A RESEARCH REPORT

ON
PERFORMANCE APPRAISAL
OF

ITC INFOTECH INDIA LIMITTED,

BANGALORE
IN
PARTIAL FULLFILLMENT OF THE
REQUIREUNMENT OF THE DEGREE
OF
MASTER OF BUSINESS ADMINISTRATION
BY
SHILPI JAIN
ROLL NO.1127670022

DEEN DAYAL COLLEGE OF MANAGEMENT

1
 CONTENTS
TITLE PAGE NO

DECLARATION 3

ACKNOWLEDGEMENT 4

PREFACE 5

COMPANY PROFILE 6

PERFORMANCE APPRAISAL 19

RESEARCH METHODOLOGY 40

ANALYSIS AND INTERPRETATION 47

RECOMMENDATION 61

CONCLUSION 63

BIBLOGRAPHY 64

ANNEXURE 65

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 DECLARATION

I, SHILPI JAIN, student of MBA, Deen Dayal College of Management,

MUZAFFARNAGAR (Affiliated to Maha Maya Technical University
Noida ), hereby declare that the project report on “PERFORMANCE
APPRAISAL” is my original work and has not been submitted by any other
person to MTU or elsewhere.

Further, I also declare that I have tried my best to

complete this project with my sincerity and accuracy even than if any mistake
or error has crept in, I shall most humbly request the readers to point out
those errors or omission and guide me for the removal of these errors in the
future.

(SHILPI JAIN)

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 ACKNOWLEDEMENT

The successful completion of this project has been accomplished with the
invaluable guidance and support of numerous people. I take opportunity to
express my profound sense of gratitude to all of them. First, I thank to
almighty God for enabling me to complete the project on time and in it’s
entirely.
I would like to thank our ---------------------------------who,
providing me an opportunity to carry out the project. I also thank my project
guide--------------------------- for his support and encouragement all
throughout the project work.
Further I would specially like to thank Mr.
ASHISH KUMAR and MR. AMIT BINDRA without whose kind co-
operation; this report would have been incomplete.
Last but not the least I thank my parents and family members for
their continuous and great support encouragement throughout this project
work.

SHILPI JAIN

4
 PREFACE

A well planned, properly executed evaluated training helps a lot in

inculcating good work culture. It provides linkage between the student and
industry in order to develop the awareness of industrial approach to problem
solving based on broad understanding of plant, machinery, process and
operation of industrial organization.

My project titled “PERFORMANCE APPRAISAL”.

Basically it has given me the opportunity to have detail study about existing
“PERFORMANCE APPRAISAL” system.

This training has also provided me an opportunity to gain practical

experience, which has increased my sphere of knowledge to great extent.

I have tried to summarize all my observations, experiences and knowledge in

this project report.

SHILPI JAIN

5
History and Evolution

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco
Company of India Limited. As the Company's ownership progressively
Indianised, the name of the Company was changed from Imperial Tobacco
Company of India Limited to India Tobacco Company Limited in
1970 and then toI.T.C. Limited in 1974. In recognition of the Company's
multi-business portfolio encompassing a wide range of businesses -
Cigarettes & Tobacco, Hotels, Information Technology, Packaging,
Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing,
Education & Stationery and Personal Care - the full stops in the Company's
name were removed effective September 18, 2001. The Company now
stands rechristened 'ITC Limited'.

The Company’s beginnings were humble. A leased office on Radha Bazar

Lane, Kolkata, was the centre of the Company's existence. The Company
celebrated its 16th birthday on August 24, 1926, by purchasing the plot of
land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata,
for the sum of Rs 310,000. This decision of the Company was historic in
more ways than one. It was to mark the beginning of a long and eventful
journey into India's future. The Company's headquarter building, 'Virginia
House', which came up on that plot of land two years later, would go on to
become one of Kolkata's most venerated landmarks.

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Though the first six decades of the Company's existence were primarily
devoted to the growth and consolidation of the Cigarettes and Leaf
Tobacco businesses, the Seventies witnessed the beginnings of a corporate
transformation that would usher in momentous changes in the life of the
Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic

backward integration for ITC's Cigarettes business. It is today India's most
sophisticated packaging house.

In 1975 the Company launched its Hotels business with the acquisition of a
hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'.
The objective of ITC's entry into the hotels business was rooted in the
concept of creating value for the nation. ITC chose the hotels business for its
potential to earn high levels of foreign exchange, create tourism
infrastructure and generate large scale direct and indirect employment. Since
then ITC's Hotels business has grown to occupy a position of leadership, with
over 100 owned and managed properties spread across India.

In 1979, ITC entered the Paperboards business by promoting ITC

Bhadrachalam Paperboards Limited, which today has become the market
leader in India. Bhadrachalam Paperboards amalgamated with the Company
effective March 13, 2002 and became a Division of the Company,
Bhadrachalam Paperboards Division. In November 2002, this division
merged with the Company's Tribeni Tissues Division to form the
Paperboards & Specialty Papers Division. ITC's paperboards' technology,
productivity, quality and manufacturing processes are comparable to the best
in the world. It has also made an immense contribution to the development of

7
Sarapaka, an economically backward area in the state of Andhra Pradesh. It is
directly involved in education, environmental protection and community
development. In 2004, ITC acquired the paperboard manufacturing facility of
BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu.
The Kovai Unit allows ITC to improve customer service with reduced lead
time and a wider product range.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British
joint venture. Since inception, its shares have been held by ITC, British
American Tobacco and various independent shareholders in Nepal. In August
2002, Surya Tobacco became a subsidiary of ITC Limited and its name was
changed to Surya Nepal Private Limited (Surya Nepal).

