1 CHAPTER-1 1.1 About the study An effective study on Performance appraisal of employees at The Dharmapuri District co- operative milk producers union ltd, krishnagiri-2.as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi- annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. Appraising the Performance of the individual, groups and organization is a common practice of all societies. While in some instance these appraisal processes are structured and formally sanctioned. In other instances they are an integral and informal part of daily activities. The teacher evaluates the performance of student, banker evaluates the performance of creditors, parents evaluate the performance of their of their children and all of unconsciously or unconsciously evaluate our own action from time to time. In social interaction, performance evaluation is done in a haphazard an often unsystematic way. But in organization formal programs of evaluating employee and managerial performance – conducted in a systematic and planned manner have achieved popularity in recent years. During and after world war-1 the systematic performance appraisal was quite prominent credit goes to Walter dill scolt for systematic performance appraisal technique of man to rating system (or merit rating) it was used for evaluating military officers. Industrial concern also used this system during 1920 and 1940’s for evaluating hourly paid workers. However with the increase of training and management development programs from 1950’s management started adopting performance appraisal for evaluating technical, skilled, professional and managerial personnel as a part of training and managerial development programs.
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1
CHAPTER-1
1.1 About the study
An effective study on Performance appraisal of employees at The Dharmapuri District co-
operative milk producers union ltd, krishnagiri-2.as a structured formal interaction between a
subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-
annual), in which the work performance of the subordinate is examined and discussed, with a
view to identifying weaknesses and strengths as well as opportunities for improvement and skills
development.
Appraising the Performance of the individual, groups and organization is a common practice of
all societies. While in some instance these appraisal processes are structured and formally
sanctioned. In other instances they are an integral and informal part of daily activities. The
teacher evaluates the performance of student, banker evaluates the performance of creditors,
parents evaluate the performance of their of their children and all of unconsciously or
unconsciously evaluate our own action from time to time. In social interaction, performance
evaluation is done in a haphazard an often unsystematic way. But in organization formal
programs of evaluating employee and managerial performance – conducted in a systematic and
planned manner have achieved popularity in recent years.
During and after world war-1 the systematic performance appraisal was quite prominent
credit goes to Walter dill scolt for systematic performance appraisal technique of man to rating
system (or merit rating) it was used for evaluating military officers. Industrial concern also used
this system during 1920 and 1940’s for evaluating hourly paid workers. However with the
increase of training and management development programs from 1950’s management started
adopting performance appraisal for evaluating technical, skilled, professional and managerial
personnel as a part of training and managerial development programs.
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1.2 INTRODUCTION
PERFORMANCE APPRAISAL
Appraising the performance of individual, groups and organizations is a common practice of all
societies. While in some instance these appraisal processes are structured and formally
sanctioned, in other instances they are in informal and integral part of daily activities. Thus
teachers evaluate the performance of students, bankers evaluate the performance of creditors,
parents evaluate the behaviors of their children, and all of us, consciously or unconsciously
evaluate our own actions from time to time. In social interactions, performance is conducted in a
systematic and planned manner to achieve widespread popularity in recent years.
Meaning:
Performance: process of performing a task or function.
Appraisal: assessment/ a formal assessment of the performance.
Performance appraisal is a method of evaluating the skill, efficiency, ability, knowledge,
behavior etc., of employees in the work spot. Normally include in both the qualitative and
quantitative aspects of the job performance. Performance appraisal is the step where the
management finds out how effective it has been at hiring and placing employees. In other words,
performance appraisal may be understood as the assessment of individual’s performance in a
systematic way. The performance being measured against such factors as job knowledge, quality
and quantity of output, initiative leadership abilities, supervision, dependability, co-operation,
judgment, versatility, health, etc. the performance appraisal is considered to be the most
significant and indispensable tool for an organization for the information provides as useful in
making decisions regarding various personnel aspects such as promotions and merit increases. It
is a tool for executive development is an attempt at improving an individual.
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Definition:
According to “Flippo”, a prominent personality in the field of human resources,
“performance appraisal is the systematic, periodic and an impartial rating of an employee’s
excellence in the matters pertaining to his present job and his potential for a better job,”
performance appraisal is a systematic way of reviewing and assessing the performance of an
employee during a given period of time and planning for his future.
Importance of performance appraisal:
Performance appraisal can achieve and contribute to the management when they are properly
managed:
Assessment and analysis
Appraisal and manager mutual awareness, understanding and relationship
Resolving confusion and misunderstanding.
Clarification, definition, redefining priorities and objectives.
Motivation through agreeing helpful aims and targets.
Motivation through achievements and feedback.
Training needs and learning desires-assessment and agreement.
Identification of personal strength and direct – including unused hidden strength.
Career and succession planning-personal and organizational.
Team roles clarification and team building.
Organizational training needs employee growth and development.
