1.1 Background of the Study Information technology (IT) revolutionized many aspects of a business. There is hardly any organization which has not installed at least one ubiquitous computer. There is a wide choice for computer users - from a simple PC to sophisticated network of computers. Applications of computers in various function is common these days; from mere data storage to more advanced software packages like ERP which can do many things in an organization but fortunately, cannot substitute common sense or human ingenuity. It is well to remember that IT is one more tool in hands of a management to get things better and faster. Example of IT application, ERP which is one of the latest developments in software for business enterprise wide Resources Planning (ERP) System is an integrated business management system which covers some important aspects of business such as logistics, production, finance, accounts, human resources, planning, materials and warehouse management. Right from the receipt of an inventory, an ERP system tracks materials, capacity and labor resources. Thus an ERP system package claims to aid a business to manage it activates dynamic and integrated manner. But it is equally important to understand and appreciate the flip side of such sophisticated IT packages like ERP. 1
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1.1 Background of the Study
Information technology (IT) revolutionized many aspects of a business. There is
hardly any organization which has not installed at least one ubiquitous computer. There is a
wide choice for computer users - from a simple PC to sophisticated network of computers.
Applications of computers in various function is common these days; from mere data
storage to more advanced software packages like ERP which can do many things in an
organization but fortunately, cannot substitute common sense or human ingenuity.
It is well to remember that IT is one more tool in hands of a management to get
things better and faster.
Example of IT application, ERP which is one of the latest developments in software
for business enterprise wide Resources Planning (ERP) System is an integrated business
management system which covers some important aspects of business such as logistics,
production, finance, accounts, human resources, planning, materials and warehouse
management. Right from the receipt of an inventory, an ERP system tracks materials,
capacity and labor resources. Thus an ERP system package claims to aid a business to
manage it activates dynamic and integrated manner.
But it is equally important to understand and appreciate the flip side of such
sophisticated IT packages like ERP. First of all the people ho handle such a package must
be qualified and must posses relevant work experience in the functional module, which a
person wants to get trained.
An organization, which wishes to work with ERP, must have already had
experience with proper working IT infrastructure. There should be enough number of
terminals for concerned people to key in data or run a query.
One of the toughest things to overcome is the attitude of the people for adapting to a
change. Thus ushering in a new "IT culture" remains one of the greatest challenges for any
management interested in adapting IT as a tool in as many functions of the organization as
possible.
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The vital role of IT is to support a management and not control it. Thus the IT most
understands their role vis-à-vis decision-making. Just because a sophisticated IT package
has been installed in an organization cannot guarantee success .If for example, a vendor is
supplying poor quality supplies consistently, the information system will tell the
management of such a fact faster. But now it is up to the management to initiate corrective
measures- visit vendor to assist him to come up to standard, develop alternate vendor or
import.
Some cautious management would like to implement information system module
by module to gain experience. Such a procedure may or may not guarantee success. Some
IT experts urge an organization to implement a total IT system such as ERP-a classic case
of all or bust.
In the enthusiasm to appear very modern and up-to date a management may go in
for IT package when the ground reality within the organization is not conductive to such a
drastic change. On the other hand a few well-tried techniques do wonders for an
organization. For example, an organization's urgent need may be to change existing
technology to an upgraded one. An ERP package obviously, won't tell the management to
do just that. Also, a few time -honored principles like "do it right at the first time" must be
followed in an organization with or without a sophisticated IT tools.
A responsible management will put the IT in its place to serve the overall business
interests.
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2.1 Statement of the Problem
The research intends to study the different approaches of appraisals adopted by
software Companies. It also analyses the most commonly occurring errors within
performance appraisal methods and to understand the level of effectiveness of 360º
appraisal in the industry
2.2 Need and Importance of the Study
This study is conducted with respect to understanding the different appraisal
systems conducted in the software industry and their effects thereafter in the same. Due to
time and resource constraints, the study was restricted to the software industry in Bangalore
City.
2.3 Objectives of the Research
1. To find out the different appraisal systems followed by software companies.
2. To find out who appraises the employees.
3. To analyze and study the benefits of the appraisal systems.
4. To analyze the shortcomings of the appraisal systems.
5. To identify the criteria and measures adopted to evaluate employee performance.
6. To find out the level of effectiveness of the 360 degree feedbacks.
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2.4 Review Of Literature
Purpose
The literature review section examines the importance of search studies, company
data or industry reports that serve as a foundation for the setup of study. The research
dimension of the related literature and the relevant information begins from an explanatory
perspective, approaching towards specific studies which do related to the judge the
limitations and informational gaps in data from the secondary sources.
