance.

5. Reward performance:
During this stage, good performance often is reinforced with a reward. The reward
system should be capable of differentiating among various levels of employee performancefor
example, the highest performers would get the greatest reward and the lowest performers would
get the smallest reward or no reward.

6. Development of performance:
The final stage of performance appraisal is 'development of performance,' or professional
development, by providing opportunities for upgrading skills and professional interactions. This
can be done by supporting participation in professional conferences or by providing
opportunities for further study. Such opportunities can also act as incentives or rewards to
employees.

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4. The Supervisors Role

1. Maintain a Development File for Each Staff member:
This is an informal record of the staff members development and could include such
items as: The current job description for the staff members position, performance standards and
objectives for the staff members position, work unit, and/or department etc.

2. Understand the Objectives:
Know the relationship between the mission and objectives of the University, the
department, the work unit and the various positions you supervise. Know how the work of each
staff member relates to the larger plan of the department and the University.

3. Know the Performance Standards:
Know the performance standards for each position you supervise and how performance
will be measured. Be able to identify the source of those standards and communicate that to the
staff members involved. Consider the following as possible sources of performance standards:
The current job description for the staff members position
Expectations of the persons served by the work the staff member performs
Performance appraisal criteria
Professional standards, performance objectives etc.

4. Assess Performance:
Become familiar enough with a staff members performance to provide an objective and
constructive assessment. Observation is best source of information, along with the staff
members own assessment and feedback from those served by the staff members work and other
supervisory staff.

5. Meet with the Staff Member:
Schedule time for a formal performance review at least annually with each staff member
you supervise. Conduct the review at a time and place when you can give your undivided
attention to the staff member. Then, dont limit performance feedback to an annual, formal
meeting. The performance development plan is an excellent tool for providing ongoing coaching
and performance assessment. Frequent, brief meetings can keep performance focus fresh and
allow for timely assessment and recognition.

6. Understand Common Reviewer Errors:
Halo Effect: Allowing a recent example of outstanding performance in one area to positively
impact your assessment of the staff members performance in other, unrelated areas.
Horns Effect: Allowing a recent example of substandard performance in one area to negatively
impact your assessment of performance in other, unrelated areas.

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Stereotyping: Rating performance based on the staff members similarity to or difference from a
Stereotypical model (all men, all women, everyone under 30, etc.)
Loose, Tight or Central Tendencies: Rating everyone the same whether its good, poor, or
neutral.
































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5. Appraisal Interview

Talks between employee and manager happen on an almost daily basis. The annual Appraisal
Interview however offers the opportunity to systematically discuss the following content:
Work and performance of the past year tasks, work conditions and cooperation
Resolve problems and misunderstandings
Agree on measures to boost development and further education
Mutually agree on long term goals and focus points

Hence, an Appraisal Interview is a OneonOne interview which:
Takes place at least once a year
Requires both parties to prepare for it
Is semistructured
Is carried out by the employee and the direct supervisor using specific contents.

Why carry out an Appraisal Interview?

From the managers perspective
A managers success depends on how well an employee can carry out his or her tasks. The
Appraisal Interview enables the manager to fulfill his/her leadership role.

From the employees perspective
An employees success and career depend on how well he/ she develops his/her skills and
competencies , performance and job satisfaction as well as how well he/she prepares for possible
future tasks and new requirements.

How does the Appraisal Interview work?
The date for the interview should be agreed upon at least two weeks ahead. The interview takes p
lace during work time. Schedule approx. one to two hours in an appropriate and quiet environme
nt.
- Manager and employee prepare for the interview independently.
- Employee and direct supervisor carry out the interview.
- Manager and employee commonly stipulate the agreement.
- Agreements remain with the manager (confidential); a copy is given to the employee.
- Information, that the Appraisal Interview was carried out is entered in VIS. Information
regarding required training are sent to the Human Resource department.




