Effectiveness of Performance Appraisal

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO
DECLARATION
I, Riju Manaf do hereby declare that this project report in Effectiveness of

Performance Appraisal system in SIDCO submitted by me in partial fulfillment of the
award of degree of MASTER OF BUSINESS ADMINISTRATION of UNIVERSITY OF
KERALA is my original work and has been prepared under the guidance of Assistant
Professor: Shamini Bijoy
I also declare that this project has not been submitted by me fully or partially for the
award of any degree diploma or recognition.
Neyyardam
Riju Manaf
26-05-2011
Reg No.
SMALL INDUSTRIAL DEVELOPMENT CORPORATION
Page 1
ACKNOWLEDGEMENT
As a part of the curriculum of the fourth semester MBA of University of Kerala, it
has been my great pleasure to work in SIDCO. as a project trainee.
This project report has been made possible through the direct and indirect cooperation
of various person to whom I would like to express my deep felt appreciation and gratitude.
First of all I express my profound gratitude to the Lord almighty for the inspiration and
guidance throughout this project.
I hereby extend my sincere gratitude and thanks to the staff of SIDCO for providing
valuable assistance, information and adequate data. I wish to thank Mr. Anil Kumar,
production manager and all other staffs of SIDCO for their kind co-operation for the
completion of the projects.
I am extremely grateful and indebted to Mr. Shamini Bijoy, Assistant Professor,
Kerala Institute of Cooperative Management, for having consented to be my project guide
and without whose co-operation the project would have real difficult to complete.
Finally I am also highly indebted to my parents for the financial as well as emotional
support.
Riju Manaf
CONTENT
Si No
Particulars
Page No
Section-I
(a)
Declaration
1
Page 2
Certificate From the Company
(b)
(c)
(d)
(e)
(f)
(g)
Certificate From the College

Acknowledgement
2
3
4
6
Table Of Content
List Of Table
List Of Figures
Section-II
Chapter 1
Introduction
Chapter 2
Research Methodology
Chapter 3
Industry Profile
Chapter 4
Company Profile
Chapter 5
Literature Review
Chapter 6
Data Analysis And Interpretation
Chapter 7
Finding And Suggestions
Chapter 8
Conclusion
9
12
15
28
41
51
97
101
Section-III
Bibliography
103
105
Appendix
LIST OF TABLES
TABLE
TITLE
PAGE NO
4.1
Distribution of age wise profile of the

Employee
53
4.2
Distribution of Gender of Employee
55
4.3
Distribution of experience of the employee
57
NO
Page 3
4.4
Distribution of Income of Employee
59
4.5
Distribution of familiarity with the present

performance appraisal system
61
4.6
Distribution of employees opinion considered

for appraisal
63
4.7
Distribution of interval at which performance

is measured
65
4.8
Distribution of effectiveness of various

attributes
67
4.9
Distribution of present performance appriasal

system helps to identify the strength and
weakness
69
4.10
Distribution of weakness of the employee is

communicated in a non threatning manner
71
4.11
Distribution of appraisal system provides an

opportunity for self evaluation
73
4.12
Distribution of company used to give

feedback after the appraisal of your
performance
75
4.13
Distribution of present performance appraisal

system is time consuming
77
4.14
Distribution of system gives idea of what is

expected him by the management
79
4.15
Distribution shows Chi-Square test

(Performance appraisal increases employee
motivation)
81
4.16
Distribution of rater have the clear knowledge

of that employees job
82
4.17
Distribution of performance appraisal system

helps to improve performance
84
4.18
Distribution of rewards are given according to

performance
86
4.19
Distribution of satisfaction of employees for

the appraisal system
88
4.20
Distribution of objectives of performance

appraisal are fair and unclear to the
subordinates
90
Page 4
4.21
Distribution of management provides

counseling after the appraisal
92
4.22
Distribution of management provides training

after the appraisal
94
LIST OF FIGURES
FIGURE
TITLE
PAGE NO
4.1
Diagram showing the distribution of age wise

profile of the Employee
54
4.2
Diagram showing the distribution of Gender of

Employee
56
4.3
Diagram showing the distribution of
58
NO
Page 5
experience of the employee

Diagram showing the distribution of Income of
Employee
60
62
4.5
Diagram showing the distribution of familiarity

with the present performance appraisal system
64
4.6

employees opinion considered for appraisal
66
4.7
Diagram showing the distribution of interval at

which performance is measured
68
4.8

effectiveness of various attributes
Diagram showing the distribution of present
performance appriasal system helps to identify
the strength and weakness
70
72
4.10
Diagram showing the distribution of weakness

of the employee is communicated in a non
threatning manner
74
4.11
Diagram showing the distribution of appraisal

system provides an opportunity for self
evaluation
Diagram showing the distribution of company
used to give feedback after the appraisal of
your performance
76
Diagram showing the distribution of present

performance appraisal system is time
consuming
78
Diagram showing the distribution of system

gives idea of what is expected him by the
management
80
Diagram showing the distribution of rater have

the clear knowledge of that employees job
83

performance appraisal system helps to improve
performance
85
4.4
4.9
4.12
4.13
4.14
4.15
4.16
Page 6
Diagram showing the distribution of rewards

are given according to performance
87
89
4.18

satisfaction of employees for the appraisal
system
91
4.19
Diagram showing the distribution of objectives

of performance appraisal are fair and unclear to
the subordinates
management provides counseling after the
appraisal
93

management provides training after the
appraisal
95
4.17
4.20
4.21
CHAPTER I
INTRODUCTION
Page 7
Introduction
Almost every organization in one way or another goes through a periodic ritual,
formally or informally, known as performance appraisal. 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.
Performance appraisal may be defined as a structured formal interaction between a
subordinate and supervisor, that usually takes the form of a periodic interview (annual
or semi-annual), in which the work performance of the subordinate is examined and
discussed, with a view to identifying weaknesses and strengths as well as
opportunities for improvement and skills development.
Page 8
Page 9
Statement of the problem:

Industrial organizations use systematic performance appraisal
procedures for both non-supervisory and managerial employees. Need
for performance appraisal system is as follows:
It helps the supervisor to evaluate the performance of his

employees systematically and assign that work in which they are
best suited.
It helps in guiding and controlling the behavior as well as the work

of the employees.
The ability of the staff is recognised and can be adequately

rewarded.
It provides information to diagnose deficiencies in the employees

skill, knowledge and determine the training and development need.
Maintain fair relationships with groups.
Page 10
CHAPTER II
RESEARCH METHODOLOGY
Research Methodology:
Page 11
It is descriptive study based on the survey method. Data are collected from
respondents through the questionnaire .Descriptive research is used to obtain
information concerning the current status of the phenomena to describe what exists
with respect to variable or conditions in a situation.
A carefully designed questionnaire is used to collect information from the chosen
respondents. The whole universe is made into different strata and the samples are
drawn at random to have a proportionate representation from each stratum. The
questions are included to know about the respondents opinion about the present
performance appraisal system in SIDCO and to know how much it affects their
performance.
Collection of Data:
The research study is a descriptive study based on survey method. The study is
completed by using primary and secondary data.
Primary Data:
For the collection of primary data a set of questionnaires were
used from a sample size of 100 in number. Data also collected through direct
interview.
Secondary Data:
The secondary data needed for the study was collected from the records
and journals provided by the organisation and from the website of the organisation.
Sampling Techniques:
Page 12
SIDCO have been selected since it covers the large population .Only 100
samples from the employees. Primary data were collected by stratified random
sampling techniques.
Scaling Techniques:
The researcher used Likert scale for analyzing the data. The employees were
asked to indicate his or her degree of agreement with the statement. Here five point
scale was used. Likert method of summated rating is the simpler and most frequently
used method to measure attitudes.
Data Analysis and Interpretation:
After the collection of data through questionnaires, the analysis of data and
interpretations are made on the basis of predetermined objectives. Various statistical
tools like pie charts and percentages are used for the analysis of data.
Scope of the study:
The study was limited to the employees of the SIDCO in Trivandrum.
Limitations:
Research was to be conducted maintaining the decorum of the

company.
Employees were busy in their work and thus did not spare much
time to respond openly to the questions asked.
Information and responses given by the respondents may be a

biased due to several reasons.
Limited time span for carrying out study also restricted the research
work.
As company is large, as per their tactics and guiding principle

employees were not ready to disclose confidential facets.
Page 13
CHAPTER III
INDUSTRY PROFILE
3.1. SMALL SCALE INDUSTRY

