Performance Appraisal Method: Which Is Most Suited?

The purpose of the study was to evaluate the best performance appraisal method which is most suited in V Mart retail limited by doing a comparison between the two methods adopted by the company i.e. ranking method in low level management and middle level management and 360 degree method at top level management, so to find which is the efficient method from the two methods.

Context of the study

Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does.

According to Angelo S. DeNisi and Robert D. Pritchard (2006) “Performance appraisal” is a discrete, formal, organizationally sanctioned event, usually not occurring more frequently than once or twice a year, which has clearly stated performance dimensions and/or criteria that are used in the evaluation process. Furthermore, it is an evaluation process, in that quantitative scores are often assigned based on the judged level of the employee‟s job performance on the dimensions or criteria used, and the scores are shared with the employee being evaluated.

By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management’s interest in the progress of the employee’s .So knowing the best method suited for the company would be an important aspect to be considered.

Significance of the study

This study will help to evaluate the best method of performance appraisal which is suited to the company and their employees from to two methods used in the company i.e. Ranking method and 360 degree method .As performance appraisal system is a very important aspect from the all the H R operations of the company. So it is of great significance if evaluate which is the best method out of the two.

Theoretical Framework

Performance appraisal (PA) is a formal system of review and evaluation of individual or team task performance. A critical point in the definition is the word formal, because in actuality, managers should be reviewing an individual’s performance on a continuing basis.

PA is especially critical to the success of performance management. Although performance appraisal is but one component of performance management, it is vital, in that it directly reflects the organization’s strategic plan.

Objective of performance appraisal system

The following are the main objectives of performance appraisal systems:

To review the performance of the employees over a given period of time.

To judge the gap between the actual and the desired performance.

To help the management in exercising organizational control.

Helps to strengthen the relationship and communication between superior –

Subordinates and management – employees.

To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future.

To provide feedback to the employees regarding their past performance.

Provide information to assist in the other personal decisions in the organization.

Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.

To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

To reduce the grievances of the employees.

Performance Appraisal Process

Figure 1.1 Performance appraisal process

As shown in Figure 1.1, the starting point for the PA process is identifying specific performance goals. An appraisal system probably cannot effectively serve every desired purpose, so management should select the specific goals it believes to be most important and realistically achievable. Too many Performance appraisal systems fail because management expects too much from one method and does not determine specifically what it wants the system to accomplish. The next step in this ongoing cycle continues with establishing performance criteria (standards) and communicating these performance expectations to those concerned.

Then the work is performed and the supervisor appraises the performance. At the end of the appraisal period, the appraiser and the employee together review work performance and evaluate it against established performance standards. This review helps determine how well employees have met these standards, determines reasons for deficiencies, and develops a plan to correct the problems. At this meeting, goals are set for the next evaluation period, and the cycle repeats.

Responsibility for Appraisal

Often the human resource department is responsible for coordinating the design and implementation of performance appraisal programs. However, it is essential that line managers play a key role from beginning to end. These individuals usually conduct the appraisals, and they must directly participate in the program if it is to succeed. Several possibilities exist with regard to the person who will actually rate the employee.

The following people or groups have the responsibility for appraisal

Immediate Supervisor

Subordinates

Peers and Team Members

Self-Appraisal

Customer Appraisal

Appraisal Period

Formal performance evaluations are usually prepared at specific intervals. Although there is nothing magical about the period for formal appraisal reviews, in most organizations they occur either annually or semiannually. Even more significant, however, is the continuous interaction (primarily informal), including coaching and other developmental activities, that continues throughout the appraisal period. Managers should be conditioned to understand that managing performance is a continuous process that is built into their job every day. Some organizations use the employee’s date of hire to determine the rating period. At times a subordinate’s first appraisal may occur at the end of a probationary period, anywhere from 30 to 90 days after his or her start date. However, in the interest of consistency, it may be advisable to perform evaluations on a calendar basis rather than on anniversaries. If firms do not conduct all appraisals at the same time, it may be impossible to make needed comparisons between employees.

Different Methods of performance appraisal

Methods of performance appraisal can be classified into two types –

Traditional Methods

Modern Methods

These two methods can be further classified as follows:

Figure 1.2 Performance appraisal methods

The 360-degree feedback evaluation method is a popular performance appraisal method that involves evaluation input from multiple levels within the firm as well as external sources. The 360-degree method is unlike traditional performance reviews, which provide employees with feedback only from supervisors. In this method, people all around the rated employee may provide ratings, including senior managers, the employee himself or herself, supervisors, subordinates, peers, team members, and internal or external customers. Many companies use results from 360-degree programs not only for conventional applications but also for succession planning, training, and professional development.

Unlike traditional approaches, 360-degree feedback focuses on skills needed across organizational boundaries. Also, by shifting the responsibility for evaluation to more than one person, many of the common appraisal errors can be reduced or eliminated. Software is available to permit managers to give the ratings quickly and conveniently. The 360-degree feedback method may provide a more objective measure of a person’s performance. Including the perspective of multiple sources results in a broader view of the employee’s performance and

may minimize biases that result from limited views of behavior.

