1.

1 Background of the Study

Information technology (IT) revolutionized many aspects of a business. There is
hardly any organization which has not installed at least one ubiquitous computer. There is a
wide choice for computer users - from a simple PC to sophisticated network of computers.
Applications of computers in various function is common these days; from mere data
storage to more advanced software packages like ERP which can do many things in an
organization but fortunately, cannot substitute common sense or human ingenuity.

It is well to remember that IT is one more tool in hands of a management to get

things better and faster.

Example of IT application, ERP which is one of the latest developments in software

for business enterprise wide Resources Planning (ERP) System is an integrated business
management system which covers some important aspects of business such as logistics,
production, finance, accounts, human resources, planning, materials and warehouse
management. Right from the receipt of an inventory, an ERP system tracks materials,
capacity and labor resources. Thus an ERP system package claims to aid a business to
manage it activates dynamic and integrated manner.

But it is equally important to understand and appreciate the flip side of such
sophisticated IT packages like ERP. First of all the people ho handle such a package must
be qualified and must posses relevant work experience in the functional module, which a
person wants to get trained.

An organization, which wishes to work with ERP, must have already had
experience with proper working IT infrastructure. There should be enough number of
terminals for concerned people to key in data or run a query.

One of the toughest things to overcome is the attitude of the people for adapting to a
change. Thus ushering in a new "IT culture" remains one of the greatest challenges for any
management interested in adapting IT as a tool in as many functions of the organization as
possible.

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 The vital role of IT is to support a management and not control it. Thus the IT most
understands their role vis-à-vis decision-making. Just because a sophisticated IT package
has been installed in an organization cannot guarantee success .If for example, a vendor is
supplying poor quality supplies consistently, the information system will tell the
management of such a fact faster. But now it is up to the management to initiate corrective
measures- visit vendor to assist him to come up to standard, develop alternate vendor or
import.

Some cautious management would like to implement information system module

by module to gain experience. Such a procedure may or may not guarantee success. Some
IT experts urge an organization to implement a total IT system such as ERP-a classic case
of all or bust.

In the enthusiasm to appear very modern and up-to date a management may go in
for IT package when the ground reality within the organization is not conductive to such a
drastic change. On the other hand a few well-tried techniques do wonders for an
organization. For example, an organization's urgent need may be to change existing
technology to an upgraded one. An ERP package obviously, won't tell the management to
do just that. Also, a few time -honored principles like "do it right at the first time" must be
followed in an organization with or without a sophisticated IT tools.

A responsible management will put the IT in its place to serve the overall business
interests.

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2.1 Statement of the Problem

The research intends to study the different approaches of appraisals adopted by

software Companies. It also analyses the most commonly occurring errors within
performance appraisal methods and to understand the level of effectiveness of 360º
appraisal in the industry

2.2 Need and Importance of the Study

This study is conducted with respect to understanding the different appraisal

systems conducted in the software industry and their effects thereafter in the same. Due to
time and resource constraints, the study was restricted to the software industry in Bangalore
City.

2.3 Objectives of the Research

1. To find out the different appraisal systems followed by software companies.

2. To find out who appraises the employees.
3. To analyze and study the benefits of the appraisal systems.
4. To analyze the shortcomings of the appraisal systems.
5. To identify the criteria and measures adopted to evaluate employee performance.
6. To find out the level of effectiveness of the 360 degree feedbacks.

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2.4 Review Of Literature

Purpose

The literature review section examines the importance of search studies, company
data or industry reports that serve as a foundation for the setup of study. The research
dimension of the related literature and the relevant information begins from an explanatory
perspective, approaching towards specific studies which do related to the judge the
limitations and informational gaps in data from the secondary sources.

This analysis may reveal conclusions from past studies to realize the reliability of
the secondary sources and their credibility. This in turn enables one to rely on a
comprehensive review for the study.

Analysis of previous study

A survey about current practice, which is followed in companies to appraise performance:
( Phatak, International Dimensions of Management)

Almost all software companies responding do have formal appraisal programs.

About 93% of smaller organizations (those with fewer than 500 employees) have such
programs. About 97% of large organizations have them.

Rating scales are by far the most widely used appraisal technique. About 62%
of small organization use rating scales, 20% use essays, and about 19% use MBO.
Among the large organizations, 51% use rating scales, just over 23% use essays and
about 17% use MBO.

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 However, those using ratings as the main appraisal technique typically also
require narrative comments to justify rating and to describe employee strengths and
weakness and document development plans. Those using essays as the main appraisal
technique usually require an overall quantitative performance rating to facilitate
employee comparisons for compensation decisions.

The employee’s immediate supervisor makes Ninety two percent of appraisals.

These appraisals are in turn reviewed by the appraiser’s supervisor in 74% of the
responding organizations.Only about 7% of the organizations use self-appraisal in any
part of the overall appraisal process.Virtually all employees (99%) are informed of the
results of their appraisals. Overall about 77% are given a chance to respond with
written comments on their appraisals. In 69% of companies, appraisals are done
annually.

Methods of reviewing the literature

The review of literature does scrutinize the important research studies. The primary
sources that provide relevant information are the best form to retrieve data from the
research. The primary sources were encouraged with the help of distribution of questioners
as well as conducting personal interviews. With this the data received enables the
researcher to accurately arrive at the problem of the study and the consecutively solutions
to the same. The secondary sources were also relied on for additional information. It
includes company journal, newsletters, records, manuals etc.

Conclusion

Performance management lays an evaluative and developmental dimension to its

makeup, and is crucial in both linking rewards to performance and providing a platform for
the development of employees. Over concentration on the assessment of performance can
work to the detriment of effort aimed at establishing the development needs of the
individual in an open and honest way. The manager, as an appraiser, may encounter
difficulties in reconciling the roles of 'judge' and 'mentor'. Managers need to develop the
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skills of coping with such tensions in their roles. In some organizations, this problem is
solved by having different managers carrying out performance and development appraisals.
Appraisal provides the context in which mangers can seek to ensure that there is acceptable
congruency between the objectives of the individual and those of the organization.

Although one recognizes the part played by performance management in the

determination of rewards, we believe that if treated as a way of providing feedback on
progress and of jointly agreeing the next set of aims, the appraisal can have a positive effect
on individual motivation.

2.5 Operational Definition of Concepts

Performance Appraisal

Performance appraisal is the assessment of an individual's performance in an

performance in a systematic way, the performance being measured against such factors as
job knowledge, quality and quantity of output, initiative, leadership abilities, supervision,
dependability, co-operation, judgment, versatility etc. assessment should not be confined to
the past performance alone. Potentials of the employee for the future performance must
also be assessed.

Performance appraisal can be defined as "the systematic evaluation of the

individual with respect to his or her performance on the job and his or her potential for
development".

A more comprehensive definition is, “Performance appraisal is a formal structured

system of measuring and evaluating an employee's job and how the employee can perform
effectively in future so that the employee, organization all be benefited."