Page 14
The prospect of development in the sector of small businesses has importance because
of its beneficial impact on the industrial economy of the world. In developing economies
entrepreneurship in small scale industries has special importance in context to employment
potential, equitable distribution of wealth, balanced regional development and growth and
above all, the preservation and development of ancient culture, art and craft.
In India the size of business criterion is used as a base of defining small scale
business units. The definition of the small business in India has changed over years. During
the year 1991, the Government of India has defined Small Scale Industrial Unit (SSI) as a
unit or an undertaking having an investment in plant and machinery of not more than Rs. 60
lakhs and not more than Rs. 75 lakhs in case of ancillary units. Small scale industries, thus,
occupy a prominent position in the development agenda of our country. This is because of
their perceived importance in enhancing forward and backward linkages throughout the
economically diverse sectors of the economy and their potential in generating employment
and incomes.
On the recommendations of the Abid Hussain Committee, the Government of India
raised in 1997 the ceiling for the small scale industries, including ancillary units and exportoriented units up to Rs. 3 crores. Thus, a small scale industrial unit is one engaged in the
production, processing and preservation of goods and rendering of certain services and
having an original investment in plant and machinery not exceeding Rs. 3 crores.
The small scale industrial sector in India comprises of a widely divergent spectrum of
industries, ranging from the micro and rural enterprises- using rudimentary technology, on the
one hand- to modern units using sophisticated technology on the other hand. The sector, as of
today comprises of 3.4 million industrial units spread throughout the country providing
employment to over 19.2 million people. It contributes to the socio- economic development
of the nation is therefore significant. Over 7500 different products for domestic as well as
international markets are produced in these units. Even in the phase of strict and difficult
environmental and other constrains, the sector has been able to register an impressive growth
rate.
The small scale sector today contributes about 40% of the value added in
manufacturing sector and 6.7% of GDP of India. Its share in the national exports stands at
over 34%. The sector accounts for about 95% of the industrial units in the country and thus is
rightly called the growth engine of the Indian economy.
Page 15
The small scale industrial sector is capable of addressing itself to the basic problems
of Indian economy viz. unemployment and disparities in the regional development. The
process of liberalization and economic reforms has created wide range of opportunities for
the development of small scale sector. However, at the same time changes in the world
scenario have thrown up new challenges to the very existence of this sector, as the integration
of global markets has made competitiveness both in terms of quality and cost vitally
important as resorting of quality goods at highly competitive prices has become the order of
the day.
Currently,
knowledge-based
industries
like
Information
Technology
and
Biotechnology are considered to be the thrust areas for the growth. Industrial output is
increasingly becoming knowledge driven, by developing new ideas and products, based on a
strong research- the small scale industry could make a substantial contribution, provided they
are able to develop a good marketing network.
3.1.1 Nature and Characteristics

Page 16
Small scale industries have some special features on its own; the main characteristics
of small scale businesses are as follows:
1) Personal character: In small business concerns, the owner himself is considered as the
manager. He actively participates in all aspects of the business such as planning, organizing,
decision-making, etc.
2) Limited area of operation: The operations of small scale industrial units are generally
localized. It may usually cater to the local and regional demands. Its products may sometimes
be exported.
3) Labour intensive: They are labour intensive and so they can provide plenty of
employment opportunities. Capital investment is limited due to its small size.
4) Closely held: A small scale industrial unit is generally owned by one man. Sometimes it is
owned by a group of persons. These persons supply the required capital.
5) Simple organization: Usually a small scale unit has no division of labour because of its
limited resources. It has only few layers of management.
6) Indigenous resources: These units are indigenous resources. The required materials and
labour are obtained by the firm locally.
7) Limited scale of operation: A small scale unit has a limited share in the market. The size
of the business is small and it has low gestation period.
8) Simple technology: Highly sophisticated technologies and machineries are rarely
employed. Machinery which can be handled manually is more in use under this sector.
9) Limited investment: Capital investment in small scale industries is generally limited
because they are not capital intensive, but labour intensive.
3.1.2. Objectives of Small scale Industrial units

The main objectives of developing small industrial units in India are:
Page 17
To generate large scale employment opportunities with relatively low capital investment.
To eradicate the unemployment problems existing in the country.
To encourage the balanced regional development of the nation.
To bring the backward and rural areas too in the mainstream of national development.
To ensure more equitable distribution of income and wealth.
To improve the standard of living of the people.
To encourage effective mobilization of countrys untapped capital and human resources.
To encourage easy dispersal of industries all over the country.
To reduce the concentration of economic power and wealth in a few.

3.1.3. The importance of promoting Small Scale Industries
The promotion of small scale industries is important due to the following reasons:
As small scale industrial are labour intensive, it provides the possibilities for creating
employment opportunities.
In a country like India where capital resources are scarce, SSIs which has less capital
requirements is more suitable.
They can be successfully operated in rural and backward areas.
They are quick yielding
They can act as a catalyst to enhance the growth of entrepreneurship.
Decentralization of authority is very easy to put into practice in the management of small
scale industrial units.
The industrial policies adopted by the Indian Government maintain certain arguments in
favour of entrepreneurial development in the small scale sector. Thus small scale industrial
units enjoy the following considerations which make them important to the Indian economy:
1) Price preference offered to small scale industrial units:
Page 18
Fore the purchases made by the government, semi government institutions and public
companies for small scale units, the government gives the following price preferences:
15% on the products of industries, which are situated out of the state.
5% on the products of medium scale industries and large scale industries situated inside the
state.
2% additional price to the products of small units with ISI registration.

2) Services rendered by taluk industries offices:
The services rendered by the taluk industries offices are to grant provisional
registration to small scale industrial units, to help them in their coordination and development
etc. these office keep the entrepreneurs of small scale industries well informed about the
incentives and assistance offered to them by the government. They also recommend the
names of small scale units which deserve to get incentives and assistance, to the respective
District Industry Office. They also help in promoting new industry units, and provide
leadership in conducting various development schemes in the taluk level.
3) Bridge Finance
Bridge finance is an interim finance which commercial banks provide to
entrepreneurs on a short term basis to enable them to tide over the delay in getting sanctioned
term loans. In case the borrowing entrepreneurs delays in submitting the necessary document,
the commercial banks and other financial institutions shall also delay in distributing
sanctioned term loans.
4) Green channel clearance:
These are several small scale units each with a capital investment, less than Rs. 10
lakhs. In order to encourage the growth of such industries, the entrepreneurs must get prior
sanction with retrospective effort. Thus the system of getting prior sanction is known as
Green Clearance Channel. Industries which are enlisted as of polluting nature by the
Pollution Control Board shall not get this facility.
5) Tax holiday benefit:
Page 19
New industrial enterprises, including small scale industrial units are exempted from
paying income tax up to 6% of their profits (7.5 in case of companies) from their gross
income. This is according to the section 80J of the Income Tax Act. Now according to section
80HH and 80HHA the entrepreneur of a small scale unit established in a rural area is entitled
to get exempted of 20% of his profits. A small scale unit gets this exemption for ten years
from the actual commencement of production.
6) Different types of government incentives:
The Central government or the State Government or both offer the following
incentives to entrepreneurs of small scale industries:
Export import subsidies and bounties

Interest free loans
Subsidies for research and development
Subsidies for transportation
Interest subsidies
Financial assistance for purchasing power generators
Exemption from property tax
Subsidies to artisans, craftsmen, and entrepreneurs of traditional industries including
handloom industries
Incentives to non- resident Indians who start business on their own
Special incentives to women entrepreneurs
Exemption from paying income tax
3.2. SMALL SCALE INDUSTRY IN INDIA

Since the time of independence, small scale sector in India has been a major
contributor to countrys gross domestic product (GDP). This traditional sector in India which
is considered to have huge growth prospect with its wide range of products, with 40% share
Page 20
in total industrial output and 35% share in exports, the small scale industrial sector in India is
acting as the engine of growth in the new millennium.
The definition of small scale industrial undertakings has changed over years. Initially
they were classified into two categories_ those using power with less than 50 employees and
those not using power with the employ strength being more than 50 but less than 100.
However, the capital resources invested on plant and machinery, building has been the
primary criteria to differentiate the small scale industries from the large and medium scale
industries. An industrial unit can be categorized as small scale unit if it fulfills the capital
investment limit fixed by the Government of India for the small scale sector.
As per the latest definition which is effective since December 21, 1999, for any
industrial unit to be regarded as small scale industrial unit, the following conditions must be
satisfied:
Investment in fixed assets like plant and equipment either held on ownership terms on lease
or on hire purchase should not be more than Rs. 10 million.
However the unit in no way must be owned or controlled or ancillary of any industrial unit.
3.2.1. Performance of Small Scale Industries
Employment
Production
Exports
Opportunities
Economic Indicators
Employment Generation
SSI Sector in India creates largest employment opportunities for the Indian populace,
next only to Agriculture. It has been estimated that a lakh rupees of investment in fixed assets
in the small scale sector generates employment for four persons.
Page 21
Chart number 3.1 Employment in small scale sector

According to the SSI Sector survey conducted by the Ministry and National Informatics
Centre with the base year of 1987-88, the following interesting observations were made
related to employment in the small scale sector.
Generation of Employment - Industry Group-wise

