Process of Appraisal of Company Pay Role Workers and Staff,

Skilled & Unskilled as Well as Senior, Middle, Lower Staff of

International Tobacco Company Limited

Submitted in the partial fulfillment of the requirements

for the award of the degree in

MASTER OF BUSINESS ADMINISTRATION

By
RAGHURAM K

215012101198

under the guidance of

Guide Name

FACULTY OF MANAGEMENT STUDIES

Dr. M.G.R.
Educational and Research Institute
(Deemed to be university)

Maduravoyal, Chennai-600 095

(An ISO 9001-2008 certified Institution)
University with Special Autonomy Status

May 2023

i
 DECLARATION

I RAGHURAM K hereby declare that the Project Report entitled Process of

Appraisal of Company Pay Role Workers and Staff, Skilled & Unskilled as
Well as Senior, Middle, Lower Staff of International Tobacco Company
Limited is done by me under the guidance of Ms. P.BHAVANI is submitted
in partial fulfillment of the requirements for the award of the degree in MASTER
OF BUSINESS ADMINISTRATION.

DATE:

PLACE: SIGNATURE OF THE CANDIDATE

ii
 Dr. M.G.R.
Educational and Research Institute
(Deemed to be university)
Maduravoyal, Chennai-600 095
(An ISO 9001-2008 certified Institution)

FACULTY OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This is to certify that this Project Report is the bonafide work of Mr. RAGHURAM K who
carried out the project entitled Process of Appraisal of Company Pay Role Workers

and Staff, Skilled & Unskilled as Well as Senior, Middle, Lower Staff of
International Tobacco Company under our supervision from Ms. P BHAVANI

Internal Guide Head of the Department

Submitted for Viva Voce Examination held on _________

iii
 ACKNOWLEDGEMENT

To acknowledge here, all those who have been a helping hand in completing this project, shall
be an endeavor in itself

I extremely thankful to our Chancellor Thiru A.C.SHANMUGAM,B.A., B.L., our President

Er. A.C.S. ARUN KUMAR, B.E. I express my sincere thanks to our Secretary Thiru A.
RAVIKUMAR and our Vice Chancellor DR.S.GEETHALAKSHMI, I would like to take the
opportunity to express my profound gratitude to Dr. G BRINDHA, Professor & head, and my project
guide, Faculty of Management Studies, for her kind permission to undergo project work successfully.

I thank Ms. P BHAVANI guiding me to execute my final year project. I also thank all faculties and
batch mates in Faculty of Management Studies, for their support and guidance throughout the course of
final year project.

I thank Mr. A. KALAIMANI of ITC LTD. (CHENNAI) for guiding and supporting throughout my project

I owe my wholehearted thanks and appreciation to entire staff of the company for their cooperation and
assistance during the project.

RAGHURAM K

iv
CHAPTER TITLE PAGE PAGE
ABSTRACT 4

CHAPTER 1
1.1 Introduction 5

1.2 Performance appraisal – Types and Classifications 6-8

Benefits 8-10
Research of the Problem 10-16
1.3
Need and Importance of the study 17-18
1.4
Different Methods Of Performance appraisal 19-24
1.5
Disadvantages of performance appraisals 24-25
1.6
CHAPTER 2 – Research Methodology
2.1 Research Design
2.2 Research Methodology 26-27

2.3 The Evaluation Process 27-28

CHAPTER – 3
3.1 CONCLUSION 27-29

3.2 ABOUT ITC COMPANY 30-32

3.3 FINDINGS 33-36

REFERENCES 37
 Process of Appraisal of
Company Pay Role
Workers and Staff, Skilled
& Unskilled as Well as
Senior, Middle, Lower Staff
of International Tobacco
Company Limited

2
3
 ABSTRACT
Process of appraisal should be systematically it is widely used in human
resource development mechanism that poses a long way for systematically
improving the perfomance level of an individual as will as organization.
Process of appraisal provides data about past, present and expected
performance of the employee. Which is helpful in taking decision on
selection Training and development, if process of Appraisal(P.O.A) is
implement well it can take the organization on a fast development trade
and faster productivity through commitment or complete people. process
of appraisal compose actual performance with standards, discuss the
process of appraisal with the employee it is necessary initial correct action.
I.T.C being a big size industries adopted a scientific system of process of
process of appraisal of its human resources the most widely used
technique is the process of appraisal system. performance to evaluation
process comprise Establish performance Standards, communication
performance expectations to employees. Measure actual perform,
compose actual performance with Standard. Discuss the appraisal with the
employee, if necessary initials corrective action. Achievements have been
received for the training and result have been obtained on the basis of
Questionnaire related to work Environment and motivation from company
pay role skilled and unskilled, 150 skilled and 50 unskilled Total No 200
and company pay role staff senior 20, middle 30, lower 50, making a total
number of 100.
Response indicate the Training programme have been well organised and
perceived by both level generaly a vibrant work cultures, the survay
indicated that the intergrated approach has brought about a radical
change in the overall performance of employees particularly with reference
to clarity of role and responsibility at various levels. Motivation leavel and
moral have gone up considelably. Training programs and workshop have
not only be improved but also the overall climate cultures of the
organisation is improved.

KEY WORDS： Process of appraisal, company pay role workers and staff,
Tobacco, Environment.

4
 INTRODUCTION

To run a public enterprise in to day highly turbulent business environment

in public enterprises marked by unexpected. Situation and changing
economic market phenomena is indeed a difficult proposition it becomes
all the more difficult when the enterprise is a large multi-product and multi
divisional one dealing with diverse markets and operating from locations
situated for and wide, to survive and grow in a company has constantly
review and innovative H.R.D strategies.