Figure 1.3 360 degree method of performance appraisal

Advantages of 360 Degree Feedback

Organizational climate fosters individual growth

Criticisms are seen as opportunities for improvement (Randel, A., 2004)

Proper framing of feedback method by management

Assurance that feedback will be kept confidential

Development of feedback tool based on organizational goals and values

Feedback tool includes area for comments (Hoffmanner, A., 2004)

Brief workers, evaluators and supervisors about purpose, uses of data and methods of survey prior to distribution of tool

Train workers in appropriate methods to give and receive feedback

Support feedback with back-up services or customized coaching

Limitations of 360 Degree Feedback

Feedback tied to merit pay or promotions

Comments traced to individuals causing resentment between workers

Feedback not linked to organizational goals or values

Use of the feedback tool as a stand alone without follow-up

Poor implementation of 360-degree tool negatively affects motivation

Excessive number of surveys are required of each worker with few tangible results provided to individuals (Clark, S., Whittall, A., 2003)

The rating scales method is a performance appraisal method that rates employees according to defined factors. Using this approach, evaluators record their judgments about performance on a scale. The scale includes several categories; normally 5-7 in number, defined by adjectives such as outstanding, meets expectations, or needs improvement. Although systems often provide an overall rating, the method generally allows for the use of more than one performance criterion.

One reason for the popularity of the rating scales method is its simplicity, which permits quick evaluations of many employees. When you quantify the ratings, the method facilitates comparison of employee’s performances.

The essay method is a performance appraisal method in which the rater writes a brief narrative describing the employee’s performance. This method tends to focus on extreme behavior in the employee’s work rather than on routine day-to-day performance. Ratings of this type depend heavily on the evaluator’s writing ability. Supervisors with excellent writing skills, if so inclined, can make a marginal worker sound like a top performer. Comparing essay evaluations might be difficult because no common criteria exist. However, some managers believe that the essay method is not only the most simple

but also an acceptable approach to employee evaluation.

The ranking method is a performance appraisal method in which the rater ranks all employees from a group in order of overall performance. For example, the best employee in the group is ranked highest, and the poorest is ranked lowest. You follow this procedure until you rank all employees. A difficulty occurs when all individuals have performed at comparable le Ranking Method

The ranking system requires the rater to rank his subordinates on overall performance. This consists in simply putting a man in a rank order. Under this method, the ranking of an employee in a work group is done against that of another employee. The relative position of each employee is tested in terms of his numerical rank. It may also be done by ranking a person on his job performance against another member of the competitive group.

Advantages of Ranking Method

Employees are ranked according to their performance levels.

It is easier to rank the best and the worst employee.

Limitations of Ranking Method

The “whole man” is compared with another “whole man” in this method. In practice, it is very difficult to compare individuals possessing various individual traits.

This method speaks only of the position where an employee stands in his group. It does not test anything about how much better or how much worse an employee is when compared to another employee.

When a large number of employees are working, ranking of individuals become a difficult issue.

There is no systematic procedure for ranking individuals in the organization. The ranking system does not eliminate the possibility of snap judgements.

Forced Distribution method

The forced distribution method of performance appraisal requires the rater to assign individuals in a work group to a limited number of categories, similar to a normal frequency distribution. The purpose of forced distribution is to keep managers from being excessively lenient and having a disproportionate number of employees in the “superior” category. Forced distribution systems have been around for decades and firms such as General Electric, Cisco Systems, EDS, Hewlett-Packard, Microsoft, Pepsi, Caterpillar, Sun Microsystems, Goodyear, Ford Motor, and Capital One use them today.30 Proponents of forced distribution believe they facilitate budgeting and guard against weak managers who are too timid to get rid of poor performers. They think that forced rankings require managers to be honest with workers about how they are doing.

This is a ranking technique where raters are required to allocate a certain percentage of rates to certain categories (eg: superior, above average, average) or percentiles (eg: top 10 percent, bottom 20 percent etc). Both the number of categories and percentage of employees to be allotted to each category are a function of performance appraisal design and format. The workers of outstanding merit may be placed at top 10 percent of the scale, the rest may be placed as 20 % good, 40 % outstanding, 20 % fair and 10 % fair.

Advantages of Forced Distribution

This method tends to eliminate raters bias

By forcing the distribution according to pre-determined percentages, the problem of making use of different raters with different scales is avoided.

Limitations of Forced Distribution

The limitation of using this method in salary administration, however, is that it may lead low morale, low productivity and high absenteeism.

Employees who feel that they are productive, but find themselves in lower grade(than expected) feel frustrated and exhibit over a period of time reluctance to work.

Critical Incident techniques

Under this method, the manager prepares lists of statements of very effective and ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor behaviour of employees or the job. The manager maintains logs of each employee, whereby he periodically records critical incidents of the workers behaviour. At the end of the rating period, these recorded critical incidents are used in the evaluation of the worker’s performance. Example of a good critical incident of a Customer Relations Officer is : March 12 – The Officer patiently attended to a customers complaint. He was very polite and prompt in attending the customers problem.

The critical incident method is a performance appraisal method that requires keeping written records of highly favorable and unfavorable employee work actions. When such an action, a “critical incident,” affects the department’s effectiveness significantly, either positively or negatively, the manager writes it down. At the end of the appraisal period, the rater uses these records along with other data to evaluate employee performance. With this method, the appraisal is more likely to cover the entire evaluation period and not focus on the past few weeks or months.

Advantages of Critical Incident techniques

This method provides an objective basis for conducting a thorough discussion of an employe’s performance.

This method avoids recency bias (most recent incidents are too much emphasized)

Limitations of Critical Incident techniques

Negative incidents may be more noticeable than positive incidents.

The supervisors have a tendency to unload a series of complaints about the incidents during an annual performance review sessions.

It results in very close supervision which may not be liked by an employee.