Food products industry has ranked first in generating employment, providing
employment to 4.82 lakh persons (13.1%). The next two industry groups were Non-metallic
mineral products with employment of 4.46 lakh persons (12.2%) and Metal products with
3.73 lakh persons (10.2%). In Chemicals & chemical products, Machinery parts and except
Electrical parts, Wood products, Basic Metal Industries, Paper products & printing, Hosiery
& garments, Repair services and Rubber & plastic products, the contribution ranged from 9%
to 5%, the total contribution by these eight industry groups being 49%. In all other industries
the contribution was less than 5%.
Per unit employment

Per unit employment was the highest (20) in units engaged in Beverages, tobacco &
tobacco products mainly due to the high employment potential of this industry particularly in
Maharashtra, Andhra Pradesh, Rajasthan, Assam and Tamil Nadu. Next came Cotton textile
products (17), Non-metallic mineral products (14.1), Basic metal industries (13.6) and
Electrical machinery and parts (11.2.) The lowest figure of 2.4 was in Repair services line.
Per unit employment was the highest (10) in metropolitan areas and lowest (5) in rural areas.
However, in Chemicals & chemical products, Non-metallic mineral
Page 22
products and Basic metal industries per unit employment was higher in rural areas as
compared to metropolitan areas/urban areas. In urban areas highest employment per unit was
in Beverages, tobacco products (31 persons) followed by Cotton textile products (18), Basic
metal industries (13) and Non-metallic mineral products (12).
Rural: Non-metallic products contributed 22.7% to employment generated in rural
areas. Food Products accounted for 21.1%, Wood Products and Chemicals and chemical
products shared between them 17.5%.
Urban: As for urban areas, Food Products and Metal Products almost equally shared
22.8% of employment. Machinery and parts except electrical, Non-metallic mineral products,
and Chemicals & chemical products between them accounted for 26.2% of employment.
In metropolitan areas the leading industries were Metal products, Machinery and parts except
electrical and Paper products & printing (total share being 33.6%).
State-wise Employment Distribution: Tamil Nadu (14.5%) made the maximum contribution
to employment. This was followed by Maharashtra (9.7%), Uttar Pradesh (9.5%) and West
Bengal (8.5%) the total share being 27.7%. Gujarat (7.6%), Andhra Pradesh (7.5%),
Karnataka (6.7%), and Punjab (5.6%) together accounted for another 27.4%. Per unit
employment was high - 17, 16 and 14 respectively - in Nagaland, Sikkim and Dadra & Nagar
Haveli. It was 12 in Maharashtra, Tripura and Delhi. Madhya Pradesh had the figure of 2. In
all other cases it was around the average of 6.
Production
The small scale industries sector plays a vital role for the growth of the country. It contributes
40% of the gross manufacture to the Indian economy. It has been estimated that a lakh rupees
of investment in fixed assets in the small scale sector produces 4.62 lakhs worth of goods or
services with an approximate value addition of ten percentage points.
The small scale sector has grown rapidly over the years. The growth rates during the
various plan periods have been very impressive.
Page 23
Chart number 3. 2Production from small scale sector

The number of small scale units has increased from an estimated 8.74 lakhs units in the year
1980-81 to an estimated 31.21 lakhs in the year 1999.
From the year 1990-91 this sector has exhibited a comparatively lower growth trend (though
positive) which continued during the next two years. However, this has to be viewed in the
background of the general recession in the economy. The transition period of the process of
economic reforms was also affected for some period by adverse factors such as foreign
exchange constraints, credit squeeze, demand recession, high interest rates, shortage of raw
material etc.
When the performance of this sector is viewed against the growth in the manufacturing and
the industry sector as a whole, it instills confidence in the resilience of the small scale sector.
The estimates of growth for the year 1995-96 have shown an upswing. The growth of SSI
sector has surpassed overall industrial growth from 1991 onwards. The positive trend is likely
to strengthen in the coming years. This trend augurs a bright future for the small scale
industry.
Export contribution
SSI Sector plays a major role in India's present export performance. 45%-50% of the Indian
Exports is being contributed by SSI Sector. Direct exports from the SSI Sector account for
nearly 35% of total exports. The number of small scale units that undertake direct exports
would be more than 5000. Besides direct exports, it is estimated that small scale industrial
units contribute around 15% to exports indirectly. This takes place through merchant
exporters, trading houses and export houses. They may also be in the form of export orders
from large units or the production of parts and components for use for finished exportable
Page 24
goods.
It would surprise many to know that nontraditional products account
for more than 95% of the SSI exports. The exports from SSI sector have been clocking
excellent growth rates in this decade. It has been mostly fuelled by the performance of
garment, leather and gems and jewellery units from this sector.
Chart number 3.3 Export from small sector

The lucrative product groups where the SSI sector dominates in exports are sports goods,
readymade garments, woolen garments and knitwear, plastic products, processed food and
leather products.
Opportunities
Small industry sector has performed exceedingly well and enabled our country to achieve a
wide measure of industrial growth and diversification.
Chart number 3.4 Small scale units

Page 25
By its less capital intensive and high labour absorption nature, SSI sector has made
significant contributions to employment generation and also to rural industrialization. This
sector is ideally suited to build on the strengths of our traditional skills and knowledge, by
infusion of technologies, capital and innovative marketing practices.
The opportunities in the small scale sector are enormous due to the following factors:
- Less Capital Intensive

- Extensive Promotion & Support by the Government
- -Reservation for Exclusive Manufacture by small scale sector
- Project Profile
- Funding
- Finance & Subsidies
- Machinery Procurement
- Raw Material Procurement
- Manpower Training
Economic Indicators
The Small Scale Industry today constitutes a very important segment of the Indian
economy. The development of this sector came about primarily due to the vision of our late
Prime Minister Jawaharlal Nehru who sought to develop core industry and have a supporting
sector in the form of small scale enterprises. Small Scale Sector has emerged as a dynamic
and vibrant sector of the economy.
- Today, it accounts for nearly 35% of the gross value of output in the manufacturing
sector and over 40% of the total exports from the country.
- In terms of value added this sector accounts for about 40% of the value added in the
manufacturing sector.
- The sector's contribution to employment is next only to agriculture in India. It is
therefore an excellent sector of economy for investment
Page 26
CHAPTER IV
COMPANY PROFILE
4.1 HISTORY
Page 27
Kerala SIDCO, a promotional agency for small scale industries, set up as a Public Sector
Undertaking of Government of Kerala which was set up in November, 1975 has four decades
of servicing to its credit. This corporation is rendering assistances to Small Scale Industries
(SSIs ) in the state, like providing infrastructure facilities, distribution of essential raw
materials, marketing of SSI products, undertaking civil and electrical works of state and
central government owned enterprises and offices. Moreover SIDCO is supplies Bitumen to
local bodies as nodal agency and paraffin wax to small scale industrial units.
SIDCO is actually an amalgamation of two former companies namely Kerala State
Small Industries Corporation formed in July 1961 and Kerala Employment promotion
Corporation formed in 1947. The authorized share capital of the company is 13 crores
comprising of 12000 equity shares of Rs.1000 each issued, subscribed and fully paid up
capital is Rs.1244.02 lakhs. At present Kerala SIDCO possess industrial lands in 12 sites,
best suited for industrial purposes. Kerala, the Gods own country is gifted with abundant
natural resources essential for the establishment of industrial units and SIDCO is glad to
promote and purpose some of the plots for allotment for industrial purpose. Kerala SIDCO is
in the lookout for more suitable areas across Kerala which will be made available to investors
suiting their requirements. The main objective of the newly formed corporation which was
clearly delineated in the articles of association is extracted below:
To aid, council, finance and protect and promote the interests of small industries in
the state, stabilizes and run any industrial undertakings, projects or enterprise whether owned
or run by government, statutory body, company ,co-operative society, firm or individuals by
providing them with capital, credit, means, resources, supply of machinery and equipments
on hire purchase procurement and distribution of scare raw materials, advise on import
control policy and export promote procedures in marketing and sales of products,
revitalization of sick units and rehabilitation of defunct units, adequate information and
publicity, construction, maintenance and management and administration of
Industrial
Estates and Development Plots, provision for all infrastructural facilities, technical and
managerial assistance for the prosecution of their work and business.
To promote employment and entrepreneurship among the skilled, semi-skilled,
trained, experienced and educated members of the public by promoting, establishing and
undertaking the development areas and plots, growth centres, common facilities or service
Page 28
centers or other infrastructural works on its own or as agents of government or any other
body, corporate or co-operative society or person.
To promote and operate schemes for industrial development and to develop
entrepreneurship by providing package consultancy services, including pre investment
services and for that purpose to prepare and get or cause to be prepared reports, studies,
surveys, procedures, designs, blue- prints, statistical and other information necessary for
successful implementation of industrial projects.
1.1.1. Organizational functions and divisions
From the inception of the new company, SIDCO was assisting the department of the
implementation of 10,000 industrial programmes.
SIDCO started in a big way with the following divisions
Technical consistency
Research and development
Raw materials
Finance ( Share participation and margin money loans)
Import and export
Marketing
Machinery
Manufacturing
Information and publicity
Page 29
.
1.1.2. Objectives of SIDCO
SIDCO aims at Development of small scale industries in the state by providing:
Infrastructure facilities
Raw material
Marketing products of Small scale industries unit
Promotional activities for SSI products.