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6. Methods of Performance Appraisal
There are two types of measures that are used in performance appraisal: Objective measures
which are directly quantifiable and Subjective measures which are not directly quantifiable.
Some techniques that were used in the past are not use during present time, like ranking, critical
incident, narrative essays. In all the way of work time, many of new advance roads have been
suggested for performance appraisal technique like MBO, Assessment Centers, BARS, Human
Resource Accounting, 360 Degree and 720 Degree. Performance Appraisal can be broadly
classified into two categories: Traditional Methods and Modern Methods. The performance
appraisal methods are:

6.1 Traditional Methods:
Traditional Methods are relatively older methods of performance appraisals. This
method is based on studying the personal qualities of the employees. It may include knowledge,
initiative, loyalty, leadership and judgment.

A. Ranking method
It is the oldest and simplest method of performance appraisal. In this method the
employee is ranked from the highest to the lowest or from best to the worst. Thus, if there are ten
employees the Best employee is given the first rank and the worst employee in the group is given
the tenth rank. However, this method has some limitations:
- It is difficult to adopt this method, in case of evaluating large number of employees.
- It is difficult to compare one individual with other having varying behavioral traits.

B. Graphic rating:
According to Dessler et al. (2011), Graphic Rating Scale is a scale that lists a number of
traits and a range of performance for each. The employee is then rated by identifying the score
that best describes his or her level of performance for each trait. In this method, the raters used a
graphic scale to appraise certain specific factors such as quality of work, quantity of work,
dependability, etc. The graphic scale method is simple to understand, easy to conduct and less
time consuming. However, there is lot of paper work and there are chances of rater bias.
The following is an example of graphic scale:


Quality of Work

Dependability
Excellent


Good

Average


Poor



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C. Check List:
In this case, a list is prepared containing various work related statements such as quality
of work, speed, etc. In this method a dichotomous questionnaire (A question with two answer
choices namely `Yes' or `No') is used. A rater is required to put a tick mark against the
respective column.
The rater indicates the individual performance by checking yes or no squares to various
statements. The main advantages are the simplicity, convenience, less time consuming, and less
expensive, reduces the evaluator's burden of rating the employee The main disadvantage of this
method is the rater is not given the flexibility to add or delete the statements. A typical check
list is given below:
Check list for Employee
(1) Is the employee regular?
(2) Does he/she complete the assignment on time?
(4) Does he/she participate in extra-curricular activities?

D. Confidential Reports:
This is an old and traditional method or appraising employees. A confidential report is a
report on the subordinates strengths and weaknesses. It is used for a variety of personnel
decisions such as transfers, promotions etc. It is normally used in Government departments and
small business units. Here, the evaluation is done by the immediate boss or supervisor. This is a
poor method of performance appraisal, as it does not provide proper feedback to the employees.

E. Critical incident method:
This method evaluates an employee on the basis of certain `events' or `episodes' known
as critical incident. The underlying principle of this method is "there are certain significant acts
in each employee's behaviour and performance, which can make all the difference between
success and failure on the job." Thus, in this method the rater focuses his attention on all those
factors that can make a difference between performing a job in a note worthy manner.
For instance, in a particular incident in which a salesman convinces an argumentative customer
to buy the product, then the salesmans performance may be given higher score.

F. Narrative Essay:
The simplest method is the narrative essay. In this, the rater describes in detail an
employees strengths and weaknesses, and potential, together with suggestions for
improvement. As there is no prescribed format, the length and content of essay is likely to vary.
Similarly, the quality of Essay would depend upon the rater's writing skills. As the essays are
descriptive in nature, it only provides qualitative information about the employee. If essays are
written well, they can give detailed feedback to the subordinates in respect of their performance.



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G. Forced Distribution Method:
This technique was contributed by Joseph Tiffin. The method operates under the
assumption that an employee's performance can be plotted in a bell shaped curve. Here 20% of
the employees are given excellent grade, 70% are given the average grade and last 10% are
given poor grade.