The system for the evaluation of the performance of employees is a key

part of the function of staffing as the evaluation serves as a basis for
judging the contribution and weaknesses of employees so that continuing
efforts can be made to build a stronger and more effective organization.

Human resource are key organizational assets since organization

performance depends on the quality of employee effort on their ability and
motivation by raising the quality of individual employees contributions to
production, organizations can make significant improvements in their
performance of company pay roll management.

Performance appraisal is a systematic way of evaluating a workers

performance and his/her potential for development, this continuous
monitoring of the performance and periodic evaluation helps in retaining
promotional and retraining policies.

Performance can be appraised against some set standards to meet the

needs of the organization and the employee, hence the technique must
be sufficiently sensitive to pick up the difference between an effective and
ineffective employee.

5
 Performance appraisals can be broken down
into four distinct significant types:

• The 360-Degree Appraisal: The manager gathers information on the

employee’s performance, typically by questionnaire, from supervisors, co-
workers, group members, and self-assessment.

• Negotiated Appraisal: This type of appraisal uses a mediator to help

evaluate the employee’s performance, with a greater emphasis on the better
parts of the employee’s performance.

• Peer Assessment: The team members, workgroup, and co-workers are

responsible for rating the employee’s performance.

• Self-Assessment: The employees rate themselves in categories such as

work behavior, attitude, and job performance.

Note that some organizations use several appraisal types during the same review.
For instance, a manager could consult with the employee’s peers and assign a self-
assessment to the employee. It doesn’t have to be a case of either/or.

Performance appraisals serve a dual purpose

for both organizations and employees.

• For organizations: employee assessments provide insight into an

employee's contribution, enabling management to improve working
conditions, address behavioural issues, recognize employee talents, support
skill and career development, and improve strategic decision-making.

• For employees: performance reviews are a way to recognize and thank

them for their achievements, find opportunities for promotions or bonuses,
help them get training or education to advance their careers, find areas
where they can improve, encourage and involve them in their career
development, and start conversations about long-term goals.

6
 Performance appraisal also aims to:

• Provide helpful information to help make decisions regarding transfers,

promotions, terminations, etc.

• Supply the necessary data to identify employee training and

development program requirements.

• Help make confirmation/acceptance decisions regarding employees who

have completed a probationary period.

• Help make decisions regarding raising an employee's salary, offering

incentives, or changing variable pay.

• Clarify expectations and facilitate communication between managers and

subordinates.

• Help employees realize their whole potential performance level.

• Collect relevant employee data and keep the records for various future
organizational purposes.

Suggested Tips and Techniques For

Performance Appraisals

Here are three valuable tips and techniques to maximize the effectiveness of your
performance appeals.

• Document your appraisal sessions: Document your employee performance

appraisal meetings and store the notes in your go-to database system. By
documenting and keeping these notes, you will have easy access when you
need them to make decisions about an employee or conduct follow-up
meetings.

• Use outlines: Create an outline template to be used for all your company’s
performance appraisals. This practice promotes a consistent company-wide
review structure and helps employees better prepare for the appraisal
meeting.

• Check in with your employees more frequently: Nothing is more

dispiriting and frustrating for an employee who performs their jobs in a
7
 particular way, only to be told at the end of the year that they’ve been
doing it all wrong and it will affect their performance reviews. Teams need
to know if they’re doing well and on the right track, so consider
conducting performance appraisals at shorter intervals.

BENEFITS

A performance appraisal has two purposes: to aid the organisation's assessment of

the value and productivity that different employees bring and to aid the company’s
employees in growing in their respective jobs.

Company Benefit

Employee evaluations can influence an organisation's performance. They enable

firms to:

• Identify areas where management may enhance working circumstances in

order to raise productivity and work quality. They give insight into how
people are contributing.

• Deal with behavioural problems before they affect the efficiency of your
department.

• Assist employees in their skills and career development.

• Enhance strategic decision-making in scenarios that call for layoffs,

succession planning, or internally filling available posts.

• Motivate employees to contribute more by recognising their talents and

skills.

Employee Benefit

Performance reviews should benefit the employees who get them. The knowledge
obtained by evaluating and debating an employee's performance can help you:

8
• Acknowledge and thank an employee for their accomplishments and
contributions.

• Be aware of the chance for a promotion or bonus.

• Recognize and advocate for the need for extra education or training to
advance one's profession.

• Identify the precise areas where skills might be strengthened.

• Encourage an employee to feel invested in and active in their professional

development.

• A candid discussion of a worker's long-term objectives.

9
 RESEARCH OF THE PROBLEM

For the ever-increasing complexity of challenge facing organization and

the place of change, both signal the escalating pressures that will be
brought to bear on human resource personnel to play a proactive and
strategic partner roles. Therefore, if PAS is implementing well, it can take
the organization on a fast development track and faster productivity
through commitment, motivated or competent people.

• Lack of clarity in vision and objectives

One of the first performance issues which prevents effective performance

management is a lack of clarity in what needs to be achieved. A vague
vision and unclear objectives leads to situations where employees do not
know what is expected of them and the leadership is unable to identify
parameters to evaluate their performance. Without specific objectives,
there will always be an ambiguity in what constitutes effective
performance.