1.1.3. Important activities of Kerala SIDCO
Kerala Small Industries Development Corporation is a fully owned Government
Corporation set up to promote small industries in the state of Kerala. This corporation is
rendering assistance to Small Scale Industries(SSIs) in the state, like providing infrastructure
facilities, distribution of essential raw materials, marketing of SSI products, undertaking civil
and electrical works of state and central government owned enterprises and offices. Moreover
Kerala SIDCO supplies Bitumen to local bodies as model agencies and paraffin wax to small
scale industrial units.
At present Kerala SIDCO posses 17 industrial estates and 36
industrial parks, best suited for industrial purpose. SIDCO is in the lookout for more suitable
areas across Kerala, which will be made available to investors suiting their requirements.
In Kerala, SIDCO is the prime institutional agency providing
support facilities to small scale industry. It has established the prime objective of rendering
and promoting schemes for industrial development and to develop entrepreneurship by
proving consultancy services.
Page 30
1.1.4. Major functional divisions

1. Raw Material Division
2. Production division
3. Marketing Division
4. Construction Division
5. Industrial Estate Division
6. Information Technology and Telecommunication Division
7. Import and Export Division
8. Super Check Cell and Quality Inspection
1. RAW MATERIAL DIVISION
Raw material division is engaged in the distribution of various raw aerials to SSI
sector and public sector undertaking in Kerala through the 14 districts Raw material
distribution includes Iron and Steel, Paraffin Wax, Titanium Dioxide, Plastic granules,
cement, a and GI pipes, Aluminium Sheet, coal , petroleum products like lubricants, Rubber
processing oil and Bitumen. Small scale industrial units can purchase the raw materials fr
their units through the raw material depots are reasonable price. The regional office of raw
material division is situating at Kadavanthra, Ernakulam.
Mode of distribution of raw materials:
The raw materials division distributes materials through 14 district level depots listed here
Trivandrum, Kollam, Alleppey
Raw materials distributed:
Iron and Steel, pig iron, paraffin wax, titanium dioxide, plastic raw materials, cement, oil and
lubricants, bitumen , aluminium sheets and sections, Galvanised iron pipes, paints.
Page 31
Field of interest:
In the current scenario of globalization and free trade, this division is looking for
import of industrial raw materials like paraffin wax, furnace oil, fatty acid, cement, iron and
steel, iron scraps, plastic raw materials, bitumen, etc of the imported prices are competitive.
2. PRODUCTION DIVISION
Now 8 production units are functioning under Kerala SIDCO in various districts of
the state. Government departments, public sector undertakings and autonomous bodies are
free to purchase all types of furniture and other equipments produced in these units, without
observing usual tender formalities.
3. MARKETING DIVISION
Marketing division of SIDCO provides assistance to small scale units in canvassing
orders from Government departments and public sector undertakings. Government of Kerala
as per the order No GP (Rt) No 54/2008/SPD dated 12.012.09 entrusted public sector
undertakings, Govt departments local self governments institutions and schools etc can
purchase steel, wooden, hospital furniture and lab equipments from SIDCO without tender
formalities. Government has been renewing the orders from time to time. There are seven
sales emporias and seven marketing centres all over Kerala. SIDCO participates in
exhibitions and trade fairs on behalf of SSI sector for the promotion of their products. Steps
are in progress to market SSI products in food, plastic, leather, Rubber, Electrical in addition
to wood, steel and hospital furniture and laboratory equipments. In the light of the
Government orders from time to time SIDCO can supply furniture to Govt. Departments
without render.
4. CONSTRUCTION DIVISION
The main functions of this division is to undertake construction and maintenance work of
sheds in Industrial Estates, Industrial Development plots, providing infrastructure facilities
for industrial growth centres, setting up of Industrial parks etc.
Page 32
5. INDUSTRIAL ESTATE DIVISION

Kerala SIDCO owns Conventional Industrial Estates and 36 Mini Industrial Estates
which are functioning in different Districts of Kerala. There are 920 factory sheds in which
more than 750 SSI units are functioning. The above said factory sheds were allotted on Lease
basis. A very few sheds are vacant for allotment preferably on Out Right purchase basis. A
very few sheds are vacant for allotment preferably on Out Right purchase basis. In addition to
these factory sheds, Industrial plots are being allotted to the entrepreneurs in Industrial
Estates, Mini Industrial Estates and industrial parks for constructing factory sheds of their
own design to rub industrial units.
Considering the importance of Small Scale Industries, as part of Government policy,
the scheme for setting upon on industrial park in each of the 140 Assembly constituencies of
the State is being implemented by SIDCO. At present 12 sites under possession of which 7
sites are ready for allotment in various districts of Kerala.
6. INFORMATION TECHNOLOGY & 8. TELECOMMUNICATION DIVISION
SIDCO IT &T Division is providing software and hardware solutions to Central and
sate Government Bodies, Autonomous Institutions and SSI units. The areas identified for
business are
-
Development & maintenance of software solutions & websites development.
IT & Telecom products & services
Hardware products & Services
Office Automation products & services
Spares and other consumables

Kerala SIDCO Ltd IT &T Division supplies Hardware (servers, laptops, and Desktop
&computer peripherals) software solutions, Telecom products, Office automation products

Annual Maintenance contract, Third party maintenance contract and repair and maintenance
contract. Kerala SODCO Ltd has empanelled accredited IT & Telecomm firms to execute
projects undertaken. We are fully equipped to execute any IT & Telecom implementation as
per Government Guidelines. Though our business partners we are capable of providing any
solution which the clients demand and with the wide repertoire of qualified service personnel
Page 33
we can provide on all support for all our future clients located through the length and breadth
of the state.
SIDCO have complete the work of digitalization of assembly proceedings of Kerala
Legislative Assembly and web based text books set ordering and individual text book
ordering system of IT at school. The digitalized proceedings of the 1st Kerala Legislative
Assembly (1957-1959) was unveils by Her Excellency Smt. Pratibha Devisingh Patil,
President on India during the closing ceremony of Golden Jubilee celebration of Kerala
Legislative Assembly.
The major projects undertaken by this division involves setting up a state of the art
Telecom city, one stop shop with all telecom facilities and services spread over 25 acres at
Trivandrum, the state capital with intelligent buildings and high tech habitat centre with a
total investment of RS 400 to 450 crores. The goal for Telecom city is to create a state of the
art telecommunication centre that will capitalize all the cutting edge technologies of the
telecommunication industry to position the state for new regional and international
investments. Another prestigious project is the construction of multi-storied commercial
complex at Kochi with a total estimate of Rs 200 cores
8. IMPORT AND EXPORT DIVISION
This is a new division formed with view to give all possible assistance to the SSI
sector by functioning and channelizing agents for the SSI units in Kerala both for their new
material import and for product export. This division is an extension of marketing division.
9. SUPERCHECK CELL AND QUALITY INSPECTION
The super check cell with the vigilance officer, SIDCO, as the convener super check
of the articles supplied by the managing division and the production division with a view to
check and ensure quality of the products/ services and to provide better after sales services
to the customers. A special officer (Quality Inspector) has been appointed exclusively for
quality inspection which will be done after the sale of the products.
4.2 STRATEGIC INTEND

Vision
Serving Small Scale Industry on a Large Scale
Mission
Page 34
To provide full client satisfaction by adding value with respect to service quality and
service experience that goes beyond managing time, cost and quality
Objectives
Development of Small Scale Industries in the state by providing
Infrastructure facilities
Raw material supplies
Marketing SSI products
Promotional activities of SSI products
4.3 Product Profile