Performance appraisal, to common understanding, is the formal and informal

assessment of the performance of the employee at work. In an informal system we are
aware that superior is continually making judgments about their subordinates' performance
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on a subjective basis. By contrast, superiors could resort to using formalized appraisal
techniques when assessing the performance of subordinate, and these judgments arc
considered to be more objective. In formalized systems the terms 'performance appraisal
and 'performance management' are used. Both refer to a process where by mangers and
their subordinates share understanding about what has to be accomplished, and the manager
will naturally be concerned about how best bring about those accomplishments by adept
management and development of people in short and long terms. Also, performance would
be measured using the techniques discussed in this chapter and it will be subsequently
related to targets or plans. In this way the subordinate receives feedback on his or her
progress.

A distinguished feature of performance management is its integrating strength in aligning

various processes with corporate objectives: for example, the introduction of performance-
related payment system and mobilization for training and development resources to achieve
corporate objectives.

Measuring Performance

In many organizations, the feedback on job performance is ambiguous or is given

annually as a ritualistic exercise. Many subordinates therefore have trouble in gasping how
their efforts are perceived by the organization. Almost every one who has worked at a job
can remember times when they were unclear on how their performance was being judged.

The annual performance appraisal system tends to serve only a little purpose: salary
administration, training and succession planning. But this is not the sole objective of
performance appraisal. These objectives will only dilute and weaken the clarity and validity
of any appraisal system. Most organization ties the formal appraisal system directly to
salary increase, which decrease their validity.

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It is therefore very important for organizations to:

(a) Link Salary and Status Realistically to the Performance Appraisals

Most personnel departments have a very narrow outlook to appraisals. The general
view is to receive the appraisal forms at a date (which usually is the deadline), issue
instructions regarding increments and promotions, receive the data regarding the same and
they issue letters to the concerned employee informing of their salary increase. The
appraisal process gets polluted as the appraiser and appraise have at the back of their minds
promotion and salary increase, rather than performance plans and participative reviews.
This dilutes the objectives of appraisal to great extent. In fact, if organizations create, a
culture of continuous feedback on the performance they would be making the appraisal
system more relevant. Several organizations have already started delinking performance
appraisal from salary increase.

(b) Making Objectives of Performance Appraisals Clear to All Employees

If performance appraisal should not directly be linked to salary increase the

question then arises, what should the objectives of performance appraisals be that could be
realistically achieved?
Some suggestions:
• To do joint goal setting, and link the goals to the organizational objectives
• To provide role clarity by defining Key Result areas for Accounting.
• To establish a level of performance in the current job and seek ways of
improving it.
• To identify potential for development and to support the total process of
planning
• To increase communication between the appraiser and the appraise.
• To identify factors that facilitate performance and other factors that hinder
performance.

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 • To help the employees identify and recognize their own strengths and
weaknesses. To make them assess their own competencies and how the same
can be multiplied and improved.
• To generate data about the employee for various decisions like transfers,
rewards, job-rotation, etc.

(c) Focus on Developmental Appraisals

Managers should develop part ownership in the employee's future. Any good
appraisal system should focus on developmental appraisal. Developmental appraisal mean
that an organization needs to develop not just isolated performance appraisal tool/system,
but the total frame work for the individuals development, improvement in job and level of
competence and preparing employees for future jobs. Thus, appraisal of people, which is a
part of the total HRD system, lies to be linked to long-term development activity and
carrier planning.

Organizations have to show vision for the future. Vision, strategies and objectives
will give rise to individual objectives and performance standards. The immediate rewards
and recognition do not lead to enduring performance and upgrading of competence and
therefore are not real motivators. The appraisal as a tool not only gives the individual and
the organization the idea of where the individual stands in terms of his skills, competencies
and abilities, but also monitors the process of growth and development, together with the
inputs that are required to develop a high level of competence by individuals.

(d) Let Employees Appraise Their Own Performance

Subordinates need feedback more often on their performance. The best way to do it
is to let them appraise their own performance.

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Self-appraisal would -
1) Motivate the employee to take more responsibility for his/her own performance.
2) Focus on the job behavior only.
3) Reduce ambiguity in performance and focus on change in job behavior.

When subordinates undertake self-appraisal, they analyze their job duties and how
key issues in a job they handle. Each individual may rate himself or herself.
Self-appraisal may focus on cost control, communication, planning, training, delegation
and decision-making. After self-appraisal, the subordinate discusses the ratings with his/her
direct report or superior to get a feed back on performance. Both then come to an
agreement in areas of convergence and draw a job improvement plan.

(e) Create a Climate for Open Appraisals in Organizations

In most organizations, the concept of open appraisal is misunderstood. Open

appraisal does nut mean that the appraisal ratings are shown by the subordinate, and his/her
signature is then obtained. What it does mean that both the appraiser and the appraise share
their views on performance with each other, identify the areas of improvement and work
towards it. One of the objectives of open communication between the appraiser and the
appraise is to bring them together to solve organizational problems and performance related
problems. The quality of ratings is likely to improve if there is shared understanding
between the appraiser and the appraise.

(f) Muscle Builds the Organization

In today's competitive world, raising performance goals is essential. This entails

analyzing the company's current situation, projecting the future, establishing higher
expectations, and selling the top management on the upgrading process and developing an
action plan.

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Muscle builds the organization by
1) Enhancing your own performance
2) Accelerating the professional growth of the best performers
3) Not tolerating managerial performers. One cannot muscle build the
organization, unless marginal performers are replaced.
4) Developing multiple skills and competencies by worshiping success and
potential.

(g) Build Commitment in the Workplace

Change is an inevitable part of manager's job. As conditions change, individual

responsibilities are also expected to change. In commitment-based approach, the
workplace, jobs are designed to be broader than before, team accountability is as important
as individual accountability for performance. The performance expectations are high and
emphasize continuous important in the workplace.

Managers have to stop being my topic to performance appraisals. No personnel

professional in the 90's will be able to afford the luxury of myopia. We have to see our way
to the various changes in environment that are taking place and those changes that will
revolutionize our organization culture in the out coming years. We must help our
organization's triumphant progress through the 90s, by recognizing and rewarding
performance.

METHODS OR TECHNIQUES OF APPRAISAL

Broadly all the approaches to appraisal can be classified into:
a) Past Oriented Methods and
b) Future – Oriented Method

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a) Past Oriented Methods
• Rating Scales
This is the simplest and most popular technique for appraising employee
performance. The typical rating scale system consists of several numerical
scales, each representing a job-related performance criterion such as
dependability, initiative, output, attendance, attitude, co-operation, and the like.
Each scale ranges from excellent to poor. The rater checks the appropriate
performance level on each criterion, and then computes the employee’s total
numerical score. The number of points scored may be linked to salary
increases etc.

• Checklist
Under this method, a checklist of statements on the traits of the employee and
his or her job is prepared in two columns – viz., a ‘Yes’ column and a ‘No’ column.
All that the rater should do is to tick the ‘Yes’ column if the statement is positive
and in column ‘No’ if the answer is negative. After ticking off against each item,
the rater forwards the list to the HR department where the actual assessment of the
employee takes place. In other words, the rater only does the reporting, while
actual evaluation is done by the HR department. The HR department assigns
certain points to each ‘Yes’ ticked. Depending on the number of ‘Yes’ the total
score is arrived at. When points are allotted to the checklist, the technique becomes
a weighed checklist.