This analysis may reveal conclusions from past studies to realize the reliability of
the secondary sources and their credibility. This in turn enables one to rely on a
comprehensive review for the study.
Analysis of previous study
A survey about current practice, which is followed in companies to appraise performance:
( Phatak, International Dimensions of Management)
Almost all software companies responding do have formal appraisal programs.
About 93% of smaller organizations (those with fewer than 500 employees) have such
programs. About 97% of large organizations have them.
Rating scales are by far the most widely used appraisal technique. About 62%
of small organization use rating scales, 20% use essays, and about 19% use MBO.
Among the large organizations, 51% use rating scales, just over 23% use essays and
about 17% use MBO.
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However, those using ratings as the main appraisal technique typically also
require narrative comments to justify rating and to describe employee strengths and
weakness and document development plans. Those using essays as the main appraisal
technique usually require an overall quantitative performance rating to facilitate
employee comparisons for compensation decisions.
The employee’s immediate supervisor makes Ninety two percent of appraisals.
These appraisals are in turn reviewed by the appraiser’s supervisor in 74% of the
responding organizations.Only about 7% of the organizations use self-appraisal in any
part of the overall appraisal process.Virtually all employees (99%) are informed of the
results of their appraisals. Overall about 77% are given a chance to respond with
written comments on their appraisals. In 69% of companies, appraisals are done
annually.
Methods of reviewing the literature
The review of literature does scrutinize the important research studies. The primary
sources that provide relevant information are the best form to retrieve data from the
research. The primary sources were encouraged with the help of distribution of questioners
as well as conducting personal interviews. With this the data received enables the
researcher to accurately arrive at the problem of the study and the consecutively solutions
to the same. The secondary sources were also relied on for additional information. It
includes company journal, newsletters, records, manuals etc.
Conclusion
Performance management lays an evaluative and developmental dimension to its
makeup, and is crucial in both linking rewards to performance and providing a platform for
the development of employees. Over concentration on the assessment of performance can
work to the detriment of effort aimed at establishing the development needs of the
individual in an open and honest way. The manager, as an appraiser, may encounter
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difficulties in reconciling the roles of 'judge' and 'mentor'. Managers need to develop the
skills of coping with such tensions in their roles. In some organizations, this problem is
solved by having different managers carrying out performance and development appraisals.
Appraisal provides the context in which mangers can seek to ensure that there is acceptable
congruency between the objectives of the individual and those of the organization.
Although one recognizes the part played by performance management in the
determination of rewards, we believe that if treated as a way of providing feedback on
progress and of jointly agreeing the next set of aims, the appraisal can have a positive effect
on individual motivation.
2.5 Operational Definition of Concepts
Performance Appraisal
Performance appraisal is the assessment of an individual's performance in an
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 etc. assessment should not be confined to
the past performance alone. Potentials of the employee for the future performance must
also be assessed.
Performance appraisal can be defined as "the systematic evaluation of the
individual with respect to his or her performance on the job and his or her potential for
development".
A more comprehensive definition is, “Performance appraisal is a formal structured
system of measuring and evaluating an employee's job and how the employee can perform
effectively in future so that the employee, organization all be benefited."
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Performance appraisal, to common understanding, is the formal and informal
assessment of the performance of the employee at work. In an informal system we are
aware that superior is continually making judgments about their subordinates' performance
on a subjective basis. By contrast, superiors could resort to using formalized appraisal
techniques when assessing the performance of subordinate, and these judgments arc
considered to be more objective. In formalized systems the terms 'performance appraisal
and 'performance management' are used. Both refer to a process where by mangers and
their subordinates share understanding about what has to be accomplished, and the manager
will naturally be concerned about how best bring about those accomplishments by adept
management and development of people in short and long terms. Also, performance would
be measured using the techniques discussed in this chapter and it will be subsequently
related to targets or plans. In this way the subordinate receives feedback on his or her
progress.
A distinguished feature of performance management is its integrating strength in aligning
various processes with corporate objectives: for example, the introduction of performance-
related payment system and mobilization for training and development resources to achieve
corporate objectives.