Kerala SIDCO ia public undertaking. Government have examined the proposal given
by the company in detail and are pleased to appoint Kerala SIDCO as the agency for
procurement supply for the following item to government department and public sector
undertaking in addition to the items enumerated to the government order.
The company supplies, Water facilities, public water taps, plastic moulded furniture,
pipes and pipe fittings, plastic water tanks and survey equipments. Kerala SIDCO is
functioning 8 production units out there.
These units include Wood working units and 4 Engineering units. Kerala SIDCO is a
sole canalizing agent for procurement supply of selected item manufactured by Small Scale
Industrial Units. SSI products are Steel furniture, hospital furniture, wooden furniture and lab
equipments and chemicals. The raw material includes Iron and steel, paraffin wax, titanium
dioxide, plastic granules, Galvanized Iron Sheets and Pipes, Aluminums sheets, Petroleum
products like Lubricants, Rubber process Oil and Bitumen.
To support Kerala SIDCO as agency for the procurement and supply for the following items
1.
2.
3.
4.
5.
6.
Tarpaulin
Electrical Chock, Condensers, Starters
Control Panels
Lab Chemicals
Aluminums and Steel Products
Man Hole Covers
Page 35
7. Wax Candles
8. Rolling Shutters
9. Voltage Stabilizers
10. Agricultural Tools and Implements
11. Paints and Varnishes
12. Safety Matches
At present 8 production units are functioning. All units are depends on job works. The
government departments can purchase various furniture and equipments produced in these
units without any tender formalities.
The Indian economy is passing through the process of globalization, liberalization and
also more as the privatization. This disreputes the control of the supply of materials among
SSI units. Almost all the items dealt in the division have been de controlled and we have to
trade these like private dealers and to face strict competitors in the market so companys
market share go on diminishing year by year.
In order to give more help and assistance to SSI units to market their products,
government has appointed Kerala SIDCO as a sole canalizing agency for certain selected
items. They have submitted a proposal to government for implementing the common
branding and marketing of SSI products by their company.
Considering the importance of Small Scale Industries in the industrialization of the state
as part of the government policy, the task of setting up an Industrial Park each in the 140
Legislative Constituencies in states is being implemented by Kerala SIDCO. Accordingly
proposals from 36 constituencies were received last year offering land for development as
industrial parks. Through land in 12 sites have been handed over in SIDCO, the land of
Mararikulam have been resumed by government and development works in Industrial Parks
at Shornur and Thiruvarpa were completed. Plots are being allocated to enterprises on 90
years long term lease with suitable lease right and at an yearly rent of Rs. 1/ per cent.
Competitor
There is only one main competitor for Kerala SIDCO is KINFRA (Kerala Infrastructural
Development Corporation). Other competitors include Local Companies and Foreign Multi
National Companies
Page 36
Customer Profile
The main customers of Kerala SIDCO are Government Departments and Public
Undertakings.
The main customers of Raw materials produced by Kerala SIDCO are Iron and Steel
Authority of India, Tata Iton and Steel CompanyLtd, Vishakhapatanam Steel Plant and
Madras Refineries Ltd for Paraffin Wax.
4.4 MANAGEMENT OF THE COMPANY

Organization structure:
The Board of Directors manages the company and Government of Kerala constitutes
them, unless and otherwise determined by the government. The number of members shall
not be less than two or not more than nine. The government appoints all the Directors,
including the full time Managing Director. The organization structure of the company is of
pyramid in shape with the Board of Directors on the top of the cadre. The Managing
Director shall execute the affairs of the company through line managers at different such as
Page 37
finance, marketing, production, etc. the BODs responsibility is the overall control and
supervision of the company. The General Manager shall be in charge of the day-to-day
management of the business of the company and in the absence of the Managing Director ,
he shall take decision on the financial matters in consolidation with the Finance controller.
Board of directors consists of:
The Chairman
Managing Director
The General Manager from SIDBI
Two Non-officials
Additional Secretary from industrial Department
President of Kerala Small Industries Association
Additional Secretary from Finance Department.
ORGANIZATIONAL STRUCTURE
Page 38
Chart number 3.1 showing organizations chart
Page 39
CHAPTER V
LITERATURE REVIEW
Concepts & Review of literature:
Page 40
"Performance, and performance alone,

Dictates the predator in any food chain"
-SEAL Team
INTRODUCTION
The process of HRD helps the employees to acquire or develop
technical, managerial and behavioural knowledge, skill and abilities and
moulds the values, beliefs and attitudes necessary to perform present and
future roles. The process of performance appraisal helps the employee
and the management to know the level of employees performance
compared to the standard level.
Performance appraisal is essential to understand and improve the
employees performance through HRD. In fact, performance is the basis
for HRD. It was viewed that performance appraisal was useful to decide
upon employee promotion/transfer, salary determination and the like. But
the recent developments in human resource management indicate that
performance appraisal is the basis for employee development.
PERFORMANCE APPRAISAL
A poor appraisal is, often worse than no appraisal at all.
Evidence shows that the training of appraisal can make than more
accurate raters.
A performance appraisal (PA) or performance evaluation is a
systematic and periodic process that assesses an individual employees
job performance and productivity in relation to certain pre-established
criteria and organizational objectives.
Performance appraisal is also a technique of
HRD. The performance interview and the process of the performance
analysis help the subordinate to interact closely with his superior. The
interaction helps particularly subordinates learn from his superior the job
related and behavioural related aspects. This process becomes a training
and development and educational process. Thus, performance appraisal is
Page 41
closely related to HRD. In fact, performance appraisal helps employee

development.
Some applications of PA are performance improvement,
promotions, termination, test validation, and more. While there are many
potential benefits of PA, there are also some potential drawbacks.
Before the 1960s, performance evaluations were designed primarily as
tools for the organization to use in controlling employees (Eichel and Bender, 1981).
Eichel and Bender go on to state that past performance was used to guide or justify
managements actions in dealing with the employee. At the time, according to these
authors, performance appraisal provided the basis for salary, retention, discharge, or
promotional decisions.
Over the past quarter century, the purpose of performance appraisal has
shifted from tools supporting the activities of management to an increasing trend
towards personnel development (Eichel and Bender,1984).
Vroom (1990) states that formal performance appraisal plans can be
designed to meet the following key needs: (a) the organization; (b) the supervisor; and
(c) the employee. He stresses the need for effective evaluation as it can effectively
serve these critical areas.
ICMA (2005) states that almost all employees are eager to know how
well they are doing in their jobs, but many dread the meetings in which their
performance is to be discussed.
Page 42
Diagrammatic Representation of Performance Appraisal
Objectives of Performance Appraisal:
To enable the employees towards achievement of superior standards of work

performance.
To help the employees in identifying the knowledge and skills required for performing
the job efficiently as this would drive their focus towards performing the right task in
the right way.
Boosting the performance of the employees by encouraging employee empowerment,

motivation and implementation of an effective reward mechanism.
Promoting a two way system of communication between the supervisors and the
employees for clarifying expectations about the roles and accountabilities,
communicating the functional and organizational goals, providing a regular and a
transparent feedback for improving employee performance and continuous coaching.
Identifying the barriers to effective performance and resolving those barriers through
constant monitoring, coaching and development interventions.
Creating a basis for several administrative decisions strategic planning, succession

planning, promotions and performance based payment.
Page 43
Promoting personal growth and advancement in the career of the employees by

helping them in acquiring the desired knowledge and skills.
Advantages of Performance Appraisal:

It is said that performance appraisal is an investment for the company
which can be justified by following advantages:
1. Promotion: Performance Appraisal helps the supervisors to chalk
out the promotion programmes for efficient employees. In this
regards, inefficient workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out
compensation packages for employees. Merit rating is possible
through performance appraisal. Performance Appraisal tries to give
worth to a performance. Compensation packages which includes
bonus, high salary rates, extra benefits, allowances and prerequisites are dependent on performance appraisal. The criteria
should be merit rather than seniority.
3. Employees Development: The systematic procedure of
performance appraisal helps the supervisors to frame training
policies and programmes. It helps to analyse strengths and
weaknesses of employees so that new jobs can be designed for
efficient employees. It also helps in framing future development
programmes.
4. Selection Validation: Performance Appraisal helps the supervisors
to understand the validity and importance of the selection
procedure. The supervisors come to know the validity and thereby
the strengths and weaknesses of selection procedure. Future
changes in selection methods can be made in this regard.
5. Communication: For an organization, effective communication
between employees and employers is very important. Through
Page 44
performance appraisal, communication can be sought for in the

following ways:
a. Through performance appraisal, the employers can
understand and accept skills of subordinates.
b. The subordinates can also understand and create a trust and
confidence in superiors.
c. It also helps in maintaining cordial and congenial labour
management relationship.
d. It develops the spirit of work and boosts the morale of
employees.
All the above factors ensure effective communication.
6. Motivation: Performance appraisal serves as a motivation tool.
Through evaluating performance of employees, a persons efficiency
can be determined if the targets are achieved. This very well
motivates a person for better job and helps him to improve his
performance in the future.
Definitions:
Denhardt (1991) defines performance appraisal as a specific evaluation with respect
to an individuals progress in completing specified tasks.
Page 45
Devries, Morrison, Shullman and Gerlach (1981) define performance appraisal as a

process by which an organization measures and evaluates an individual employees
behaviour and accomplishments for a finite period.
Moulder (2001) states that performance appraisals are valued for defining
expectations and measuring the extent to which expectations are met. She goes on to
state that appraisals can make clear to employees where they are having success and
where they need to improve performance. Moulder indicates that appraisals are useful
in setting goals and in fostering improved communications among work groups and
between employees and supervisors.
Dale Yodder defines performance appraisal refers to all formal procedure
used in working org to evaluate personalities and contribution and
potential of group members.
Edward Flippo defines performance appraisal is the systematic periodic
and an impartial rating of an employees excellence in matters pertaining
to his present job and his potential for better job.
Dale.S.Beach definesperformance appraisal is the systematic evaluation
of individuals with respect to his or her performance on the job and his or
her potential for development.
Performance appraisal methods

