1 1. INTRODUCTION 1.1 PERFORMANCE APPRAISAL Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees. People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Therefore, performance management and performance appraisal is necessary to understand each employee's abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance. Performance appraisal takes into account the past performance of the employees and focuses on the improvement of the future performance of the employees. 1.1.1 OBJECTIVES OF PERFORMANCE APPRAISAL: • To review the performance of the employees over a given period of time. • To judge the gap between the actual and the desired performance. • To help the management in exercising organizational control.
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1. INTRODUCTION
1.1 PERFORMANCE APPRAISAL
Performance appraisal is the process of obtaining, analyzing and recording
information about the relative worth of an employee. The focus of the performance appraisal
is measuring and improving the actual performance of the employee and also the future
potential of the employee. Its aim is to measure what an employee does.
It is a powerful tool to calibrate, refine and reward the performance of the employee.
It helps to analyze his achievements and evaluate his contribution towards the achievements
of the overall organizational goals. By focusing the attention on performance, performance
appraisal goes to the heart of personnel management and reflects the management's interest
in the progress of the employees.
People differ in their abilities and their aptitudes. There is always some difference
between the quality and quantity of the same work on the same job being done by two
different people. Therefore, performance management and performance appraisal is
necessary to understand each employee's abilities, competencies and relative merit and
worth for the organization.
Performance appraisal rates the employees in terms of their performance.
Performance appraisal takes into account the past performance of the employees and focuses
on the improvement of the future performance of the employees.
1.1.1 OBJECTIVES OF PERFORMANCE APPRAISAL:
• To review the performance of the employees over a given period of time.
• To judge the gap between the actual and the desired performance.
• To help the management in exercising organizational control.
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• Helps to strengthen t h e relationship and communication between supervisor-
subordinates and management-employees.
• To diagnose the strengths and weaknesses of the individuals so as to identify the
training and development needs of the future.
• To provide feedback to the employees regarding their past performance. Provide
information to assist in the other personal decisions in the organization.
• Provide clarity of the expectations and responsibilities of the functions to be
performed by the employees.
• To judge the effectiveness of the other human resource functions of the organization
such as recruitment, selection, training and development.
• To reduce the grievances of the employees.
If employee development is required for performance improvement then solving
these performance problems should be straight forward with a clear understanding of root
causes. Possible approaches include changing the work environment, better prioritization of
conflicting priorities, time off, additional training, shadow or buddy system, mentoring or
coaching, changing team environment or set objectives and soon.
1.2 INDUSTRY PROFILE
1.2.1 HISTORY
The first practical automobile with a Petrol engine was built by Karl Benzin, 1885 in
Mannheim, Germany. Benz was granted a patent for his automobile on 29 January 1886, and
began the first production of automobiles in 1888 after Bertha Benz his wife had proved with
the first long-distance trip in August 1888 from Mannheim to Pforzheim and back that the
horseless coach was absolutely suitable for daily use. Since 2008 a Bertha Benz Memorial
Route commemorates this event.
Soon after, Gottlieb Daimler and Wilhelm Mabuchi in Stuttgart in 1889 designed a
vehicle from scratch to be an automobile, rather than a horse-drawn carriage fitted with an
engine. They are also usually credited as inventors of the first motorcycle in 1886, but Enrico
Bernardio of the University of Padua in 1882, patented a 0.024 horsepower one-cylinder
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petrol motor fitting into his son’s tricycle making it at least a candidate for the first
automobile, and first motorcycle. Bernardi enlarged the tricycle in 1892 to carry two adults.
1.2.2 AUTOMOTIVE INDUSTRY
The automotive industry designs, develops, manufacturers, markets, and sells the
world’s motor vehicles. In 2009, more than 88 million motor vehicles, including cars and
commercial vehicles were produced worldwide.
In 2009-2010, a total of 90 million new automobiles were sold worldwide: 24 million
in Europe, 21.4 million in Asia-Pacific, 19.4 million in USA and Canada, 14.4 million in
Latin America, 6.4 million the Middle East and 7.4 million in Africa. The markets in North
America and Japan were stagnant, while those in South America and Asia grew strongly. Of
the major markets, Russia, Brazil, India and China saw the most rapid growth.