• Forced Choice Method

Here, there would be certain statements mentioned and the appraiser
will only have to select the appropriate statement that suits the appraise. This is
called as Forced Choice Method because here, the appraiser has no freedom at
all. He only has a few statements that he will have to select that suit the
appraise. The list is then forwarded to the HR Department who will do the
assessment. There will be points given to each of the individual statements.

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• Forced Distribution Method
One of the errors in rating is leniency – clustering a large number of employees
around a high point on a rating scale. The forced distribution method seeks to
overcome the problem by compelling the rater to distribute the rates on all points
on the rating scale.

The method operates under an assumption that the employee performance level
conforms to a normal statistical distribution. Generally, it is assumed that
employee performance levels conform to a bell – shaped curve. For example, the
following distribution might be assumed to exist - excellent 10%, good 20%,
average 40% below average 20% and unsatisfactory 10%.

The major weakness of the forced distribution method lies in the assumption
that employee performance levels always conform to a normal (or some other)
distribution. In organizations that have done a good job of selecting and retaining
only the good performers, the use of forced distribution approach would be
unrealistic as well as possibly destructive to the employee morale. One merit of
this approach is that it seeks to eliminate the error of leniency. This technique is
however not acceptable by most of the rates and rates.

• Critical Incidents Method

This method of employee assessment has generated a lot of interest
these days. This approach focuses on certain critical behaviors of an employee
that make all the differences between effective and non-effective performance
of a job. Such incidents are recorded by the superiors as and when they occur.

One of the advantages of this method is that the evaluation is based on

actual job behavior. Further, the approach has descriptions in support of
particular ratings of an employee. Giving job – related feedback to the rate is
also easy. It reduces bias on the part of the raters. The method however has
significant limitations. These include:

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a) Negative incidents tend to get noticed more than positive incidents.
b) Recording is a chore, so supervisor could easily forget.
c) Overly close supervision may result.

• Behaviorally Anchored Rating Scales (BARS)

Behaviorally anchored rating scales, sometimes called as Behavioral
Expectation Scales are rating scales whose scale points are determined by
statements of effective and ineffective behaviors. They are said to be behaviorally
anchored in that the scales represent a range of descriptive statements of behavior
on each scale best described and employee’s performance. Behaviorally anchored
rating scales (BARS) have the following features:

1. Areas of performance to be evaluated are identified and defined by the people

who will use the scales.
2. The scales are anchored by descriptions of actual job behavior that, supervisors
agree, represent specific levels of performance. The result is a set of rating scales in
which both dimensions and anchors are precisely defined.
3. All dimensions of performances to be evaluated are based on observable
behaviors and are relevant to the job being evaluated since BARS are tailor made for
the job.
4. Since the raters who will actually use the scales are actively involved in the
development process, they are more likely to be committed to the final product.

BARS were developed to provide results, which subordinates could use to

improve performance. Superiors would feel comfortable to give feedback to the
rates. Further BARS help to overcome rating errors. Unfortunately, this method
too suffers from distortions inherent in most rating techniques.

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• Essay Method
Here, the rater must describe the employee within a number of broad categories
such as.
1. The raters overall impression of the employee’s performance.
2. The promotability of the employee
3. The jobs that the employee is now qualified or capable to perform
4. The strengths and weakness of the employee
5. The training and development assistance required by the employee.

Although, this method might be used individually, it is most frequently used in

combination with others. It is extremely useful in filing information gaps about the
employees that often occur in the better-structured checklist method.

• Cost Accounting Method

This method evaluates performance from the monetary returns the employee
yields to his or her organization. A relationship is established between the cost
included in keeping the employee and the benefit the organization derives from him
or her. Performance of the employee is then evaluated based on the established
relationship between the cost and the benefit.

b) Future Oriented Method

• Management by Objectives (MBO)
The concept of MBO conceived by Peter F. Drunker, reflects a management
philosophy which values and utilized employee contributions. Applications of
MBO in the field of performance appraisals are a recent thinking.

The working of MBO can be described in four steps:

The first step is to establish the goals each person is to attain. These goals can be
used to evaluate employee performance.

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 The second step involves setting the performance standard for the subordinates
in a previously arranged time period. As subordinates perform, they know fairly
well what there is to do, what has been done and what remains to be done.

The third step, the actual level of goal attainment is compared with the goals
agreed upon. The evaluator explores reasons for the goals that were not met and
for the goals that were exceeded. This step helps determine possible training needs.
It also alerts the superior to conditions in the organization that may affect a
subordinate but over which the subordinate has no control.

The final step involves establishing new goals and possibly, new strategies for
goals not previously attained.

• Psychological Appraisals
Large organizations employ full time industrial psychologists. When
psychologists are used for evaluations, they assess an individual’s future potential
and not past performance. The appraisal normally consists of in-depth interviews,
psychological tests, discussions with superiors and a review of other evaluations.
The psychologist then writes an evaluation of the employee’s intellectual,
emotional, motivational and other related characteristics that suggest individual
potential and my predict future performance. The evaluation by the psychologist
may be for a specific job opening for which the person is being considered, or it
may be a global assessment for his or her future potential. From these evaluations,
placement and development decisions may be made to shape the person’s career.

• 360 Degree Appraisal

This is a technique of appraisals wherein multiple rates are involved in
evaluating performance. This is understood as a systematic collection of
performance data on an individual or group, derived from a number of stakeholders
– the stakeholders being the immediate supervisors, team members, customers,
peers and self. In fact, anyone who has any information on ‘how an employee does
the job’ may be one of the appraisers. This provides a broader perspective about an

16
 employee’s performance. In addition, the technique provides for greater self-
development of the employees. For an employees development multi-source
feedback is very useful as it enables the employee to compare his or her
perceptions of self with the perceptions of others.

360-DEGREE FEEDBACK DEFINED

360° feedback is a relatively new feature of performance management. 360°

feedback has been defined by Ward (1995) as: The systematic collection and feedback
of performance data on an individual or group derived from a number of stakeholders
on their performance.

The data is usually fed back in the form of ratings against various performance
dimensions. 360° feedback is also referred to as multi-source assessment or multi-rater
feedback.

360-DEGREE FEEDBACK – METHODOLOGY

1. The Questionnaire
360° feedback processes usually obtain data from questionnaires, which
measure from different perspectives the behaviors of individuals against a list of
competencies. The competence model may be developed within the organization or
the competency headings may be provided by the supplier of the questionnaire. The
dimensions may broadly refer to leadership, management and approaches to work.

2. Ratings
Ratings are given by the generators of the feedback on a scale against each
heading. This may refer both to importance and performance, as in the questionnaire,
which asks those completing it to rate the importance of each item on a scale of 1 (not
important) to 6 (essential) and performance on a scale of 1 (weak in this area) to 6
(outstanding).

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3. Data Processing
Questionnaires are normally processed with the help of software developed
within the organization or, most commonly, provided by external suppliers. This
enables the data collection and analysis to be completed swiftly, with the minimum of
effort and in a way that facilitates graphical as well as numerical presentation.