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper

manufacturing company and a major supplier of tissue paper to the cigarette
industry. The merged entity was named the Tribeni Tissues Division (TTD).
To harness strategic and operational synergies, TTD was merged with the
Bhadrachalam Paperboards Division to form the Paperboards & Specialty
Papers Division in November 2002.

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri
Business Division for export of agri-commodities. The Division is today one
of India's largest exporters. ITC's unique and now widely acknowledged e-
Choupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now
it extends to 10 states covering over 4 million farmers. ITC's first rural mall,
christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On
the rural retail front, 24 'Choupal Saagars' are now operatonal in the 3 states
of Madhya Pradesh, Maharashtra and Uttar Pradesh.

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In 2000, ITC forayed into the Greeting, Gifting and Stationery products
business with the launch of Expressions range of greeting cards. A line of
premium range of notebooks under brand “Paperkraft”was launched in
2002. To augment its offering and to reach a wider student population, the
popular range of notebooks was launched under brand “Classmate” in
2003. “Classmate” over the years has grown to become India’s largest
notebook brand and has also increased its portfolio to occupy a greater share
of the school bag. Years 2007- 2009 saw the launch of Children Books, Slam
Books, Geometry Boxes, Pens and Pencils under the “Classmate” brand. In
2008, ITC repositioned the business as the Education and Stationery Products
Business and launched India's first environment friendly premium
business paper under the “Paperkraft” Brand. “Paperkraft” offers a
diverse portfolio in the premium executive stationery and office consumables
segment. Paperkraft entered new categories in the office consumable segment
with the launch of Textliners, Permanent Ink Markers and White Board
Markers in 2009.

ITC also entered the Lifestyle Retailing business with the Wills Sport range
of international quality relaxed wear for men and women in 2000. The Wills
Lifestyle chain of exclusive stores later expanded its range to include Wills
Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC
also initiated a foray into the popular segment with its men's wear
brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of
the country's most premier fashion event - Wills Lifestyle India Fashion
Week - that has gained recognition from buyers and retailers as the single
largest B-2-B platform for the Fashion Design industry. To mark the
occasion, ITC launched a special 'Celebration Series', taking the event

9
forward to consumers.

In 2000, ITC spun off its information technology business into a wholly
owned subsidiary, ITC Infotech India Limited, to more aggressively pursue
emerging opportunities in this area. Today ITC Infotech is one of India’s
fastest growing global IT and IT-enabled services companies and has
established itself as a key player in offshore outsourcing, providing
outsourced IT solutions and services to leading global customers across key
focus verticals - Manufacturing, BFSI (Banking, Financial Services &
Insurance), CPG&R (Consumer Packaged Goods & Retail), THT (Travel,
Hospitality and Transportation) and Media & Entertainment.

ITC's foray into the Foods business is an outstanding example of successfully

blending multiple internal competencies to create a new driver of business
growth. It began in August 2001 with the introduction of'Kitchens of
India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the
confectionery and staples segments with the launch of the brands mint-
o and Candyman confectionery and Aashirvaadatta (wheat flour). 2003
witnessed the introduction of Sunfeast as the Company entered the biscuits
segment. ITC's entered the fast growing branded snacks category
with Bingo! in 2007. In eight years, the Foods business has grown to a
significant size with over 200 differentiated products under six distinctive
brands, with an enviable distribution reach, a rapidly growing market share
and a solid market standing.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness

of the entire value chain found yet another expression in the Safety
Matches initiative. ITC now markets popular safety matchesbrands

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like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003

marked the manifestation of its partnership with the cottage sector. ITC's
popular agarbattis brands include Spriha and Mangaldeepacross a range of
fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and
Nagchampa.

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and

bath & body care products for men and women in July 2005. Inizio, the
signature range under Essenza Di Wills provides a comprehensive grooming
regimen with distinct lines for men (Inizio Homme) and women (Inizio
Femme). Continuing with its tradition of bringing world class products to
Indian consumers the Company launched 'Fiama Di Wills', a premium range
of Shampoos, Shower Gels and Soaps in September, October and December
2007 respectively. The Company also launched the 'Superia' range of Soaps
and Shampoos in the mass-market segment at select markets in October 2007
and Vivel De Wills & Vivelrange of soaps in February and Vivel range of
shampoos in June 2008.

The ITC Profile

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ITC is one of India's foremost private sector companies with a market
capitalization of over US $ 22 billion and a turnover of US $ 6 billion.* ITC
is rated among the World's Best Big Companies, Asia's 'Fab 50' and the
World's Most Reputable Companies by Forbes magazine, among India's
Most Respected Companies by Business World and among India's Most
Valuable Companies by Business Today. ITC ranks among India's `10 Most
Valuable (Company) Brands', in a study conducted by Brand Finance and
published by the Economic Times. ITC also ranks among Asia's 50 best
performing companies compiled by Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty

Papers, Packaging, Agri -Business, Packaged Foods & Confectionery,
Information Technology, Branded Apparel, Personal Care, Stationery, Safety
Matches and other FMCG products. While ITC is an outstanding market
leader in its traditional businesses of Cigarettes, Hotels, Paperboards,
Packaging and Agri-Exports, it is rapidly gaining market share even in its
nascent businesses of Packaged Foods & Confectionery, Branded Apparel,
Personal Care and Stationery.

As one of India's most valuable and respected corporations, ITC is widely

perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls
this source of inspiration "a commitment beyond the market". In his own
words: "ITC believes that its aspiration to create enduring value for the nation
provides the motive force to sustain growing shareholder value. ITC practices
this philosophy by not only driving each of its businesses towards
international competitiveness but by also consciously contributing to
enhancing the competitiveness of the larger value chain of which it is a part."