About 250 million vehicles are in the use in the United States. Around the world,
there were about 806 million cars and light trucks on the road in 2009: they burn over 260
billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly,
especially in China and India. In the opinion of some, urban transport systems based around
the car have proved unsustainable, consuming excessive energy, affecting the health of
populations, and delivering a declining level of service despite increasing investments. Many
of these negative impacts fall disproportionately on those social groups who are also least
likely to own and drive cars. The sustainable transport movement focuses on solutions to
these problems.
In 2009, with rapidly rising oil prices, industries such as the automotive industry, are
experiencing combination of pricing pressures from raw material costs and changes in
consumer buying habits. The industry is also facing increasing external competition from the
public transport sector, as consumers re-evaluate the private vehicle usage. Roughly half of
the US’s fifty one light vehicle plants are projected to permanently close in the coming years
with the loss of another 200,000 jobs in the sector, on top of the 560,000 jobs lost this
decade. As a result, in 2010, China became the largest automobile markets in the world.
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1.3 INTRODUCTION OF THE COMPANY
BMW is an acronym for Bayerische Motoren Werke AG--or, in English, Bavarian
Motor Works. Whatever you call it, the German-based company is one of the world's most
respected automakers, renowned for crafting luxury cars and SUVs that offer superior levels
of driving enjoyment. Founded in Munich, the company began in the early 1910s as an
aircraft manufacturer. BMW's current logo, designed to represent white propeller blades
against a blue sky, reflects these origins; its blue-and-white color scheme also references
Bavaria's blue-and-white checkered flag. It wasn't until 1928 that production began on the
first BMW automobile, the Dixi. The car proved tremendously popular, and its success
helped the manufacturer weather the Depression. BMW's best-known pre-World War II
vehicle was the Type 328 roadster, a supple two-seater that racked up over 120 victories on
the motorsport circuit between 1936 and 1940.
Postwar BMW cars maintained this tradition, winning several racing, rallying and hill
climb victories. The early 1950s saw the launch of the BMW 501, a roomy, voluptuous sedan
that was M resplendent with all of the hopefulness of that era. It was soon followed by the
502 which was powered by the world's first light-alloy V8, foreshadowing BMW's ongoing
commitment to developing new technology. The best-selling BMW of that decade was the
Isetta, a petite two-seat "micro car" typically powered by a 12- or 13-horsepower engine. The
mid-'50s also saw the debut of the limited production and breathtakingly beautiful 507 sports
car which had an alloy body and used the 502's V8 for propulsion. In the 1960s, BMW sales
strengthened significantly, thanks in part to the immense popularity of the 1500, a sporty
family sedan. By the 1970s, BMW was establishing itself as a full-fledged car company. It
was a pioneer for many emerging technologies, including turbo charging and advanced
vehicle electronics. This was also the period when BMW of North America was established
and consumers, who coveted both sports and luxury cars, became loyal "Bimmer" owners.
The '70salso saw the birth of BMW's three-tier sport sedan range consisting of the 3 Series, 5
Series and7 Series cars and the creation of its performance division. More recently, the
company has been expanding its reach worldwide. It opened its first U.S. manufacturing
plant in the latter half of the 1990s and has expanded its brand empire to include Mini and
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Rolls-Royce. BMW also continues to build motorcycles, something it has done since the
1920s.
The automaker's famous advertising slogan describes each of its vehicles as "the
ultimate driving machine," and it's not mere hyperbole. Over the past couple of decades,
BMWs have become the standard for performance and luxury in most of the "over $30,000"
From the above table, it can be inferred that 87% of the respondents feel that performance
appraisal is highly relevant to employee job and 13% feel it is relevant.
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FIGURE 5.13 PERFORMANCE APPRAISAL RELEVANCE TO EMPLOYEE
JOB
5.14 OPINION AND SUGGESTIONS SHARED TO MANAGERS
TABLE 5.14 OPINION AND SUGGESTIONS SHARED TO MANAGERS
Opinion and Suggestions No. of Respondents Percentage (%)
Mostly 100 100 Rarely - - Never - -
Total 100 100
Sources: Primary Data
INTERPRETATION:
From the above table, it can be inferred that 100% of the respondents mostly share their
opinion and suggestions to their managers.