Solution for fast growing organizations:

Start with a clear vision and strong company values. Clearly and regularly
communicate them along with long term and short-term objectives. It is
possible for the vision to be dynamic and change from time to time. In
such cases, keep the team members updated on what the organization is
progressing towards. Additionally, fast growing organizations must clearly
indicate the role of each employee in achieving the vision and objectives
to ensure transparency across all levels. When employees know the how
and what of their roles, they perform better.

• Lack of well-defined work processes

The next employee performance issue that organizations come across is

a lack of clarity on how the vision and objectives are to be achieved. This
obstacle is especially true for fast growing organizations which lack clear
processes and systems to achieve an identified goal. Often, employees
have no institutional benchmark for a particular task and hence, face
performance issues.

10
 Solution for fast growing organizations:
Leaders need to guide team members on how to navigate their way to
the end and collectively brainstorm and ideate on the best path. While
internal benchmarks might be lacking, fast growing companies can
always take inspiration from external benchmarks and processes.
Additionally, hypergrowth organizations can give their employees the
freedom and autonomy to experiment the best way forward.

• No alignment between employee and leadership thinking

Another performance issue is a lack of alignment between employee and

leadership thinking. This is again more relevant to fast growing
companies, where a dynamism of vision and best practices leads to
conflicting views between employees and the leadership. They may have
different notions of what constitutes effective performance, and, thus,
achieving the same will have different pathways and metrics for
evaluation.

Solution for fast growing organizations:

Involve employees across the organization in brainstorming and promote
shared goal setting. Identify a middle way on what success will look like
and how it can be achieved. The best way for fast growing organizations
to mitigate this obstacle is by having effective OKRs which communicate
the top objectives and associated key results to align expectations
across.

• Lack of evaluation metrics and tools

Effective performance management and the path to dealing with

performance issues requires mapping and measuring performance and
productivity. However, most fast growing companies lack metrics and key
performance indicators to measure the same. Often, they have an ad hoc
approach and understanding of what constitutes good performance,
which is neither inspirational nor uniform.

Solution for fast growing organizations:

It is important to have specifically defined KPIs and metrics to measure
performance effectiveness. It is important to customize the KPIs to
11
 specific roles and tasks, instead of simply implementing those that
appear on the first page of Google search. Since the work culture of fast
growing companies is different from others, the KPIs must be customized
and adapted accordingly to suit specific business needs.

• Shortage of the right talent, skills, and resources

This performance issue is faced by almost all organizations as there is an

overall shortage of skilled, qualified talent with the right attitude and
work ethic. However, it is more apparent for hyper growth organizations
which have financial constraints and limitations on how much they can
spend along with a relatively lesser know brand name. Shortage of
competent talent and resources leads to inefficiency in performance and
other employee performance issues.

Solution for fast growing organizations:

Despite financial constraints, fast growing companies can deal with
shortage of talent and resources by focusing on upskilling existing
employees through intensive learning and development opportunities to
address organizational needs.
Furthermore, there needs to be a judicious and strategic approach to
hiring and resource utilization based on top organizational priorities. It is
a good idea to complement the compensation for employees with other
benefits and rewards to attract the top talent as most millennials prefer
autonomy, flexibility, and work culture over a fat paycheck.

• Inadequate rewards and recognition

Performance issues arise when employees feel their efforts are going
unrecognized. Often, in the hustle of growing the businesses and 1000
other things that go on, fast growing organizations miss rewarding,
acknowledging, and appreciating everything their employees do,
especially when they go the extra mile. Many companies in the growth
stage feel the financial limitations prevent them from rewarding
exceptional performance. However, this leads to a lack of motivation,
resulting in low levels of performance.

Solution for fast growing organizations:

Focus on showing gratitude to employees for everything they do. Most
performance issues can be solved by creating incentives for higher

12
 outcomes. Rewards don’t have to be monetarily driven and can simply be
Thank You notes, public acknowledgement and appreciation, gift
vouchers, an extra day off, etc. The idea is to show that their
performance and efforts are being recognized.

• Overlooking employee voice and opinion

Employee performance issues are intrinsically linked to overlooking what

employees have to say. Most employees who join fast growing
companies are driven by their purpose and passion and seek to make a
difference. This requires organizations to hear what employees have to
say, and when this does not happen, there is a performance disconnect.

Solution for fast growing organizations:

Focus on gauging employee pulse and opinion by leveraging different
platforms. It is important to understand what employees have to say
about the culture, factors contributing to performance problems and
much more. If employee performance issues are to be addressed to
facilitate effective performance management, understanding their side of
the story is crucial to uncover the challenges as well as potential
solutions.

• Lack of leadership commitment

Unless the leadership is committed to addressing performance issues and

removing the obstacles to effective performance management, it is very
difficult to move the needle. Often, leaders in fast growing companies are
occupied with multiple things on their plate and find themselves
stretched for time. Invariably, they are unable to understand the causes
of performance problems and thus, unable to manage the same.
SUPER TIP: Check out which mistakes to avoid while leading a team in
an organization.

Solution for fast growing organizations:

Leaders must set time aside to address employee performance issues
and commit to their growth and development. They need to display their
commitment by regularly communicating with team members,
understanding the challenges, and identifying solutions collaboratively.

• Inability to provide coaching and mentoring

13
 Coaching and mentoring are integral to effective performance
management. Due to lack of mentoring and guidance, employees find
themselves lost in the way, leading to performance problems. Leaders
and managers find themselves pressed for time and are often unable to
see the return on investment with respect to coaching and mentoring.