Counseling and feedback.
There are various ways of conducting performance appraisals, and ideas change over
time as to what are the most effective appraisal methods and system. In fact performance
appraisal of all types are effective if they are conducted properly, and better still if the
appraisal process is clearly explained to, agreed by, the people involved well prepare and
well conducted
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Objectives of performance appraisal:
The objectives of a performance appraisal may be as follows:
A. Evaluative
Compensation
Staffing
Evaluate selection system
B. Developmental
Performance feedback
Future direction
Training needs assessment
Almost all organizations practice performance appraisal in one form or another to achieve
certain objectives. These objectives may vary from organization to organization or even within
the same organization from time to time. It has been found that there are two primary objectives
behind the use of this methodology. One is to use it an evaluation system and second, to use it as
a feedback system.
The aim of the evaluation system is to identify the performance gap. This means that it
helps to determine the gap between the actual performance of the employees and that required or
desired by the organization.
The aim of the feedback system is to inform the employee about the quality of his work
or performance. This is an interactive process by which the employee can also speak about his
problems to his superior.
An effective performance appraisal system should emphasis individual objectives, organizational
objectives and also mutual objectives.
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From the organizational view point a performance appraisal should generate manpower
information, improve efficiency and effectiveness serve as a mechanism of control and provide a
rational compensation structure. In short the appraisal system establishes and upholds the
principle of accountability in the absence of which organization failure is the possible outcome.
Purpose of performance appraisal:
To create ant to maintain a level of satisfactory level of performance.
To know the performance potential.
To have good internal communication.
To contribute to the employees development and growth.
To help senior to have a proper understanding about subordinates.
To guide to job changes with the help of continuous based on performance.
To provide information for making decisions.
Essential characteristics of an effective appraisal system:
Performance appraisal system should be effective as a number of crucial decisions are
made on the basis of score or rating given by the appraisers, which in turn, is heavily based on
the appraisal system. An appraisal system, to be effective, should possess the following essential
characteristics:
Reliability and validity
Job relatedness
Standardization
Practical viability
Legal sanction
Training to appraisers
Open communication
Employee access to results
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Who will appraise?
The appraisers may be any person who has through knowledge about the job content,
contents to be appraised, standards of contents and who observes the employee while performing
a job. The appraiser should be capable of determining what is more important and what is
relatively less important. He should prepare reports and make judgments without bias. Typical
appraisers are:
Supervisors
Peers
Subordinates
Self-appraisal
Users of services
Consultants
1.1.2 Chart showing appraiser
When to appraise?
Informal appraisals are conducted whenever the supervisor or personnel managers feel it
is necessary. However systematic appraisals are conducted on a regular basis e.g., for every 6
months or annually. One study of 244 firms found that appraisals were most often conducted
once a year.
Supervisors Peers Subordinates
Users of services Consultants Self-appraisal
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According to another Indian study, eight organizations apprised their supervisory
personnel at their anniversary date of joining. Research has also indicated that appraisals for
development purpose be separated from those for salary administration.
Problems with performance appraisal
The problems inherent in performance appraisal may be listed thus:
Judgment errors
Poor appraisal forms
Lack of rater preparedness
Ineffective organizational policies and practices
Judgment errors:
People commit mistakes while evaluating people and their performance. Biases and judgment
errors of various kinds may spoil the show. Bias here refers to inaccurate distortion of a
measurement. A few of them are:
First impressions(primary effect)
Halo
Horn effect
Leniency
Central tendency
Problems areas of performance appraisal
Recent performance most influential
Focus on outstanding events
Personal feelings-halo effect
Lack of yardsticks
Rater attitudes
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Leniency/stringency error
Similar-to-me error
Central tendency error
First impression error
Racial bias
Focus on longevity
Complacency of managers
Avoiding appraisal problems:
Evaluating individual job performance as a basis for making objective personnel decisions.
Making performance appraisals legally defensible
Use job analysis to develop the appraisal system
Check that the appraisal system is behavior-oriented, not trait-oriented
Have evaluators follow specific written instructions when conducting appraisals
Have evaluators review results with the rates.
Performance appraisal contents of an officer
Attendance
Punctuality
Expression-written & oral
Presentation skills
Job knowledge
Knowledge of related jobs
Ability to get along with others
Technical knowledge/ skills
Reasoning ability
Application of mind
Ability to work under stress
Integrity
Honesty and sincerity
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Effective performance appraisal:
Apart from traditional performance appraisals, there are many different methods of
performances evaluation. The use of these methods depends on the purpose of the evaluation, the
individual, and the environment.
The performance appraisals generally the over-riding instrument, which gathers together
and review all other performance data.
What is to be appraised?
Content appraised may be in the form of contribution to the organization objectives like
productive, cost saving, return on capital etc.