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5.15 TRAINING OF FILL UP PERFORMANCE APPRAISAL FORM
TABLE 5.15 TRAINING OF FILL UP PERFORMANCE APPRAISAL FORM
Forms No. of respondents Percentage
Yes 100 100 No - -
Total 100 100%
Sources: Primary Data
INTERPRETATION:
From the above table, it can be inferred that 100% of the respondents are given training to fill
the appraisal form.
5.16 APPRAISER'S AWARENESS ON EMPLOYEE JOB RESPONSIBLITIES
AND DUTIES
TABLE 5.16 APPRAISER'S AWARENESS ON EMPLOYEE JOB
RESPONSIBLITIES AND DUTIES
Aware No. of respondents Percentage (%)
Completely Aware - - Aware to an extent - -
Not Aware 100 100 Total 100 100%
Sources: Primary Data
INTERPRETATION:
From the above table, it can be inferred that 100% of the respondents feel that the appraiser
is not aware of their job responsibilities and duties.
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5.17 FEEDBACKS PROVIDED FOR PERFORMANCE IMPROVEMENT
TABLE 5.17 FEEDBACKS PROVIDED FOR PERFORMANCE
IMPROVEMENT
Aware No. of respondents Percentage (%) Frequently 89 89
Occasionally 11 11 Never - - Total 100 100%
Sources: Primary Data
INTERPRETATION:
From the above table, it can be inferred that 89% of the respondents feel that feedback is
provided occasionally whereas 11% feel that feedback is provided frequently.
FIGURE 5.17 FEEDBACKS PROVIDED FOR PERFORMANCE
IMPROVEMENT
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5.18 INVOLVEMENT OF RATER
TABLE 5.18 INVOLVEMENT OF RATER
Involvement No. of respondents Percentage (%) Highly involved 34 34
Less involved 40 40 Not involved 26 26
Total 100 100%
Sources: Primary Data
INTERPRETATION:
From the above table, it can be inferred that 44% of the respondents feel the rater is less
involved, 34% of the respondents feel they are highly involved and 26% of the respondents
are not involved.
5.19 PROPER EXECUTION OF PERFORMANCE APPRAISAL
TABLE 5.19 PROPER EXECUTION OF PERFORMANCE APPRAISAL
Properly executed in your organization
No. Of Respondents
Percentage (%)
Yes 78 78 No 22 22
Total 100 100
Sources: Primary Data
INTERPRETATION:
From the above table, it can be inferred that 78% of the respondents feel performance
appraisal is properly executed while 22% feel it is not properly executed.
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FIGURE 5.19 PROPER EXECUTION OF PERFORMANCE APPRAISAL
5.20 UPDATING OF PERFORMANCE APPRAISAL
TABLE 5.20 UPDATING OF PERFORMANCE APPRAISAL
Reviewed and updated No. Of Respondents Percentage (%) Frequently 46 46
Occasionally 54 54 Never - -
Total 100 100
Sources: Primary Data
INTERPRETATION:
From the above table, it can be inferred that 54% of the respondents feel the performance
appraisal is reviewed occasionally while 46% of respondents feel they are reviewed
frequently.
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FIGURE 5.20 UPDATING OF PERFORMANCE APPRAISAL
5.21 STATISTICAL ANALYSIS
5.21.1 CHI-SQUARE TEST
TABLE 5.21.1 CROSS TABULATION BETWEEN THE CHANGES TAKEN FOR
PERFORMANCE APPRAISAL AND IMPROVEMENT OF
PERFORMANCE APPRAISAL.
Improvement
in
Overall
PA
Highly
effective Effective Moderate
In
Effective
Highly
ineffective Total
Change in motivating
strategy 7 5 9 12 0 33
Re-structuring of
organization or individual
objectives
12 2 6 3 2 25
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Improvement in
Management employment relationship
11 8 0 6 0 25
Making changes in dissatisfied
areas
4 1 0 4 8 17
No decision taken
0 0 0 0 0 0
Total 34 16 15 25 10 100
STEP 1: SETTING AN HYPOTHESIS
H0: There is no significant relationship between the changes taken for performance appraisal
and improvement of performance appraisal.