Solution for fast growing organizations:

While companies in the growth stage may not have enough leaders to
offer coaching and mentoring support to all their employees, leveraging
external partnerships and technology to facilitate personalized 1:1
meetings can be a good option. The idea is to invest in the personal and
professional development of employees to encourage and motivate them
to bridge the performance gap.

• Poor communication and siloed working

Employee performance issues often stem from lack of transparent

communication and a siloed approach to working. Adapting to new
models of working, especially in the new normal, employees in hybrid
organizations find it difficult to communicate with everyone on the team.
This leads to miscommunication and prevents everyone from being on
the same page. Consequently, these collaboration barriers result in
declining performance.

Solution for fast growing organizations:

Explore and experiment with unconventional forms of communicating
with team members. Have an open-door policy and share as much as
possible. Promote a clear and transparent communication policy without
hierarchies. Greet everyone in the team with a smile and have coffee/
virtual coffee breaks to bond beyond work. Finally, conduct icebreakers
and different activities to facilitate communication and collaboration,
which fall in your financial constraints, but are also effective and
impactful. Using technology to keep employees engaged is often a useful
and cost-effective solution.

• Inability to offer feedback

Finally, many fast-growing companies lack the patience to allow their

employees to make mistakes and offer feedback to help them improve.
This often results in performance issues or rapid turnover. Either way, it

14
is an obstacle to effective performance management.

Solution for fast growing organizations:

Encourage leaders to provide constructive and timely feedback to all their
team members to help them learn from their mistakes. Share what team
members can improve and also listen to their side of the story. Explain
how small changes will not only improve their performance, but add to
their professional development in the longer run.

Addressing performance issues: Essential guidance for fast

growing organizations

Before we wrap up, here are a few best practices for fast growing
organizations to address performance issues and facilitate effective
performance management:
• Promote clarity of vision, goals, objectives, roadmap, expectations and
anything that employees might have questions about to ensure they
understand what they are performing for and why.

• Leverages or Objectives and Key Results for strategic goal setting to

help employees gauge how each objective will manifest itself and where
they fall in the picture.

• Provide opportunities for growth. Most employees that join fast

growing companies are driven not simply by monetary gains, but by a
thirst to grow and make a difference.

• Have clear performance management metrics to help employees

evaluate their performance on their own and offer adequate feedback to
address the challenges and performance problems.

• Communicate as much as possible. Often lean teams of fast-growing

organizations work on different tangents, leading to different priorities.
Step up the communication game to work like a well-oiled machine and
improve performance.

15
 Payroll Considerations
When appraising the salary of employees, it is important to consider the
company’s payroll policies and procedures, as well as the industry
standards.

The company should also consider the performance of the staff, their
roles and responsibilities, the cost of living in the area, and the current
market rate for similar positions

Payroll management is a critical task that needs to be precisely executed

to prevent your organization from shelling out more payroll taxes. This
mandatory employer contribution is levied by the government to fund its
various employee oriented activities like pension, healthcare support,
disability compensation, etc.

Payroll tax rates are calculated by factoring in net salaries, perks and
any other monetary entitlements paid by your organization to its
employees.

16
 NEED AND IMPORTANCE OF THE STUDY
Process of Appraisal can be appraised against some set standards
According to McGregor the format performance appraisal plans are
designed to meet three needs, one of the organizations and the other two
of the individuals. These are :-

• They provide systematic judgment to back up promotions, transfers,

salary increments etc.

• They let the subordinate know where he stands and whether any
changes are required in his behavior attitudes, skill or job knowledge

• A sound Motivation performance appraisal system can be useful in.

• Encouraging employees to express their views or to

seek clarification on job duties. Serving as a predictor
for future responsibilities.

• Preventing grievances, since the employees will know where they

stand relative to their achievements

• Increasing the analytical ability of the supervisors, since they will be

directly involved in making judgment about their work‟s performance
level.

Role of Performance Appraisal in

Enhancing Employee Motivation

Motivation has great significance in an organisational setting. Its

importance primarily lies in its ability to initiate human behaviour, direct
and channel that behaviour as well as sustain it. From this context,
Emmerik, Schreurs, Cuyper, and Peters, (2012) argues that the
performance appraisals can be used to motivate employees through
rewards such as promotions and salary increases. Based on Herzberg ‘s
theory, such rewards are in the form of extrinsic rewards which can be
used to boost performance.

17
 DIFFERENT METHODS OF PERFORMANCE
APPRAISAL

• Performance Appraisal for Motivation through

Promotions

As part of the performance appraisal process, the evaluators measure the

employee‘s performance and offer a performance number (Kumar, 2012).
The performance number further leads to the development of level
performance number (LPN) which the management use as a platform to
determine rewards as part of the motivation process. Whenever there are
new job openings beyond the entry level, the LPN becomes a useful reference
point for the managers to use for internal promotions (Kumar, 2012).
According to Maana (2008), such promotions not only serve as a reward for
the employee‘s past performance but also perform a crucial role in sending a
message to co-workers that their future hard work will indeed payoff. As such,
other employees in the organisation are motivated to improve their
performance.

