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Submittedinthepartialfulfillmentfortheawardofthedegreeof

MasterofBusinessAdministration

CERTIFICATE
ThisistocertifythatthisProjectReportentitledEvaluationofPerformanceAppraisalSystemistheresultofresearchworkcarriedoutbyMr.__________undertheguidanceand
supervisionofProfessor_______________________.
Signature

PROJECTREPORTONPERFORMANCEAPPRAISALSYSTEMATBSNL
INTRODUCTIONTOWARDSPERFORMANCEAPPRAISALSYSTEM
HumanResource(orpersonnel)management,inthesenseofgettingthingsdonethroughpeople,isanessentialpartofeverymanagersresponsibility,butmany organizations find it advantageous to
establishaspecialistdivisiontoprovideanexpertservicededicatedtoensuringthatthehumanresourcefunctionisperformedefficiently.
Peopleare our most valuable asset is a clich, which no member of any senior management team would disagree with. Yet, the reality for many organizations are that their people remain under
valued,undertrainedandunderutilized.

PerformanceAppraisalistheprocessofassessingtheperformanceandprogressofanemployeeoragroupofemployeesonagivenjobandhis/theirpotentialforfuturedevelopment.It
consistsofallformalproceduresusedintheworkingorganizationstoevaluatepersonalities,contributionsandpotentialsofemployees.

PREFACE
Managinghumanresourcesintodaysdynamicenvironmentisbecomingmoreandmorecomplexaswellasimportant.Recognitionofpeopleasavaluableresourceintheorganization
hasledtoincreasestrendsinemployeemaintenance,jobsecurity,etc
My research project deals with Performance Appraisal as carried out at Bhart Sanchar Nigam Ltd. (BSNLK). In this report, I have studied &evaluated the performance appraisal process as it is
carriedoutinthecompany.
Thefirstsectionofmyreportdealswithadetailedcompanyprofile.Itincludesthecompanyshistory:itsactivitiesandoperations,organizationalstructure,etc.thissectionattempts to give detailed
informationaboutthecompanyandthenatureofitsfunctioning.
The second section deals with performance appraisal. In this section, I have given a brief conceptual explanation to performance appraisal. It contains the definition, process and significance of
performanceappraisal.
Inthethirdsectionofmyreport,IhaveconductedaresearchstudytoevaluatetheprocessofperformanceappraisalatBharatSancharNigamLtd.thissectionalsocontainsmyfindings,conclusions,
suggestionsandfeedback.

TheforthandfinalsectionofthisreportconsistsofextrainformationthatIrelatedtothemaincontentsofthereport.Theseannexureincludesomegraphsanddiagramsrelatingtothecompany,graphs
relatingtotheresearchstudyandimportantdocumentsuponwhichtheprojectisbased.

RATIONALEOFTHESTUDY
PerformanceAppraisalistheimportantaspectintheorganizationtoevaluatetheemployeesperformance.Ithelpsinunderstandingtheemployeesworkculture,involvement,andsatisfaction.Ithelpsthe
organizationindecidingemployeespromotion,transfer,incentives,payincrease.

INTRODUCTIONTOHUMANRESOURCEMANAGEMENT
HumanResource(orpersonnel)management,inthesenseofgettingthingsdonethroughpeople,isanessentialpartofeverymanagersresponsibility,butmany organizations find it advantageous to
establishaspecialistdivisiontoprovideanexpertservicededicatedtoensuringthatthehumanresourcefunctionisperformedefficiently.

Peopleare our most valuable asset is a clich, which no member of any senior management team would disagree with. Yet, the reality for many organizations are that their people remain under
valued,undertrainedandunderutilized.
Themarketplacefortalented,skilledpeopleiscompetitiveandexpensive.Takingonnewstaffcanbedisruptivetoexistingemployees.Also,ittakestimetodevelop cultural awareness, product /
process/organizationknowledgeandexperiencefornewstaffmembers.
FUNCTIONSOFHUMANRESOURCEMANAGEMENT

FollowingarethevariousfunctionsofHumanResourceManagementthatareessentialfortheeffectivefunctioningoftheorganization:
1.Recruitment
2.Selection
3.Induction
4.PerformanceAppraisal
5.Training&Development
Recruitment
Theprocessofrecruitmentbeginsaftermanpowerrequirementsaredeterminedintermsofqualitythroughjobanalysisandquantitythroughforecastingandplanning.
Selection
Theselectionistheprocessofascertainingwhetherornotcandidatespossesstherequisitequalifications,trainingandexperiencerequired.
Induction
a)Inductionisthetechniquebywhichanewemployeeisrehabilitatedintothechangedsurroundingsandintroducedtothepractices,policiesandpurposesoftheorganization.
WHATISPERFORMANCEAPPRAISAL?