H1: There is significant relationship between the changes taken for performance appraisal
and improvement of performance appraisal.
STEP 2: TO FIND THE EXPECTED FREQUENCY
Expected frequency = Corresponding row total * Corresponding column total Total number of samples STEP 3: CALCULATION OF CHI-SQUARE VALUE
Formula:
= ∑ (O-E) 2
E
Where
= Chi-Square
Oi = Observed Frequency
Ei = Expected Frequency
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TABLE 5.21.1.1 COMPUTATION TABLE FOR
O E (O-E) (O-E)2 (O-E)2/E
7 11.22 -4.22 17.81 1.59
5 5.28 -0.28 0.08 0.01
9 4.95 4.05 16.40 3.31
12 8.25 3.75 14.01 1.70
0 3.30 -3.30 10.8 3.30
12
8.50
3.50
12.25 1.44
2 4.00 -2.00 4.00 1.00
6 3.75 2.25 5.0 1.35
3 6.25 -3.25 10.5 1.69
2 2.50 -0.50 0.25 0.10
11 8.50 2.50 6.25 0.74
8 4.00 4.00 16.00 4.00
0 3.75 -3.75 14.06 3.75
6 6.25 -0.25 0.06 0.01
0 2.50 -2.50 6.25
2.50 4 5.78 -1.78 3.11 0.55
1
2.72
-1.72
2.9
1.09 0 2.55 -2.55 6.50 2.55
4 4.25 -0.25 0.0 0.01
8 1.70 6.30 39.69 23.35
0 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00 0 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00
TOTAL 54.04
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STEP 4: LEVEL OF SIGNIFICANCE
Level of significance α = 0.05
Degrees of freedom = (R-1) (C-1)
= (4-1) (5-1) =12
Tabulated value at 5% level of significance and degree of freedom 12 is 21.026
STEP 5 : COMPARING WITH TABLE VALUE
The calculated value is greater than the tabulated value: 54.04 > 26.296
FINDING
Therefore, reject the Null Hypothesis Ho and accept the Alternate Hypothesis H1.
INFERENCE
There is significant relationship between the changes taken for performance
appraisal and improvement of performance appraisal.
TABLE 5.21.2 CROSS TABULATION BETWEEN THE PROPER EXECUTION OF
PERFORMANCE APPRAISAL AND RATING EMPLOYEE
PERFORMANCE.
Proper execution
Rating Performance
YES NO TOTAL
Based on abilities and skills 8 2 10
Based on management reference 19 6 25
Based on superiority 21 4 25
Based on contribution 30 10 40
TOTAL 78 22 100
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STEP 1: SETTING AN HYPOTHESIS
H0: There is no significant relationship between the changes taken for performance appraisal
and improvement of performance appraisal.
H1: There is significant relationship between the changes taken for performance appraisal
and improvement of performance appraisal.
STEP 2: TO FIND THE EXPECTED FREQUENCY Expected frequency = Corresponding row total * Corresponding column total Total number of samples STEP 3: CALCULATION OF CHI-SQUARE VALUE
Formula:
= ∑ (O-E) 2
E
Where
= Chi-Square
Oi = Observed Frequency
Ei = Expected Frequency
TABLE 5.21.2.1 COMPUTATION TABLE FOR
O E (O-E) (O-E)2 (O-E)2/E
8 7.80 0.20 0.04 0.01 2
2.20
-0.20
0.04
0.02
19
19.50
-0.50
0.25
0.01
6 5.50 0.50 0.25 0.05
21 19.50 1.50 2.25 0.12
4 5.50 -1.50 2.25 0.41
30 31.20 -1.20 1.44 0.05
10 8.80 1.20 1.44 0.16
TOTAL 0.82
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STEP 4: LEVEL OF SIGNIFICANCE
Level of significance α = 0.05
Degrees of freedom = (R-1) (C-1)
= (4-1) (2-1) = 3
Tabulated value at 5% level of significance and degree of freedom 3 is 7.28
STEP 5 : COMPARING WITH TABLE VALUE
The calculated value is greater than the tabulated value: 0.82<7.82
FINDING Therefore, accept the Null Hypothesis H0 and reject the Alternate Hypothesis H1.
INFERENCE
There is no significant relationship between the changes taken for performance appraisal and improvement of performance appraisal.