4. Feedback
The feedback is often anonymous and may be presented to the individual (most
commonly) to the individual’s manager (less common) or to both the individual and the
manager. Some organizations do not arrange for feedback to be anonymous. Whether
or not feedback is anonymous depends on the organization’s culture – the more open
the culture, the more likely is the source of feedback to be revealed.

5. Action
The action generated by the feedback will depend on the purposes of the
process, i.e. development, appraisal or pay. If the purpose is primarily developmental,
the action may be left to individuals as part of their personal development plans, but
the planning process may be shared between individuals and their managers if they
both have access to the information. Even if the data only goes to the individual, it can
be discussed in a performance review meeting so that joint plans can be made, and
there is much to be said for adopting this approach.

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 360-Degree Feedback – Advantages and Disadvantages

• Individuals get a broader perspective of how they are perceived by others than
previously possible.
• Increased awareness of and relevance of competencies
• Increased awareness by senior management that they too have development
needs.
• More reliable feedback to senior managers about their performance.
• Gaining acceptance of the principle of multiple stakeholders as a measure of
performance.
• Encouraging more open feedback – new insights.
• Reinforcing the desired competencies of the business.
• Provided a clearer picture to senior management of individual’s real worth
(although there tended to be some ‘halo’ – effect syndromes).
• Clarified to employee’s critical performance aspects.
• Opens up feedback and gives people a more rounded view of performance than
they had previously.
• Identifying key development areas for the individual, a department and the
organization as a whole.
• Identify strengths that can be used to the best advantage of the business.
• A rounded view of an individuals / teams / the organization performance and
what its strength and weakness are
• It has raised the self awareness of people managers of how they personally
impact upon others – positively and negatively
• It is supporting a climate of continuous improvement
• It is starting to improve the climate / morale, as measured through out employee
opinion survey
• Focused agenda for development. Forced line managers to discuss
development issues.
• Perception of feedback as more valid and objective, leading to acceptance of
results and actions required.
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But there may be problems. These include:
 People not giving frank honest feedback;
 People being put under stress in receiving or giving feedback;
 Lack of action following feedback;
 Over-reliance on technology
 Too much bureaucracy

These can all be minimized if not avoided completely by careful design,

communication, training and follow-up.

360-DEGREE FEEDBACK – CRITERIA FOR SUCCESS

360-Degree is most likely to be successful when;

 It has the active support of top management who themselves take part in giving
and receiving feedback and encourage everyone else to do the same.
 There is commitment everywhere else to the process based on briefing, training,
and an understanding of the benefits to individuals as well as the organization.
 There is a real determination by all concerned to use feedback data as the basis
for development.
 Questionnaire items fit or reflect typical and significant aspects of behavior.
 Items covered in the questionnaire can be related to actual events experienced
by the individual.
 Comprehensive and well-delivered communication and training programs are
followed.

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APPRAISAL ERRORS
None of the methods for appraising performance is absolutely valid or reliable;
each method has its own strengths and weakness. Let us try to understand the most
commonly occurring errors within performance appraisal methods.

1. Error of Central Tendency:

This refers to the tendency of not using extreme scale scores on the judgment
scale; most of the rates are clustered in the middle.

2. Error of Leniency:
This is caused by the tendency of the lenient rater to put most of the rates on the
higher side of the scale, while a tough rater places them on the lower side of the scale.

3. Halo Effect:
In other words, it is tendency to allow the assessment on one trait to influence
assessment on others. This usually arises when traits are unfamiliar, ill – defined and
involved personal reactions.

4. Error in Unreliability:
This error occurs when there is the existence of inconsistency in the evaluations
of a group of employees by two / more appraisers.

5. Personal Bias:
This error occurs when there exists a close relationship between the appraiser
and the appraise. This tends to influence the evaluation. The scores could be on the
higher when there would be a bias on the side of the appraiser. Therefore, the scores
given could tend to be higher then what the appraise deserves. This would give the
appraise an undue advantage for the appraise during the times of promotions, pay rise
etc. the same could happen vice versa too if an appraiser does not share a good
relationship with the appraise, he could tend to give absolutely low scores for the
appraise.

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5. No Consultation
There would tend to be an error in the scores if the appraiser just goes on giving
scores without discussing with the appraise. If the appraise would not be given his say
in the matter, the score will not reflect the actual capability of the appraise.

6. Spill over Effect

This refers to allowing past performance appraisal ratings to unjustifiably
influence current ratings.

7. Status Effect:
It refers to over rating of employed in higher level job or jobs held in high
esteem, and under rating employees in lower level job at job held in low esteem.

2.6 Research methodology

Type of Research
The research design comprise of the plan and structure of investigation conceived
so as to arrive at the responses to the research queries. It there by addresses the aims and
objectives of the study, both descriptively and analytically.

Sampling Technique
The sampling technique adopted for the study is non-probability Random sampling
technique according to the convenience of the researcher.
A questionnaire was administered to HR managers / executives of different
software companies to obtain data for the purpose of analysis.

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Sample Size
Data is collected using a sample of 30 software companies.

Sample Description
The sample mainly consists of data from the primary sources that are utilized for
the purpose of this study. This is done by means of administrating questioners to human
resource managers / executives in different software companies in the city of Bangalore.
Secondary data like company journals, newsletters, records etc. were also relied on for
retrieving further information.

Instrumentation Technique
Questionnaire and structure disguised questions.

Actual Collection of Data

Both secondary and primary sources of data are utilized for the purpose of this
study. Primary data is collected by means of administering a questionnaire to the Human
Resource Managers / Executives in different software companies. Secondary data is
collected from various records, manuals and other sources of the HR Department.

Tools used for testing of hypothesis

In attempting to arrive at a decision about the population on the basis of the sample
information it is necessary to make assumptions or guesses about the population parameters
involved such an assumption is called statistical hypothesis, which may or may not be true
or not is called test of hypothesis or test of significance. In the test of hypothesis it begins
with an assumption or hypothesis is called Null Hypothesis.

The null hypothesis asserts that there are no significant differences between the
statistics and the population parameters and whatever observes difference is there merely
due to fluctuations in sampling from the sample population. Null hypothesis is usually
denoted by the symbol, Ho. Any hypothesis that contradicts the Ho (null hypothesis) is

23
called an alternative hypothesis and is denoted by symbol H1. The technique used to test
the hypothesis is Test for proportion.

Test for Proportion

Suppose the population of an attribute in a population is now known, we want to
test whether the proportion is a given value P. The null hypothesis is Ho : p = P. The
alternative hypothesis is H1: p ≠ P.

The large random sample of size n from the population, let x units possess the
attribute. Then the sample proportion is p = x/n.

p-P
And so, Z =
√ PQ
n
Therefore, the test statistics is | Z | = P = assumed level of effectiveness
Q = 1-P
p = level of effectiveness of sample
n = sample size

For the sample, if | Z | cal > k, Ho is rejected .On the other hand, if | Z | cal < Ho is
accepted.