6.2 Modern Methods:
A. MBO (Management by Objective or Joint Target Setting):
This method was propounded by Alfred Sloans and Donaldson Brown in 1920s.
However, it was further popularised by Peter Drucker in his book "The Practice of Management"
in 1954. According to George S. Odiorne, MBO can be described as "a process whereby the
superior and the immediate subordinate of an organisation jointly identify the common goals,
define each individual's major areas of responsibility in terms of results expected of him and use
these measures as guides for operating the unit and assessing the contribution of each of its
members."
In this method emphasis is laid on stating objectives for Key Result Areas (KRAs) in
Quantifiable terms. For example, in case of Research and Development department, objective is
stated in the following terms i.e. to design a new product by 31st March, 2013. MBO is used as a
performance appraisal technique, as it is easy to measure whether the stated objectives have been
achieved or not.
In MBO, the process involved is as follows:
- The superior and subordinate managers jointly define common goals.
- The subordinate manager implements the plan.
- Joint review of plans where performance appraisal of subordinate manager takes place.

B. BARS (Behaviourally Anchored Rating Scale):
In order to overcome the problem of judgmental evaluation, this method was conceived
by some organisations. This method combines the benefits of Essay Method, Critical Incident
and Rating scales. In this method the employee's behaviour and performance dimensions are
analysed and used for evaluating the performance of the employee. The HR department is

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involved in the process of preparing the BARS. Based on the Employee's performance and
behaviour, employees are anchored in different slots of good, average and poor. The rater is
required to give corresponding ratings to the employee. For example:
Good
(9, 8, 7)
(1) Has command over the subject.
(2) Is abreast with latest information.

Average
(4, 5, 6)
(1) Has subject knowledge.
(2) Is not very up-to-date with latest happenings.

Poor
(1, 2, 3)
(1) Has no subject knowledge.
(2) Is not at all aware.

C. Assessment Centers:
This method was used to appraise army officers in Germany way back in 1930s. The
concept was adapted from army to business arena in 1960s. In India, the concept has been
adopted by organisations such as Crompton Greaves, Eicher, Hindustan Lever and Modi Xerox.
This method is mainly used to evaluate executive and supervisory potential. Here employees are
taken to a place away from work and a series of tests and exercises are administered. For
example, assesses are asked to participate in; in-basket exercise, simulations, group exercise and
role plays. Performance of the employee is evaluated in each of these tests and feedback is
provided to the ratee, in terms of strengths and weaknesses.

D. 360 Appraisal Method:
Where multiple raters are involved in evaluating performance, the technique is called
360-degree appraisal. The 360-degree technique is understood as systematic collection of
performance data on an individual or a, group derived from a number of stakeholdersthe
stakeholders being the immediate, team members customers peers and self. In this method an
employee's performance is evaluated by his supervisor, subordinates, peers and customers (or an
outside expert). All these appraisers provide information or feedback by completing a
questionnaire designed for this purpose. The 360-degree degree appraisal provides a broader
perspective about an employees performance. In addition, the technique facilitates greater self
development of the employee. It enables an employee to compare his evaluation about self with
perceptions of others.


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7. Problems Faced In Performance Appraisal
There are several challenges which arise in the practice of performance appraisal activities:

1. Fairness: The main issue in the practice of performance appraisal activity is the fairness
of the evaluation decision. Raters have problems evaluating the performance appraisal in
a proper way. Performance of individual employees that is not measured accurately can
lead to dissatisfaction with the system.

2. Less knowledgeable raters: One of the factors that contribute to employees
dissatisfaction is that raters are not knowledgeable and do not have the required skills.
This will affect the process of evaluation because bias, unfairness and unreliability may
occur. Although there is a formal evaluation form and a set of standards to be followed,
employees seem not to trust the tools of evaluation.

3. Subjectivity in the performance evaluation: There is an issue of subjectivity in the
performance evaluation in the public and private sector. Although it is written in black
and white to be as objective as possible, however, during the implementation of
performance appraisal, the evaluation becomes subjective. The subjectivity of the
evaluation discourages employees on supporting the measurement of performance
appraisal. Therefore, the objective of the performance appraisal is not achieved.

4. The quota system: practiced in certain organization also creates dissatisfaction among
employees. Only a small portion of the employees will get salary increment either
vertically or diagonally. Therefore, although the employees may perform well, they might
not get a reward because it depends on the quota system. This will lead to a decrease in
work performance, self-esteem and loyalty to the organization.