Page 46
Performance appraisal methods include 10 appraisal methods / types as follows:

1. Critical incident method
This format of performance appraisal is a method which is involved identifying and
describing specific incidents where employees did something really well or that needs
improving during their performance period.
2. Weighted checklist method
In this style, performance appraisal is made under a method where the jobs being evaluated
based on descriptive statements about effective and ineffective behavior on jobs.
3. Paired comparison analysis
This form of performance appraisal is a good way to make full use of the methods of options.
There will be a list of relevant options. Each option is in comparison with the others in the
list. The results will be calculated and then such option with highest score will be mostly
chosen.
4. Graphic rating scales
This format is considered the oldest and most popular method to assess the employees
performance. In this style of performance appraisal, the management just simply does checks
on the performance levels of their staff.
5. Essay Evaluation method
In this style of performance appraisal, managers/ supervisors are required to figure out the
strong and weak points of staffs behaviours. Essay evaluation method is a non-quantitative
technique. It is often mixed with the method the graphic rating scale.
6. Behaviourally anchored rating scales
Page 47
This formatted performance appraisal is based on making rates on behaviors or sets of

indicators to determine the effectiveness or ineffectiveness of working performance. The
form is a mix of the rating scale and critical incident techniques to assess performance of the
staff.
7. Performance ranking method
The performance appraisal of ranking is used to assess the working performance of
employees from the highest to lowest levels. Managers will make comparisons of an
employee with the others, instead of making comparison of each employee with some certain
standards.
8. Management by Objectives (MBO) method
MBO is a method of performance appraisal in which managers or employers set a list of
objectives and make assessments on their performance on a regular basis, and finally make
rewards based on the results achieved. This method mostly cares about the results achieved
(goals) but not to the way how employees can fulfil them.
9. 360 degree performance appraisal
The style of 360 degree performance appraisal is a method that employees will give
confidential and anonymous assessments on their colleagues. This post also information that
can be used as references for such methods of performance assessments of 720, 540, 180
10.Forced ranking (forced distribution)
In this style of performance appraisal, employees are ranked in terms of forced allocations.
For instance, it is vital that the proportions be shared in the way that 10 or 20 % will be the
highest levels of performances, while 70 or 80% will be in the middle level and the rest will
be in the lowest one.
Performance appraisal system practiced in SIDCO

Page 48
The Performance appraisal system practiced in SIDC

in 360 Degree Performance Appraisal. An appraisal made by top
management, immediate superior, peers, subordinates, self and
customers is called 360 Degree Appraisal. Here, the performance of the
employee or manager is evaluated by six parties, including himself. So, he
gets a feedback of his performance from everyone around him. This
method is very reliable because evaluation is done by many different
parties. These parties are in the best position to evaluate the employee or
manager because they are continuously interacting and working with him.
This method is mostly used to evaluate the performance of the
employees. However, it is also used to evaluate other qualities such as
talents, behaviour, values, ethical standards, tempers, loyalty, etc.360
degree appraisal was first developed by General Electric (GE), USA in
1992. Today it is used by all major organisations. In India, it is used by
Crompton Greaves, Wipro, Infosys, Reliance Industries, etc.
Six Parties In 360 Degree Appraisal
Page 49
The six parties involved in 360 degree appraisal are :-
1. Top Management
The top management normally evaluates the middle level managers.
However, in a small organization, they also evaluate the performance of
the lower level managers and senior employees.
2. Immediate Superior
The immediate superior is in a very good position to evaluate the
performance of his subordinates. This is because they have direct and
accurate information about the work performance of their subordinates.
3. Peers / Co-workers
Peer or colleagues also evaluate each other's performance. They work
continuously with each other, and they know each other's performance.
Peer evaluation is used mostly in cases where team work is important.
4. Subordinates
The Subordinates can also evaluate the performance of his superior. Nowa-days students are asked to evaluate the performance of their teachers.
5. Self Appraisal
In the self-appraisal, a person evaluates his own performance. He should
be honest while evaluating himself. This results in self-development.
6. Customers
Customers can also evaluate the performance of the employees who
interacts with them. This evaluation is best because it is objective. It is
also given a lot of importance because the customer is the most important
person for the business. Organizations use customer appraisals to improve
the strengths and remove the weaknesses of their employees. In addition
to these six parties, appraisal can also be done by an Appraisal Panel. This
panel consists of 5 to 6 different types of members. Outside Consultants
are also used for conducting appraisals. In some cases, Personnel
Department also conducts an appraisal of employees and managers.
Page 50
Objectives of the Study:
To study the effectiveness of the current performance appraisal system in
SIDCO
To assess, whether the current performance appraisal system motivates the
employee.
To find out the opinion of the employees about the present system.
To find out whether performance appraisal system identifies any training
needs & development.

To propose suitable suggestion, if required, regarding the performance
appraisal system
Page 51
CHAPTER VI
DATA ANALYSIS
&
INTERPRETATION
Data Analysis and Interpretation
Page 52
The term analysis refers the computation of certain measures along with
searching for patterns of relationships that exists among data groups. Statistical
tools used in this study for data analysis are
a) Percentage analysis: Percentage analysis is a useful tool for data analysis
Percentage analysis is calculated as follows
Percentage analysis: Number of respondents
X 100
Total number of respondents

b) Diagrams: Diagrams are used to represent the data diagrammatically. It gives a
clear idea about information. Here I have used bar diagrams to represent the raw
data.
Page 53
Table 4.1
Distribution of age wise profile of the Employee
Sl. No
Age
No: of
Percentage (%)
Respondents
1
20-30 yrs
30-40 yrs
12
12
40-50 yrs
46
46
50-60 yrs
42
42
Total
100
100
Table Source: Survey Data
Interpretation:
The above table shows that 46 percent of the employee belongs
to the age group of 40-50 yrs, 42 percent belongs to 50-60 yrs and the
rest belongs to 30-40 yrs.
Page 54
Figure 4.1
Distribution showing the distribution of age wise profile of the

Employee
Age
12%
20-30 yrs
42%
30-40 yrs
40-50 yrs
46%
50-60 yrs
Page 55
Table 4.2
Distribution of Gender of Employee
Sl.
Gende
No. of respondents
Percentage (%)
No
Male
46
46
Female
54
54
Total
100
100
Interpretation:
The above table shows that 54 percent of the employee is
Female and the rest is Male employee.
Page 56
Figure 4.2
Diagram showing the distribution of Gender of Employee
Gender
54%
46%
Male
Female
Page 57
Table 4.3
Distribution of experience of the employee
Sl. No
Experience
No. of
Percentage (%)
1-10 yrs
respondents
6
10-20 yrs
34
34
20-30 yrs
60
60
Total
100
100
Interpretation:
The above table shows that 60 percent of the employees have
experience between 20-30 yrs, 34 percent have 10-20 yrs and rest have
1-10 yrs.
Page 58
Figure 4.3
Diagram showing the distribution of experience of the employee
Experiance
6%
1-10 yrs
34%
60%
10-20 yrs
20-30 yrs
Page 59
Table 4.4
Distribution of Income of Employee

Sl. No
Income (Rs)
No. of respondents
Percentage(%)
Below 10000
16
16
10000-20000
20
20
20000-30000
40
40
Above 30000
24
24
Total
100
100
Interpretation:
The above table shows that 40 percent of the employee have income between Rs
20000-30000.
Page 60
Figure 4.4
Diagram showing the distribution of Income of Employee
Income
16%
24%
Below 10000
20%
10000-20000
20000-30000
Above 30000
40%
Page 61
Table 4.5
Distribution of familiarity with the present performance appraisal

system
Sl.
Response
No. of respondents
Percentage (%)
Yes
80
80
No
20
20
Total
100
100
No
Interpretation:
The above table shows that 80 percent of the employees have
familiar with the present performance appraisal system.
Page 62
Figure 4.5
Diagram showing the familiarity of the present performance

appraisal system
Familiarity
20%
Yes
No
80%
Page 63
Table 4.6
Distribution of employees opinion considered for appraisal.
Sl.
Response
No. of respondents
Percentage (%)
Yes
70
70
No
30
30
Total
100
100
No
Interpretation:
The above table shows that 70 percentage agree to the
statement, 30 percentage disagree to the statement and other reluctant
to say their opinion.
Page 64
Figure 4.6
Diagram showing the distribution of employees opinion considered

for appraisal.
Opinion
30%
Yes
No
70%
Page 65
Table 4.7
Distribution of interval at which performance is measured
Sl. No
Interval
No. of respondents
Percentage(%)
3 Months
6 Months
1 year
100
100
Others (Specify)
Interpretation:
The above table shows that 100 percentage employees performance is measured at a
year.
Page 66
Figure 4.7
Diagram showing the interval at which the performance is measured
Interval
3 Months
6 Months
1 Year
Others (specify)
100%
Page 67
Table 4.8
Distribution of effectiveness of the various attributes in

the peformance appraisal.
Sl. No
Opinion
No. of
Percentage(%)
respondents
1
Strongly
Agree
Agree
70
70
Neutral
20
20
Disagree
Strongly
100
100
Disagree
6
Total
Interpretation:
The above table shows that 78 percent employees
agrees that the various attributes used in the appraisal are effective.
Figure 4.8
Page 68
Diagram showing the distribution of efectiveness of the various

attributes in the peformance appraisal
Effectveness of Various attributes
20%
2% 8%
Strongly Agree
Agree
Neutral
Disagree
70%
Strongly Disagree
Page 69
Table 4.9
Distribution of present performance appriasal system

helps to identify the strength and weakness.
Sl. No
Opinion
No. of respondents Percentage