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ITC's diversified status originates from its corporate strategy aimed at
creating multiple drivers of growth anchored on its time-tested core
competencies: unmatched distribution reach, superior brand-building
capabilities, effective supply chain management and acknowledged service
skills in hoteliering. Over time, the strategic forays into new businesses are
expected to garner a significant share of these emerging high-growth markets
in India.

ITC's Agri-Business is one of India's largest exporters of agricultural

products. ITC is one of the country's biggest foreign exchange earners (US $
3.2 billion in the last decade). The Company's 'e-Choupal' initiative is
enabling Indian agriculture significantly enhance its competitiveness by
empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter of a
case study at Harvard Business School, is expected to progressively create for
ITC a huge rural distribution infrastructure, significantly enhancing the
Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India

Ltd, provides IT services and solutions to leading global customers. ITC
Infotech has carved a niche for itself by addressing customer challenges
through innovative IT solutions.

ITC's production facilities and hotels have won numerous national and
international awards for quality, productivity, safety and environment
management systems. ITC was the first company in India to voluntarily seek
a corporate governance rating.

ITC employs over 26,000 people at more than 60 locations across India. The
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Company continuously endeavors to enhance its wealth generating
capabilities in a globalising environment to consistently reward more than
3,76,000 shareholders, fulfill the aspirations of its stakeholders and meet
societal expectations. This over-arching vision of the company is
expressively captured in its corporate positioning statement: "Enduring
Value. For the Nation. For the Shareholder."

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The ITC Vision & Mission

Sustain ITC's position

as one of
India's most valuable To enhance the
corporations wealth generating
through world class capability of the
performance, enterprise in a
creating growing globalizing
value for the Indian environment,
economy and the delivering superior
Company’s and sustainable
stakeholders stakeholder value

Core Values

ITC's Core Values are aimed at developing a customer-

focused, high-performance organization which creates value
for all its stakeholders:

Trusteeship

As professional managers, we are conscious that ITC has

been given to us in "trust" by all our stakeholders. We will
actualise stakeholder value and interest on a long term
sustainable basis.

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Customer Focus

We are always customer focused and will deliver what the

customer needs in terms of value, quality and satisfaction.

Respect For People

We are result oriented, setting high performance standards

for ourselves as individuals and teams.

We will simultaneously respect and value people and uphold

humanness and human dignity.

We acknowledge that every individual brings different

perspectives and capabilities to the team and that a strong
team is founded on a variety of perspectives.

We want individuals to dream, value differences, create and

experiment in pursuit of opportunities and achieve leadership
through teamwork.

Excellence

We do what is right, do it well and win. We will strive for

excellence in whatever we do.

Innovation

We will constantly pursue newer and better processes,

products, services and management practices.

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Nation Orientation

We are aware of our responsibility to generate economic

value for the Nation. In pursuit of our goals, we will make no
compromise in complying with applicable laws and
regulations at all levels.

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Theoretical background of the study:-
Performance appraisal

Performance appraisal is the step where the management

finds out how effective it has been at hiring and placing
employees. If any problem is identified, step is taken to
communicate with the employee and to remedy them.
A “performance appraisal is a
process of evaluating an employee’s performance of a job in
terms of its requirements. It is a process of estimating or
judging the value, excellence, qualities or status of some
object, person or thing.”

Meaning of performance appraisal:

In simple terms, 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. Assessment should
not be confined to past performance alone. Potentials of the
employee for future performance must also be assessed.

Definition:
A formal definition of performance appraisal is
 “It is the systematic evaluation of the individual
with respect to his or her performance on the job
and his or her potential for development.”

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  “Performance appraisal is a formal, structured
system of measuring and evaluating an
employee’s job related behaviors and outcomes to
discover how and why the employee is presently
performing on the job and how the employee can
perform more effectively in the future so that the
employee, organization, and society all benefit.”

Features of performance appraisal:

Performance appraisal is the systematic description of an

Employee’s job relevant strengths and weaknesses.
 Appraisals are arranged periodically according to a
definite plan.
 Performance appraisal is a continuous process in every
large scale organization.
 Performance appraisal process, which improves
employer-employee relations.
 Performance appraisal is an important tool for rating
personnel in an organization.
Need for performance appraisal
Performance appraisal is needed in order to:

 Provides information about the performance ranks

basing on which decision regarding salary fixation,
confirmation, promotion, transfer and demotion are
taken.
 Provide feedback information about the level of
achievement and behavior of subordinate. This
information helps to review the performance of the
subordinate, rectifying performance deficiencies and to
set new standards of if necessary.

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 Provides information, which helps in the counseling of
the subordinate.
 Provide information to diagnose deficiency in employee
regarding skill, knowledge; determine training and
development needs to prescribe the means for
employee growth and for the correct placement of the
employee.
 To prevent grievances and indisplinary activities.

Importance of performance appraisal

Performance appraisal aims at attaining different goals:
 Performance improvement- performance
feedback allows the employee, manager and
personnel specialists to intervene with appropriate
actions to improve performance.
 Compensation adjustments- performance
evaluations help decision makers determine who
should receive pay raises.
 Placement decisions- promotions, transfers and
demotions are usually based on past or anticipated
performance.
 Training and development needs- poor
performance may indicate for retaining. Likewise
good performance may indicate untapped potential
that should be developed.
 Career planning and development- performance
feedback guides career decisions about specific
career paths one should investigate.
 Staffing process deficiencies-good or bad
performance implies strengths or weaknesses in
the personnel departments staffing procedures.