The recording of incidents may be a chore for the manager concerned, who may be too busy or may forget to do it.

Checklists and Weighted Checklists

In this system, a large number of statements that describe a specific job are given. Each statement has a weight or scale value attached to it. While rating an employee the supervisor checks all those statements that most closely describe the behaviour of the individual under assessment. The rating sheet is then scored by averaging the weights of all the statements checked by the rater. A checklist is constructed for each job by having persons who are quite familiar with the jobs. These statements are then categorized by the judges and weights are assigned to the statements in accordance with the value attached by the judges.

Advantages of Checklists and Weighted Checklists

Most frequently used method in evaluation of the employees performance.

Limitations of Checklists and Weighted Checklists

This method is very expensive and time consuming

Rater may be biased in distinguishing the positive and negative questions.

It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employees characteristics, contributions and behaviours.vels (as perceived by the evaluator).

Paired comparison is a variation of the ranking method in which the performance of each employee is compared with that of every other employee in the group. A single criterion, such as overall performance, is often the basis for this comparison. The employee who receives the greatest number of favorable comparisons receives the highest ranking. Some professionals in the field argue for using a comparative approach, such as ranking, whenever management must make human resource decisions. They believe that employees are promoted or receive the highest pay increases not because they achieve their objectives, but rather because they achieve them better than others in their work group.

The behaviorally anchored rating scale (BARS) method is a performance appraisal method that combines elements of the traditional rating scales and critical incident methods; various performance levels are shown along a scale with each described in terms of an employee’s specific job behavior. A BARS system differs from rating scales because, instead of using terms such as high, medium, and low at each scale point, it uses behavioral anchors related to the criterion being measured. This modification clarifies the meaning of each point on the scale and reduces rater bias and error by anchoring the rating with specific behavioral examples based on job analysis information.

Problems in Performance Appraisal

Performance appraisal is constantly under a barrage of criticism. The rating scales method seems to be the most vulnerable target. Yet, in all fairness, many of the problems commonly mentioned are not inherent in this method but, rather reflect improper implementation. For example, firms may fail to provide adequate rater training or they may use appraisal criteria that are too subjective and lack job-relatedness. The following point highlights some of the more common problem areas.

Appraiser Discomfort: Conducting performance appraisals is often a frustrating human resource management task. One management guru, Edward Lawler, noted the considerable documentation showing that performance appraisal systems neither motivate individuals nor effectively guide their development. Instead, he maintains, they create conflict between supervisors and subordinates and lead to dysfunctional behaviors. This caveat is important. If a performance appraisal system has a faulty design, or improper administration, employees will dread receiving appraisals and the managers will despise giving them.

Lack of Objectivity: A potential weakness of traditional performance appraisal methods is that they lack objectivity. In the rating scales method, for example, commonly used factors such as attitude, appearance, and personality are difficult to measure. In addition, these factors may have little to do with an employee’s job performance. Although subjectivity will always exist in appraisal methods, employee appraisal based primarily on personal characteristics may place the evaluator and the company in untenable positions with the employee and equal employment opportunity guidelines.

Halo/Horn: A halo error occurs when a manager generalizes one positive performance feature or incident to all aspects of employee performance, resulting in a higher rating. The phenomenon is known as the horn error, when an evaluation error that occurs when a manager generalizes one negative performance features or incident to all aspects of employee performance, resulting in a lower rating.

Leniency/Strictness: Some managers are too generous with praise or too hard on a person. Giving undeserved high ratings to an employee is referred to as leniency. This behavior is often motivated by a desire to avoid controversy over the appraisal. It is most prevalent when highly subjective (and difficult to defend) performance criteria are used, and the rater is required to discuss evaluation results with employees.

Central tendency error is an evaluation appraisal error that occurs when employees are incorrectly rated near the average or middle of a scale. This practice may be encouraged by some rating scale systems that require the evaluator to justify in writing extremely high or extremely low ratings. With such a system, the rater may avoid possible controversy or criticism by giving only average ratings. However, since these ratings tend to cluster in the fully satisfactory range, employees do not often complain. Nevertheless, this error does exist and it influences the accuracy of evaluations.

Personal Bias (Stereotyping): This pitfall occurs when managers allow individual differences to affect the ratings they give. If these are factors to avoid such as gender, race, or age, not only is this problem detrimental to employee morale, but it is blatantly illegal and can result in costly litigation. The effects of cultural bias, or stereotyping, can definitely influence appraisals.38 Managers establish mental pictures of what are considered ideal typical workers, and employees who do not match this picture may be unfairly judged.

Introduction to V Mart Retail Ltd

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Introduction

V Mart, a leading chain of complete family lifestyle stores spread across India. In the rapidly growing retail industry, V Mart has successfully created a niche for itself. V Mart is one of India’s fastest growing value-retailer promoted by Mr. Lalit Agarwal, a first generation entrepreneur. It operates a chain of medium sized hypermarket format retail stores (10000-12000 sq. ft.) with a focus on tier II and tier III cities.

It currently operates 59 stores across 50 cities in northern and western regions of India, covering over 5 lakh sq. ft. “Price Less Fashion” is the main motto through which we believe in providing the latest trends to the upwardly mobile Indians at the best possible price. V mart provides a complete range of products ranging from Clothes, Accessories & Footwear for men, women and kids besides Cosmetics, Luggage, and Toys & Games. We also provide a wide range of food, non- food and staple items in our Kirana Bazaar section.

History

V-MART RETAIL was established in the year 2002. The company made its foray into retail sector in October 2003, by opening its maiden showroom in Ahmadabad.