Measuring Performance
In many organizations, the feedback on job performance is ambiguous or is given
annually as a ritualistic exercise. Many subordinates therefore have trouble in gasping how
their efforts are perceived by the organization. Almost every one who has worked at a job
can remember times when they were unclear on how their performance was being judged.
The annual performance appraisal system tends to serve only a little purpose: salary
administration, training and succession planning. But this is not the sole objective of
performance appraisal. These objectives will only dilute and weaken the clarity and validity
of any appraisal system. Most organization ties the formal appraisal system directly to
salary increase, which decrease their validity.
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It is therefore very important for organizations to:
(a) Link Salary and Status Realistically to the Performance Appraisals
Most personnel departments have a very narrow outlook to appraisals. The general
view is to receive the appraisal forms at a date (which usually is the deadline), issue
instructions regarding increments and promotions, receive the data regarding the same and
they issue letters to the concerned employee informing of their salary increase. The
appraisal process gets polluted as the appraiser and appraise have at the back of their minds
promotion and salary increase, rather than performance plans and participative reviews.
This dilutes the objectives of appraisal to great extent. In fact, if organizations create, a
culture of continuous feedback on the performance they would be making the appraisal
system more relevant. Several organizations have already started delinking performance
appraisal from salary increase.
(b) Making Objectives of Performance Appraisals Clear to All Employees
If performance appraisal should not directly be linked to salary increase the
question then arises, what should the objectives of performance appraisals be that could be
realistically achieved?
Some suggestions:
To do joint goal setting, and link the goals to the organizational objectives
To provide role clarity by defining Key Result areas for Accounting.
To establish a level of performance in the current job and seek ways of
improving it.
To identify potential for development and to support the total process of
planning
To increase communication between the appraiser and the appraise.
To identify factors that facilitate performance and other factors that hinder
performance.
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To help the employees identify and recognize their own strengths and
weaknesses. To make them assess their own competencies and how the same
can be multiplied and improved.
To generate data about the employee for various decisions like transfers,
rewards, job-rotation, etc.
(c) Focus on Developmental Appraisals
Managers should develop part ownership in the employee's future. Any good
appraisal system should focus on developmental appraisal. Developmental appraisal mean
that an organization needs to develop not just isolated performance appraisal tool/system,
but the total frame work for the individuals development, improvement in job and level of
competence and preparing employees for future jobs. Thus, appraisal of people, which is a
part of the total HRD system, lies to be linked to long-term development activity and
carrier planning.
Organizations have to show vision for the future. Vision, strategies and objectives
will give rise to individual objectives and performance standards. The immediate rewards
and recognition do not lead to enduring performance and upgrading of competence and
therefore are not real motivators. The appraisal as a tool not only gives the individual and
the organization the idea of where the individual stands in terms of his skills, competencies
and abilities, but also monitors the process of growth and development, together with the
inputs that are required to develop a high level of competence by individuals.
(d) Let Employees Appraise Their Own Performance
Subordinates need feedback more often on their performance. The best way to do it
is to let them appraise their own performance.
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Self-appraisal would -
1) Motivate the employee to take more responsibility for his/her own performance.
2) Focus on the job behavior only.
3) Reduce ambiguity in performance and focus on change in job behavior.
When subordinates undertake self-appraisal, they analyze their job duties and how
key issues in a job they handle. Each individual may rate himself or herself.
Self-appraisal may focus on cost control, communication, planning, training, delegation
and decision-making. After self-appraisal, the subordinate discusses the ratings with his/her
direct report or superior to get a feed back on performance. Both then come to an
agreement in areas of convergence and draw a job improvement plan.
(e) Create a Climate for Open Appraisals in Organizations
In most organizations, the concept of open appraisal is misunderstood. Open
appraisal does nut mean that the appraisal ratings are shown by the subordinate, and his/her
signature is then obtained. What it does mean that both the appraiser and the appraise share
their views on performance with each other, identify the areas of improvement and work
towards it. One of the objectives of open communication between the appraiser and the
appraise is to bring them together to solve organizational problems and performance related
problems. The quality of ratings is likely to improve if there is shared understanding
between the appraiser and the appraise.
(f) Muscle Builds the Organization
In today's competitive world, raising performance goals is essential. This entails
analyzing the company's current situation, projecting the future, establishing higher
expectations, and selling the top management on the upgrading process and developing an
action plan.
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Muscle builds the organization by
1) Enhancing your own performance
2) Accelerating the professional growth of the best performers
3) Not tolerating managerial performers. One cannot muscle build the
organization, unless marginal performers are replaced.