PerformanceAppraisalisdefinedastheprocessofassessingtheperformanceandprogressofanemployeeoragroupofemployeesonagivenjobandhis/their potential for future

development.Itconsistsofallformalproceduresusedinworkingorganizationsandpotentialofemployees.AccordingtoFlippo,PerformanceAppraisalisthesystematic,periodicand
animportantratingofanemployeesexcellenceinmatterspertainingtohispresentjobandhispotentialforabetterjob.
CHARACTERISTICS

1.PerformanceAppraisalisaprocess.
2.Itisthesystematicexaminationofthestrengthsandweaknessofanemployeeintermsofhisjob.
3.Itisscientificandobjectivestudy.Formalproceduresareusedinthestudy.
4.Itisanongoingandcontinuousprocesswhereintheevaluationsarearrangedperiodicallyaccordingtoadefiniteplan.
5.ThemainpurposeofPerformanceAppraisalistosecureinformationnecessaryformakingobjectiveandcorrectdecisionanemployee.
PROCESS

Theprocessofperformanceappraisal:
1.Establishingperformancestandards
2.CommunicatingtheStandards
3.MeasuringPerformance
4.Comparingtheactualwiththestandards
5.Discussingtheappraisal
6.TakingCorrectiveAction
LIMITATIONS

1.ErrorsinRating
2.Lackofreliability
3.Negativeapproach
4.Multipleobjectives
5.Lackofknowledge

METHODSOFPERFORMANCEAPPRAISAL
Theforegoinglistofmajorprogrampitfallsrepresentsaformidablechallenge,evenconsideringtheavailablebatteryofappraisaltechniques.Butattemptingtoavoid these pitfalls by
doingawaywithappraisalsthemselvesisliketryingtosolvetheproblemsoflifebycommittingsuicide.Themorelogicaltaskistoidentifythoseappraisalpracticesthatare(a)most
likelytoachieveaparticularobjectiveand(b)leastvulnerabletotheobstaclesalreadydiscussed.
Beforerelatingthespecifictechniquestothegoalsofperformanceappraisalstatedattheoutsetofthearticle,Ishallbrieflyrevieweach,takingthemmoreorlessinanorderofincreasing
complexity.
Thebestknowntechniqueswillbetreatedmostbriefly.

ESSAYAPPRAISAL
Initssimplestform,thistechniqueaskstheratertowriteaparagraphormorecoveringanindividual'sstrengths,weaknesses,potential,andsoon.Inmostselectionsituations,particularly
thoseinvolvingprofessional,sales,ormanagerialpositions,essayappraisalsfromformeremployers,teachers,orassociatescarrysignificantweight.
.

GRAPHICRATINGSCALE
Thistechniquemaynotyieldthedepthofanessayappraisal,butitismoreconsistentandreliable.Typically,agraphicscaleassessesapersononthequalityandquantityofhiswork(is

heoutstanding,aboveaverage,average,orunsatisfactory?)andonavarietyofotherfactorsthatvarywiththejobbutusuallyincludepersonaltraitslikereliabilityandcooperation.Itmay
alsoincludespecificperformanceitemslikeoralandwrittencommunication.

FIELDREVIEW
Thefieldreviewisoneofseveraltechniquesfordoingthis.Amemberofthepersonnelorcentraladministrativestaffmeetswithsmallgroupsofratersfromeachsupervisoryunitand
goes over each employee's rating with them to (a) identify areas of interrater disagreement, (b) help the group arrive at a consensus, and (c) determine that each rater conceives the
standardssimilarly..

FORCEDCHOICERATING
Likethefieldreview,thistechniquewasdevelopedtoreducebiasandestablishobjectivestandardsofcomparisonbetweenindividuals,butitdoesnotinvolvetheinterventionofathird
party.

MANAGEMENTBYOBJECTIVES
Toavoid,ortodealwith,thefeelingthattheyarebeingjudgedbyunfairlyhighstandards,employeesinsomeorganizationsarebeingaskedtosetorhelpsettheirownperformance
goals.Withinthepastfiveorsixyears,MBOhasbecomesomethingofafadandissofamiliartomostmanagersthatIwillnotdwellonithere.