• Salary Increases and Bonus Payments

Within the performance management literature one of the most dominant

views is that money or pay-for-performance is one of the most effective ways
of rewarding employees and hence increased motivation (Van Herpen et al.,
2005; Kominis & Emmanuel, 2007). Money in this case acts as an extrinsic
motivator by satisfying the employee‘s needs indirectly through means of
bonuses and pay (Anthony & Govindarajan, 2007). Jensen and Murphy (2004)
while explaining the rationale behind pay for performance draw upon the
reinforcement theory, which suggests that pay, can be linked to performance
through setting of specific targets. Employees are then reward based on their
ability to achieve these targets. The extrinsic motivation to earn more in this
case influences employees to put in extra effort and better performance
(Petersen, 2007; Chung et al., 2012). Performance appraisals perform a
crucial role in determining the amount of bonus payment of salary increase.
Stringer et al., (2011) for instance notes that in the calculation of bonus
payments the sales and HR department may set expected performance level
of an employee such as the number of units sold. Employees who exceed the
set thresholds receive incentive payments such as an extra 2 percent for a
given level of sales figures. Performance appraisals facilitate the entire
process.

18
Performance appraisals have also been found to serve a useful purpose in
employee motivation by providing a platform for recognition of achievements
(Brun and Dugas, 2008). Recognition in this context entails the assignment of
personal non-monetary awards that aid in reinforcing desired behaviours
depicted by an employee. It main include giving of praise through
compliments; awards such as certificates of achievement and private
budgets; and ceremonies such as public celebrations and speeches (Long &
Sheilds, 2010). Past studies in this area suggest that managers and other
superiors should recognise the efforts of their employees as such behaviour
may trigger innovation and application of behaviour that leads to better
performance (Nijhof, Krabbendam and Looise, 2004). In addition, recognition
has been found to encourage the application of creative problem solving skills
among employees (Grawitch, Gottschalk and David, 2006).

While employee recognition as facilitated by performance appraisals is largely

considered as a motivating factor, a number of studies that are based on
social comparison theory also suggest that recognition can result into negative
effects (Pearson & Porath, 2005). Within groups in a work environment,
employees do not only receive recognition but also witness the recognition
of others. Other‘s recognition can have the potential to affect one‘s own
emotions as well as responses that are directed to other individuals (Feys
et al., 2013). This takes place through interpersonal counterproductive
behaviour. In this case, recognition is considered to create an atmosphere of
―losers and ―winners.

19
 • Using Performance Appraisal to Provide Supervisory
Support

Performance appraisals are also considered as motivational tools due to the

ability to help identify employees‘ strengthen and help capitalise on them
through support. At the same time, weaknesses are identified and measures
put in place in form of supervisory support that is necessary in helping the
employee to improve. Based on findings from a study by Cory, Ward and
Schultz (2007), employees who receive support after an appraisal process
indicate that such support contribute significantly towards creation and
generation of ideas. The ability to motivate through performance appraisal is
however found to be largely dependent on how the results of the process are
used. In instances where the results are used to punish mistakes, innovative
behaviour is greatly discouraged

Performance appraisal results which consider mistakes as learning

opportunities have on the contrary been found to encourage creativity among
employees. These assertions are supported by an empirical study by Krause
(2004), who studied the impact of supportive supervisory behaviour on
innovation based organisations such as manufacturing plants and R&D
organisations. The study found out that employees are more likely to deviate
from ordinary or routine behaviour to unconventional behaviour as well as
implement innovative ideas if they believe their supervisors will not penalise
them.

• Motivation through Provision of Feedback

Providing feedback is considered as one of the most common justification for

an organisation to put in place a performance appraisal system. As Swan
(2012) further explains, it is through the process of performance appraisal
that employees learn exactly what they did during the work period and use
that information as a reference point to improve their future performance. In
this regard, the feedback given through performance appraisal ensures that
the employer‘s expectations are clearly communicated. Feedback is in this
case considered as important tool for increasing employee morale and
motivation by pointing out areas where employee did something especially
good. Specifically, the positive feedback motivates the employee to do better.
In case of cases where the employee‘s performance was below expectation
the fair criticism from the feedback helps address the deficiencies and failures
and hence reinforce appropriate behaviour in terms of better performance.
20
 Types of Performance Appraisal

➢ 360 Degree/Multi-Rater Performance Appraisal

The 360 degree performance appraisal as evident from existing literature is

one of the appraisal system that has in the recent years gained significant
popularity in both small and large-sized firms (Deb, 2009; Lepsinger & Lucia,
2009). By description the 360 degree appraisal system involves an appraisal
system that encompasses the views of different groups of reviewers who
socialize with the organization’s employees. Such reviewers include the
employee‘s superiors (managers and supervisors), co-workers/peers and
customers. The process also includes the employee‘s opinion about
him/herself and hence its recognition as a multi-source, multi-rater and full-
circle appraisal system (Grund & Przemeck, 2012). While on this context,
Horng Hsu, Liu, Lin, & Tsai, (2011) through a study on employee
competencies identifies four key assessments that should constitute a 360
degree appraisal system. They include self-assessment; immediate supervisor
assessment; subordinate assessment and peer assessment.

The underlying premise behind the use of 360 degree performance appraisal
is that a significant amount of performance data about a given employee can
be gathered when multi-sources are used (Sahoo & Mishra, 2012). In other
words, the 360 degree appraisal systems allows for gathering of information
about an individual from different degree and angles. While supporting such
views, Deb (2009) underscores that the use of multiple assessment sources
helps ensure that an employee‘s performance is double checked. Moreover,
the 360 degree performance appraisal system is considered as one that helps
in overcoming disadvantages such as prejudice, subjectivity and halo errors,
which characterise traditional evaluation systems (Hsu et al., 2005). Espinilla
et al., (2013) for instance notes that the use of this evaluation method makes
it unlikely that the employee is criticised solely by the manager. Sahoo and
Mishra (2012) add that systems of 360- degree appraisal are perceived by
employees as more accurate and more reflective of their performance. They
are thus considered as quite effective in providing comprehensive information
that can be used to determine the employee‘s training needs.