Today V-MART has 52 stores across 48 cities and is expanding at a rapid pace with a turnover of more than 150 crores last year. In an extremely fashionable and price conscious market, V-Mart has been successful in maintaining the equilibrium between the quality and price. Through its chain of stores the company always strives to offer Indian masses with excellent ambience and tremendous convenience of shopping.

Success Stories

V Mart is present in tier-II & Tier-III cities and is catering to middle & lower middle segment of customers. They are dedicated to provide customers a high class & soothing shopping experience with value products. The whole team is always in par with fashion trends & changes in industry. They are trend setters in all our major location.

Here is a snapshot of V Mart’s Life.

2002

V-Mart came into existence with its registration in CALCUTTA.

2003

A milestones was created in history of AHMEDABAD with inauguration of maiden store at LAW GARDEN.

2004

V-MART comes to capital city with launch of its first store at KAMLA NAGAR and successful launch of PITAMPURA & LAJPAT NAGAR showroom.

2005

They created havoc in Gujarat with opening of RAJKOT & VADODRA STORE & India’s heart was touched with opening of a complete family showroom at BHOPAL in MADHYA PRADESH.

2006

Continuing its journey vmart made a buzz in CHANDIGARH town with opening maiden store in PUNJAB and first store with KIRANA BAZAR. Travelling over whole PUNJAB we laid our stone at many other places.

2007

A new landmark was created with start of manufacturing facility at AHEMDABAD.

2008

A year written in golden ink. Vmart opened 18 stores in a span of 4 months with a presence in GUJRAT, PUNJAB, HARYANA, UP, MP, RAJASTHAN & DELH.

2009

Vmart continues to expand with 7 new stores in North India.

2010

Vmart one of the preferred brand in Uttar Pradesh with a presence in more than 20 locations in one state.

Vision Statement of V Mart

Create Value and make our ecosystem proud

Mission Statement of V Mart

Care for customer aspirations

Discover and nurture talent

Sustained ethical growth for stakeholders

Harness vendor relationships

V Mart Policies

Sabse Sasta Sabse Achcha: The philosophy behind ‘ Sabse Sasta, Sabse Achcha’ or “Best Products at Lowest Prices” is to fully respect the hard earned money of our customer. The slogan signifies value for money, because the company caters to the middle and lower-middle segment of the society.

Price less Fashion: Is the phrase which they live. They are fashion retailer and always provide latest fashion trends to our customers. Their kitty offers customers fashion at best affordable prices which are less in comparison to market prices.

In addition, V Mart provides the comfort of shopping at a big retail store with a customized air-conditioned ambience. They strive to give the customers top quality products at the best possible price. All items are procured in bulk which gives them a price advantage. Also they procure from manufacturers & there in production facility lands them in attractive price bands… Further their in-house designers & Quality Control department ensure that best quality products come out of their in-house manufacturing units. V Mart’s products cater to the needs of all the segments of the society.

Organisational Structure of V Mart

The organisational structure of the organisation is as follows:

Figure 1.4 Organizational structure of V Mart

Performance appraisal of V Mart according to ranking method

The company conducted the performance appraisal according to the ranking methods of 83 employees on the four parameters i.e. discipline, dedication, communication skills, grooming. The employees were given ranks from 1 to 5 after which the scores were totaled and their total score was converted into percentages. After that grades were allotted to the employees A to the employees whose total score percentage is more than 85 % , B to the employees whose total score percentage is more than 70 % , C to the employees whose total score percentage is more than 50 % , D to the employees whose total score percentage is below 50 % . After this it can be seen as how many employees are lying under which grades and accordingly training needs are evaluated and employees are given training to improve their performance .So the following chart shows the number of employees lying in different grades.

Figure 1.5 graphical representations for the number of employees in each grade under ranking method

Definitions

Performance appraisal: According to Angelo S. DeNisi and Robert D. Pritchard (2006) “Performance appraisal” is a discrete, formal, organizationally sanctioned event, usually not occurring more frequently than once or twice a year, which has clearly stated performance dimensions and/or criteria that are used in the evaluation process. Furthermore, it is an evaluation process, in that quantitative scores are often assigned based on the judged level of the employee’s job performance on the dimensions or criteria used, and the scores are shared with the employee being evaluated.

360-degree feedback evaluation method: Popular performance appraisal method that involves evaluation input from multiple levels within the firm as well as external sources. In this method, people all around the rated employee may provide ratings, including senior managers, the employee himself or herself, supervisors, subordinates, peers, team members, and internal or external customers.

Ranking method: method in which the rater ranks all employees from a group in order of overall performance. For example, the best employee in the group is ranked highest, and the poorest is ranked lowest. You follow this procedure until you rank all employees. A difficulty occurs when all individuals have performed at comparable levels.

Summary

Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future.

It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management’s interest in the progress of the employees.

CHAPTER 2: REVIEW OF LITERATURE

Bayat, R.F(2011) Australian Journal of Basic and Applied Sciences, Impact on the Productivity of Human Resources Management, Performance Evaluation in his paper investigates the performance management, evaluation of the performance management cycle, improve productivity, performance, benefits, performance management, performance management disadvantages, comparative study, which outlines the performance indicators and measurement model. Organizational performance, the performance of its human resources and their interaction with the resources, facilities and technology in the organization. Performance of human resources, motivation and their ability to function. Ability of its human resources function, job knowledge and skills in applying knowledge to perform the job duties and activities. Motivation of human resources, the attitudes and circumstances in which they work. The functions of performance management in the organization are to communicate. Performance management systems in a unique performance not improve, or enhance and improve organizational performance is not due to loss of time and resources spent to design and implement it as a source of cost are considered. That has not only increased productivity but also has caused some losses.

Key words: Management, Performance Indicators, Measure, Model, Productivity

Boice, Deborah F(1997) Work Study, Designing effective performance appraisal systems in his paper investigates the effective performance appraisal systems help to create a motivated and committed workforce. To be effective they require the support of top management to show their commitment and to translate organizational goals and objectives into personalized employee specific objectives. Its explains a framework for the implementation of performance appraisal and in particular the need for appropriate training for supervisors, raters and employees, a system for the frequent review of performance, accurate record keeping, a clearly defined measurement system, and a multiple rater group to perform the appraisal.

Developing an effective performance appraisal system requires strong commitment from top management if the system does not provide the linkage between employee performance and organizational goals, it is bound to be less than completely effective..

Key words: Organizational and employee objectives, performance appraisal, Measurement system

Jafari, Mostafa (2009), European Journal of Social Sciences, A New Framework for Selection of the Best Performance in this paper the author wants to investigate a framework for the selection of appraisal methods and compare some performance appraisal methods in order to facilitate the selection process for organizations. The value of this framework is that, with use of it, organisations can evaluate their performance appraisal method with respect to the key features of it before implementing any method as well as expending extra costs. This framework is theoretical in nature, and is build based on a review of related literature. There is a verity of methods for the appraisal of employee’s performance. Obviously, no method can claim that it has an integrated approach in performance appraisal. Therefore, human resource managers should select an appraisal method which is most efficient in their organizations.

Key words: Human Resource Management, Absolute Standards, Relative Standards, Objectives Approach, Personnel Psychology

Parker, Thomas R.(1998) National Fire Academy, Wilson, North Carolina, Exploring 360-Degree Feedback Performance Appraisal in this paper the purpose was to gather information that would assist in the development of a fair, accurate, honest and objective performance appraisal system. This research project utilizes an evaluative research methodology. The following questions were answered while completing this project (i) What is 360-degree feedback performance appraisals (ii) Should 360-degree feedback be used for development or for management decisions such as raises and promotion also (iii) What are the advantages and disadvantages of 360-degree feedback (iv) Should the raters providing feedback be anonymous. The results of this research project confirmed that most organizations are using the traditional supervisor-to-subordinate appraisal. It also concludes that multi assessors increase validity and that subordinates and peers are in a better position to provide accurate feedback to their supervisors and co-workers. The survey concluded that personnel are dissatisfied with the traditional performance appraisal and are willing to evaluate their superiors, peers and subordinates. The recommendation is that personnel growth and development will be more probable with the adoption of 360-degree feedback performance appraisal.

Key Words: Satisfaction with Current Evaluation System, 360 degree performance appraisal, Evaluations Associated with Pay Raises, objectivity of appraisal

Kondrasuk , Jack N.(2011) Journal of Applied Business and Economics University of Portland, So What Would An Ideal Performance Appraisal Look Like in this paper investigation is done assessing all problems occurring with present performance appraisal systems produced 76 performance appraisal problems (reduced to 4 general categories). Performance appraisal systems are improved by rectifying common shortcomings (e.g. reducing biases, training those involved, using formats with research substantiation). However, the most important changes require 1) clarifying the goals of performance appraisal, 2) focusing on both results and behaviour appraisals, 3) adding an appraisal category, 4) better timing, and 5) better involving constituencies. The most difficult and most distasteful human resource management task for line managers to perform is the process that appraises employee performance and acts on that appraisal-termed “Performance Appraisal.” The process and techniques applied are based on evidence-based management that applies valid and reliable approaches. Implementation of the ideal performance appraisal may not be feasible, or possible, for all organizations.

Key Words: Clarifying the Goals of Performance Appraisal, Timing and Arrangement of the Process, Performance appraisal method

Ale wine, Thomas C (1982) Personnel Journal 61(3) 213.”Performance Appraisal and Performance Standards.” Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal has been called many things. The formal performance appraisal has been called a tool of management, a control process, an activity and a critical element in human resources allocation. Uses for performance appraisal have included equal employment opportunity considerations, promotions, transfer and salary increases. Primarily performance appraisal has been considered an overall system for controlling an organization. Performance appraisal has also been called an audit function of an organization regarding the performance of individuals, groups and entire divisions. The performance appraisal has been defined as any personnel decision that affects the status of employees regarding retention, termination, promotion, demotion, transfer, salary increases or decreases, or admission into a training program.1 for this study performance appraisal has been confined to the formal performance appraisal.

Key Words: Performance appraisal, organizational development, employee career development, developmental performance appraisal

Carroll, Stephen J. and Craig E. Schneier , Workforce Compensation and Performance Service, Performance Appraisal and Review Systems, Assessing the value and effectiveness of an appraisal program is necessary for determining how to improve it. This guide suggests procedures and criteria for evaluating the implementation and effect of performance appraisal programs. It provides a brief summary of program evaluation and is a starting point for program evaluators Appraisal programs can be evaluated from two broad perspectives: Are we doing things right? (i.e., are the process and the rules being followed) and Are we doing the right things? (i.e., what effect does the program have) A periodic, well-designed evaluation of the results of performance appraisal programs will provide the information managers and employees need to continually improve their appraisal processes. As program designers or evaluators design the evaluation tool, the underlying questions should be, what difference would it make to have this information? How would the information be used and how would it be useful ?

Key Words: organizational goals, team accountability, recognizing and rewarding accomplishments, Training of employees, performance appraisal

Vance, C.M., McClaine, S.R., Boje, D.M. and Stage, H.D. (1992), Management International Review, “An examination of the transferability of traditional performance appraisal principles across cultural boundaries,” This study examines the multi-dimensional nature of reward preferences (i.e. types, systems, and criteria) in the cross-border context, an area not sufficiently addressed by prior research. We found empirical evidence to suggest both similarities and differences in employee reward preferences. Although culture may impinge on reward preferences, this study suggests that its influence may be diminishing or giving way to a range of other contextual forces. Directions for future research are also presented.

Key Words: Cross-national differences, Culture, International reward management, reward preferences

Ahmed, Adnan (2010), International Journal of Business and Management, Performance Appraisals Impact on Attitudinal Outcomes and

Organisational Performance Performance appraisal is a widely recognized process, yet in Pakistan efforts to study and examine its effect on attitudinal outcomes and firm performance are scarce. The present study addresses this research gap. Researchers explored the relationship between PA satisfaction, job satisfaction and turnover intentions in semi-governmental organizations in Pakistan. Using responses collected from 123 respondents, we find statistically significant relationships between studied variables. The results have significant policy implications for improving the process of performance appraisal in semi-governmental organizations in Pakistan as well as other developing countries. Further the study enriches the body of knowledge on performance appraisal and its impact on organizational performance in developing countries.

Key words: Performance appraisal, SGOs, Job satisfaction, Turnover

Vignaswaran, Rajendran (2005), The Relationship Between Performance

Appraisal Satisfaction And Employee Outcomes The purpose of the present study is to examine the relationship between performance appraisal satisfaction and employee outcomes, in the form of work performance, affective organizational commitment and turnover intention. Data were collected from 303 employees from many organizations pertaining to several different industries, throughout peninsular Malaysia. Results from a survey of 303 employees showed that the relationship between performance appraisal satisfaction and employee outcomes in the form of work performance, affective organizational commitment and turnover intention was mediated by employees’ intrinsic motivation. These results have important managerial implications: in order to obtain positive employee outcomes, organization should provide a performance appraisal platform where employees must report satisfaction with performance appraisal. This study contributes to the knowledge on satisfaction with performance appraisal and the influences on the employee outcomes, an area of research that is almost unexplored in Malaysia.

Key words: Performance appraisal, Human resource management, Performance management, Work performance, Intrinsic Motivation, Affective organizational commitment, Turnover intention

Khan, Ayaz (Volume I, Number 2)Journal of Managerial Science, Performance Appraisal’s Relation with Productivity and Job Satisfaction The whole essence of the management activities of an organization culminates in the system of performance appraisal adopted in that organization. This, in turn, reflects the extent of the individual contributions and commitment of the employees in different hierarchical levels toward the achievement of organizational objectives/goals. It goes without saying that an effective performance appraisal system can lead an organization to take strides towards success and growth by leaps and bounds. Conversely, an ineffective performance appraisal system can seal the fate of an organization by creating chaos and confusion from top to bottom in the administrative hierarchy. As a consequence the chances of success and growth of that organization are doomed. The significance of performance appraisal, being a major and pivotal HR activity, can hardly be overemphasized for the growth, development and success of any organization. Unfortunately, in most of the public sector organizations, this fundamental activity is not given due importance.

Key words: Capacity, Opportunity, Job Description, Job Satisfaction, Performance appraisal

CHAPT ER 3: RESEARCH METHODS AND PROCEDURES

Research in common parlance refers to a search for knowledge. Once can also define research as a scientific and systematic search for pertinent information on a specific topic.

Purpose of the Study

The purpose of the study was to evaluate the best performance appraisal method which is most suited in a retail company by doing a comparison between the two methods adopted by the company i.e. ranking method in low level management and 360 degree method at middle and top level management, so to find which is the efficient method from the two methods.

Research Design

A Research design is a framework or blueprint for conducting the marketing research project. It is the details of the procedures necessary for obtaining the information needed to structure and or solve marketing research problem

In our study we used descriptive research so that we could work upon the parameters of our study. Descriptive research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when, “why” and how. Although the data description is factual, accurate and systematic, the research cannot describe what caused a situation. Thus, Descriptive research cannot be used to create a causal relationship, where one variable affects another. In this with the help of the descriptive design have been able to properly work on the various variable of our study that are motivation, ability to compare , training need evaluation and objectivity of both the methods.

Research Question

The research question of the study is –

Out of two methods i.e. ranking method and 360 degree method of performance appraisal which is the best suited in a retail industry?

Null hypothesis: There is no significant difference between ranking method and 360 degree method

Alternate hypothesis: There is significant difference between ranking method and 360 degree method

Participant

Participants were selected on the bases of Judgmental sampling and that they must have gone through the appraisal system process at least once in the organisation so that the data input given by them has due relevance. . Potential participant in the study included 100 employees in which 50 were those who have undergone through the ranking method of the performance appraisal and 50 were those who have undergone through 360 degree method of performance appraisal. These employees were given the questionnaires to complete.