RANKINGMETHODS
Forcomparativepurposes,particularlywhenitisnecessarytocomparepeoplewhoworkfordifferentsupervisors,individualstatements,ratings,orappraisalformsarenotparticularly
useful.Instead,itisnecessarytorecognizethatcomparisonsinvolveanoverallsubjectivejudgmenttowhichahostofadditionalfactsandimpressionsmustsomehowbeadded.Thereis
nosingleformorwaytodothis.
Thebestapproachappearstobearankingtechniqueinvolvingpooledjudgment.
Thetwomosteffectivemethodsarealternationrankingandpairedcomparisonranking.
1.Alternationranking:
Rankingofemployeesfrombesttoworstonatraitortraitsisanothermethodforevaluatingemployees.Sinceitisusuallyeasiertodistinguishbetweentheworstandthebestemployees
thantorankthem,analternationrankingmethodismostpopular.Heresubordinatestoberatedarelistedandthenamesofthosenotwellenoughtorankarecrossed.Thenonaformas
shownbelow,theemployeewhoishighestonthecharacteristicbeingmeasuredandtheonewhoisthelowestareindicated.Thenchosethenexthighestandthenextlowest,alternating
betweenhighestandlowestuntilalltheemployeestoberatedhavebeenranked.
2.Pairedcomparisonranking:
Thistechniqueisprobablyjustasaccurateasalternationrankingandmightbemoreso.Butwithlargenumbersofemployeesitbecomesextremelytimeconsumingandcumbersome.
Bothrankingtechniques,particularlywhencombinedwithmultiplerankings(i.e.,whentwoormorepeopleareaskedtomakeindependentrankingsofthesameworkgroupandtheirlists
areaveraged),areamongthebestavailableforgeneratingvalidorderofmeritrankingsforsalaryadministrationpurposes.

ASSESSMENTCENTERS

Sofar,wehavebeentalkingaboutassessingpastperformance.Whatabouttheassessmentoffutureperformanceorpotential?Inanyplacementdecisionandevenmoresoinpromotion
decisions,somepredictionoffutureperformanceisnecessary.Howcanthiskindofpredictionbemademostvalidlyandmostfairly?

360DEGREEFEEDBACK
Manyfirmshaveexpandedtheideaofupwardfeedbackintowhatthecall360degreefeedback.Thefeedbackisgenerallyusedfortraininganddevelopment,ratherthanforpayincreases.
Most 360 Degree Feedback system contains several common features. Appropriate parties peers, supervisors, subordinates and customers, for instance complete survey, questionnaires on an
individual.360degreefeedbackisalsoknownasthemultiraterfeedback,wherebyratingsarenotgivenjustbythenextmanagerupintheorganizationalhierarchy,butalsobypeersandsubordinates.
Appropriatescustomer ratings are also included, along with the element of self appraisal. Once gathered in, the assessment from the various quarters are compared with one another and the results
communicatedtothemanagerconcerned.

Another technique that is useful for coaching purposes is, of course, MBO. Like the critical incident method, it focuses on actual behavior and actual results, which can be discussed
objectivelyandconstructively,withlittleornoneedforasupervisorto"playGod."

Advantages
Instead of assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or exceeds the set objectives, then he or she has demonstrated an acceptable level of job
performance.Employeesarejudgedaccordingtorealoutcomes,andnotontheirpotentialforsuccess,oronsomeone'ssubjectiveopinionoftheirabilities.

TheguidingprincipleoftheMBOapproachisthatdirectresultscanbeobservedeasily.TheMBOmethodrecognizesthefactthatitisdifficulttoneatlydissectallthecomplexandvaried
elementsthatgotomakeupemployeeperformance.
MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts, but to put all the parts together and the performance may be directly observed and
measured.

Disadvantages
This approach can lead to unrealistic expectations about what can and cannot be reasonably accomplished. Supervisors and subordinates must have very good "reality checking" skills to use MBO
appraisalmethods.Theywillneedtheseskillsduringtheinitialstageofobjectivesetting,andforthepurposesofselfauditingandselfmonitoring.
Variableobjectivesmaycauseemployeeconfusion.Itisalsopossiblethatfluidobjectivesmaybedistortedtodisguiseorjustifyfailuresinperformance.

BenefitsofPerformanceAppraisals
Measuresanemployeesperformance.
Helpsinclarifying,defining,redefiningprioritiesandobjectives.
Motivatestheemployeethroughachievementandfeedback.
Facilitatesassessmentandagreementoftrainingneeds.
Helpsinidentificationofpersonalstrengthsandweaknesses.
PlaysanimportantroleinPersonalcareerandsuccessionplanning.
Clarifiesteamrolesandfacilitatesteambuilding.
Playsmajorroleinorganizationaltrainingneedsassessmentandanalysis.
Improvesunderstandingandrelationshipbetweentheemployeeandthereportingmanagerandalsohelpsinresolvingconfusionsandmisunderstandings.
Playsanimportanttoolforcommunicatingtheorganizationsphilosophies,values,aims,strategies,priorities,etcamongitsemployees.
Helpsincounselingandfeedback.

RatingErrorsinPerformanceAppraisals
Performanceappraisalsaresubjecttoawidevarietyofinaccuraciesandbiasesreferredtoas'ratingerrors'.Theseerrorscanseriouslyaffectassessmentresults.Someofthemostcommonratingerrors
are:
Leniencyorseverity:Leniencyorseverityonthepartoftheratermakestheassessmentsubjective.Subjectiveassessmentdefeatstheverypurposeofperformanceappraisal.Ratingsarelenientfor
thefollowingreasons:
a)Theratermayfeelthatanyoneunderhisorherjurisdictionwhoisratedunfavorablywillreflectpoorlyonhisorherownworthiness.
b)He/Shemayfeelthataderogatoryratingwillberevealedtotheratetodetrimenttherelationsbetweentheraterandtheratee.
c)He/Shemayratelenientlyinordertowinpromotionsforthesubordinatesandtherefore,indirectlyincreasehis/herholdoverhim.
Centraltendency:Thisoccurswhenemployeesareincorrectlyratedneartheaverageormiddleofthescale.Theattitudeoftherateristoplaysafe.Thissafeplayingattitudestemsfromcertain
doubtsandanxieties,whichtheratershavebeenassessingtherates.
Haloerror:Ahaloerrortakesplacewhenoneaspectofanindividual'sperformanceinfluencestheevaluationoftheentireperformanceoftheindividual.Thehaloerroroccurswhenanemployeewho
works late constantly might be rated high on productivity and quality of output as well ax on motivation. Similarly, an attractive or popular personality might be given a high overall rating. Rating
employeesseparatelyoneachoftheperformancemeasuresandencouragingraterstoguardagainstthehaloeffectarethetwowaystoreducethehaloeffect.
Ratereffect:Thisincludesfavoritism,stereotyping,andhostility.Extensivelyhighorlow score are given only to certain individuals or groups based on the rater's attitude towards them and not on
actualoutcomesorbehaviorssex,age,raceandfriendshipbiasesareexamplesofthistypeoferror.
PrimacyandRegencyeffects:Therater'sratingisheavilyinfluencedeitherbybehaviorexhibitedbytherateeduringhisearlystageofthereviewperiod(primacy)orbytheoutcomes,orbehavior
exhibitedbytherateeneartheendofthereviewperiod(regency).Forexample,ifasalespersoncapturesanimportantcontract/salejustbeforethecompletionoftheappraisal,thetimingoftheincident
mayinflatehisorherstanding,eventhoughtheoverallperformanceofthesalespersonmaynothavebeenencouraging.Onewayofguardingagainstsuchanerroristoasktheratertoconsiderthe
compositeperformanceoftherateandnottobeinfluencedbyoneincidentoranachievement.
Performancedimensionorder:Twoormoredimensionsonaperformanceinstrumentfolloweachotherandbothdescribeorrotatetoasimilarquality.Theraterratesthefirstdimensionsaccurately
andthenratestheseconddimensiontothefirstbecauseoftheproximity.Ifthedimensionshadbeenarrangedinasignificantlydifferentorder,theratingsmighthavebeendifferent.
Spillovereffect:Thisrefersloallowingpastperformanceappraisalratinglounjustifiablyinfluencecurrent ratings. Past ratings, good or bad, result in similar rating for current period although the
demonstratedbehaviordocsnotdeservetherating,goodorbad.