Despite the effectiveness of 360 degree appraisal systems, several issues

have been identified in literature that prevents the effectiveness of such
systems. Espinilla et al., (2013) for instance notes that the use of a single type
of expression domain such as numerical or linguistic in 360 degree systems
limits the ability to gather the richness of information that reviewers provide.
21
 In addition, the correct interpretation of final results is hard as quantitative
assessment do not always represent qualitative information accurately (Hsu
et al., 2005).

➢ Management by Objectives (MBO)

Management by objectives as one of the key appraisal methods is defined as

a result-based evaluative program (Choon & Embi, 2012). In greater detail,
the goals of the performance appraisal system from an MBO perspective are
mutually defined by a number of key stakeholders who include the
subordinates, supervisors and employees as well. A typical MBO appraisal
system consists of several steps. The process begins by the establishment
of clear objectives for the employee. An action plan detailing the way in which
the objectives are to be achieved is develop. The employee is then allowed
to implement the developed action plan. This allows for appraisal of
performance in an objective manner. Corrective actions are taken in
situations deemed necessary as well as new objectives for the future
established (Sillup & Klimberg, 2010).

As key aspect of MBO as identified by Huang et al., (2011) is that it stresses

the importance and value of employee involvement. MBO as a concept was
popularised by Peter Drucker, who noted that objectives perform a crucial role
in all areas where performance and results have a direct impact on the survival
of the firm (Armstrong, 2009). As Armstrong (2009) further notes, Drucker
emphasised on participative goal setting and self-evaluation as one of the most
important aspects of MBO. While the MBO concept was initiated by Drucker, it
is McGregor, one of the most influential figures in the field of management,
who modified it for full application as a performance appraisal approach.
McGregor‘s MBO approach draws attention to weaknesses in conventional
appraisal programs such as excessive focus on personality traits. Rather,
McGregor advocates for an approach in which the subordinate also sets short-
term performance which are discussed with the superior and performance
evaluated against these goals (Stein, 2010).

In terms of effectiveness, the MBO approach has been found to provide

significant benefits to both the organisation and the employees (Armstrong,
2009). Notably, the MBO approach promotes objectivity, allows for a two-way
22
feedback as well as encourages performance improvement of employees
through motivation. In a similar vein, Drucker (2013) underscores that the
MBO approach when correctly implemented helps in establishing a
performance appraisal system that is based on efficiency and fairness. Huang
et al., (2011) while supporting the need for organisations to implement MBO
notes that this approach adds significant value to productivity in the sense
that employees tend to show support for goals which they agree are
acceptable. In this case, employee acceptance of the organisational goals is
considered as one of strongest motivators in the MBO process.

A critical review of MBO literature however reveals that this type of

performance appraisal is not without shortcomings. One of the main
shortcomings of this approach pertains to the fact that it does not allow
monitors to see how employee deal with every eventuality over the given
work period. This is attributed to the focus on outcomes (Bipp & Kleingeld,
2011). In this case, the manner in which the employee under appraisal arrives
at the outcomes may not necessary represent the most efficient use of
resources. In addition, Bipp and Kleingeld (2011) argue that the MBO
approach gives little consideration for comparative evaluation as no
benchmark are provided based on the changing workplace environment
during the work period.

23
 Disadvantages of performance appraisals:
o If not done right, they can create a negative experience.

o Performance appraisals are very time consuming and can be overwhelming

to managers with many employees.

o They are based on human assessment and are subject to rater errors and
biases.
o Can be a waste of time if not done appropriately.

o They can create a very stressful environment for everyone involved.

Finally, performance appraisals are only as good as the performance management

system it operates within. Organizations that only do performance appraisals for the
sake of doing them are wasting their time.
But organizations that incorporate performance appraisals into a comprehensive
performance management system and use them to implement business goals have an
advantage for accomplishing their goals and ultimately their strategic plan.

24
 RESEARCH METHODOLOGY
The most effective process of appraisal system have the following
characteristics:-

• The system must be bias-free. The evaluator must be objective and

the methods of appraisal must be fair and equitable. The atmosphere
must be that of confidence and trust.

• It must be relevant. It should only measure behaviors that are

relevant to the successful job performance and not any other
personal traits.

• It should be reliable, dependable, stable and consistent. High reliability

is essential for correct decision making and validation studies. It
should be sufficiently scientific, so that if an employee is evaluated by
two difference evaluators, than the result should be significantly the
same.

Performance appraisal has become a very significant activity in most of

the enterprises. It provides data about past, present and expected
performance of the employees which is helpful in taking decisions on
selection, training , Development , Increase in pay , etc.

The benefits of performance appraisal are

as follows:-

• It help the supervisor to evaluate the performance of his employees

systematically and periodically. It also helps him to assign that work
to individuals for which they are best suited.

• Rating helps in guiding and correction of employees. The supervisor

may use the result of the purpose of constructively guiding the
employees in the efficient performance of work.

• The ability of the staff is recognized and can be adequately rewarded

by giving them special increments.

• Performance appraisal can be used as a basis of sound personnel

policy in relation to transfer and promotion. If the performance of an
25
 employee is better than other, he can be recommended for promotion,
but if a person is not doing well on a job, he may be transferred to
some other job.

THE EVALUATION PROCESS

The Process of Appraisal system Communicate performance expectations

to employees, Measure actual performance, Compose actual performance
with standards, Discuss the appraisal with the employee, If necessary
initial corrective action.