4) Developing multiple skills and competencies by worshiping success and
potential.
(g) Build Commitment in the Workplace
Change is an inevitable part of manager's job. As conditions change, individual
responsibilities are also expected to change. In commitment-based approach, the
workplace, jobs are designed to be broader than before, team accountability is as important
as individual accountability for performance. The performance expectations are high and
emphasize continuous important in the workplace.
Managers have to stop being my topic to performance appraisals. No personnel
professional in the 90's will be able to afford the luxury of myopia. We have to see our way
to the various changes in environment that are taking place and those changes that will
revolutionize our organization culture in the out coming years. We must help our
organization's triumphant progress through the 90s, by recognizing and rewarding
performance.
METHODS OR TECHNIQUES OF APPRAISAL
Broadly all the approaches to appraisal can be classified into:
a) Past Oriented Methods and
b) Future – Oriented Method
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a) Past Oriented Methods
Rating Scales
This is the simplest and most popular technique for appraising employee
performance. The typical rating scale system consists of several numerical
scales, each representing a job-related performance criterion such as
dependability, initiative, output, attendance, attitude, co-operation, and the like.
Each scale ranges from excellent to poor. The rater checks the appropriate
performance level on each criterion, and then computes the employee’s total
numerical score. The number of points scored may be linked to salary
increases etc.
Checklist
Under this method, a checklist of statements on the traits of the employee and
his or her job is prepared in two columns – viz., a ‘Yes’ column and a ‘No’ column.
All that the rater should do is to tick the ‘Yes’ column if the statement is positive
and in column ‘No’ if the answer is negative. After ticking off against each item,
the rater forwards the list to the HR department where the actual assessment of the
employee takes place. In other words, the rater only does the reporting, while
actual evaluation is done by the HR department. The HR department assigns
certain points to each ‘Yes’ ticked. Depending on the number of ‘Yes’ the total
score is arrived at. When points are allotted to the checklist, the technique becomes
a weighed checklist.
Forced Choice Method
Here, there would be certain statements mentioned and the appraiser
will only have to select the appropriate statement that suits the appraise. This is
called as Forced Choice Method because here, the appraiser has no freedom at
all. He only has a few statements that he will have to select that suit the
appraise. The list is then forwarded to the HR Department who will do the
assessment. There will be points given to each of the individual statements.
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Forced Distribution Method
One of the errors in rating is leniency – clustering a large number of employees
around a high point on a rating scale. The forced distribution method seeks to
overcome the problem by compelling the rater to distribute the rates on all points
on the rating scale.
The method operates under an assumption that the employee performance level
conforms to a normal statistical distribution. Generally, it is assumed that
employee performance levels conform to a bell – shaped curve. For example, the
following distribution might be assumed to exist - excellent 10%, good 20%,
average 40% below average 20% and unsatisfactory 10%.
The major weakness of the forced distribution method lies in the assumption
that employee performance levels always conform to a normal (or some other)
distribution. In organizations that have done a good job of selecting and retaining
only the good performers, the use of forced distribution approach would be
unrealistic as well as possibly destructive to the employee morale. One merit of
this approach is that it seeks to eliminate the error of leniency. This technique is
however not acceptable by most of the rates and rates.
Critical Incidents Method
This method of employee assessment has generated a lot of interest
these days. This approach focuses on certain critical behaviors of an employee
that make all the differences between effective and non-effective performance
of a job. Such incidents are recorded by the superiors as and when they occur.
One of the advantages of this method is that the evaluation is based on
actual job behavior. Further, the approach has descriptions in support of
particular ratings of an employee. Giving job – related feedback to the rate is
also easy. It reduces bias on the part of the raters. The method however has
significant limitations. These include:
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a) Negative incidents tend to get noticed more than positive incidents.
b) Recording is a chore, so supervisor could easily forget.
c) Overly close supervision may result.
Behaviorally Anchored Rating Scales (BARS)
Behaviorally anchored rating scales, sometimes called as Behavioral
Expectation Scales are rating scales whose scale points are determined by
statements of effective and ineffective behaviors. They are said to be behaviorally
anchored in that the scales represent a range of descriptive statements of behavior
on each scale best described and employee’s performance. Behaviorally anchored
rating scales (BARS) have the following features:
1. Areas of performance to be evaluated are identified and defined by the people
who will use the scales.