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 Job design errors- poor performance may be a
symptom of ill-conceived job design. Appraisals
help diagnose these errors.
 Equal employment opportunity- accurate
performance appraisals that actually measure job
related performance ensure that internal placement
decisions are not discriminatory.
 Feedback to human resources- good/bad
performances throughout the organization
indicates how well the human resource functions
performing.
 Improvement of interpersonal relationships- to
help the superior to have proper understanding
about their subordinates.
 Organizational effectiveness- to ensure
organizational effectiveness through correcting
employee for standard and improved performance,
and suggesting the change in employee behavior.

Contents to be appraised for an officer’s job

 Regularity of attendance.
 Self-expression: written and oral.
 Ability to work others.
 Leadership styles and abilities.
 Initiative.
 Technical skills.
 Ability to reason.
 Originality and resourcefulness.
 Creative skills.
 Area of interest.
 Area of suitability.
 Judgment skills.
 Integrity.
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  Capability of accepting responsibility.
 Level of acceptance by the subordinates.
 Honesty and sincerity.
 Thoroughness in job and organizational
knowledge.
 Knowledge of system and procedures.
 Quality of suggestions offered for improvement.

Performance evaluation to performance

analysis and development
Performance appraisal was formerly used for the purpose of
evaluating employee’s performance and controlling the
performance against the set standards. This technique was
used to control the employee ignoring the human aspect. But,
with the emergence of the human resource concept,
organizations are using this technique to analyze employee’s
performance and to further improve and develop it. Thus, this
technique is now used as enabling and motivating to improve
the performance.

The performance analysis and development helps the

organization to meet the following changes:

 Creates a culture of excellence that inspires every

employee.
 Match organizational objectives to individual aspirations.
 Equip people with skills necessary to perform their
duties.
 Clear growth paths for especially talented individuals.
 Provide new challenges to rejuvenate plateau the
careers.
 Forge a partnership with people for managing their
careers.
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  Empower employees to take decisions without fear of
failing.
 Allows the voices of workers closest to the customer to
be heard.
 De-bureaucratize the structure for free flow of
information.

What should be rated

The seven criteria for assessing performance are:

 Quality- the degree to which the process or result of

carrying out an activity approaches perfection.
 Quantity- the amount produced, expressed in
monetary terms, number of units, or number of
completed activity cycles.
 Timeliness- the degree to which an activity or a result
produced.
 Cost effectiveness- the degree to which the use of
organization’s resources (e.g. human, monetary,
technological, and material) is maximized in the sense
of getting the highest gain.

 Need for supervision- the degree to which a job

performer can carry out a job function without
supervisory assistance.

 Interpersonal impact- the degree to which a performer

promotes feelings of self-esteem, goodwill and
cooperation among co-workers and subordinates.

 Training- need for training for improving his skills

knowledge.

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The evaluation process

The process of performance appraisal follows a set pattern,

viz., a man’s performance is periodically appraised by his
superiors. The process has following steps:

ESTABLISH PERFORMANCE STANDARDS

↓
COMMUNICATING STANDARDS TO EMPLOYEES
↓
MEASURE ACTUAL PERFORMANCE
↓
COMPARING ACTUAL PERFORMANCE WITH
STANDARD
↓
DISCUSS THE APPRAISAL WITH THE EMPLOYEE
↓
IF NECESSARY CORRECTIVE ACTION IS TAKEN

 Establish performance standards- at the time of

designing a job and formulating a job description,
performance standards are usually developed for the
position.

 Communicating standards to employees- the

standards are communicated to the employees so that
they may not find it difficult to guess what is expected of
them. To make communication effective feedback is
necessary from the subordinate to the manager.
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 Measure actual performance- it is necessary to obtain
information about the actual performance with the help
of personal observation, statistical reports, oral reports
and written reports.

 Comparing actual performance with the standards-

attempts are made to note deviations between standard
performance and the actual performance.

 Discuss the appraisal with the employee- the results

of appraisal are discussed with the employees where
good points, weak points and difficulties are indicated
and discussed so that performance is improved.

 If necessary corrective action is taken- immediate

corrective action is any discrepancy is found. The action
taken can be two types. One is immediate and deals
predominantly with symptoms. The other is basic and
delves into causes.

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26
Methods or techniques for appraising
performance

The methods or scales used for measuring performance

differ due to difference in the qualities or traits to be
appraised, different workers to be appraised and the degree
of precision attempted in an evaluation.
Strauss and sales have classified performance appraisal
methods into traditional and modern methods.

 Traditional methods

Graphic rating scale- under this method the

employees are ranked from best to worst on some
characteristics. The rater first finds the employee with the
highest performance and the employees with the lowest
performance in that particular job category and rates the
former as the best and the latter as the poorest. Then the
rater selects the next highest and next lowest and so on until
he rates all the employees in that group.

Man to man comparison method- this technique

was used by the us army during the First World War. By this
method, certain factors are selected for the purpose of
analysis (such as leadership, dependability and initiative),
and the rater for each factor designs a scale. A scale of man
is also created for each selected factor. The each man to be
rated is compared with the man in the scale, and certain
scores for each factor are awarded to him. This method is

27
used in job evaluation, and is also know as factor comparison
method. This is a complicated method so is less used.

 Grading method- under this system, the rater

considers certain features and marks them accordingly to
a scale. Certain categories of worth are first established
and carefully defined. The selected features may be
analytical ability, cooperativeness, dependability, self-
expression, job knowledge, etc. they may be A-
outstanding, B- very good, C- good, D- fair, E- Poor and –
B-very poor. The actual performance of an employee is
then compared with these grade definitions, and he is
allotted the grade which best describes his performance.