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6. SUMMARY AND CONCLUSION
6.1 FINDINGS
1. Majority (89%) of respondents are male.
2. Most of the respondents (33%) belong to the age group of 30 to 35.
3. 54% of the respondents have above 5 to10years of work experience.
4. Majority (49%) of the respondents are under graduates.
5. All of the respondents have under gone performance appraisal program once in a
year.
6. 100% of the employees interpret the reason for conducting performance appraisal
includes all the factors such as to identify motivating methods, to decide monetary
benefits and identify barriers for performance.
7. For 87% of the respondents performance appraisal was conducted during working
hours.
8. For 100% of the respondents the performance appraisal is conducted by outsider.
9. Most (77%) of the respondents feel that the reason for performance appraisal is
discussed sometimes.
10. Once in a year the meeting IS scheduled for all employees to discuss their
performance.
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11. 69% of the respondents feel that performance appraisal is related to organizational
goals to some extent.
12. All of the respondents infer that they are never involved in designing the performance
appraisal system.
13. 87% of the respondents feel that the performance appraisal system is developed
highly relevant to the employee’s job.
14. All respondents mostly share their opinion and suggestions freely during the
performance appraisal.
15. All respondents have got the training to fill up the performance appraisal forms.
16. All of the respondents feel that the appraiser is not aware of the jobs and duties of the
each and every employee.
17. 89% respondents feel the superior will provide informal feedbacks for
performance improvement occasionally.
18. Most (44%) of the respondents feel that the raters are less involved while appraising
employees.
19. Most (78%) of the respondents says the Performance Appraisal is properly executed
in the organization.
20. Majority (54%) of the respondents feel that performance appraisal system is reviewed
and updated occasionally.
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6.2 SUGGESTIONS
1. Performance appraisal could be conducted by a person inside the organization and
one who is familiar with the employees.
2. Objective of conducting the performance appraisal could be discussed and doubts
can be clarified.
3. Performance appraisal could be updated regularly to match individual and
organizational goals.
4. Suggestion could be obtained from employees regarding framing the performance
appraisal system.
5. Since the performance appraisal is conducted by the outsider, employees'
suggestion during performance appraisal may not reach the top managers. For
such situations suggestion box can be implemented and frequently reviewed.
6. The appraiser must be familiarized with the employee's job responsibilities and
duties before conducting performance appraisal.
7. Feedback on performance could be discussed through formal or informal
meetings.
8. This may enhance the involvement and performance of employees.
9. Appropriate and experienced appraiser can be appointed for effective
performance appraisal results.
10. Performance appraisal can developed in such away to identify the hidden talent
and skills of employees.
11. Employees having low performance could be called individually, encouraged and
monitored closely to make improvements.
12. Appraisal feedback is very important in any performance appraisal program.
Could be carefully communicated by making high performers increase their target
and low performers to build up their confidence.
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6.3 CONCLUSION
Performance appraisal may be understood as the assessment of an 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 and the like. It also helps in
developing strength and rectifies weakness of the employees.
BMW Group have been conducting performance appraisal for the past four years.
From the study it has been identified that the performance appraisal is able to identify
employees' potential and find the motivating factors of employees. The major drawback is in
terms of the appraiser and his knowledge regarding employee’s job responsibilities and
duties.
BMW Group has been running successfully for past 5years and has created a good
name among its customers and society. People having poor background are given training
and provided with jobs. Performance appraisal can be conducted more effectively by using
the right tools and properly reviewing and updating the performance appraisal program.
Suggestion form employees and experienced personnel can further enhance and make the
performance appraisal an ideal evaluation system.
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BIBLOGRAPHY
BOOKS
Human Resource Management. By S. Seetharaman & B.Venkateswara Prasad, Scitech Publication, 2007.
Kothari, C.R., Research Methodology- Methods & Techniques, New Delhi, New Age international(P)Ltd.,Publishers,SecondEdition,2004.
Performance Management, Concepts, Practices and Strategies for Organisation success by S.K.Bhatia, Deep & Deep Publications Pvt. Ltd, 2008.
Statistical Methods for Management, By P.N.Arora & S.Arora New Delhi, Sultan Chand & Sons Publishers, 2005.