2. The scales are anchored by descriptions of actual job behavior that, supervisors
agree, represent specific levels of performance. The result is a set of rating
scales in which both dimensions and anchors are precisely defined.
3. All dimensions of performances to be evaluated are based on observable
behaviors and are relevant to the job being evaluated since BARS are tailor
made for the job.
4. Since the raters who will actually use the scales are actively involved in the
development process, they are more likely to be committed to the final product.
BARS were developed to provide results, which subordinates could use to
improve performance. Superiors would feel comfortable to give feedback to the
rates. Further BARS help to overcome rating errors. Unfortunately, this method
too suffers from distortions inherent in most rating techniques.
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Essay Method
Here, the rater must describe the employee within a number of broad categories
such as.
1. The raters overall impression of the employee’s performance.
2. The promotability of the employee
3. The jobs that the employee is now qualified or capable to perform
4. The strengths and weakness of the employee
5. The training and development assistance required by the employee.
Although, this method might be used individually, it is most frequently used in
combination with others. It is extremely useful in filing information gaps about the
employees that often occur in the better-structured checklist method.
Cost Accounting Method
This method evaluates performance from the monetary returns the employee
yields to his or her organization. A relationship is established between the cost
included in keeping the employee and the benefit the organization derives from him
or her. Performance of the employee is then evaluated based on the established
relationship between the cost and the benefit.
b) Future Oriented Method
Management by Objectives (MBO)
The concept of MBO conceived by Peter F. Drunker, reflects a management
philosophy which values and utilized employee contributions. Applications of
MBO in the field of performance appraisals are a recent thinking.
The working of MBO can be described in four steps:
The first step is to establish the goals each person is to attain. These goals can be
used to evaluate employee performance.
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The second step involves setting the performance standard for the subordinates
in a previously arranged time period. As subordinates perform, they know fairly
well what there is to do, what has been done and what remains to be done.
The third step, the actual level of goal attainment is compared with the goals
agreed upon. The evaluator explores reasons for the goals that were not met and
for the goals that were exceeded. This step helps determine possible training needs.
It also alerts the superior to conditions in the organization that may affect a
subordinate but over which the subordinate has no control.
The final step involves establishing new goals and possibly, new strategies for
goals not previously attained.
Psychological Appraisals
Large organizations employ full time industrial psychologists. When
psychologists are used for evaluations, they assess an individual’s future potential
and not past performance. The appraisal normally consists of in-depth interviews,
psychological tests, discussions with superiors and a review of other evaluations.
The psychologist then writes an evaluation of the employee’s intellectual,
emotional, motivational and other related characteristics that suggest individual
potential and my predict future performance. The evaluation by the psychologist
may be for a specific job opening for which the person is being considered, or it
may be a global assessment for his or her future potential. From these evaluations,
placement and development decisions may be made to shape the person’s career.
360 Degree Appraisal
This is a technique of appraisals wherein multiple rates are involved in
evaluating performance. This is understood as a systematic collection of
performance data on an individual or group, derived from a number of stakeholders
– the stakeholders being the immediate supervisors, team members, customers,
peers and self. In fact, anyone who has any information on ‘how an employee does
the job’ may be one of the appraisers. This provides a broader perspective about an
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employee’s performance. In addition, the technique provides for greater self-
development of the employees. For an employees development multi-source
feedback is very useful as it enables the employee to compare his or her
perceptions of self with the perceptions of others.
360-DEGREE FEEDBACK DEFINED
360° feedback is a relatively new feature of performance management. 360°
feedback has been defined by Ward (1995) as: The systematic collection and feedback
of performance data on an individual or group derived from a number of stakeholders
on their performance.
The data is usually fed back in the form of ratings against various performance
dimensions. 360° feedback is also referred to as multi-source assessment or multi-rater
feedback.
360-DEGREE FEEDBACK – METHODOLOGY
1. The Questionnaire
360° feedback processes usually obtain data from questionnaires, which
measure from different perspectives the behaviors of individuals against a list of
competencies. The competence model may be developed within the organization or
the competency headings may be provided by the supplier of the questionnaire. The
dimensions may broadly refer to leadership, management and approaches to work.
2. Ratings
Ratings are given by the generators of the feedback on a scale against each
heading. This may refer both to importance and performance, as in the questionnaire,
which asks those completing it to rate the importance of each item on a scale of 1 (not
important) to 6 (essential) and performance on a scale of 1 (weak in this area) to 6
(outstanding).