 Graphic rating scale- this is the most commonly

used method. In this method the individual’s
performance is compared with the standards. In this
method, judgments about the performance are recorded
on the scale. The appraisers are supplied with printed
forms, one for each employee. These form contain a
number of objectives, behavior and trait based qualities
and characters to be rated like qualities and characters
to be rated like quality and volume of work etc.
performance regarding each character is known by the
point given by the rater. The point given by the rater to
each character is added up to find out the overall
performance. The employees are ranked on the basis of
total points assigned to each one of them.

 Forced distribution method- forced distribution

was evolved by Joseph tiff in after statistical work. This
system was introduced to prevent rater’s bias. It

28
 requires the rater to appraise the employee according to
a predetermined distribution scale. Under this system it
is performance and promo ability. For this purpose a
five-point performance scale is used without any
descriptive statement. Employees are placed between
the two extremes of good and bad job performances.
This forced method assumes that, of the total personnel,
10 percent must go to the top grade, 20 percent to the
second grade, 40 percent to the middle grade, 20
percent to the grade next to the lowest end of the scale,
and 10 percent to the lowest grade. This system is easy
to understand and easy to apply in the organizations.

 Forced choice description method- this

method attempts to correct a rater’s tendency to give
consistently high or give consistently low ratings to all the
employees. Under this method, the rating elements are several
sets of pair phrases or adjectives relating to job proficiency or
personal qualifications. The rater is asked to indicate which of
the four phrases is the most and least descriptive of the
employee. Trained technicians are required to prepare sets of
series for each occupational group. Such tests are expensive to
develop. The results of evaluation do not prove useful for
counseling and training purposes because the rater is ignorant
of how he is evaluating the individual.

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 Checklist method- under this method, the rater
dose not evaluates employee performance: he supplies
reports about it and the personnel department does the
final rating. It is a simple rating technique in which the
supervisor is given a list of statements or words and
asked to check statements representing the
characteristics and performance of the employees.
There are three types of checklist methods, viz., simple
checklists have to be developed for every level. This
process can be weigh a number of statements about
employee characteristics and contributions.

 Free form essay method- this is an open-ended

appraisal method of an employee. In this method the
supervisor takes note of the following factors:

 Relationships with the superiors and the personnel

assigned to him.

 Planning ability.

 Jo knowledge and potential.

 Employee attitude.

 Understanding of the company policies.

 Production, quality and cost control.

 Production, quality and cost control.

 Physical conditions.

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  Development needs for the future.

This method requires the manager to write a short essay

describing each employee’s performance during the rating
period. This format emphasizes evaluation of overall
performance based on strengths/weaknesses of employs.
Performance, rather than specific job descriptions. By asking
supervisor to enumerate specific examples of employee’s
behavior, the essay technique minimizes supervisory bias
and halo effect.

 Critical incident method-the essence of this

system is that it attempts to measure worker’s
performance in terms of certain events or episodes that
occur in performance of the rate’s job. These events are
known as critical incidents. The basis of this method is
that there are certain significant acts in each employee’s
behavior and performance, which make all the
difference between success and failure on the job. The
supervisor keeps the written record of the events that
can easily be recalled and used in the course of a
periodical or formal appraisal. These critical incidents
are discovered after a through study of the personnel
working on the job. The collected incidents are then
ranked in order of frequency and importance. This
method has certain limitations, as negative incidents are
more noticeable than the positive ones. Secondly it is
not easy to record each of the incidents occurring in
one’s job.

Group appraisal- in this method an employee is

appraised by a group of appraisers. This group consists of

31
the immediate supervisor of the employee, to other
supervisors who have close contact with employee’s work,
manager or head of the department and consultants. The
head of the department or manager may be the chairman of
the group activities. This group uses any one or multiple
techniques discussed earlier. The immediate supervisor
enlightens other members about the job character, demands,
and standards of performance. Then the group appraises the
performance of the employee, compares the actual
performance with the standards of performance, find out the
deviations, disuses the reason therefore, and suggest ways
for improvement of performance.

Field review method- under this method, a trainer

employee form the personnel department interviews line
supervisors to evaluate their respective subordinates. The
appraiser is fully equipped with definite test questions,
usually memorized in advance, which he puts to the
supervisor. The supervisor is required to give his opinion
about the progress of his subordinates, the level of the
performance of each subordinate, his weaknesses, good
points, outstanding ability, promo ability, and the possible
plans of action in cases requiring further consideration. The
questions are asked and answered verbally. The answers of
the employee’s folder. The success of this system depends
on the competence of the interviewer. These systems of
performance appraisal are obtained by three way
categorization, viz., outstanding, satisfactory and
unsatisfactory.

32
Modern methods

 Assessment center- this method was first introduced in

the German army by simoniet. The purpose of this method is
to test the candidates in a social situation, using a number of
assessors and a variety of procedures. Its most important
aspect is the job related simulation. The evaluators observe
and evaluate participants as they perform activities
commonly found in these higher-level jobs.

In this method individuals form various departments are

brought together to spend two or three days working on an
individual or group assignment similar to the ones they would
be handling when promoted. Observers rank the
performance of each and every participant in order of merit.
Since assessment centers are basically meant for evaluating
the potential of candidates to be considered for promotion,
training or development, they offer an excellent means for
conducting evaluation processes in an objective way.

 Management by objective- this method is a process of

agreeing upon objectives within an organization so that
management and employees agree to the objectives and
understand what they are. MBo was first popularized by peter
ducker in 1954 in his book “the practice of management”.
MBo substitutes for good intentions a process that requires
rather precise written description of objectives and timeliness
for their monitoring and achievement. The process requires
that the manager and the employee agree to what the
employee will attempt to achieve in the period ahead and that
the employee accept and agree to the objectives. Its
objective is to change behavior and attitude towards getting

33
the job done. It provides responsibility and accountability and
recognizes that employees have needs for achievement and
self- fulfillment. It meets these needs by providing him an
opportunity for participation in goal setting process.
Subordinates become involved in planning their own careers.
So in this process, an employee and his supervisor meet and
decide, establish and set certain goals or objectives which
the employee would attempt to achieve within the period of
prescribed time. They also discuss the ways and methods of
measuring employee progress. The goals, which are set
arework, related and career oriented. The employee
periodically meets the supervisor to evaluate the employee’s
goal progress. If necessary these goals can be revised.
Frequent feedback and employee supervisor interaction is
the key feature of this system.

 360 degree appraisal – the appraiser may be any

person who has through knowledge about the job done by
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 important and what
is relatively capable of determining what is important and
what is relatively less important. In human resources, 360-
degree feedback, also known as ‘multi-rater feedback’,
‘multisource feedback’ or multisource assessment, is
employee development feedback that comes form all around
the employee. 360 refer to the 360-degree in a circle. The
feedback would come from the subordinates, peers and
managers in the organizational hierarchy, as well as self-
assessment, and in some cases external sources such as
customers and suppliers or other interested stakeholders. It
may be contrasted with upward feedback, where managers
are given feedback by their direct reports, or a traditional
performance appraisal, where the employees are most often
34
reviewed only by their managers. The results form this 360-
degree feedbacks are often used by the person receiving the
feedback to plan their training and development. The results
are also used by some of the organizations for making
promotional or pay decisions, which is sometimes called “360
degree review.”

 Psychological appraisals- psychological appraisals are

conducted to assess the employees potential. Psychological
appraisal consist of

 In-depth interviews.

 Psychological tests.

 Consultations and discussions with the employee.

 Discussions with superiors, subordinates and

peers.

Evaluation is conducted in the areas of:

 Employee’s intellectual abilities.

 Emotional stability.

 Motivational responses.

 Reasoning and analytical abilities.

 Interpretation and judgment skills.

35
  Sociability.

 Ability to foresee the future

Why appraisal techniques prove failure

Performance appraisal techniques have often failed to give a

correct assessment of the employee. Some of the causes of
such failure can be
 The supervisor plays dual and confecting role of both
the judge and the helper.
 Too many objectives often cause confusion.
 The supervisor feels that the subordinate appraisal is not
rewarding.
 A considerable time gap exists between two appraisal
programs.
 Poor communication keeps the employees in the dark
about what is expected of them.
 There is difference of opinion between the supervisor and
the subordinate in regard to the latter’s performance.
 Feedback on appraisal is generally unpleasant for both
the supervisor and the subordinate.

36
How appraisals can be made successful

The rater must be thoroughly well versed in the philosophy

and nature of the rating system. Factors and factor scales
must be well-defined analyses and discussed. The success
of an appraisal programme depends upon:

 The existence of an atmosphere of confidence and trust

so that all the matters are discussed frankly between the
employee and the supervisor.
 The supervisor must thoroughly evaluate the
employee’s performance so that he is capable of
meeting challenges of his ratings of his subordinates.
 The results of performance rather than personality traits
should be given due weight.
 The supervisor should try to analyses the strengths and
weaknesses of an employee and advise him on
correcting the weaknesses.
 The appraisal programme should be less time
consuming and less costly.
 The results if negative should be immediately
communicated to the employees, so that they may try to
improve their performance.

37
  The post-appraisal interview should be conducted to
provide feedback to the employees and know about the
problems they are facing on job.
 The appraisers can effectively appraise the employees if
they are given proper training.
Ethics of appraisal

There are certain ethics, which must be followed while

carrying out performance appraisal of the employees

otherwise the very purpose of the appraisal will be defeated.

Some of the does and don’ts are:

 Don’t appraise without knowing the purpose of the

appraisal.
 Don’t write one thing and say another.
 Appraise on the basis of sufficient information.
 Appraise on the basis of relevant information.
 Be honest in your appraisal.
 Mention in your appraisal that it is only your personal
opinion.
 Pass on the appraisal report only to those who really
want it.

38
System of performance standards

ESTABLISH PERFORMANCE STANDARDS

COMMUNICATE STANDARDS TO THE EMPLOYEES

MEASURE ACTUAL PERFORMANCE ACCORDING TO THE

NEED

COMPARE THE ADJUSTED PERFORMANCE WITH THAT OF

OTHERS

COMPARING WITH THE STANDARDS AND MAKING

CORRECTIONS

COMMUNICATE THE ACTUAL PERFORMANCE TO THE

EMPLOYEE

SUGGEST CHANGES IN STANDARDS, IF NECESSARY

FOLLOW UP PERFORMANCE APPRAISAL REPORT

39
Research methodology is a way to mathematically solve the

research problem .It may be understood as a science of

studying how research is done scientifically.

When we talk of Research Methodology, we not only talk

of the research methods but also consider the logic

behind the methods we use in the context of our research

study and explain why we are using a particular method or

technique and why we are not using so that research

results are capable of being evaluated either by research

himself or by others.

As the title of the project suggests the project is about the

Study of the performance appraisal system.