Performance appraisal should suit the organizations culture. Research findings strongly
suggest that multinational companys manager should carefully design the appropriate system
for foreign operation based on the different cultural factors of the country.









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8. Ethical Issues Involved In Performance Appraisals
A manager must consider ethics as an important aspect while carrying out performance
appraisals. These appraisals can be highly subjective, which can impact the relationships
between the managers and the employee being reviewed. There are many different ways that a
meeting can do from ethical to unethical. Listed are some of the general appraisal characteristics
and an understanding on how it can be unethical:

1. Rewards, punishments and threats
These should be used in a positive way. If they are negatively used, it can affect the morale of
the employee. An appraiser should not be able to reward an employee that he/she likes more than
another, when the other is more qualified.

2. Reliability and validity
The appraiser should provide consistent, reliable, and valid information
Job Relatedness
Standardization
The performance appraisal process, forms, administration techniques, and ratings should be
standardized so it affects all employees of the group. For example, if they provide one form or
rating system for one employee, they must provide the same for another.

3. Rater Bias
The person filling out the forms and rating the other employee or manager may distort the
information by using their own values or prejudices.

4. Similar-to-me/Different-from-me Error
This is where the rater creates a bias for a person whose characteristics are similar or different
from their own. Instead of measuring the individuals job performance; they end up measuring the
individual against another person.

5. Employee Access to Results
Feedback is necessary for growth or change to occur. Keeping any results away from the
employees is unethical

6. Confidentiality
The feedback that the appraiser provides should be confidential. Leaking it to unnecessary
employees is unethical.





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9. Performance Management and Appraisal at IOT

9.1 The Process:
Period: - April-March (other organizations appraises in September)

Eligibility: - Joined on or before 31
st
December of previous year

- The performance management and appraisal at IOT is done through an online process.
360 performance management is not followed instead it follows MBO and forced
distribution method.

- IOT appraisals and performance management includes appraisals for previous years and
setting goals. In this process the evaluation of employees performance over the past
three years is considered. Though no official mid-term review takes place an immediate
feedback is always provided. The review team for the same consists of four members. An
employee with 2 years of service is eligible for promotion. IOT rates its employees on the
scale of 1-5 and a bell shaped curve is plotted based on these ratings.

- IOT defines a HIPO system for the employees with outstanding performance. Employees
with 90% performance are eligible to at least 10% bonus, while if they have an
outstanding performance they may get hike of about 12-14%.

- If the performance of a good rated employee is observed to be degrading the root cause
analysis for the same takes place and accordingly action is taken. Employees below 60%
score are not eligible for appraisal.

- For the employees with rating 2 a warning is given and if no improvement in such
employees takes place then they are terminated. Employees with rating 1 are subject to
immediate termination.

- IOT doesnt provide any non-monetary perks or rewards.










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9.2 ETHICAL ISSUES INVOLVED:
As far as performance appraisal at IOT is concerned they do not have any ethical issues involved
rather they describe it as dilemmas. They are as follows:
Dilemma:
- In case of two employees with same score but only one position:
In this situation IOT tries to promote both the individuals but, if it is not possible to do so
IOT decides who should be promoted on basis of the suitability of the person for the
position based on performance as well as his compatibility (considering personality
traits). To avoid the demotivation of the other employee it tries to promote that employee
to a position equally valuable in other vertical. In case if there is no scope for any such
parallel promotion the employee is assured to be promoted according to his potential
whenever there is a scope for promoting.

- In case of an overall economic crunch:
In the recent years due to the economic slowdown the company was not able to give the
promised increments as far as the salaries were concerned. In this situation they had no
choice but to reduce the margin of increment.

Scope for Improvement:
Though the appraisals takes place in March-April the actual benefits of it are reaped from
the months of July to September which shows that the implementation takes place quite long
time. This waiting period is mainly due to complicated procedures in the promotions of high
rated employees. An efficient and quick process needs to be followed to reduce this lean time.

Myth & Reality:
Performance management and appraisal is not only restricted to promotions and
appraisals but also it is a way to self evaluation. However employee perceives performance
directly in terms of monetary gains and not as a constructive feedback.
The performance management followed at IOT facilitates not only salary rise and promotions but
it also helps in self assessment helping him in self improvement through the goal setting.











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10. Global Trends

The emergence of following concepts and the following trends related to Performance appraisal
can be seen in the global scenario

1. Performance measuring system
Performance measuring, rating and review systems have become more detailed,
structured and person specific than before.

2. Performance related pay
Performance related pay is being incorporated in the strategies used by the organisations
nowadays

3. 360 Degree Appraisal
360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive
appraisal where the feedback about the employees performance comes from all the
sources that come in contact with the employee on his job. Organisations are increasingly
using feedback from various sources such as peer input, customer feedback, and input
from superiors. Different forms with different formats are being used to obtain the
information regarding the employee performance.

4. Team Performance Appraisal
According to a wall street journal headline, "Teams have become commonplace in U.S.
Companies". Most of the performance appraisal techniques are formulated with
individuals in mind i.e. to measure and rate the performance of the individual employee.
Therefore, with the number of teams increasing in the organisations, it becomes difficult
to measure and appraise the performance of the team. The question is how to separate the
performance of the team from the performance of the employees. A solution to this
problem that is being adopted by the companies is to measure both the individual and the
team performance. Sometimes, team based objectives are also included in the individual
performance plans.

5. Rank and Yank Strategy
Also known as the "Up or out policy", the rank and yank strategy refers to the
performance appraisal model in which best-to-worst ranking methods are used to identify
and separate the poor performers from the good performers. Then the action plans and the
improvement opportunities of the poor performers are discussed and they are given to
improve their performance in a given time period, after which the appropriate HR
decisions are taken. Some of the organisations following this strategy are Ford, Microsoft
and Sun Microsystems.

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11. Conclusion
Performance management and Performance appraisal are two terms that are used in the
field of evaluation of employee efficiency. These two procedures differ in terms of their concept
and connotations. Performance appraisal consists in the setting of job standards and evaluation of
the past performance. It is understood that the evaluation is carried out based on the job
standards that have earlier been set. On the other hand performance management concentrates on
managing the performance in state time so that the performance can reach the expected level.
Both these types are employed by the company or a firm in a bid to evaluate the performance
skills of its employees especially in the present scenario characterized by competitive nature of
economy and rapid changes in the environment.

Many companies continue to rely on traditional performance management processes
because they provide a consistent way to evaluate employees and apportion rewards. Year after
year, managers follow a well-worn routine: Fill out goal forms, track progress, fill out more
forms, conduct a formal annual assessment, and then fill out more forms. But when it comes to
motivating and engaging people, these conventional processes seem increasingly obsolete.
According to a recent World at Work study, 58 percent of HR leaders gave their performance
management process a C grade or worse. Few other processes in an organization are allowed
to perform so poorly, and performance management should not be allowed to any longer.

The challenge is that while the way work gets done has changed dramatically over the
last few decades, performance management processes at many organizations have remained
essentially the same. In this new world of work, team relationships often influence an
individuals performance more than a supervisor. For team members, on-the-spot improvements
based on immediate feedback from their peers can have a big impact on performance. Plus, as
individual and organizational goals are increasingly tied to project cycles that last a few months
or weeks, the fiscal year can become less relevant. Add in the matrix organizationwith
individuals migrating from one cross-functional team to another, each with a different leader
and performance management can turn into chaos.

While no single answer has emerged that spans the conflicting needs of the organization
and its individuals, the search for innovation in performance management is accelerating.









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12. Bibliography

Human resource management Text and cases by K. Ashwathappa

Human resource management P. Subba Rao

www.iotinfraenergy.com

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http://www.oocities.org/wilfratzburg/performanceappraisal.html

http://www.pugetsound.edu/files/resources/4027_SupvrRole.pdf

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%20Performance%20Appraisal-
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