Achievements have been received for the training and result have been
obtained on the basis of Questionnaire related to personal motivation from
company pay roll worker skilled 150 and 50 un skilled making total no 200
and company staff senior 20. Middle 30 and lower50 making a total no
100. Response indicates the Training program have been well organized.
The survey indicated that the integrated approach has brought about a
radical change in the overall Motivation performance of the employees
particularly with reference to the following aspects.

1. Motivation level and morale have gone up considerably.

2. The program has helped the participants to introspect and modify their behavior

3. Improved communication approach at various levels

These training programs and workshop have not only improved the overall
climate and culture of the organization but also generated better quantity
of life and satisfaction amongst the supervisors and workers in their
personal lives.

26
 CONCLUSIONS

The first aim of the study concerns the analysis of the types of
performance appraisal techniques and motivation and their effectiveness.
From the interview conducted with the organisation‘s HR manager, several
performance analysis systems are used. These include the multi-rater/360
degree system, behavioural anchored rating scale and graphical rating
scale.

In terms of effectiveness, the study finds that the 360 degree

performance appraisal system is quite effective in offering a
comprehensive analysis of the employees‘ performance at Shine
Communications. This is consistent with the reviewed literature, which
underscores that 360- degree appraisal helps assess an employee‘s
performance from different angles and is therefore reflective of the
employee‘s actual performance (Sahoo & Mishra, 2012). In the case of
graphical rating scale, the literature reviewed suggests that this traditional
appraisal system tends to overlook a number of employee traits due to
its standardised nature (Armstrong, 2009). The study findings however
indicate that such as a scale still performs a useful role especially in work
tasks that are based on explicit goals and quantifiable in nature.

In regards to types of motivation, it is evident that the Shine

Communication makes use of both extrinsic and intrinsic motivation. The
resultant high satisfaction with these types of motivation as evident from
the survey helps validate the wisdom of the Herbzerg‘s hygiene theory of
motivation, which suggests that combining intrinsic and extrinsic
motivation factors can have a positive impact on employee performance
(Huang et al., 2011). In terms of the factors affecting the level of
motivation, the study findings indicate that the study respondents had
mixed attitudes on the effect of rewards and recognition. The mixed
responses in this case can it part be explained through the help of
Maslow‘s hierarchy theory, which suggests that employees experience

27
different classes of needs with varying degrees of strength at any given
time (Saeednia, 2011).

Overall, the study findings in regards to the first research question indicate
that a cumulative total of 78% of the employees were satisfied with the
existing PAS at the organisation. It can therefore be concluded that the
use of a variety of performance appraisal techniques and motivation yields
greater satisfaction when compared to a single techniques or type of
motivation. This further confirms that different types of appraisals and
motivation have different outcomes on employee motivation. The study
findings also point out to rewards as the most statistically significant factor
influencing satisfaction with existing PAS.

In the study‘s investigation into the ways in which performance appraisal

influences employee motivation. Five main ways were in this context
identified. They include the linking of PA to rewards and incentives; use
of PA to assess employees‘ ability to meet set objectives; use of job
description as performance benchmarks; use of PA to help identify
employees‘ strength and weaknesses; and use of PA as a promotional tool.
Based on data analysis, each of these uses of performance appraisal
contributes positively to employee motivation.

The above findings are largely consistent with the literature reviewed in
the study. Kominis and Emmanuel (2007) for instance consider
promotions and pay for performance as one of the most effective ways of
rewarding and motivating employees. Long and Shields (2010) also
consider rewards and recognition based on achieved job description goals
as one of the ways that help trigger innovative behaviour as an outcome
of motivation. In addition, the use of performance appraisals to identify
employee strengthens and weaknesses is considered as an effective way
of motivating employees through supervisory support (Jong et al., 2009).

Notably, the statistical analysis shows that use of performance appraisal

for identifying employee strengths and weaknesses as well as a basis for
employee promotion are the most statistically significant factors that
influence employee motivation. It can therefore be concluded that the
organisation should focus on the two aspects to help improve motivation.
28
 Overall, the positive impact of the five identified roles in improving
employee motivation helps confirm that a positive relationship exists
between performance appraisal and employee motivation.

Performance appraisal systems should be designed in such a way that

they create perceptions of fair treatment relative to other employees as
well as the employee‘s own expectations. This can contribute significantly
towards positive attitudes, which have been shown in this study to be a
significant determinant of employee‘s level of motivation and
consequently work performance.

The study also shows that employees differ in their preference for rewards
following a performance appraisal. Organizations should therefore adapt a more
personal approach in linking performance appraisal results to rewards and
incentives. This could contribute significantly towards boosting of employee
motivation as a result of improved levels

29
 ABOUT ITC COMPANY

ITC Limited has a long history of about 90 years and now marched into
the next millennium. ITC, decidedly the leader of Indian cigarette industry,
is a conglomerate of many diversified businesses having overall turnover
to the tune of Rs. 5000 corer. The group having started from its core
competency business of tobacco and financial services has evolved as
leader in many other businesses such as hotels an tourism, agro-
businesses, paper business, etc. During this course of development in
business, the ITC has undergone many ups and downs in its business as
well as managerial practices. Thus, it seems to be a case worth studying
for any good manager or researcher.

It is the story of Scissors cigarette, the breadwinner brand of ITC, a doyen

of Indian industry and the leader in cigarette. It is the story of ITC‟s
struggle, with its breadwinner brand facing near extinction on account of
competition. It is the story of how the company handled its dilemma-„to
revive the brand of exit‟ – how it opted in favor of reviving the brand and
how it succeeded in its mission.

The ITC Scissors case is essentially a story of effective product

management. From 1921 to date. Scissors had a long product life. It has
seen many ups and downs

and suffered some of the worst set-backs; but every time, it has risen to
new peaks of excellence and growth. In view of this unique phenomenon,
the Scissors case represents one of the best examples of effective PLC
management. The case vividly portrays how the company evolved a
superb product market strategy, how it handled the inescapable product
decline with care and caution, how it retrieved the product to normalcy
and prolonged almost limitlessly its mature and profitable of life.

ITC has its head quarter at Virginia House, 37 Chowringhee Road,

Calcutta. Its annual turnover is more than Rs. 6000 corers approximately
and market capitalization is more than Rs. 8,000 cores. It ranks 5th among
the giant corporations. The company has network of branches & offices in
the country. The Ghaziabad unit of the company is situated at Guldhar
(Near Muradnagar) on the main Ghaziabad Meerut highway about 5 km
32
from the heart of the
Journal of research on Humanities

and Social

city. It is connected with all important roads and highways. The

production dept. of the company is fully air- conditioned because artificial
humidification is very

necessary for the manufacture of cigarettes. The total strength of the

employees in Ghaziabad unit including temporary, casual and contract
labor is about 2500.

In the year 1963-64, M/s NARHARI & CHAUDHARY CO. LTD., a leading
Tobacco-Exporter of Guntur (A.P.) purchased the present premises of the
company which

was owned by a soap manufacturer. RAM INDUSTRIAL CORPORATION

which is adjacent to the factory.

M/s NARHARI & CHAUDHARY CO. LTD. (known as NCC) was a leading
Raw Tobacco Exporter to Czechoslovakia. One of the partners of the NCC
had a Czech wife, who was related to the top official of SKODA. Taking
advantage of the relationship, NCC anaged to procure cigarette making
machinery along with packing machines from SKODA on BARTER SYSTEM.
These machines were installed in the present plot under dilapidated
sheds.

In the year 1964-65, NCC made an alliance with another reputed and
leading export house “NAV BHARAT ENTERPRISE PVT. LTD. GUNTUR” as
NCC did not have adequate finance, technical know- how etc. to produce
and market cigarettes. However, with this alliance a new company was
formed titled as TOBACCO COMPANY PVT. LTD., having its registered
office at Hyderabad (A.P.).

Subsequent6ly, ITC employed some technical personnel from the then

IMPERIAL TOBACCO COMPANY LTD., Bangalore and this attempts was
not successful because of lack of funds. After hanging on fire fro months
together, they sold M/s ITC to M/s. MARCOPOLO & COMPANY LTD.,

33
Mumbai, the oldest tobacconist who had the sole distributorship for M/s
GODFREY PHILIPS INDIA LIMITED.

After reconstruction of the buildings, ITC started manufacturing on SKODA

machines. The factory ultimately went into commercial production from
1967 against manufacturing charges of the GPI brands. D. MACROPOLO
was a limited company and ITC became a limited company after take
over. Over a period of time even D. MACROPOLO merged with GPI and
ITC became a subsidiary of GPI. Since then there has been a continuous
technological up - gradation in the factory which started increasing the
filter cigarette production gradually and also started wrapping the
cigarette packs. Also new generation tobacco cutting machines were
installed to improve the quality.

In 1970 the IMPERIAL TOBACCO COMPANY of India changed its name

to INTERNATIONAL TOBACCO COMPANY LTD. This holds a new
program me of diversification, which was aligned to national priorities
and the phased disinvestment in foreign equity.

34
 FINDINGS

In ITC, HRD has a formal process of appraisal and cancelling approach

to the systematic expansion of people‟s work related abilities, focused
on the attainment of both organizational and personal goals.

The focus is on people, who are perceived as possessing skills, potential

and who have ability to grow, change and develop. While the accent is
on increasing talent and abilities, HRD in ITC works towards
development of people in their organizational setting. The effort are
balanced between the organization‟s need the individual development
although this ideal is obviously difficult to achieve, but every attempt in
being made to get as near to it as possible.

While the diversity of circumstances of individual public enterprises

would dictate circumstances of training of individual manager in variety
of ways, the essential pattern are applicable in appropriate forms to all
public enterprises, what ever their size. Hence this study of ITC also
provides positive direction and guidance to other in the area of Human
Resource Development.

To sum up the findings of the data collected and analyzed, the researcher
proceeds on the basis conclusion, as revealed by the study, that both the
management. and executives recognize the importance and need of HRD
in ITC and company is taking due interest and care to this effect.

EXECUTIVE DEVELOPMENT POLICIES

ITC has clear policy objectives to ensure continuous development of

competent management personnel and make best use of both the human
and material resources of the business. The training and development
policy provides opportunities of advancement and growth to the
executives and of promotion from within. It also provide of time both on
the job and off the job. Majority of the executives in the middle cadre have
been exposed to training and development programmes.
 PERFORMANCE APPRAISAL

ITC has a formal performance appraisal and counseling skills system.

The target setting programme coupled with the performance appraisal
and counseling programme provide formal processes to ensure
manager/employee contact for development and ounselling, away from
the hustle and bustle of daily activities.

An important feature is the self appraisal and counseling programme. ITC

believes that employee are responsible and trustworthy enough to be able
to review their own performance in a matured and balanced manner and
they have, faith in this.

36
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THANK YOU

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