40
 OBJECTIVE OF THE STUDY
 To find out the satisfaction of the employees in
respect to the present performance appraisal
system.
 To find out whether the present system is effective
and helping the employees in some way.

SAMPLE SIZE
An optimum sample in survey is one which fulfills the
following requirement.
1. Efficiency
2. Representativeness
3. Reliability
4. Flexibility
The sample should be small enough to avoid unnecessary
expenses and large enough to avoid intolerable sampling
error.
Factors to be considered in sampling size:
1. The size of the universe
2. Resources available
3. Degree of accuracy/precision required
4. Homogeneity/Heterogeneity of the universe
5. Nature of study

41
 6. Methods of sampling adopted.
The total of 100 people was asked to fill the questionnaire.

METHOD OF SAMPLING

There are two types of sampling method:

1. Probability Sampling Method and

2. Non-probability Sampling Method

 The major sampling methods under probability sampling

are:

1. Simple Random Sampling

2. Systematic Sampling
3. Stratified Sampling
4. Cluster Sampling
5. Multi-stage Sampling

 The major sampling methods under non-probability

sampling are:

1. Convenience Sampling
2. Judgment Sampling
3. Quota Sampling

42
In the survey, the method of sampling used is Convenience

Sampling.

MODE OF DATA COLLECTION

In the survey, the mode of data collection is PRIMARY

DATA.

PRIMARY DATA

 Data that is collected for the specific purpose at hand is

called as primary data. According to the need of the
researchers focus was exclusively on the current
research problem. The collection of primary data is
costly and time consuming. It calls for greater planning
and coordination basic method of collecting primary data
are the questionnaire method and the observation
method.

 Feedback from official of ITC INFOTECH INDIA

LIMITED.

 Valuable information provided by the employees.

SECONDARY DATA
Secondary data may be defined as the data has been
collected earlier for some purpose of the present study.
Secondary source of data provide a wealth of information to
the researcher. It often obviates the needs of primary data a
collection that saves valuable time efforts and money.
 Internet

43
  Books

 Companies newsletters

 Companies website

SAMPLE SIZE DETERMINATION

Before deciding the sample size I was made aware of total

hierarchy of company. So I have taken and chosen the more

interactive groups and interactive departments. With a view

to have real responses in managerial position, assistant

manager, manager AGM were taken into account while

deciding sample size. Thus a diversified core group with the

guidance, suggestions of P&A department was taken. The

survey was done taking the nature of the interaction with

employees and day to day quantum of workload assigned.

The idea behind the survey was that by adopting this

process, the real outcome of majority thinking could be

revealed and also pragmatic view of all the questions was

44
obtained. Thus an effort has been made to make survey

more wishes of employees in general. It is heartening to

know that lot of new ideas and practical approach of getting

the job done and also a practical approach of getting the job

done and also a practical way of solving the complex issues

were intimated in a very definite and clear vision. The sample

size taken was 100 and the sample questionnaire is

distributed at random basis in different layers i.e. middle and

lower level of hierarchy so that majority views can be

obtained

.
Sample area: - ITC Infotech India Ltd ITC Infotech Park,
No18, Banaswadi Main Road, Pulikeshi Nagar,
Bangalore – 560005

45
 ANALYSIS AND
INTERPRETATION OF
DATA

46
The performance appraisal system is aligned with the
organizational objectives.

10%
15%
strongly agree
5% agree
55% neutral
disagree
15%
strongly disagree

About 70% of the employees agree with the statement that the performance
appraisal system is aligned with the organizational objectives. This means a
major portion of the employees is well aware about the organizational
objectives, which is positive sign for the organization.

47
1. Performance is appraised on the basis of pre decided
standards.

10%

10%
strongly agree

5% agree
60% neutral
15% disagree
strongly disagree

Almost 75% of the employees are aware of the fact that performance
standards are pre decided. This means that still there are some people in the
organization who are either unsure or not known about the decision to be
made with regards to the setting of the standards to be followed.

48
2. Appraisers are trained for carrying out performance
appraisal.

10%

10%
55% strongly agree
agree
10% neutral
disagree
15% strongly disagree

While answering this question the total number of the employees has broken
down into three different groups of almost equal number (30%). First group
believes that the appraisers are well trained, second group says that are not
sure about it and the rest say that they are not trained before carrying out the
appraisal of the employees.

49
3. Performance appraisal evaluates strengths and
weaknesses of an employee.

10%

15% 43% strongly agree

agree
neutral
15% disagree
strongly disagree
17%

More than 50% of the employees believe that the appraisal process but the
other half do not conform to this statement can well reveal their strengths and
weaknesses. This means that the second half does not have full faith in the
present system.

50
4. Performance appraisal aims at development of the
employee.

5%

15% 37% strongly agree

agree
neutral
disagree
28%
strongly disagree
15%

52% of the employees feel that the appraisal process helps in the in
development. The rest are either unsure or do not conform to this fact. This
means that most of the people working in the organization are either not
satisfied with the appraisal process or has not gained anything out of it
personally.

51
5. There is an inbuilt incentive/ reward for satisfactory
performance.

5%

10%
42% strongly agree
agree
neutral
disagree
33%
strongly disagree
10%

52% of the employees feel that their satisfactory performance is

rewarded.15% have denied and rest are not aware of this incentive system. It
signifies the fact that the employees are not told about the performance linked
rewareds.

52
6. Performance appraisal aims at fault finding in the
individual.

5%

10% 44%
strongly agree
agree
neutral

28% disagree
strongly disagree
13%

Majority (57%) of the employees do not agree that the performance appraisal
system aims at fault finding. Only 15% of them feel that faults are being
identified. Others remained silent on this issue. This shows that there is a
very small percentage of those employees who really are concerned about
their performance and development by knowing and rectifying their faults.

53
7. There is inbuilt punishment for unsatisfactory
performance.

10%

15% 41%
strongly agree
agree
neutral
disagree
29%
strongly disagree
15%

56% employees say that there is an inbuilt punishment system for

unsatisfactory performance, 25% deny it and the rest remained silent on this
topic.

54
8. Negative feedback does not put off the employee.

21%
21%
strongly agree
3% agree
neutral
21% disagree
34% strongly disagree

42% of the employees believe that if the appraiser gives a negative feedback
on their performance then they will be put off. 34% of them remained silent
on this topic and 24% of them agreed to the above statement. This shows that
most of the employees don’t like to be given a negative feedback.

55
9. The system helps employees to know their potential.

10%
34%
19% strongly agree
agree
neutral
disagree
27% strongly disagree
10%

44% of the employees believe that their potential can be explored by this
system, 29% fell that it doesn’t do so and the rest were neutral in their
response. This signifies that most of the employees strive to improve by
knowing their potential.

56
10. Employee training and promotion needs can be
identified by performance appraisal system and are
properly adhered.

3%

21%
50% strongly agree
agree
neutral
16% disagree
strongly disagree

10%

60% of the employees are satisfied with the appraisal system and think that
their training and promotion needs can be well identified by this system,
whereas 24% don’t agree with the above statement. This shows that training
and promotion programmes are in conformity with the appraisal system.

57
11. Performance appraisal system facilitates placement
of employees on suitable jobs.

2%

36% strongly agree

31%
agree
neutral
disagree
strongly disagree

26% 5%

41% of the employees being questioned are satisfied with their job
placements after being appraised, whereas 33% feel otherwise.

58
12. Performance appraisal increases satisfaction.

2%

24% 34% strongly agree

agree
neutral
disagree
30% 10% strongly disagree

44% of the employees feel that Performance appraisal system increases job
satisfaction, 26% disagree with the statement and the rest were neutral. This
shows that the Performance appraisal system can act to be a motivator.

59
RECOMMENDATIONS
On the basis of the responses given by the employees of
ALPS through questionnaires, I have reached to some
conclusions. So taking them into consideration I have
forwarded some suggestions, which may be considered while
designing the performance appraisal system.

 The main aim of performance appraisal is to develop the

potential of the human capital present in the
organization so that the organizational and individual
objectives can be easily achieved. So, the first thing,
which should be done, is to educate the employees
about the process, methods and results of the appraisal
system to be carried out in the organization.

 Morality, espirit de corps, discipline, dedication are

some of the attributes, which an organizational member
should possess. These things cannot be taught, so,
while appraising an individual these traits should be
given due weight age to motivate the employees.

 It is a well known fact that the appraisers can be

effective only when they are well trained for carrying out
their work but, it is even more important that the
employees are aware of the fact that the people who are
going to appraise them are well equipped with the
knowledge and are competent enough to do that job.

60
 It is human to work for materialistic and instant reward;
so, the satisfactory performers should be rewarded
immediately.

 The shortcomings or the faults of the employees should

be communicated to them in such a way that they feel
as if the organization cares for their development and is
always ready to support them.

 A human being can also be called as an emotional

being as he is much concerned about his relationships
at home and at his workplace. So, performance
appraisal should not be based totally on practical
grounds. Emotional aspects should also be taken into
consideration.

 The procedure for carrying out the appraisal of an

employee should not be too scientific or complicated,
which may pose problems for both the employees and
the appraisers.

 Trust between the superiors and the subordinates are a

key for coordination in the activities being performed. An
impartial and transparent environment provided by the
appraisers can prove beneficial.

 Every superior should act as a role model for his/her

subordinate.

61
 Conclusion
The project effectiveness of performance appraisal at ITC
Infotech provides a comparative study of ITC with the
theoretical concept. On the basis of feedback through
questionnaire, interview and observation method, I found that
process of performance appraisal is quite effective,
management of ITC infotech is constantly making efforts to
make the company the best place to work in truly
professional way.
Our analysis is based on sample results.
It was difficult to meet personally in order to get questionnaire
filled by senior level employees. There was time pressure.

62
BIBLIOGRAPHY
Reference books:
 Human resource and personnel management- K.
Aswathappa
 Human resource management by T.V.Rao
 Research methodology –C.R. Kothari
 S.B Robbins,

Internet sites:
 http://www.itcinfotech.com.
 www.itcportal.com.
 www.hrcity.com

63
ANNEXURE

64
QUESTIONNAIRE

PERSONAL DATA:

NAME:
DESIGNATION:
DURATION OF SERVICE:

(Strongly agree=1, agree=2, neutral=3, disagree=4, strongly

disagree=5)

Based on the present performance appraisal system

1. The performance appraisal is aligned with the organizational objectives

2. Performance is appraised on the basis of pre decided standards.

3. Appraisers are trained for carrying out performance appraisal.

4. Performance appraisal evaluates strengths and weaknesses of an

employee.

5. Performance appraisal aims at development of the employee.

65
6. There is an inbuilt incentive/reward for satisfactory performance.

7. Performance appraisal aims at fault finding in the individual.

8. There is inbuilt punishment for unsatisfactory performance.

9. Negative feedback does not put off the employee.

10. The system helps employees to know their potential.

11. Employee training and promotion needs can be identified by

performance appraisal system and are properly adhered.

12. Performance appraisal system facilitates placement of employees on

suitable jobs.

13. Performance appraisal increases job satisfaction.

66