Appraisal method:
Confidential report
Graphical rating scales
Ranking method
Paired comparison method
Forced distribution method
Checklist method
Simple checklist
Weighted checklists
Forced choice
Critical incident method
Essay or free from appraisal
Group appraisal
Behaviorally anchored rating scales
Assessment center
Human resources accounting
Management by objectives(also known as appraisal by objectives)
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Chart no: 1.1.3
Process of performance appraisal
Establish performance standards
Communicate performance to
employees
Measure actual performance
Compare actual performance with
standard
Discuss the appraisal with the employee
If necessary, initiative corrective action
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Establish performance standards;
The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judges the performances of the employees as successful or
unsuccessful and degree of their contribution to the organizational goals and objectives. The
standards set should be clear, easily understandable and in measurable terms. In case the
performance of the employee cannot be measurable, great care should be taken to describe the
standards.
Communicate the standards:
Once sets, it is the responsibility of the managements to communicate the standards to the
employees of the organization. The employees should be informed and the standards should be
clearly explained to them. This will helps them to understand their roles and to know what
exactly is expected from them. The standards should also be communicated to the appraisers or
the evaluators and if required, the standards can also be modified at the stages itself according to
the relevant feedback from the employees or the evaluators.
Measuring the actual performance:
The most difficult part of the performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified
period of the time. It sis a continuous process which involves monitoring the performance
throughout the year. This stage requires the careful selection of the appropriate techniques of
measurement, taking care that personal bias does not affect the outcome of the process and
providing assistance rather than interfering in an employees work.
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Comparing the actual performance with the desired performance:
The actual performance is compared with the desired or the standard
performances. The comparison tells the deviations in the performances of the employees from
the standards sets. The result can show the actual performances being more than the desired
performances or, the actual performances being less than the desired performances. It includes
recalling, evaluating and analysis of data related to the employees’ performance.
Discussing results:
The result of the appraisal is communicated and discussed with the employees on
one- to-one basis; the focus of this discussion is on communication and listening. The results, the
problem and the possible solutions are the aim of problem solving and reaching consensus. The
feedback should be given with a positive attitude as this can have an effect on the employees’
future performance. The purpose of the meeting should be to solve the problem faced and
motivate the employees to the perform better.
Uses of performance appraisal
The following uses of a performances appraisal
Performance improvement
Compensation adjustment
Placement decisions
Training and development needs assessment
Career planning
Job design error detection
Detection of external factors influencing job performances
Performance deficiencies may be due to family or other pressures.
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Why performances appraisals fail:
A. Guilt : many supervisors feel uncomfortable in making judgments about the
performance of other.
B. Lack of accountability: managers often go through the motions of the performance
appraisal without giving any real thought to the process because they are not held
accountable for the accuracy of the appraisals.
C. Ineffective application of standards: Overrating often results when supervisors do
not have a good grasp of the standards being applied.
D. Fear of hurt feelings: Some supervisors would rather give everyone a high rating
than risk ’’hurting someone’s feeling” by pointing out performance deficiencies.
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1.3 NEED FOR THE STUDY
A performance appraisal (PA) or performance evaluation is a systematic and periodic
process that assesses an individual employee’s job performance and productivity in relation to
certain pre-established criteria and organizational objectives. Other aspects of individual
employees are considered as well, such as organizational citizenship behavior accomplishments,
potential for future improvement, strengths and weaknesses, etc.
The aim of performance appraisal is to encourage employees to set his objectives for the next
time period following his past performance in order to improve his performance on the job.
These objectives should be mutually agreed, for next twelve months, as far as possible every
employee should be aware of transaction objectives, since they provide a basis for individual’s
performance objectives. The other basis is the appraise and the wishes of the employee
himself. In order to set worthwhile defectives, it is necessary.
Effective promotions and transfers,
Assess training needs etc.
These objectives are appropriate as long as the approach in individual is individual.
Appraisal in future would assume system orientation. In system approach appraisal aims
at improving the performance instead of merely assessing it emphasize is not on
individual assessment rewards or punishment but it is on how the work system
affects the individual performance.
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1.4 COMPANY PROFILE
The Dharmapuri District Cooperative Milk Producers' Union has been registered under
Cooperative Societies Act on 29-05-1982 and started functioning with effect from 1-6-1982.
The Tamilnadu Co-operative Milk Producers' Federation Ltd, Chennai, the State Level Apex
Body has handed over the Assets and liabilities charges on 16-11-1982. During that time the
Union had 310 numbers of Milk Producers' Cooperative Societies and 30015 members with an
average milk procurement of 32,207 lits of milk per day. At present the Union is procuring 1,
40,000 Lts per day from 665 Milk Producers Cooperative Societies in the district. 1, 49,000
producer members are involved in the white revolution of the Union.
1.4.1 THE DHARMAPURI DISTRICT CO-OPERATIVE MILK PRODUCERS UNION