ROLESINTHEPERFORMANCEAPPRAISALPROCESS

a)ReportingManager
Providefeedbacktothereviewer/HODontheemployeesbehavioraltraitsindicatedinthePMSPolicyManual
Ensuresthatemployeeisawareofthenormalization/performanceappraisalprocess
Addressemployeeconcerns/queriesonperformancerating,inconsultationwiththereviewer
b)Reviewer(ReportingManagersReportingManager)

Discusswiththereportingmanagersonthebehavioraltraitsofalltheemployeesforwhomhe/sheisthereviewer
Whererequired,independentlyassessemployeesforthesaidbehavioraltraitssuchassessmentsmightrequirecollectingdatadirectlyfromotherrelevantemployees
c)HOD(Insomecases,areviewermaynotbeaHOD)
PresentstheproposedPerformanceRatingforeveryemployeeofhis/herfunctiontotheNormalizationcommittee.
HODalsoplaystheroleofanormalizationcommitteemember
Ownstheperformanceratingofeveryemployeeinthedepartment
d)HRHead
Secretarytothenormalizationcommittee
AssistsHODs/ReportingManagersincommunicatingtheperformanceratingofalltheemployees
e)NormalizationCommittee
DecidesonthefinalbellcurveforeachfunctionintherespectiveBusinessUnit/Circle
Reviewstheperformanceratings proposed by the HODs, specifically on the upward / downward shift in ratings, to ensure an unbiased relative ranking of employees on overall
performance,andthusfinalizetheperformanceratingofeachemployee

KEYCONCEPTSINPMS
InordertounderstandthePerformanceManagementSystematBHARTI,someconceptsneedtobeexplainedwhichplayaveryimportantroleinusingthePMSsuccessfully.Theyare:
KRAS(KEYRESULTAREAS):TheperformanceofanemployeeislargelydependentontheKRAscoreachievedbytheemployeeduringthatparticularyear.Thus,itis
necessarytoanswerafewbasicquestionsi.e.
oWhataretheguidelinesforsettingtheKRAsforanemployee?
oHowdoesanemployeewritedownhisKRAsforaparticularfinancialyear?
oKRAs:TheFourPerspectives.
oHowistheKRAscorecalculatedforanemployeeonthebasisofthetargetssetsandtargetsachieved?
BEHAVIORALTRAITS:Someofthequalitativeaspectsofanemployeesperformancecombinedwiththegeneralbehavioraltraitsdisplayedbytheemployeeduringayear
constituteshisbehaviortraits.Anemployeeisassignedtheratingonthebasisoftheintensityofthebehaviordisplayedbyhim.Theyplayaveryimportantroleinthedecidingthe
finalperformanceratingforanemployeeasisevencapableofshiftingtheratingonelevelupwards/downwards.
BHARTI2010LEADERSHIPCOMPETENCYFRAMEWORK:Thiscompetencyframeworkisasimpleandstructuredwaytodescribetheelementsofbehaviorsrequiredto
performaroleeffectively.Thisframeworkalsotriestoassesstheperformanceofanemployeeobjectively.
THEPERFORMANCERATINGPROCESS:Theratingprocesstriestoexplainthefourdifferenttypesofratingthatanemployeecanachievei.e.EC,SC,CandPC.Italso

explainsthecriteria,whichisconsideredforawardinganyoftheseratingstotheemployee.
PROMOTIONANDRATINGDISRTRIBUTIONGUIDELINES:Thepromotionandnormaldistributionguidelinesprovidetheframeworkwithin which the performance
appraisal process has to work. It is very important that the HR department pays due attention to these guidelines while preparing the bell curves for various functions and the
consolidatedbellcurveforallthefunctions.Theseguidelinesalsohelpindecidinguponthepromotioncasesinayear.

PERFORMANCERATINGPROCESS
EXCEPTIONALCONTRIBUTOR(EC)

SIGNIFICANTCONTRIBUTOR(SC)

Performs consistently and substantially

aboveexpectationsinallareas

Performsaboveexpectationsinallareas
Achievesfinalscorebetween100114%

Achievesafinalscoregreaterthanorequal
to115%

Versatileinhis/herareaofoperation

Consistentlydeliversonstretchtargets
Isproactive

Develops creative solutions and require

little/minimalsupervision

Spotsandanticipatesproblems,implements
solutions

Setsexamplesforothers

Seesandexploitsopportunities
Deliversaheadoftime
Sees the wider pictureimpacts across
business
Focusesonwhatsgoodforthebusiness

Takeownershipofowndevelopment
Coachesothers
Demonstratesbusinessinitiative

Seenasrolemodelbyothers
Recognizedasexceptionalbyotherfunctions
aswell

Isselfmotivated
Supportiveteamplayer

Motivatesotherstosolveproblems
Developsothers

Leadsownteamveryeffectively

Providesopenandhonestfeedback
Able to establish and lead crossfunctional
teams

Demonstratefunctionalinitiative

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