Data Collection

Data collection is a term used to describe a process of preparing and collecting data, for example, as part of a process improvement or similar project. The purpose of data collection is to obtain information to keep on record, to make decisions about important issues, to pass information on to others. Primarily, data are collected to provide information regarding a specific topic. In this project data were collected as follows:

Primary Data – Through questionnaires

Secondary Data – Through research papers and journals

Instrument Used

In order to conduct the research I have used a closed ended questionnaire to collect the primary data from the respondent. A questionnaire is essentially a structured technique for collecting primary data. It is generally a series of written questions for which the respondents has to provide the answers.

I have used a LIKERT SCALE for our questionnaire. A likert scale is widely used rating scale that requires the respondent to indicate the degree of agreement or disagreement with each of a series of statement about the stimulus objects. Typically each scale item has five response categories, ranging from “strongly disagree” to “strongly agree”. Thus the likert scale possesses the characteristics of description and distance. To conduct the analysis, each statement is assigned a numerical score, ranging from 1 to 5.The analysis can be conducted on an item by item basis or a total score can be calculated for each respondent by summing across items.

Procedure

A questionnaire was developed and it was filled by the employees of the organisation. After that the filled questionnaire data was analysed using the SPSS software. Using this software firstly the reliability of the questionnaires were checked and all the questions under all the four parameters showcased high level of reliability.

In order to get results we have used independent T-test. Independent T-test is used to test for a comparison between two independent groups like males and females) on the means of a continuous variable. An independent samples t-test is used to determine differences between the means of two distinct samples within a population. As in this research two methods of performance appraisal was to be analysed so independent T – test was used.

Sampling Techniques

Sampling is one of the components of a research design. It is the only feasible way to collect research data in most situations. The sampling design process includes various steps which are inter-related and relevant to all aspects of marketing research project.

In this research non probability sampling techniques is used. Judgemental sampling is used because the data for this study were collected from a single organization and the sample was not random. Therefore, it cannot be assumed that the results of this study will be generalizable to employees of all the retail companies.

Sample Size = 100 (50 for one method and 50 for second method)

Data Analysis

The data which was collected from the questionnaire is being analysed by running that data in the SPSS software and independent t-test and regression analysis is used and the output that we got are used for making conclusions and suggestions. A detailed analysis is in the next chapter.

Limitations

The level of education of most of the employees was not up-to the expectation.

One of the major loop holes of our study is that the sample size is limited only to employees of the head quarter. On the basis of such a limited sample we cannot draw any major conclusions.

All the data has been collected through self designed questionnaires which may not include all the aspects which are required for the perfect evaluation of the existing appraisal system.

False answers are given by people as people do not take questionnaires seriously and do not devote much time to it.

CHAPTER 4: DATA ANALYSIS AND FINDINGS

Review of Methodology

In order to analyse we have used independent T-test and regression analysis. Independent T-test is used to test for a comparison between two independent groups like males and females) on the means of a continuous variable. An independent samples t-test is used to determine differences between the means of two distinct samples within a population. As in this research two methods of performance appraisal was to be analysed so independent T – test was used. Four variables taken were: – efficiency, motivation, training need analysis and objectivity.

Dependent variable is – objectivity

Independent variables are – efficiency, motivation, training need analysis

Result of Research Questions

Our Research Question was –

Out of two methods i.e. ranking method and 360 degree method of performance appraisal which is the best suited in a retail industry?

For the analysis following two test were conducted on the four variables

Independent T-test

Regression Analysis

Null Hypotheses: There is no significant difference between ranking method and 360 degree method

Alternate Hypotheses: There is a significant difference between ranking method and 360 degree method

After entering the data into the SPSS sheet we tend to analysis our result using two test i.e.

Independent T-test

Regression analysis

Before applying these test, we had to check the reliability of the variable.

For checking the reliability of the question following were the steps followed:

Click on Analyze and select Scale

Then write the Item name for which the reliability has to be checked.

Name the variable for which reliability is to be checked.

Then click OK and the mean score column is added in your data sheet.

Reliability Test Results

Scale: questionnaire

Cronbach’s Alpha

N of Items

.776

20

Table 4.3 Reliability Statistics

This showcases that the questions in the questionnaire has a high level of reliability which is around 77%.The Cronbach’s Alpha is more than .50 so we can say that it is reliable.

Reliability of each variable

Scale: efficiency

Cronbach’s Alpha

N of Items

.518

5

Table A.1 Reliability Statistics for efficiency

This showcases that the questions coming under the variable efficiency has a high level of reliability which is around 51%.The Cronbach’s Alpha is more than .50 so we can say that it is reliable.

Scale: training need

Cronbach’s Alpha

N of Items

.525

6

Table A.2 Reliability Statistics for training need

This showcases that the questions coming under the variable efficiency has a high level of reliability which is around 52%.The Cronbach’s Alpha is more than .50 so we can say that it is reliable.

Scale: objectivity

Cronbach’s Alpha

N of Items

.682

4

Table A.3 Reliability Statistics for objectivity

This showcases that the questions coming under the variable efficiency has a high level of reliability which is around 68%.The Cronbach’s Alpha is more than .50 so we can say that it is reliable.

Scale: motivation

Cronbach’s Alpha

N of Items

.663

5

Table A.4 Reliability Statistics for motivation

This showcases that the questions coming under the variable efficiency has a high level of reliability which is around 66%.The Cronbach’s Alpha is more than .50 so we can say that it is reliable.

From the above individual scores which we get after doing the reliability test increases the confidence in us that the all the questions of the questionnaire are extremely reliable.

For computing the mean of the scores of the question of one variable, following were the steps followed:

Click on Transform and select Compute Variable

Then write the Target Variable name in which the mean score has to be stored.