Other Software used for the data analysis

For the data analysis, and the subsequent interpretation the researcher has adopted
advanced version of MS-EXCEL 2000. This application software has facilitated the
researcher to construct the frequency table, various kinds of graphs and to find out the
average responses from the sample. By this automated data analysis it has minimized the
researcher’s time constraint and reduced human errors and also accurate outlay of
information.

24
 PROFILE OF SOFTWARE INDUSTRY

SOFTWARE INDUSTRY

3.1 Indian IT - ITES Industry:

The Indian IT-ITES industry is broadly categorized into IT services and software,
ITES-BPO and Hardware segments.

The industry continues to chart remarkable double-digit growth, with industry

aggregate revenue for 2005-06 expected to reach US$ 28 billion. The industry is forecast to
grow more than fivefold over FY 1999-06, at a CAGR of 28 percent.

3.2 Industry Trends (2004-05)

• The earnings from IT-ITES exports was US$ 13.3 billion (61.9 percent of total
industry revenues) in 2004-05 and is expected to touch US$ 17.9 billion (63.7
percent) in 2005-06. Key drivers of growth include the growing adoption of IT
outsourcing and the rapid expansion in the scale and breadth of ITES-BPO
offerings by Indian vendors.
o During 2005-06, software and services, and ITES-BPO would continue to
remain the key contributors to India’s IT-ITES export revenues, with a share
of 67.8 percent and 28.4 percent, respectively. While contribution of
hardware exports would be around 3.7 percent, the situation is expected to
change in the medium term, with this segment receiving a boost owing to
market conditions.
o Overall pricing levels in IT services stabilized at US$ 55-60 per hour for
onsite services and between US$ 18-24 per hour for offshore services.
o Indian IT-ITES vendors successfully executed the offshore delivery model
to achieve sustained growth in service exports and established India as the
most preferred offshore destination for global sourcing of services.

25
 • Indian IT-ITES vendors successfully executed the offshore delivery model to
achieve sustained growth in service exports and established India as the most
preferred offshore destination for global sourcing of services.
• The domestic IT-ITES market witnessed a revival during 2004-05, with revenues
reaching US$ 8.2 billion (a growth of 30 percent over previous year). The segment
is expected to touch revenues of around US$ 10.2 billion during 2004-05, at a
CAGR of 19.2 percent for the 2004-05 periods. Hardware and IT services
accounted for around 90 percent of the domestic IT-ITES revenues during 2004-05
and this market share is not likely to change in 2004-05.
o The BFSI (Banking, Financial services, Insurance), Government and
telecom segments remained the key revenue drivers for the domestic IT-
ITES market.
• Two more companies within the IT-ITES domain joined the billion-dollar club,
which now includes the HCL Group, Infosys, TCS and Wipro.
• During 2004-05, the Indian IT software and services segment added 98,000 jobs
and the ITES-BPO sector added about 73,500 jobs. A total of 203,5000 new jobs
are likely to be created by the IT-ITES sector in the current fiscal.
• Indian IT-ITES vendors focused on improving productivity and utilization and
moved up the value chain. While IT service companies included new service lines
such as package software implementation, systems integration, R&D engineering
and remote network management to their portfolio of offerings, ITES-BPO
companies began more complex services such as financial research and analytics,
actuarial modeling, corporate and business research.

The Indian IT-ITES players expanded their focus from the Fortune 500 companies to
address the needs of Global 2000 corporations.

26
Bangalore - The "Technopolis" of India

A large part of India's success in the software sector is due to the crucial role played
by the State of Karnataka in promoting and providing a boost to IT. Karnataka has emerged
as the computer capital and center of high-tech industries, especially software. Bangalore
has for long been known as India's answer to Silicon Valley, and this is the city where most
large software companies have set up shop and operate out of state-of-the-art facilities.
This is the reason why it is fast becoming the "Technopolis" of India. The Government of
Karnataka has also been extremely positive about the software and services marketplace
and has helped create the relevant telecom and policy infrastructure conducive to the
growth of this sector. The dynamic industrial policy declared in 1996, with comprehensive
packages of incentives and concessions, has ensured a productive ground for various
industries. The hardware and software industries have now brought about a revolution of
sorts under these schemes. Various institutions and computer training centers have
contributed to the large number of trained and talented professionals.

The City of Bangalore has positioned itself to help market the software industry.
This is also why Bangalore has been playing host to international-class conferences,
workshops and exhibitions devoted to the software cause. The city has the highest number
of engineering colleges in the world, almost 50 percent of the world's SEI CMM Level 5
companies; COPC/ISO recognized Customer Interaction Centers, and over 103 R&D
Institutions. It is, in fact, home to GE's biggest R&D Center outside the U.S.-the Jack
Welch Technology Center, which hires over 200 PhDs/scientists every month! To top it all,
Bangalore has just been ranked the fourth best "Global hub of technological innovation" by
none other than the United Nations.
Bangalore's strengths in the software market also lie in its pursuit of new
opportunities. In fact, two key segments that are expected to open up over the next few
years for India are e-commerce and remote processing. Opportunities in e-commerce
software solutions are emerging as a major area of growth in the Indian IT software and
services industry. A recent study undertaken by The Boston Consulting Group for
NASSCOM clearly stated that India could earn revenues of US$9 billion from e-business
solutions by 2005.
.
27
 Various Approaches Of Performance Appraisal

The data was processed after collection and analyzed for the purpose. The data was

edited, classified and tabulated for analysis.

Analysis of data was done with the purpose of summarizing the collected data and

organizing these in such a manner that they answer the research questions. Percentage

analysis was used for analysis of data and the results have been presented by way of pie

charts, bar charts, with the help of SPSS package.

After analysis, the phase of interpretation starts. This is done by drawing inferences

from analyzed data. After interpretations, a report was prepared on the basis of inferences.

28
Table 4.1 Distribution of companies according to the total no of Employees

Total no of employees Frequency Percent Cumulative Percent

Upto 100 9 30.0 30.0
100 – 1000 16 53.3 83.3
Above 1000 5 16.7 100.0
Total 30 100.0

Source – Primary Data

Interpretation:
The above table indicates that 9 companies were selected who employed 100 and
below employees. 16 companies employed between 100 and 1000 employees and only 5
companies were selected who employed above 1000 employees.

Graph 4.1Indicates the total number of employees in the organization

Total no.of employees

Above 1000

Upto 100

100 - 1000

29
Table 4.2 Type of Appraisal System

Frequency Percent Cumulative Percent

Type of Appraisal System
Manager, Supervisor,Appraisers 11 36.7 36.7
Self appraisal 6 20.0 56.7
open system 4 13.3 70.0
MBO 3 10.0 80.0
36Feed Back 2 6.7 86.7
5 Point Scale 1 3.3 90.0
3.point Scale 1 3.3 93.3
4.Point scale 1 3.3 96.7
10 Point scale 1 3.3 100.0
Total 30 100.0
Source – Primary Data
Interpretation
The above table indicates that 36.7% of the companies are appraised by the
managers/supervisors/appraiser assessment, 20% of the companies emphasis on self
assessment, in addition to this few companies follow Open System (13.3%), MBO (10%),
360 feed back (6.67%), 5 point scale (3.3%), 3 point scale (3.3%), 4 point scale (3.33%)
and 10 point scale (3.33%).

Graph 4.2 Indicates the type of appraisal system adopted by the software companies

Typeof Appraisal System

10Point scale

4.Point scale

3.point Scale

5Point Scale

36FeedBack
Manager,Supervisor,A

MBO

opensystem
Self appraisal

30
Table 4.3 Frequency of Appraisal
Period Frequency Percent Cumulative Percent
Quarterly 14 46.7 46.7
Half 6 20.0 66.7
Yearly
Annually 4 13.3 80.0
Others 6 20.0 100.0
Total 30 100.0

Source – Primary Data

Interpretation
From the above table most of the companies follow the annual system of appraisal (46.7%).
Half yearly appraisal is carried out in 20% of the companies. 13.3% follow quarterly
system of appraisal. Some companies follow the combination of half yearly and annual
system (16.7%). Only 3.33% of the companies followed half yearly + quarterly + annual
system of appraisal.

Graph 4.3Indicates how often appraisals are carried out by the companies

Frequency of Appraisal
Others

Quarterly

Annually

Half Yearly

31
Table 4.4 Criteria used for evaluation

Criteria Frequency Percent Cumulative Percent

Performance 12 40.0 40.0
customer Focus 6 20.0 60.0
Technical Competence 4 13.3 73.3
Attendance 3 10.0 83.3
Target Vs. Achievement 2 6.7 90.0
Key Result Areas 1 3.3 93.3
Quality of Output 1 3.3 96.7
3 Point Scheme 1 3.3 100.0
Total 30 100.0
Source – Primary Data
Interpretation
The above table indicates the criteria used in evaluating the employees. 40% of the
companies evaluate their employee with the performance, 20% by the technical
competence, 13.33% by the target v/s achievement, 13.33% by quality of output, 6.67 by
customer focus, 3.33% on attendance, 3.33% by the key result area and 3.33% by the 3
point scale.

Graph 4.4

Criteria used for evaluation

3 Point Scheme

Quality of Output
Key Result Areas

Target Vs. Achieveme

Performance
Attandence

Technical Competence

customer Focus

32
Table 4.5 Rating System used by S / W Companies

Rating Frequency Percent Cumulative Percent

system
Scoring 9 30.0 30.0
Comment 6 20.0 50.0
s
Both 15 50.0 100.0
Total 30 100.0

Source – Primary Data

Interpretation
The above table indicates that 30% of the companies use scoring as the rating scale, 20%
on comments and 50% of the companies use both scoring and comments as rating scale.

Graph 4.5 Rating scale used in software companies

Rating System used by S/W Companies

Scoring

Both

Comments

33
Table 4.6 Percentage if scoring is the Rating Scale

Scoring Frequency Percent Cumulative Percent

Alpha 7 23.3 29.2
Numeric 14 46.7 87.5
Both 3 10.0 100.0
Total 24 80.0
System 6 20.0
30 100.0

Source – Primary Data

Interpretation
From the above table the companies, which follow scoring as rating scale use 23.3% alpha,
46.7% numeric and 10% both alpha and numeric.

Graph 4.6 if scoring is the rating scale

Percentage if scoring is the Rating Scale

Missing
Alpha

Both

Numeric

34
Table 4.7 Feedback to employees after Appraisal

Feedback Frequency Percent Cumulative Percent

Yes 26 86.7 86.7
No 4 13.3 100.0
Total 30 100.0
Source – Primary Data

Interpretation
The above table indicates that 86.67% of the employees appraised received feedback and
13.33% employees did not receive feedback.

Graph 4.7 whether the person being appraised obtain feedback

Feedback toemployees after Appraisal

No

Yes

35
Table 4.8 Percentage of Feedback given to Employees

Feedback Frequency Percent Cumulative Percent

Written 9 30.0 30.0
Oral 7 23.3 53.3
Detailed 5 16.7 70.0
Summarized 3 10.0 80.0
Self-Assessed 3 10.0 90.0
Manger Assessed 3 10.0 100.0
Total 30 100.0
Source – Primary Data
Interpretation
The above table indicates how feedback is given to the employees. Most companies follow
a written feedback with 30.00%, oral being 10%, manager assessed 10%, self assessed
16.67%, detailed 23.33% and summarized being 10%. Almost all the companies that were
sampled followed a combination of more than one type of feedback.

Graph 4.8How feedback is given to the employees

% of feedback given to Employees

Manger Assessed

Self-Assessed Written

Summarized

Detailed
Oral

36
Table 4.9 Percentage of Positive or Negative Feedback

Feedback Frequency Percent Cumulative Percent

Yes 26 86.7 86.7
No 4 13.3 100.0
Total 30 100.0

Source – Primary Data

Interpretation
The above table indicates that 86.67% companies follow the sharing of feedback both
positive and negative in the same meeting while 13.33% said no. adverse was
communicated in writing and good performance is already known.

Graph 4.9 whether the negative and positive feedback is shared with the appraise in the
same meeting.

% of Positive & Negative feedback

No

Yes

37
Table 4.10 Self-Assessment

Self- Assessment Frequency Percent Cumulative Percent

Yes 21 70.0 70.0
No 9 30.0 100.0
Total 30 100.0

Source – Primary Data

Interpretation
The above table indicates that 70% of the companies follow self assessment of an
employee while 30% did not follow.

Graph 4.10 whether the self-assessment of employee is followed in the company or not.

Self-Assessment

No

Yes

38
Table 4.11 Percentage of Company following Self-Assessment.

Self- Assessment Frequency Percent Cumulative Percent

Yes 18 60.0 85.7
No 3 10.0 100.0
Total 21 70.0
System 9 30.0
30 100.0

Source – Primary Data

Interpretation
The above table states the integration of the self-assessment of an employee in the existing
appraisal system, 85.71% said yes and 14.29% said no.

Graph 4.11 If the company follows a self-assessment of an employee, is it integrated in the

appraisal system followed?

%of companyfollowingSelf-Assessment

Missing

Yes

No

39
Table 4.12 Percentage of Compensation increase

Compensation Frequency Percent Cumulative Percent

Yes 25 83.3 83.3
No 5 16.7 100.0
Total 30 100.0
Source – Primary Data
Interpretation
The above table indicates that 83.33% of the companies agreeing that appraisal are related
to compensation increase and 16.67% did not agree.

Graph 4.12 Relation of performance appraisal in compensation increase

Percentage of Compensation increase

No

Yes

40
Table 4.13 Compensation increased and Appraisers set targets

Compensation Frequency Percent Cumulative Percent

Yes 22 73.3 73.3
No 8 26.7 100.0
Total 30 100.0

Source – Primary Data

Interpretation
The above table indicates that 73.33% of the respondents agreeing to setting targets to
employees being appraised while 26.67% said no.

Graph 4.13 The sets target for an employee being appraised

Appraiser's set targets.

No

Yes

41
Table 4.14 Distribution of set target

Distribution Frequency Percent Cumulative Percent

3 Months 2 6.7 9.1
3 - 6 Months 2 6.7 18.2
6 Months 4 13.3 36.4
12 Months 14 46.7 100.0
Total 22 73.3
System 8 26.7
30 100.0
Source – Primary Data

Interpretation

From the above table, half (15) of the companies, the appraiser sets targets for an
employee being appraised for a period of 12 months (50%), in other companies the
targets are set for 6 months (20%), 3-6 (20%) and 3 months (10%).

Graph 4.14 If the appraiser sets targets, for what period the targets are set.

Distribution of set target

Missing 3 Months
3 - 6 Months

6 Months

12 Months

42
Table 4.15 Usage of checklists in Appraisals

Check List Frequency Percent Cumulative Percent

Yes 23 76.7 76.7
No 7 23.3 100.0
Total 30 100.0
Source – Primary Data

Interpretation
The above table indicates that 76.67% of the companies (23) have a checklist for
carrying out appraisals while 23.33% said no. Some companies have a performance
appraisal handbook, which gives the details. One of the companies has an IT Tool as
checklist.

Graph 4.15 Do the companies have a checklist for carrying out appraisal

Usage of checklists in Appraisals

No

Yes

43
Table 4.16 Is Career Planning effective

Career Planning Frequency Percent Cumulative Percent

Yes 19 63.3 63.3
No 11 36.7 100.0
Total 30 100.0
Source – Primary Data
Interpretation

The above table indicates that out of 30 companies 19 companies feel that career
planning place an important role in Performance Appraisal (63.33%) and rest of the 11
companies do not agree with this (36.36%).

Graph 4.16 Effectiveness of 360 degree appraisals.

Is Career Planning effective

No

Yes

44
Table 4.17 Effectiveness of 360 degree appraisal

Parameters Frequency Percent Cumulative Percent

Less than 20% 1 3.3 3.3
20% - 35% 3 10.0 13.3
35% - 50% 5 16.7 30.0
Above 50% 21 70.0 100.0
Total 30 100.0
Source – Primary Data
Interpretation
From the above table, it is understood that when 360° score is implemented as a form
of appraisal so as to realize its effectiveness in a firm, almost above 50% opts it to be
very effective, with a score of 70% while 35-50% and 20%-35% votes its effectiveness
up to a level of 16.67% and 10% respectively and less than 20% declares it least
effective, i.e. 3.33%.
Graph 4.17 The level of effectiveness of 3600 score when implemented as a

form of appraisal.

Effectiveness of 360 degree appraisal

Less than 20%

20%- 35%

35%- 50%

Above 50%

45
Table 4.18 Distribution Of Companies according to the total no. of
employees

Companies Distribution of Companies according to the total no of Employees

Per. Cus. Tech. Atten. Tar. KRA’s Quality 3Point Total
Focus Competence Vs. Of Scheme
Acheiv. Output
Small 9 9
(100) (100)
Medium 3 6 4 3 16
(18.8) (37.5) (25) (18.8) (100)
Large 2 1 1 1 5

(40) (20) (20) (20) (100)

Total 12 6 4 3 2 1 1 1 30

40% 20% 13.3% 10% 6.7% 3.3% 3.3% 3.3% 100%

Note: Figures in brackets indicates percentage to total.

Source – Primary Data

Interpretation
From the above table it can be inferred that the criteria used to evaluate an employee for a
Small Company is performance (100%) but for a Medium Company it is
performance(18.8%),customer focus(37.5%), technical competence(25%) and
attendance(18.8%). And finally for a Large Company the criteria include target Vs.
achievement(40%),Key Result Areas(20%), quality of output(20%) and 3Point
scheme(20%)

46
 Table 4.19 Type of Appraisal System adopted and the frequency of
Appraisal

Appraisal Frequency
Quarterly Half Annually Others Total
Yearly
Manager 11 11
Supervisor
Appraiser (100) (100)
Self-Appraisal 3 3 6

(50) (50) (100)

Open 3 1 4
System
(75) (75) (100)
MBO 3 3

(100) (100)
360 Feedback 2 2

(100) (100)
5Point 1 1
Scale
(100) (100)
3Point Scale 1 1

(100) (100)
4point 1 1
Scale
(100)
(100)
Total 14 6 4 5 30

(46.7) (20) (13.3) (16.7) (100)

Note: Figures in brackets indicates percentage to total.

Source – Primary Data

Interpretation
This table indicates that the Organization carries out appraisals for Quarterly-
Managers/Supervisors/Appraisers, Self-Appraisal- Quarterly as well as Half-yearly(50%).
Open system which is carried out half-yearly and annually. Where as 360Degree feedback,
5Point Scale, 3Point Scale, 4Point Scale follow other Appraisal System

47
Table 4.20 Adoption of Performance Appraisal and percentage of
Feedback given to employees.

Feedback
Companies Written Oral Detailed Summarized Self- Manager Total
Assessed assessed

9 9
Small
(100)
(100)
Medium 7 5 3 1 16

(43.8) (31.3) (18.8) (6.3) (100)

Large 2 3 5

(40) (60) (100)

9 7 5 3 3 3 30
Total
(30) (23.3) (16.7) (10) (10) (10)
(100

Note: Figures in brackets indicates percentage to total.

Source – Primary Data

Interpretation

This table indicates how feedback is obtained from the employee, ie., Oral(23.3%),
Written(30%), Detailed(16.7%), Summarized(10%), Self-Assessed(10%), Manager
Assessed(10%) which holds good for Small, Medium and Large Companies.

48
Table 4.21 Performance Appraisal System and the effectiveness of
360Degree feedback

Effectiveness of 360Degree Appraisal Total

Less Than 20%-35% 35%-50% Above 50%
Appraisal 20%
1 3 5 21 30

(3.3) (10) (16.67) (70) (100)

Total 1 3 5 21 30

(3.3) (10) (16.7) (70) (100)

Note: Figures in brackets indicates percentage to total.

Source – Primary Data

Interpretation
This table shows how effective and feasible the 360Degree Appraisal format applies to the
Companies broken up into segments of : less than 20%, in between 20%-35%, 35%-50%,
Above 50%

49
Table 4.22 The level of effectiveness of 3600 appraisals

Effectiveness Percentage Of Company No. of Company

Less than 20% 3.33% 1
20%-35% 10% 3
35%-50% 16.67% 5
50% and Above 70% 21
TOTAL 100% 30

Source: Primary Data

Ho: The Level of effectiveness of 3600 appraisals is less than 50%

H1: The level of effectiveness of 3600 appraisals is more than or equal to 50%
Level of Significance, 0.05
Z=
p-P

√ PQ
n

p= X /N = 21 / 30

X= number of respondents saying the effectiveness of 3600 appraisals is more than or equal
to 50%
n = total number of respondents ie; 30
P = assumed level of effectiveness i.e., 0.50
Q = 1-P
Q = 1 - 0 .50 = 0.50

Z= 0.7 – 0.5
√ 0.5 * 0.5
30

Z = 2.191

50
Calculated Value |Z| cal: 2.191
Table Value |Z| tab: 1.645

Inference

Since the |Z| cal > Z tab, the researcher has to reject Null hypothesis at 5% level of
significance and the researcher can conclude that the level of effectiveness of 3600
appraisal is more than or equal to 50% (H1).

51
5.1FINDINGS

The following findings have been derived from the study conducted. The most
common appraiser is the manager/supervisor/appraiser. The self-appraisal of an employee
is emphasized. Most of the companies followed a combination of self-appraisal and
manager assessment.

The positive areas/benefits of the appraisal system followed in software companies

are inputs for training and development, career planning and development. There is an
opportunity for free and regular feedback because of the open and transparent system. The
manager appraisal and self-appraisals help in comprehensive results, due to the appraisals
there is scope for the growth of the employee and organization.

There is benefit of the objective setting for next six months. A clear distinction
between performers and non-performers is possible. Appraisal on performance as well as
values makes it a positive area where it makes it punctual and efficient. All variables are
easily quantified into a meaningful exercise and objective with work behavior, helping
qualitative contribution in building culture.

The criteria / measures to evaluate an employee in most of the companies are

technical competence, performance, work knowledge, achievement vs. objectives,
contribution coding standard, common working capital, key result areas set at the
beginning of a specific period forming the result-oriented areas, leadership skills,
teamwork, attitude, communication, value system, conflict management, interpersonal
skills, and dependability forming the behavior-oriented areas in most of the companies. The
rating system used in most of the companies is both scoring and comments with numeric-
type widely used and a few companies use both alpha and numeric type of scoring.

52
 Majority of the companies obtain feedback on the person being appraised. Manager
gives the feedback in most cases while peer and mixed is used in few cases. 360° feedback
is followed in a lesser percentage of companies. Reverse appraisal, slab-not time based is
prevalent in a few companies.

Feedback is given in the written form, manager assessed and self-assessed in most
cases while summarized in few cases. There is a combination of the type of feedback given
to the employers. Both positive and negative feedbacks are shared in the same meeting with
appraise. Almost all companies follow a self-assessment of an employer, which is
integrated, into the appraisal system followed. In majority of the companies, the appraisal
by the manager and self-sources are protected, the manager assessment in a few companies
the sources are protected.

Compensation increase is related to performance and depends on the performance

code/rating given. If the appraise scores beyond the cut-off score based on the grades, a
raise is given. It is related to the increment and project allowance.

The appraiser sets targets for the employee being appraised for a period of six
months, 12 months and three months being lease. Targets are tracked by constant
monitoring, appraisal at the end of the project, input form customer, six months reviews,
weekly reports, by revenues and assignments.

A checklist for carrying out appraisal is followed in many companies. Career

planning is followed in most companies for two to three months, six months, project
completion time, and current estimated potential. The appraisal system is manual with a
few companies following automated and few both.

The benefits of 360° feedback are that it gives an all round perspective restricting
the inconsistency factors that exists in traditional appraisal system. Evaluation and
feedback is more comprehensive and complete. It removes a lot off friction down the line
improving boss-subordinate relation. The limitations because of 360° feedback is not

53
directly appreciated and not well taken in application-oriented areas. Most companies’ have
not implemented the system as it consumes more time.

The 3600 feedback is an appropriate system to use as it helps the appraise to know
the areas to be focused for development. An appropriate system should be an open system,
system that link reward / recognition and pay for performance. It should provide for two-
way feedback, reduce subjectivity judgment factor.

Most of the software companies are in the verge of implementing 360 0 feedback
processes in the near future.

5.2 RECOMMENDATIONS

During the study, distribution of the questionnaire and conducting of personal

interviews did help to arrive at the standards of appraisal system adopted by the software
industry in the city of Bangalore.

Appraisal systems are a very effective means to realize the growth of a company and its
employees. Hence, it is considered to be important for the development of the industry.
From the appraisal systems, the 3600 are the most preferred by a majority of them.

5.3 CONCLUSION

The major implications are to know the different appraisal systems adopted in the
software industry and its level of effectiveness when implemented in the various
organizations. From the research, certain suggestions could be arrived at with the help of
available and relevant data. This in turn could enable one to understand the growth and
development of a company and that of its employees.

The common type of appraisal system is the open system and the management by
objectives; some of the companies followed the 360-feedback process. The point-based
54
system of appraisal is also very popular among the software companies, with the 5-point
scale being widely used. One of the companies followed personal interaction evaluation
personal business commitment program. None of the companies followed one single
system of appraisal. Performance appraisal is followed in most of the companies annually
and half yearly while a less percentage follows the quarterly system.

A combination of half-yearly and annual system is followed. No appraisal system is

free from limitations as it is very subjective. The rating by peer and subordinates is not
followed which is shortcoming. Absence of project end reviews poses as a limitation.
Implementation may not be as planned because of time constraints and span of reports.
Over a period of time, appraisal becomes a ritual because of a lot of distrust and employees
being scared of the process.

55
Ashwathappa K. Human Resource and Personnel Management. TATA McGraw Hill,
1997.

Monappa Arun and Mizra S. Saiyadin. Personnel Management, TATA McGraw Hill,
1997.

Krishna Swami O.R. Methodology of Research in Social Science. Himalaya Publication,

1997.

Rudrebasavaraj M.N. Dynamic Personnel Administration management of Human

Resourse. Himalaya Publishing House, 1996.

Edwards, R.Mark. 360Degree Feedback: The powerful new model for Employee
Assessment and Performance management.US Publication, 1996.

Martin Fischer. Performance Appraisal. Sunday Times Business Skills, 1996.

56
 QUESTIONNAIRE

I am a final year MBA student of Kristu Jayanti College Bangalore, conducting a research
on Appraisal Systems. This project is in partial fulfillment of my MBA program. Your
participation ill be greatly appreciated in this research effort; the responses will be kept
confidential and only be used in an aggregate manner.

Name of the Organization:

Designation:
Total No. Of employees in the Organization

1. Do you appraise an employee by an appraisal system?

Yes No

2. If yes, what is the system of appraisal adopted by your company?

3. How often are appraisals carried out in your organization?

Quarterly Half Yearly
Annually Others (Please Specify)

4. What are the criteria used in your company to evaluate an employee?

Performance Customer Focus
Technical Competence Attendance
Target Vs. Achievement Key Result Areas
Quality of Output 3 Point Scale

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5. What is the rating system used in your company?
Scoring Comments
Both
If scoring is it
Alpha Numeric
Both
6. Do you obtain feedback on the person being appraised?
Yes No

7. How is feedback given to the employees?

Written Oral
Detailed Summarized
Self-Assessed Manager Assessed

8. Do you share both positive and negative feedback with appraise in the same meeting?
Yes No

9. Do you follow a self-assessment of an employee?

s No
a) If yes, is it integrated into the appraisal system you follow?
Yes No

10. Is compensation increase related to an appraisal in any way?

Yes No

11. Does the appraiser set targets for an employee being appraised?
Yes No

If yes, for what period?

3 Months 3-6 Months
6 Months 12 Months

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12. Do you have a checklist for carrying out appraisals?
Yes No
13. Do you follow career planning?
Yes No

14. What would be the level of effectiveness of 360 score when implemented as a form of
appraisal?

Less than 20% 20% - 35%

35% - 50% above 50%

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