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3. Data Processing
Questionnaires are normally processed with the help of software developed
within the organization or, most commonly, provided by external suppliers. This
enables the data collection and analysis to be completed swiftly, with the minimum of
effort and in a way that facilitates graphical as well as numerical presentation.
4. Feedback
The feedback is often anonymous and may be presented to the individual (most
commonly) to the individual’s manager (less common) or to both the individual and the
manager. Some organizations do not arrange for feedback to be anonymous. Whether
or not feedback is anonymous depends on the organization’s culture – the more open
the culture, the more likely is the source of feedback to be revealed.
5. Action
The action generated by the feedback will depend on the purposes of the
process, i.e. development, appraisal or pay. If the purpose is primarily developmental,
the action may be left to individuals as part of their personal development plans, but
the planning process may be shared between individuals and their managers if they
both have access to the information. Even if the data only goes to the individual, it can
be discussed in a performance review meeting so that joint plans can be made, and
there is much to be said for adopting this approach.
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360-Degree Feedback – Advantages and Disadvantages
Individuals get a broader perspective of how they are perceived by others than
previously possible.
Increased awareness of and relevance of competencies
Increased awareness by senior management that they too have development
needs.
More reliable feedback to senior managers about their performance.
Gaining acceptance of the principle of multiple stakeholders as a measure of
performance.
Encouraging more open feedback – new insights.
Reinforcing the desired competencies of the business.
Provided a clearer picture to senior management of individual’s real worth
(although there tended to be some ‘halo’ – effect syndromes).
Clarified to employee’s critical performance aspects.
Opens up feedback and gives people a more rounded view of performance than
they had previously.
Identifying key development areas for the individual, a department and the
organization as a whole.
Identify strengths that can be used to the best advantage of the business.
A rounded view of an individuals / teams / the organization performance and
what its strength and weakness are
It has raised the self awareness of people managers of how they personally
impact upon others – positively and negatively
It is supporting a climate of continuous improvement
It is starting to improve the climate / morale, as measured through out employee
opinion survey
Focused agenda for development. Forced line managers to discuss
development issues.
Perception of feedback as more valid and objective, leading to acceptance of
results and actions required.
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But there may be problems. These include:
People not giving frank honest feedback;
People being put under stress in receiving or giving feedback;
Lack of action following feedback;
Over-reliance on technology
Too much bureaucracy
These can all be minimized if not avoided completely by careful design,
communication, training and follow-up.
360-DEGREE FEEDBACK – CRITERIA FOR SUCCESS
360-Degree is most likely to be successful when;
It has the active support of top management who themselves take part in giving
and receiving feedback and encourage everyone else to do the same.
There is commitment everywhere else to the process based on briefing, training,
and an understanding of the benefits to individuals as well as the organization.
There is a real determination by all concerned to use feedback data as the basis
for development.
Questionnaire items fit or reflect typical and significant aspects of behavior.
Items covered in the questionnaire can be related to actual events experienced
by the individual.
Comprehensive and well-delivered communication and training programs are
followed.
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APPRAISAL ERRORS
None of the methods for appraising performance is absolutely valid or reliable;
each method has its own strengths and weakness. Let us try to understand the most
commonly occurring errors within performance appraisal methods.
1. Error of Central Tendency:
This refers to the tendency of not using extreme scale scores on the judgment
scale; most of the rates are clustered in the middle.
2. Error of Leniency:
This is caused by the tendency of the lenient rater to put most of the rates on the
higher side of the scale, while a tough rater places them on the lower side of the scale.
3. Halo Effect:
In other words, it is tendency to allow the assessment on one trait to influence
assessment on others. This usually arises when traits are unfamiliar, ill – defined and
involved personal reactions.
4. Error in Unreliability:
This error occurs when there is the existence of inconsistency in the evaluations
of a group of employees by two / more appraisers.
5. Personal Bias:
This error occurs when there exists a close relationship between the appraiser
and the appraise. This tends to influence the evaluation. The scores could be on the
higher when there would be a bias on the side of the appraiser. Therefore, the scores
given could tend to be higher then what the appraise deserves. This would give the
appraise an undue advantage for the appraise during the times of promotions, pay rise
etc. the same could happen vice versa too if an appraiser does not share a good
relationship with the appraise, he could tend to give absolutely low scores for the
appraise.