From the Function Group select ‘Statistical’.

Then select Mean from the Functions and Special Variable.

From the questions select the questions coming under that variable separated by comma.

Then click OK and the mean score column is added in your data sheet.

These Six steps have to be followed for the other three variables also.

Once, these mean score are calculated, now we apply the independent T-test to these variables.

To apply independent T-test, following steps have to be followed:

Click on Analyze and then Compare Means.

Click on Independent-Samples T test.

Now add the four mean variables in the Test variables and the bank variable in the grouping variable.

Click on Define Groups to add the values to the Grouping Variable.

Following table in the output sheet appears.

Figure 4.1 Output sheet of Independent T- test (print screen view)

Result of Independent T-test:

Through the output sheet of the SPSS, the output showed that the four variables are having almost same result in both the methods.

Hence, our Null Hypothesis i.e. these two methods are almost same and no significant difference can be seen in these two methods.

Next step was to calculate Regression Analysis and following steps are to be followed:

Click on Analyze and select Regression.

Now click on Linear.

The Dependent Variable is Objectivity so add the mean score of this variable in the Dependent.

Then add the other three variables in the Independent and click OK.

Result of Regression Analysis:

For the Hypothesis, we had to compute and find out that what is the impact of efficiency, motivation and training need evaluation on objectivity in the method of performance appraisal. In order to do this we did the Regression Analysis in which objectivity is the dependent variable and other three are the independent variables.

Through the output sheet of the Regression Analysis, we drew a conclusion that the variable efficiency is having the highest beta value i.e. .271 hence this is the factor which is effecting the objectivity most, next comes the motivation having .250 beta value and lastly is the training need evaluation having .201 beta value .

Summary of the findings

In the research it was observed the difference between the two methods of performance appraisal adopted by the company. Likert scale was utilized in which 1 was indicative of strong disagreement,2 was indicative of agreement, 3 was indicative of neutral feeling,4 was indicative of agreement and 5 was indicative of strong agreement. In order to see the difference between the two methods of performance appraisal adopted by the company we formulated null hypotheses.

The findings of the research were that there is no significance difference between the two methods of performance appraisal used by the company i e Ranking method and 360 degree method.

But as in the mean of the two methods there was a very minute difference between them.

So we can say that there is no significance difference between them but if we compare both methods 360 degree method is a better method of performance appraisal which the company used adopted.

CHAPTER 5: CONCLUSIONS AND RECOMMENDATION

Summary of conclusion

The findings of the research were that there is no significance difference between the two methods of performance appraisal used by the company i e Ranking method and 360 degree method. But as in the mean of the two methods there was a very minute difference between them. So we can say that there is no significance difference between them and company does not need to change its method of performance appraisal for the employees i.e. ranking method for the low and middle level and 360 degree for the top level management.

Discussion of Research Question

The Research Question was –

Out of two methods i.e. ranking method and 360 degree method of performance appraisal which is the best suited in a retail industry?

After analysing the data we have seen that out of the two method 360 degree method is better as compared to the ranking method of performance appraisal, though no significant difference has been observed and hence we can conclude that the two methods are almost the same and the company can continue using the two methods as they are currently using.

Recommendations

This study looked at selected variables at a particular point in time. A longitudinal analysis of the same constructs may have yielded important results. The study recommend that as currently the company is using 360 degree method of performance appraisal at top level and middle level and ranking method of performance appraisal at low level, the company should not change its method of performance appraisal at different level of management and should continue using 360 degree method at top level and ranking method at middle and low level.

Limitations

Limitation of the research was as follows:

The level of education of most of the employees was not up-to the expectation.

One of the major loop holes of our study is that the sample size is limited only to employees of the head quarter. On the basis of such a limited sample we cannot draw any major conclusions.

All the data has been collected through self designed questionnaires which may not include all the aspects which are required for the perfect evaluation of the existing appraisal system.

False answers are given by people as people do not take questionnaires seriously and do not devote much time to it.

Future Scope

The scope of the study was limited to the selected variables i.e. efficiency, motivation, training need evaluation and objectivity. Even all the possible dimensions of a particular variable are not considered. Additionally, the data for this study were collected from a single organization and the sample was not random. Therefore, it cannot be assumed that the results of this study will be generalizable to employees of all the retail companie

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Jafari, Mostafa (2009), European Journal of Social Sciences, A New Framework for Selection of the Best Performance

Parker, Thomas R.(1998) National Fire Academy, Wilson, North Carolina, Exploring 360-Degree Feedback Performance Appraisal

Kondrasuk , Jack N.(2011) Journal of Applied Business and Economics University of Portland, So What Would An Ideal Performance Appraisal Look Like

Alewine, Thomas C (1982) Personnel Journal 61(3) 213.”Performance Appraisal and Performance Standards.

Carroll, Stephen J. and Craig E. Schneier , Workforce Compensation and Performance Service, Performance Appraisal and Review Systems

Vance, C.M., McClaine, S.R., Boje, D.M. and Stage, H.D. (1992), Management International Review, “An examination of the transferability of traditional performance appraisal principles across cultural boundaries”

Ahmed, Adnan (2010), International Journal of Business and Management, Performance Appraisals Impact on Attitudinal Outcomes and Organisational Performance

Vignaswaran, Rajendran (2005), The Relationship Between Performane Appraisal Satisfaction And Employee Outcomes

Khan, Ayaz (Volume I, Number 2)Journal of Managerial Science, Performance Appraisal’s Relation with Productivity and Job Satisfaction