(%)
Strongly
12
12
Agree
2
Agree
62
62
Neutral
18
18
Disagree
Strongly
100
100
Disagree
6
Total

Interpretation:
Page 70
The above table shows that 74 percent agree to the statement,

18 percent reluctant to say the opinion
Figure 4.9
Diagram showing the distribution of present performance appriasal

system helps to identify the strength and weakness.
Identify strength and weakness
8%
12%
Strongly Agree
Agree
18%
Neutral
Disagree
62%
Strongly Disagree
Page 71
Table 4.10
Distribution of weakness of the employee is communicated in a nonthreatening manner.
Sl.No
Opinion
No. of respondents Percentage

(%)
Strongly
14
14
Agree
2
Agree
58
58
Neutral
16
16
Disagree
12
12
Strongly
100
100
Disagree
6
Total
Interpretation:
Page 72

16 percent reluctant to say their opinion and rest disagree to the
statement.
Figure 4.10
Diagram showing the distribution of weakness of the

employee is communicated in a non-threatening manner.
Weakness of the employee is communicated in non-threatnin
12%
14%
Strongly Agree
Agree
16%
Neutral
Disagree
58%
Strongly Disagree
Page 73
Table 4.11
Distribution of appraisal system provides an opportunity for self

evaluation.
Sl.
Response
No. of respondents
Percentage (%)
Yes
88
88
No
12
12
No
100
100
No
Comments
4
Total
Interpretation:
The above table shows that 88 percent of the employee agrees
to the statement, 12 percent reluctant to say their opinion.
Page 74
Figure 4.11
Diagram showing the distribution of appraisal system

provides an opportunity for self evaluation.
Page 75
Opprtunity for self evaluation
12%
Yes
No
No comments
88%
Page 76
Table 4.12
Distribution of company used to give feedback after the appraisal of

your performance.
Sl.
Response
No. of respondents
Percentage (%)
Yes
84
84
No
16
16
Total
100
100
No
Interpretation:
16 percent to their opinion.
Page 77
Figure 4.12
Diagram showing the distribution of company used to give feedback

after the appraisal of your performance.
Feedback after appraisal
16%
Yes
No
3rd Qtr
84%
Page 78
Table 4.13
Distribution of present performance appraisal system is

time consuming.
Sl.
Response
No. of respondents
Percentage (%)
Yes
48
48
No
52
52
Total
100
100
No
Interpretation:
The above table shows that 52 percent says that the
appraisal is not time consuming, 48 percent says that the
appraisal is time consuming.
Page 79
Figure 4.13
Diagram showing the distribution of present performance appraisal

system is time consuming.
Time consuming
52%
48%
Yes
No
Page 80
Table 4.14
Distribution of system gives idea of what is expected of him by the

management
Sl. No
Opinion
No. of
Percentage (%)
respondents
1
Strongly
13
13
Agree
2
Agree
67
67
Neutral
15
15
Disagree
Strongly
100
100
Disagree
6
Total
Interpretation:
Page 81
The above table shows that 80 percent agree to the statement

and 15 percent reluctant to say their opinion.
Page 82
Figure 4.14
Diagram showing the distribution of system gives idea of what is

expected of him by the management
Idea of what is expected of him by the mgt
15%
6%
13%
Strongly Agree
Agree
Neutral
Disagree
67%
Strongly Disagree
Page 83
TESTING THE EFFECTIVENESS OF PERFORMANCE APPRAISAL ON

EMPLOYEE MOTIVATION
USING CHI-SQUARE TEST
Ho: {There is effect of performance appraisal on employee motivation}
H1: {There is no effect of performance appraisal on employee motivation }
TABLE 4.15
SI No
Employees
Observed
Expected
0-E
(0-E)2
(0-E)2/E
Opinion
Frequenc
Frequency
Strongly
y (0)
25
(E)
20
25
1.25
agree
Agree
45
20
25
625
31.25
Neither
20
20
disagree
Disagree
10
20
-10
100
Strongly
20
-20
400
20
agree nor
disagree
(0-E)2/E = 57.5
Calculated Value = 57.5
Degree of freedom = 0.05
Level of Significance = (n-r-1) = 5-1 = 4
Table value = 9.488
Here, Calculated Value > Tabled Value
Interpretation:
Since the calcuated value is greater than tabled value, the
hypothesis is rejected. There is an effect of performance appraisal on
employee motivation.
Table 4.16
Page 84
Distribution of rater have clear knowledge of that employees job.
Sl.
Response
No. of respondents
Percentage (%)
Yes
80
80
No
20
20
Total
100
100
No
Interpretation:
20 percent reluctant to say their opinion and the rest disagree.
Page 85
Figure 4.15
Diagram showing the distribution of rater have clear

knowledge of that employees job.
Knowledge of the rater towards employee's job
4%
Yes
No
96%
Page 86
Table 4.17
Distribution of performance appraisal system helps to

improve performance.
Sl.
Response
No. of respondents
Percentage (%)
Yes
88
88
No
12
12
Total
100
100
No
Interpretation:
The above table shows that 88 percent agree to the statement and 12
percent disagree to the statement.
Page 87
Figure 4.16
Diagram showing the distribution of performance appraisal system

helps to improve performance.
Appraisal system helps to improve the performance
12%
Yes
No
88%
Page 88
Table 4.18
Distribution of rewards are given according to performance.

Sl.
Response
No. of respondents
Percentage (%)
Yes
52
52
No
48
48
Total
100
100
No
Interpretation:
The above table shows that 52 percent agree to the statement
and 48 percent disagree.
Page 89
Figure 4.17
Diagram showing the distribution of rewards are given according to

performance.
Rewards are given according to performance
6%
Yes
No
94%
Page 90
Table 4.19
Distribution of satisfaction of employees for the appraisal system.
Sl. No
Opinion
No. of
Percentage (%)
respondents
1
Highly
satisfied
2
Satisfied
62
62
Neutral
21
21
Dissatisfied
Strongly
100
100
Dissatisfied
6
Total
Interpretation:
The above table shows that 68 percent satisfied to the
statement, 21 percent reluctant to say opinion and rest dissatisfied to
this.
Figure 4.18
Page 91
Diagram showing the distribution of satisfaction of employees for the

appraisal system.
Satisfaction level of employee
9% 2% 6%
Highly satisfied
Satisfied
21%
Neutral
Dissatisfied
62%
Strongly Dissatisfied
Table 4.20
Page 92
Distribution of objectives of performance apprisal are fair and clear

to the subordinates.
Sl.
Response
No. of respondents
Percentage (%)
Yes
80
80
No
20
20
Total
100
100
No
Interpretation:
The above table shows that 80 percent employees agree to the
statement and 20 percent employees disagree to the statement.
Figure 4.19
Page 93
Diagram showing the distribution of objectives of performance

apprisal are fair and clear to the subordinates.
Objectives are fair and clear to the subordinates

20%
Yes
No
80%
Table 4.21
Page 94
Distribution of management provides counseling after the appraisal.

Sl.
Response
No. of respondents
Percentage (%)
Yes
50
50
No
50
50
Total
100
100
No
Interpretation:
The above table shows that 50 percent agree and 50 percent disagree to the
statement.
Figure 4.20
Page 95
Diagram showing the distribution of management provides

counseling after the appraisal.
Provides counselling after appraisal to the employees
Yes
No
50%
50%
Table 4.22
Page 96
Distribution of management provides training after the appraisal.