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5. No Consultation
There would tend to be an error in the scores if the appraiser just goes on giving
scores without discussing with the appraise. If the appraise would not be given his say
in the matter, the score will not reflect the actual capability of the appraise.
6. Spill over Effect
This refers to allowing past performance appraisal ratings to unjustifiably
influence current ratings.
7. Status Effect:
It refers to over rating of employed in higher level job or jobs held in high
esteem, and under rating employees in lower level job at job held in low esteem.
2.6 Research methodology
Type of Research
The research design comprise of the plan and structure of investigation conceived
so as to arrive at the responses to the research queries. It there by addresses the aims and
objectives of the study, both descriptively and analytically.
Sampling Technique
The sampling technique adopted for the study is non-probability Random sampling
technique according to the convenience of the researcher.
A questionnaire was administered to HR managers / executives of different
software companies to obtain data for the purpose of analysis.
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Sample Size
Data is collected using a sample of 30 software companies.
Sample Description
The sample mainly consists of data from the primary sources that are utilized for
the purpose of this study. This is done by means of administrating questioners to human
resource managers / executives in different software companies in the city of Bangalore.
Secondary data like company journals, newsletters, records etc. were also relied on for
retrieving further information.
Instrumentation Technique
Questionnaire and structure disguised questions.
Actual Collection of Data
Both secondary and primary sources of data are utilized for the purpose of this
study. Primary data is collected by means of administering a questionnaire to the Human
Resource Managers / Executives in different software companies. Secondary data is
collected from various records, manuals and other sources of the HR Department.
Tools used for testing of hypothesis
In attempting to arrive at a decision about the population on the basis of the sample
information it is necessary to make assumptions or guesses about the population parameters
involved such an assumption is called statistical hypothesis, which may or may not be true
or not is called test of hypothesis or test of significance. In the test of hypothesis it begins
with an assumption or hypothesis is called Null Hypothesis.
The null hypothesis asserts that there are no significant differences between the
statistics and the population parameters and whatever observes difference is there merely
due to fluctuations in sampling from the sample population. Null hypothesis is usually
denoted by the symbol, Ho. Any hypothesis that contradicts the Ho (null hypothesis) is
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p-P
PQn
called an alternative hypothesis and is denoted by symbol H1. The technique used to test
the hypothesis is Test for proportion.
Test for Proportion
Suppose the population of an attribute in a population is now known, we want to
test whether the proportion is a given value P. The null hypothesis is Ho : p = P. The
alternative hypothesis is H1: p P.
The large random sample of size n from the population, let x units possess the
attribute. Then the sample proportion is p = x/n.
And so, Z =
Therefore, the test statistics is | Z | = P = assumed level of effectiveness
Q = 1-P
p = level of effectiveness of sample
n = sample size
For the sample, if | Z | cal > k, Ho is rejected .On the other hand, if | Z | cal < Ho is
accepted.
Other Software used for the data analysis
For the data analysis, and the subsequent interpretation the researcher has adopted
advanced version of MS-EXCEL 2000. This application software has facilitated the
researcher to construct the frequency table, various kinds of graphs and to find out the
average responses from the sample. By this automated data analysis it has minimized the
researcher’s time constraint and reduced human errors and also accurate outlay of
information.
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PROFILE OF SOFTWARE INDUSTRY
SOFTWARE INDUSTRY
3.1 Indian IT - ITES Industry:
The Indian IT-ITES industry is broadly categorized into IT services and software,
ITES-BPO and Hardware segments.
The industry continues to chart remarkable double-digit growth, with industry
aggregate revenue for 2005-06 expected to reach US$ 28 billion. The industry is forecast to
grow more than fivefold over FY 1999-06, at a CAGR of 28 percent.
3.2 Industry Trends (2004-05)
The earnings from IT-ITES exports was US$ 13.3 billion (61.9 percent of total
industry revenues) in 2004-05 and is expected to touch US$ 17.9 billion (63.7
percent) in 2005-06. Key drivers of growth include the growing adoption of IT
outsourcing and the rapid expansion in the scale and breadth of ITES-BPO
offerings by Indian vendors.
o During 2005-06, software and services, and ITES-BPO would continue to
remain the key contributors to India’s IT-ITES export revenues, with a share
of 67.8 percent and 28.4 percent, respectively. While contribution of
hardware exports would be around 3.7 percent, the situation is expected to
change in the medium term, with this segment receiving a boost owing to
market conditions.
o Overall pricing levels in IT services stabilized at US$ 55-60 per hour for
onsite services and between US$ 18-24 per hour for offshore services.
o Indian IT-ITES vendors successfully executed the offshore delivery model
to achieve sustained growth in service exports and established India as the
most preferred offshore destination for global sourcing of services.
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Indian IT-ITES vendors successfully executed the offshore delivery model to
achieve sustained growth in service exports and established India as the most
preferred offshore destination for global sourcing of services.
The domestic IT-ITES market witnessed a revival during 2004-05, with revenues
reaching US$ 8.2 billion (a growth of 30 percent over previous year). The segment
is expected to touch revenues of around US$ 10.2 billion during 2004-05, at a
CAGR of 19.2 percent for the 2004-05 periods. Hardware and IT services
accounted for around 90 percent of the domestic IT-ITES revenues during 2004-05
and this market share is not likely to change in 2004-05.
o The BFSI (Banking, Financial services, Insurance), Government and
telecom segments remained the key revenue drivers for the domestic IT-
ITES market.
Two more companies within the IT-ITES domain joined the billion-dollar club,
which now includes the HCL Group, Infosys, TCS and Wipro.
During 2004-05, the Indian IT software and services segment added 98,000 jobs
and the ITES-BPO sector added about 73,500 jobs. A total of 203,5000 new jobs
are likely to be created by the IT-ITES sector in the current fiscal.
Indian IT-ITES vendors focused on improving productivity and utilization and
moved up the value chain. While IT service companies included new service lines
such as package software implementation, systems integration, R&D engineering
and remote network management to their portfolio of offerings, ITES-BPO
companies began more complex services such as financial research and analytics,
actuarial modeling, corporate and business research.
The Indian IT-ITES players expanded their focus from the Fortune 500 companies to
address the needs of Global 2000 corporations.
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Bangalore - The "Technopolis" of India
A large part of India's success in the software sector is due to the crucial role played
by the State of Karnataka in promoting and providing a boost to IT. Karnataka has emerged
as the computer capital and center of high-tech industries, especially software. Bangalore
has for long been known as India's answer to Silicon Valley, and this is the city where most
large software companies have set up shop and operate out of state-of-the-art facilities.
This is the reason why it is fast becoming the "Technopolis" of India. The Government of
Karnataka has also been extremely positive about the software and services marketplace
and has helped create the relevant telecom and policy infrastructure conducive to the
growth of this sector. The dynamic industrial policy declared in 1996, with comprehensive
packages of incentives and concessions, has ensured a productive ground for various
industries. The hardware and software industries have now brought about a revolution of
sorts under these schemes. Various institutions and computer training centers have
contributed to the large number of trained and talented professionals.
The City of Bangalore has positioned itself to help market the software industry.
This is also why Bangalore has been playing host to international-class conferences,
workshops and exhibitions devoted to the software cause. The city has the highest number
of engineering colleges in the world, almost 50 percent of the world's SEI CMM Level 5
companies; COPC/ISO recognized Customer Interaction Centers, and over 103 R&D
Institutions. It is, in fact, home to GE's biggest R&D Center outside the U.S.-the Jack
Welch Technology Center, which hires over 200 PhDs/scientists every month! To top it all,
Bangalore has just been ranked the fourth best "Global hub of technological innovation" by
none other than the United Nations.
Bangalore's strengths in the software market also lie in its pursuit of new
opportunities. In fact, two key segments that are expected to open up over the next few
years for India are e-commerce and remote processing. Opportunities in e-commerce
software solutions are emerging as a major area of growth in the Indian IT software and
services industry. A recent study undertaken by The Boston Consulting Group for
NASSCOM clearly stated that India could earn revenues of US$9 billion from e-business
solutions by 2005.
.
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Various Approaches Of Performance Appraisal
The data was processed after collection and analyzed for the purpose. The data was
edited, classified and tabulated for analysis.
Analysis of data was done with the purpose of summarizing the collected data and
organizing these in such a manner that they answer the research questions. Percentage
analysis was used for analysis of data and the results have been presented by way of pie
charts, bar charts, with the help of SPSS package.
After analysis, the phase of interpretation starts. This is done by drawing inferences
from analyzed data. After interpretations, a report was prepared on the basis of inferences.
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Table 4.1 Distribution of companies according to the total no of Employees
Total no of employees Frequency Percent Cumulative Percent