Sl.
Response
No. of respondents
Percentage (%)
Yes
76
76
No
24
24
Total
100
100
No
Interpretation:
The above table shows that 76 percent agree to the satement, 24
disagree to the statement.
Page 97
Figure 4.20
Diagram showing the distribution of management provides training

after the appraisal.
Provides training after the appraisal
24%
Yes
No
76%
Page 98
CHAPTER VII
FINDINGS & SUGGESTIONS
Page 99
FINDINGS
Performance appraisal has also been called an audit function of an organization regarding
the performance of individuals, groups and entire divisions. Performance appraisal also
helps in assigning right job to right person and thus prevents the organization from money
drain in human resources. The following are findings from the study conducted at SIDCO.
1. An attempt to the age in the study reveals that 46 percent of the

employees belongs to 40-50 yrs.
2. An attempt to the gender in the study reveals that 54 percent of the
employee belongs to female.
3. Regarding the experience of the employee, the study reveals that 60
percent of the employees have 20-30 yrs of experience.
4. Regarding the income of the employee, the study reveals that 40
percent of the employees have salary between Rs. 20000-30000.
5. An analysis of the familiarity with the present appraisal system reveals
that 80 percent of the employees are familiar.
6. An analysis on the employee opinion considered for appraisal reveals
that 70 percent agree to it.
7. An analysis of the attributes rated in the appraisal system shows, 78
percent agree that it helps to reveal the performance of the employee.
8. An analysis of whether the appraisal helps to identify the strength and
weakness, 74 percent agree to it.
9. An analysis on weakness of the employee communicated in nonthreatening manner reveals that 72 percent agree to it.
10. Regarding the self evaluation, the study reveals that 88 percent agree
that the appraisal help them in self evaluation.
11. Regarding the feedback, the study reveals that 84 percent agree that
feedback is given to them after appraisal.
12. Regarding the time consumption of the system, the study reveals that
52 percent disagree that it is time consuming.
13. The Chi-Square test shows that there is no effect of performance
appraisal on employee motivation
14. Regarding the raters knowledge of employees job, the study reveals
that 80 percent agree that rater have clear knowledge.
Page 100
15. Regarding the performance improvement, the study reveals that 88

percent agree that the appraisal system helps to improve their
performance.
16. Regarding the rewards, the study reveals that only 52 percent agree
that rewards are given according to the performance.
17. An analysis on whether they are satisfied with the appraisal system
shows that 68 percent are satisfied.
18. An analysis on whether the management provides counseling after the
appraisal reveals that 50 percent agree and 50 percent disagree to it.
19. Regarding the training after the appraisal, the study reveals that 76
percent agree that the management provides training if required.
SUGGESTIONS
The employees are not that much confident about the fact that their performance is
been measured correctly, that is because of the lack of transperancy from the part
of the top management. Hence they should take enough action so that the
Page 101
subordinates does not have feeling that the wrong person is given merit, which will
let down their morale and performance.

Employee participation is minimum in the performance mangement and the
performance appraisal system in the company. Hence I suggest them to make sure
enough participation of employees in such decision making through meetings or
opinion polls etc.

The company should give achiveble goals to the employees.
Many employees feels that proper feedback is not given after the appraisal. To
improve performance, feedback is necessary so management should take necessary
steps for that.

To improve performance, motivation is a factor. Most of the employees have a
positive attitude towarsd learning new things. Mangement should utilise this and
motivate the employee.

Previously SIDCO was using Check List method for appraisal. Recently they have
introduced 360 degree performance appraisa. Since it is new method for the
employees, mangement should take steps to educate them.
Page 102
CHAPTER VIII
CONCLUSION
Conclusion
The study reveals that Apprisal system in SIDCO is somewhat satisfactory. Most of
the employees are familiar with the present apprasial system in the organisation. They
have the opinion that appraisal help to improve their performance. Main problem
Page 103
revealed through the study was that, employees are not confident that their
performance is been measured correctly. And other one, employee participation is
minimum in the performance mangement and the performance appraisal system in the
company.Management should take proper steps to overcome these issues.
Page 104
BIBLIOGRAPHY
BIBLIOGRAPHY
1. Chhabra TN : Principles & Practice of Management, Dhanpat Rai &

co.(P) Ltd 2008, P-394
2. Khanka SS : Human resource Management, S. Chand & Company
Ltd 2008, P-343
Page 105
3. Khanka SS : Organisational Behaviour, S. Chand & Company Ltd

2009, P-201
4. Gupta C.B: Human Resource Management ,New Delhi ,Sultan &
Chands Publication , 2007
5. Kothari C.R : Research Methodology , New Delhi: New age
international Publisher ,2006
6. Shekaran, Uma: Research Methods for Business, New Delhi, John
Willy India Privatr Ltd, 2004
7. Luthans Fred : Organizational Behaviour, Tata Mcgraw Hill, 2004.
8. Aswathappa.K : Human Resource Management and Personnel
Management, Newdelhi, Tata Mcgraw Hill, 2004.
Page 106
APPENDIX
QUESTIONNAIRE:
A study on the Effectiveness of the Performance Appraisal System in

SIDCO
Page 107
Sir/Madam
I, Riju Manaf doing MBA program in University of Kerala. As a part of my

academic course I am required to do a project. I present before you a questionnaire to be
answered by you for the purpose of my study. The data collected from you will be strictly
kept confidential and is used only for study purpose. I will be grateful if you kindly spend
some time to fill up this questionnaire.
[Instruction:-Put tick ( ) mark for appropriate response and detail if necessary on space
provided]
1) Name:
2) Age: 20-30yrs
30-40yrs
3) Gender: Male
Female
40-50yrs
4) Experience: 1- 10 yrs
10-20yrs
5) Income: Below10000
10,000-20,000
50-60yrs
20-30yrs
20,000-30,000
Above 30000
6) Are you familiar with the present performance appraisal system?

Yes
No
7) Do you feel that your opinion are considered for appraising the performance
Yes
No
8) Interval at which performance is measured

3 Month
6 Month
l year
Others (Specify)................................
9) Are you agreeing that the various attributes rated in the present appraisal system are
effective?
Strongly agree
Agree
Neutral
Disagree
Strongly Disagree
10) Current performance appraisal system helps you to identify your strength and weakness.
Strongly agree
Agree
Neutral
Disagree
Strongly Disagree
11) Do you feel that the weakness of an employee is communicated in a non-threatening

manner.
Strongly agree
Agree
Neutral
Disagree
Strongly Disagree
Page 108
12) Do you feel that the performance appraisal system provides an opportunity for self
evaluation.
Yes
No
No Comments
13) Do you feel that the company used to give feedback after the appraisal of your
performance.
Yes
No
14) Do you feel that the current performance appraisal system is too time consuming.
Yes
No
15) The present appraisal system gives each appraise an idea of what is expected of him by
the management
Strongly agree
Agree
Neutral
Disagree
Strongly Disagree
16) The performance appraisal system in SIDCO increases employee motivation

Strongly agree
Agree
Neutral
Disagree
Strongly Disagree
17) Do you feel that the rater have clear knowledge of that employees job.
Yes
No
18) Do you think that the performance appraisal system helps to improve your performance?
Yes
No
19) Do you feel that the rewards are given according to your performance.
Yes
No
20) Are you satisfied with the current performance appraisal system?
Highly satisfied
Satisfied
Neutral
Dissatisfied
Strongly Dissatisfied
21) Do you feel that the objectives of performance appraisal are fair and clear to the
subordinates?
Yes
No
22) Do you feel that the management provides counselling, if required, after the performance
appraisal for employees?
Yes
No
Page 109
23) Do you feel that the management provides training, if required, after the performance
appraisal for employees?
Yes
No
24) Any suggestion

........................................................................................................................
Page 110

Effectiveness of Performance Appraisal

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A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

I, Riju Manaf do hereby declare that this project report in Effectiveness of

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

Certificate From the Company

Certificate From the College

Data Analysis And Interpretation

Finding And Suggestions

Distribution of age wise profile of the

Distribution of Gender of Employee

Distribution of experience of the employee

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

Distribution of Income of Employee

Distribution of familiarity with the present

Distribution of employees opinion considered

Distribution of interval at which performance

Distribution of effectiveness of various

Distribution of present performance appriasal

Distribution of weakness of the employee is

Distribution of appraisal system provides an

Distribution of company used to give

Distribution of present performance appraisal

Distribution of system gives idea of what is

Distribution shows Chi-Square test

Distribution of rater have the clear knowledge

Distribution of performance appraisal system

Distribution of rewards are given according to

Distribution of satisfaction of employees for

Distribution of objectives of performance

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

Distribution of management provides

Distribution of management provides training

Diagram showing the distribution of age wise

Diagram showing the distribution of Gender of

Diagram showing the distribution of

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

experience of the employee

Diagram showing the distribution of familiarity

Diagram showing the distribution of

Diagram showing the distribution of interval at

Diagram showing the distribution of

Diagram showing the distribution of weakness

Diagram showing the distribution of appraisal

Diagram showing the distribution of present

Diagram showing the distribution of system

Diagram showing the distribution of rater have

Diagram showing the distribution of

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

Diagram showing the distribution of rewards

Diagram showing the distribution of

Diagram showing the distribution of objectives

Diagram showing the distribution of

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

SMALL INDUSTRIAL DEVELOPMENT CORPORATION

A STUDY ON EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN SIDCO

Statement of the problem: