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A PROJECT REPORT

ON

Impact of Performance Appraisal on employee motivation

SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS OF BANGALORE UNIVERSITY FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

SWETA SINGH

REGNO: 09SKCMA078

UNDER THE GUIDANCE OF

Prof. Ranganathan

E M P O W E R I N G M I N D

ACHARYA INSTITUTE OF MANAGEMENT AND SCIENCES

1st Cross, 1st Stage, Peenya,

Bangalore 560058.

2009-11

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CERTIFICATE

Certified that this Project Report titled Impact of Performance Appraisal on employee

motivation is conducted by SWETA SINGH of 1V semester MBA under the guidance of

PROF.RANGANATHAN.

This Project Report is based on the training under gone by the student and has not formed the

basis for the award of any other degree/diploma by Bangalore University or any other

university.

Prof. RANGANATHAN (Prof. KERRON

REDDY)

(PROGRAM DIRECTOR) (CEO& Principal)

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CERTIFICATE FROM THE GUIDE

This is to certify that the Project titled Impact of Performance Appraisal on employee

motivation submitted by Miss SWETA SINGH for the award of degree in Master of Business

Administration has been completed under my supervision & guidance. It is an original piece of

work based on primary as well as secondary data.

This work is satisfactory and complete in every respect. I wish her all the success for his future

Endeavour

Place: Bangalore

Date: PROF.

RANGANATHAN

(PROJECT GUIDE)

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ACKNOWLEDGEMENT

I, SWETA SINGH, would like to convey my deep gratitude to my guide PROF.

RANGANATHAN, for hir valuable guidance imparted, which has enabled me to complete this

report in accordance with Bangalore University norms.

I feel highly delighted with the way my dissertation report on topic Impact of Performance

Appraisal on employee motivation has been completed.

I would also like to express grateful thank to all the respondents who helped me to proceed at

every step of a perfect destined life and favoured me with their valuable feedback about the

survey and cooperation

I am thankful to Prof. Kerron Reddy, Principal and CEO of A.I.M.S., who had provided all therequired facilities to carry out the report work and nurturing my skills to execute the

requirement.

Last but not least, my gratitude goes to my family members and friends, who showered upon me

their best of good wishes and help, towards successful completion of this report.

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TABLE OF CONTENTS

CHAPTER NO. NAME OF THE CHAPTER PAGE NO.

1 Introduction

1.1 Meaning of performance appraisal1.2 Performance appraisal and competitive advantage1.3 Organizational strategy and performance appraisal1.4 Appraisal process1.5 Meaning of motivation1.6 Definition of motivation1.7 Significance of motivation1.8 Types of motivation1.9 Process of motivation1.10 Intrinsic and extrinsic motivation1.11 Effects of motivation1.12 Benefits of motivation1.13 Theories of motivation1.14 Appraisals as employee motivation mechanism

1-3912-34-55-2121222323-242525-26262728-3838-39

2 Research methodology

2.1 Meaning of research methodology2.2 Introduction2.3 Statement of the problem2.4 Objective of the study2.5 Scope of the study2.6 Limitations of the study2.7 Research Methodology2.8 Sampling design2.9 Data Collection2.10 Tool of analysis

40-4240404141414142424242

3 Company profile

3.1 Introduction3.2 Financial highlights3.3 Key people3.4 Board of directors3.5Top competitors3.6 Codes of conduct3.7 Global alliances3.8 Business value for TCS clients3.9 TCS alliance partner advantage

43-4943434343-444444-45454546

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3.10 TCS alliance framework3.11 Intellectual power3.12 Sponsorships

464647-49

4 Analysis and Interpretation 50-72

5 Findings and Suggestions 73-76

6 Conclusion 77

Bibliography

Annexure

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LIST OF TABLES

Table No. Description Page No.

4.1 Gender of the employees 514.2 Age of the respondents 52

4.3 department to which the employee belongs to 534.4 working experience of the respondents in the current organization 544.5 satisfaction from the support of the hr department 554.6 performance appraisal method followed in the organization 564.7 satisfaction with the existing performance appraisal system 574.8 performance appraisal done and assessed by 584.9 performance appraisal is done periodically 59

4.10 performance appraisal help the organization in the following ways 604.11 performance appraisal is done by company to 614.12 performance appraisal system transparent to the employees 624.13 ways performance appraisal discussed with the employees 634.14 performance appraisal activities are helpful to get motivated 644.15 management is interested in motivating the employees 654.16 performance appraisal motivates the employees in the following

ways

66

4.17 factor which motivates the employees 67418 type of incentive which motivates more 684.19 training provided to employees if rated low 694.20 training helped employees to build confidence and get motivated 704.21 motivation help in improving productivity 71

4.22 how motivation impact employees productivity 72

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LIST OF CHARTS

Chart No. Description Page No.

4.1 Gender of the employees 514.2 Age of the respondents 524.3 department to which the employee belongs to 534.4 working experience of the respondents in the current organization 544.5 satisfaction from the support of the hr department 554.6 performance appraisal method followed in the organization 564.7 satisfaction with the existing performance appraisal system 574.8 performance appraisal done and assessed by 58

4.9 performance appraisal is done periodically 594.10 performance appraisal help the organization in the following ways 604.11 performance appraisal is done by company to 614.12 performance appraisal system transparent to the employees 624.13 ways performance appraisal discussed with the employees 634.14 performance appraisal activities are helpful to get motivated 644.15 management is interested in motivating the employees 65

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4.16 performance appraisal motivates the employees in the following

ways

66

4.17 factor which motivates the employees 674.18 type of incentive which motivates more 68

4.19 training provided to employees if rated low 694.20 training helped employees to build confidence and get motivated 704.21 motivation help in improving productivity 714.22 how motivation impact employees productivity 72

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CHAPTER 1

INTRODUCTION

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An organizations goals can be achieved only when people put in their best efforts. How to

ascertain whether an employee has shown his or her best performance on a given job? The

answer is performance appraisal. Employee assessment is one of the fundamental jobs of HRM.

But not an easy one though. This chapter is devoted to a detailed discussion of the nature and

process of conducting performance appraisal.

1.1 Meaning and Definition of performance appraisal

In simple terms, performance appraisal may be understood as the assessment of an individual's

performance in a systematic way, the performance being measured against such factors as jobknowledge, quality and quantity of output, initiative, leadership abilities, supervision,

dependability, co-operation, judgment, versatility, health, and the like. Assessment should not be

confined to past performance alone. Potentials of the employee for future performance must also

be assessed.

A formal definition of performance appraisal is:

It is the systematic evaluation of the individual with respect to his or her performance on the job

and his or her potential for development.

A more comprehensive definition is:

Performance' appraisal is a formal structured system of measuring and evaluating an employees

job related behaviors and outcomes to discover how and why the employee is presently

performing on the job and how the employee can perform more effectively in the future so that

the employee organization and society all benefit.

The second definition includes employees behavior as part of the assessment. Behavior can be

active or passive--do something or do nothing. Either way behavior affects job results. The other

terms used for performance appraisal arc: performance rating, employee assessment. Employees

performance review, personnel appraisal, performance evaluation employee evaluation and

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(perhaps the oldest of the terms used) merit rating. Job analysis sets out requirements, which are

translated into performance standards, which in turn from the basis for performance appraisal.

1.2 PERFORMANCE APPRAISAL AND COMPETITIVE ADVANTAGE

The objectives of performance appraisal, listed above, point out the purpose which such an

exercise seeks to meet. What needs emphasis is that performance evaluation contributes to firm's

competitive strength. Besides encouraging high levels of performance, the evaluation system

helps identify employees with potential, reward performance equitably and determine

employee's need for training. Specifically, performance appraisal helps an organization gain

competitive edge in the following ways (see Fig below)

Fig: How Performance Appraisal can contribute to Firm's Competitive Advantage?

1.2.1 Improving Performance

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Strategy and

Behavior

Improving

PerformanceMaking

correct

decisions

Competitive

Advantage

Minimizing

dissatisfaction

and turnover

Ensuring

Legal

Compliance

Values and

Behavior


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An effective appraisal system can contribute to competitive advantage by improving employee

job performance in two ways-by directing employee behavior towards organizational goals, as

was done by the second beekeeper (see opening case), and by monitoring that behavior to ensure

that the goals are met.

1.2.2 Making Correct Decisions

As stated above, appraisal is a critical input in making decisions on such issues as pay raise,

promotion, transfer, training, discharges and completion of probationary periods. Right decision

on each of these can contribute to competitive strength of an organization.

1.2.3 Ensuring Legal Compliance

Promotions made on factors other than performance might land up a firm in a legal battle, thus

diverting its focus on non-productive areas, as it happened to Williamson Magar. Organizations

can minimize costly performance-related litigation by using appraisal systems that give fair and

accurate ratings.

1.2.4 Minimizing Job Dissatisfaction and Turnover

Employees tend to become emotional and frustrated if they perceive that the ratings they get are

unfair and inaccurate. Such employees find that the efforts they had put in became futile and

obviously get de-motivated.

Dissatisfaction in the job sets in and one of the outcomes of job dissatisfaction is increased

turnover. Fair and accurate appraisal results in high motivation and increased job satisfaction.

An organization having satisfied and motivated employees will have an edge over its

competitors.

1.2.5 Consistency between Organizational Strategy and Behavior

An organization needs a strategy consistent with the behavior of its employees if it were to

realize its goals. A truism of organizational life is that people engage themselves in behaviors

that they perceive will be rewarded. As employees want to be rewarded, they tend to occupy

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themselves more with those activities on which the organization emphasizes. For example, if the

focus is on service, employees will behave in ways that will help them in gaining rewards

associated with service delivery. If the focus is on cost control, employees will seek to control

cost and thus be recongnised and rewarded. If the focus is on rewarding productivity, employees

will strive for productivity. The performance appraisal becomes not only a means of knowing if

the employees' behaviour is consistent with the overall strategic focus, but also a way of

bringing to the fore any negative consequence of the strategy- behavior fit.

1.3 Organizational Strategy and Performance Appraisal

The performance appraisal system serves many organizational objectives and goals. Besides

encouraging high level of performance, the evaluation system is useful in identifying employees

with potential, rewarding performance equitably and determining employees' needs fordevelopment. These are all the activities that should support the organizations strategic

orientation. Although these activities are clearly instrumental in achieving corporate plans and

long-term growth, typical appraisal systems in most organizations have been focused on short-

term goals.

From the strategic management point of view, organizations can be grouped into three

categories defenders, prospectors and analyzers. Performance appraisal has definite roles in all

the three strategies.

Organizations with a prospector strategy continuously search for different product and market

opportunities. In addition, these organizations regularly experiment with potential responses to

new and emerging environmental trends. Prospectors are often the harbingers of change.

Because of the emphasis on skills identification and acquisition of human resources from

external sources, as opposed to skills building with the organization, prospectors often use the

performance appraisal as a means of identifying staffing needs. The emphasis is on results.

Finally, the focus is on division and corporate performance evaluation as they compare with

other companies during the same evaluation period.

Organizations with an analyzer strategy operate in two types of product-.market domains. One

domain is stable while the other is changing. In their more innovative areas, managers watch

their competitors closely and rapidly adopt the ideas that appear promising. In general, analyzers

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use cost effective technologies for stable products and project or matrix technologies for new

product. Thus, these organizations attempt to identify both training as well as staffing needs.

The appraisal systems are considered at the individual, group and divisional levels. Finally,

successful analyzers have a tendency to examine current performance with past performance

within the organization. Cross-sectional comparisons (comparisons among 'companies) may

also occur.

Whatever the category, a performance appraisal system has strategic importance to a firm in

three ways:

1. Feedback mechanism,

2. Consistency between organizational strategy and job behaviour, and

3. Consistency between organizational values and job behaviour.

1.4 APPRAISAL PROCESS

Figure below outlines the performance- appraisal process. Each step in the process is crucial and

is arranged logically. The process as shown in Fig. Below is somewhat idea1ised. Many

organizations make every effort to approximate the ideal process, resulting in first-rate appraisal

systems. Unfortunately, many others fail to consider one or more of the steps and, therefore,

have less-effective appraisal system.

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oo

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Objective of

performance

Establish job

Expectation

Design an

appraisal

Appraise

Performance

Performance

interview

Archive appraisal

data

Use appraisal data

for appropriate


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The performance appraisal process

1.4.1 Objectives of Appraisal

Objectives of appraisal as stated above include effecting promotions and transfers, assessing

training needs, awarding pay increases, and the like. The emphasis in all these is to correct

problems. These objectives are appropriate as long as the approach in appraisal is individual.

Appraisal in future, would assume systems orientations. In the systems approach, the objectives

of appraisal stretch beyond the traditional ones.

In the systems approach, appraisal aims at improving the performance, instead of merely

assessing it. Towards this end, an appraisal system seeks to evaluate opportunity factors.Opportunity factors include the physical environment such as noise, ventilation and lightings,

available resources such as human and computer assistance and social processes such as

leadership effectiveness. These opportunity variables are more important than individual

abilities in determining work performance. In the systems approach the emphasis is not on

individual assessment and rewards or punishments. But it is on how work the work system

affects an individuals.

1.4.2. Establish Job Expectations

The second step in the appraisal process is to establish job expectations. This includes informing

the employee what is expected of him or her on the job. Normally, a discussion is held with his

or her superior to review the major duties contained in the job place of formal performance

evaluation.

1.4.3. Design Appraisal Programme

Designing an appraisal programme poses several questions which we need to answers. They are:

1. Formals versus informal appraisal

2. Whose performance is to be assessed?

3. Who are the raters?

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4. What problems are encountered?

5. How to solve the problems?

6. What should be evaluated?

7. When to evaluate?

8. What methods of appraisal are to be used?

1. Whose performance should be rated? To the question as to whose performance should be

rated, the answer is obviousemployees, is it individual or teams? Specifically the rate may be

defined as the individual, work group, division, or organizations. It is also possible to define the

rate at multiple levels.

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2. Formal V/s informal appraisal: - the first step in designing an appraisal programme is to

decide whether the appraisal should be formal or informal. Formal appraisal usually occurs at

specified time periodsonce or twice year. Formal appraisals are most often required by the

organizations for the purposes of employee evaluation. Informal performance appraisal can

occur whenever the superior feels the need for communication.

3. Who are Raters? Raters can be immediate supervisors, specialist from the HR department,

subordinates. Peers, committees, clients, self appraisal, or a combination of several.

a. Immediate supervisor is the fit candidate to appraise the performance of his or her

subordinate. There are 3 reasons in support of this choice. No one is familiar with the

subordinates performance than his or her superior. Another reason is that the superior has the

responsibility of managing a particular unit. When the tasks of evaluating a subordinate is givento another person, the superior authority may be undermined seriously. Finally, training and

development of subordinate is am portent element in every mangers job.

b.Subordinate can assess the performance of their superiors. The use of this choice may be

useful in assessing an employee ability to communicate, delegate work, allocate resources,

disseminate information, resolve intra-personal conflict, and deal with employees on a fair basis.

But the problem with the subordinate evaluation is that supervisors tend to become popular, not

by effective leadership, but by mere gimmicks.

c. Peers are in better position to evaluate certain facts of job performance which the subordinates

or supervisors cannot do. Such facts include contribution skills, reliability and initiative.

Closeness of the working relationships and the amount of personal contacts place peers in a

better position to make accurate assessments. Unfortunately friendship or animosity may result

in distortion of evaluation. Further when reward allocation is based on peer evaluation, series

conflicts among co-workers may develop.

d. Although clients are seldom used for rating employee performance, nothing prevents an

organization from using this source. Clients may be members within the organization who have

direct contact with the rate and make use of an output (goods or services) this employee

provides. Interest, courtesy, dependability and innovativeness are but a few of the qualities for

which clients can offer rating information. Clients, external to the organization can also offer

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similar kinds of information. Where appraisal is made by the superior, peers, subordinates and

clients, it is called the 360-degree system of appraisal.

e. In self appraisal employee himself or herself evaluates his or her own performance. Indian

Telephone Industries has been following the self-appraisal system for executives in grade I toIV. Hewlett-Packard and Texas Instruments too ask their performance to prepare their own

appraisal. On the positive side it may be stated that in self-appraisal there is an opportunity to

participate in evaluation particularly if it is combine with goal setti9ng and this should be

improve the mangers motivation. Managers are less defensive in self-evaluation than when

supervisors tell them what they are.

4. Problems of rating: Performance appraisals are subject to a wide variety of inaccuracies and

biases referred to as rating errors. These errors occur in the raters observations, judgment, andinformation processing, and can seriously affect assessment results. The most common rating

errors are leniency or severity, central tendency, halo effect, primacy and recency effects,

perceptual set, performance dimension behavior, spillover effect, and status effect.

5. Solving raters problem: The best way to overcome the problems is to provide training to

the raters.

6. What should be rated: The seven criteria for assessing performance are:

a) Quality: The degree to which the process or result of carrying out an activity approaches

perfection in terms of their conforming to some ideal way of performing the activity, or

fulfilling the activitys intended purpose.

b) Quantity: The amount produced, expressed in monetary terms, number of units, or number

of completed activity cycles.

c) Timeliness: The degree to which an activity is completed or a result produced, at the earliesttime desirable from the standpoints of both co-ordinating with the outputs of others and of

maximizing the time available for other activities.

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d) Cost effectiveness: The degree to which the use of the organizations resources is maximized

in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a

resource.

e) Need for supervision: The degree to which a job performer can carry out a job functionwithout either having to request supervisory assistance or requiring supervisory intervention to

prevent an adverse outcome.

f) Interpersonal impact: The degree to which a performer promotes feeling of self-esteem,

goodwill and co-operation among co-workers and subordinates

g) Community service: Firms are increasingly emphasizing on employees community

involvement. This is particularly true in educational institutions. One of the criteria for

accreditation by National Assessment and Accreditation Council (NAAC) of any college or

university is the involvement of staff in social activities.

7. Timing of evaluation: Performance appraisal can be conducted once in three months, six

months or once in a year. Majority of the firms, however, conduct appraisal once in a year.

8. METHODS OF PERFORMANCE APPRAISAL

The performance appraisal methods may be classified into three categories, as shown in Figure

below.

PERFORMANCE APPRAISAL TECHNIQUE

Individual evaluation methods Multiple- person evaluation methods Other Methods

Confidential report Ranking Performance

tests

Essay evaluation Paired comparison method Field review

Critical incidents Forced distribution technique

Checklists

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Graphic rating scale

BARS

Forced choice method

MBO

Individual Evaluation Methods

Under the individual evaluation methods of merit rating, employees are evaluated one at a time

without comparing them with other employees in the organization.

(a) Confidential report: It is mostly used in government organizations. It is a descriptive

report prepared, generally at the end of every year, by the employees immediate superior. Thereport highlights the strengths and weaknesses of the subordinate. The report is not databased.

The impressions of the superior about the subordinate are merely recorded there. It does not

offer any feedback to the appraisee. The appraisee is not very sure about why his ratings have

fallen despite his best efforts, why others are rated high when compared to him, how to rectify

his mistakes, if any; on what basis he is going to be evaluated next year, etc. Since the report is

generally not made public and hence no feedback is available, the subjective analysis of the

superior is likely to be hotly contested. In recent years, due to pressure from courts and trade

unions, the details of a negative confidential report are given to the appraisee.

(b) Essay evaluation: Under this method, the rater is asked to express the strong as well as

weak points of the employees behavior. This technique is normally used with a combination of

the graphic rating scale because the rater can elaborately present the scale by substantiating an

explanation for his rating. While preparing the essay on the employee, the rater considers the

following factors: (i) Job knowledge and potential of the employee; (ii) Employees

understanding of the companys programmes, policies, objectives, etc.; (iii) The employeesrelations with co-workers and superiors; (iv) The employees general planning, organizing and

controlling ability; (v) The attitudes and perceptions of the employee, in general.

Essay evaluation is a non-quantitative technique. This method is advantageous in at least one

sense, i.e., the essay provides a good deal of information about the employee and also reveals

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more about the evaluator. The essay evaluation method however, suffers from the following

limitations:

It is highly subjective; the supervisor may write a biased essay. The employees who are

sycophants will be evaluated more favorably then other employees. Some evaluators may bepoor in writing essays on employee performance. Others may be superficial in explanation and

use flowery language which may not reflect the actual performance of the employee. It is very

difficult to find effective writers nowadays. The appraiser is required to find time to prepare the

essay. A busy appraiser may write the essay hurriedly without properly assessing the actual

performance of the worker. On the other hand, appraiser takes a long time, this becomes

uneconomical from the view point of the firm, because the time of the evaluator (supervisor) is

costly.

(c) Critical incident technique: Under this method, the manager prepares lists of statements of

very effective and ineffective behavior of an employee. These critical incidents or events

represent the outstanding or poor behavior of employees on the job. The manager maintains logs

on each employee, whereby he periodically records critical incidents of the workers behavior. At

the end of the rating period, these recorded critical incidents are used in the evaluation of the

workers performance. An example of a good critical incident of a sales assistant is the

following:

July 20 The sales clerk patiently attended to the customers complaint. He is polite, prompt,

enthusiastic in solving the customers problem.

On the other hand the bad critical incident may appear as under:

July 20 The sales assistant stayed 45 minutes over on his break during the busiest part of the

day. He failed to answer the store managers call thrice. He is lazy, negligent, stubborn and

uninterested in work.

This method provides an objective basis for conducting a thorough discussion of an employees

performance. This method avoids recency bias (most recent incidents get too much emphasis).

This method suffers however from the following limitations:

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Negative incidents may be more noticeable than positive incidents. The supervisors have a

tendency to unload a series of complaints about incidents during an annual performance review

session.It results in very close supervision which may not be liked by the employee. The

recording of incidents may be a chore for the manager concerned, who may be too busy or

forget to do it.

Most frequently, the critical incidents technique of evaluation is applied to evaluate the

performance of superiors rather than of peers of subordinates.

(d) Checklists and weighted checklists: Another simple type of individual evaluation method

is the checklist. A checklist represents, in its simplest form, a set of objectives or descriptive

statements about the employee and his behavior. If the rater believes strongly that the employee

possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank. Amore recent variation of the checklist method is the weighted list. Under this, the value of each

question may be weighted equally or certain questions may be weighted more heavily than

others. The following are some of the sample questions in the checklist.

l Is the employee really interested in the task assigned? Yes/No

l Is he respected by his colleagues (co-workers) Yes/No

l Does he give respect to his superiors? Yes/No

l Does he follow instructions properly? Yes/No

l Does he make mistakes frequently? Yes/No

A rating score from the checklist helps the manager in evaluation of the performance of the

employee. The checklist method has a serious limitation. The rater may be biased indistinguishing the positive and negative questions. He may assign biased weights to the

questions. Another limitation could be that this method is expensive and time consuming.

Finally, it becomes difficult for the manager to assemble, analyze and weigh a number of

statements about the employees characteristics, contributions and behaviors. In spite of these

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limitations, the checklist method is most frequently used in the employees performance

evaluation.

(e) Graphic rating scale: Perhaps the most commonly used method of performance evaluation

is the graphic rating scale. Of course, it is also one of the oldest methods of evaluation in use.Under this method, a printed form, as shown below, is used to evaluate the performance of an

employee. A variety of traits may be used in these types of rating devices, the most common

being the quantity and quality of work. The rating scales can also be adapted by including traits

that the company considers important for effectiveness on the job.

The rating scale is the most common method of evaluation of an employees performance today.

One positive point in favor of the rating scale is that it is easy to understand, easy to use and

permits a statistical tabulation of scores of employees. When ratings are objective in nature theycan be effectively used as evaluators. The graphic rating scale may however suffer from a long

standing disadvantage, i.e., it may be arbitrary and the rating may be subjective. Another pitfall

is that each characteristic is equally important in evaluation of the employees performance and

so on.

(f) Behaviorally anchored rating scales: Also known as the behavioral expectations scale, this

method represents the latest innovation in performance appraisal. It is a combination of the

rating scale and critical incident techniques of employee performance evaluation. The critical

incidents serve as anchor statements on a scale and the rating form usually contains six to eight

specifically defined performance dimensions. The following chart represents an example of a

sales trainees competence and a behaviorally anchored rating scale.

How to construct BARS? Developing a BARS follows a general format which combines

techniques employed in the critical incident method and weighted checklist ratings scales.

Emphasis is pinpointed on pooling the thinking of people who will use the scales as both

evaluators and evaluees.

Step 1: Collect critical incidents: People with knowledge of the job to be probed, such as job

holders and supervisors, describe specific examples of effective and ineffective behavior related

to job performance.

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Step 2: Identify performance dimensions: The people assigned the task of developing the

instrument cluster the incidents into a small set of key performance dimensions. Generally

between five and ten dimensions account for most of the performance. Examples of

performance dimensions include technical competence, relationships with customers, handling

of paper work and meeting day-to-day deadlines. While developing varying levels of

performance for each dimension (anchors), specific examples of behavior should be used, which

could later be scaled in terms of good, average or below average performance.

Step 3: Reclassification of incidents: Another group of participants who are knowledgeable

about the job is instructed to retranslate or reclassify the critical incidents generated (in Step II)

previously. They are given the definition of job dimension and told to assign each critical

incident to the dimension that it best describes. At this stage, incidents for which there is not 75

per cent agreement are discarded as being too subjective.

Step 4: Assigning scale values to the incidents: Each incident is then rated on a one-to-seven or

one-to-nine scale with respect of how well it represents performance on the appropriate

dimension. A rating of one represents ineffective performance; the top scale value indicates very

effective performance. The second group of participants usually assigns the scale values. Means

and standard deviations are then calculated for the scale values assigned to each incident.

Typically incidents that have standard deviations of 1.50 or less (on a 7-point scale) are retained.

Step 5: Producing the final instrument: About six or seven incidents for each performance

dimension all having met both the retranslating and standard deviation criteria will be used

as behavioral anchors. The final BARS instrument consists of a series of vertical scales (one for

each dimension) anchored (or measured) by the final incidents. Each incident is positioned on

the scale according to its mean value.

Because the above process typically requires considerable employee participation, its

acceptance by both supervisors and their subordinates may be greater. Proponents of BARS also

claim that such a system differentiates among behavior, performance and results and

consequently is able to provide a basis for setting developmental goals for the employee.

Because it is job-specific and identifies observable and measurable behavior, it is a more reliable

and valid method for performance appraisal.

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Researchers, after surveying several studies on BARS, concluded that despite the intuitive

appeal of BARS, findings from research have not been encouraging. It has not proved to be

superior to other methods in overcoming rater errors or in achieving psychometric soundness. A

specific deficiency is that the behaviors used are activity oriented rather than results oriented.

This creates a potential problem for supervisors doing the evaluation, who may be forced to deal

with employees who are performing the activity but not accomplishing the desired goals.

Further, it is time consuming and expensive to create BARS. They also demand several

appraisal forms to accommodate different types of jobs in an organization. In a college,

lecturers, office clerks, library staff, technical staff and gardening staff all have different jobs;

separate BARS forms would need to be developed for each. In view of the lack of compelling

evidence demonstrating the superiority of BARS over traditional techniques such as graphic

rating scales. Decotis concluded that: It may be time to quit hedging about the efficacy of

behavioral scaling strategies and conclude that this method has no clear-cut advantages over

more traditional and easier methods of performance evaluation.

(g) Forced choice method: This method was developed to eliminate bias and the preponderance

of high ratings that might occur in some organizations. The primary purpose of the forced

choice method is to correct the tendency of a rater to give consistently high or low ratings to all

the employees. This method makes use of several sets of pair phrases, two of which may be

positive and two negative and the rater is asked to indicate which of the four phrases is the most

and least descriptive of a particular worker. Actually, the statement items are grounded in such a

way that the rater cannot easily judge which statements apply to the most effective employee.

They overall objectivity is increased by using this method in evaluation of employees

performance, because the rater does not know how high or low he is evaluating the individual as

he has no access to the scoring key. This method, however, has a strong limitation. In the

preparation of sets of phrases trained technicians are needed and as such the method becomes

very expensive. Further, managers may feel frustrated rating the employees in the dark.

Finally, the results of the forced choice method may not be useful for training employees

because the rater himself does not know how he is evaluating the worker. In spite of these

limitations, the forced choice techniques is quite popular.

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(h) Management by Objectives (MBO): MBO represents a modern method of evaluating the

performance of personnel. Thoughtful managers have become increasingly aware that the

traditional performance evaluation systems are characterized by somewhat antagonistic

judgments on the part of the rater. There is a growing feeling nowadays that it is better to make

the superior work with subordinates in fixing goals. This would inevitably enable subordinates

to exercise self-control over their performance behaviors. The concept of management by

objectives is actually the outcome of the pioneering works of Drucker, McGregor and Odiorne

in management science. Management by objectives can be described as a process whereby the

superior and subordinate managers of an organization jointly identify its common goals, define

each individuals major areas of responsibility in terms of results expected of him and use these

measures as guides for operating the unit and assessing the contributions of each of its

members. MBO thus represents more than an evaluation programme and process. Practicing

management scientists and pedagogues view it as a philosophy of managerial practice; it is a

method by which managers and subordinates plan, organize, control, communicate and debate.

Features

MBO emphasizes participatively set goals that are tangible, verifiable and measurable.

MBO focuses attention on what must be accomplished (goals) rather than how it is to be

accomplished (methods).

MBO, by concentrating on key result areas translates the abstract philosophy of

management into concrete phraseology. The technique can be put to general use (non-

specialist technique). Further it is a dynamic system which seeks to integrate the

companys need to clarify and achieve its profit and growth targets with the managers

need to contribute and develop himself.

MBO is a systematic and rational technique that allows management to attain maximum

results from available resources by focusing on achievable goals. It allows the

subordinate plenty of room to make creative decisions on his own.

MULTIPLE PERSON EVALUATION METHODS

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test to be job related, observations should be made under circumstances likely to be

encountered. Practicality may suffer if costs of test development or administration

b) Field review method: This is an appraisal by someone outside the, assessors own

department. Usually someone from the corporate office or the HR department. The outsiderreviews Employee records and holds interviews with the ratee and his or her superior.

This method is primarily used for making promotional decision at the managerial level. Field

reviews are also useful when comparable information is needed from employees in different

units or locations.

Two disadvantage of this method are:-

An outsider is usually not familiar with conditions in an employees work environmentwhich may affect the employees ability or motivation to perform.

An outsider review does not have the opportunity to observe employee behavior of

performance over a period of time and in a variety of situations. But only in an artificially

structured interview situation which extends over a very short period of time.

1.4.4. Appraise the performance: The next step in the appraisal process is to measure the

performance. What then is performance? Performance is essentially what an employee does or

does not do. Employee performance common to most jobs include the following elements:

Quality of output

Quantity of output

Timeliness of output

Presence at work

Cooperativeness

In addition to these, other elements that deserve assessment, are job knowledge, leadership

abilities, judgement, supervisors, versatility, and health. Assessment should also include ones

potential to perform and not just actual performance.

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1.4.5. Performance Management: Performance appraisal provides feedback about employee

job performance. Getting feedback is not enough.Three more activities need to be undertaken to

complete the process: performance interview, archiving performance data and use of appraisal

data. These three activities constitute the core of performance management.

Performance interview: Performance interview is another step in the appraisal process. Once

appraisal has been made of employees, the raters should discuss and review the performance

with the ratees, so that they will receive feedback about where they stand in the eye of superiors.

Feedback is necessary to effect improvement in performance, specially when it is inadequate.

Speciafically, performance interview has three goals: (i) to change behaviour of employees

whose performance does not meet organizational requirements or their own personal goals, (ii)

to maintain the behaviour of employees who perform in an acceptable manner, and (iii) to

recognise superior performance behaviours so that they will be continues.

1.4.6. Archiving Performance Data: Organization need to archive or store the appraisal data so

that at any point in future, the information can be retrieved and used. For example, if an

employee has been told that he or she was not promoted because of below average performance

and he or she would consider favorably for a jump in status and remuneration provided the

performance improves. The HR manager should have those details to convince the employee

concerned when he or she joins issue with the management on matters relating to promotion.Other issues such as pay hale, confirmation of probationary services, affirmative action and the

like deserve reference to the past information. Archiving appraisal data is not just desirable but

essential too.

1.4.7.Use of Appraisal Data: The final step in the evaluation process is the use of evaluation

data. The data and information generated through performance evaluation must be used by the

HR department.

1.5 MEANING OF MOTIVATION

To the behavioral scientists, the word motivation is something stemming from within a person.

According to them, motivation refers to a dynamic driving force, which stems from within. It is

an inner striving condition, which activates or moves individual into action and continues him

in the course of action enthusiastically. Thus, motivation is defined as an inner state that

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activates, energizes or moves behaviour towards goals. And, the forces inside the individual that

inspire him to continue work are variously called as wishes, drives, needs etc.

According to Rensis Likert motivation is the core of management. Motivation is an important

function performed by manager for actuating the people to work for the accomplishment oforganizational objectives. Issuance of well-conceived instructions and orders does not mean that

they will be followed. A manager has to make appropriate use of various techniques of

motivation to enthuse the employees to follow them. Effective motivation succeeds not only in

having an order accepted but also in gaining a determination to see that it is executed efficiently

and effectively.

Motivation is an effective and dynamic instrument in the hands of a manager for inspiring the

workforce and creating confidence in them. Through the motivation of the workforce,management creates will to work which is necessary for the achievement of organisational

goals and objectives. Motivation is the process of getting the members or the group to pull

weight effectively, to give their loyalty to the group and to carry out properly the purpose of the

organization.

1.6Meaning and definition of motivation

The term motivation has its origin in the Latin word mover which means to move. Thus,motivation stands for movement. One can get a donkey to move by using a carrot or a stick,

with people one can use incentives, or threats or reprimands. However, these only have a limited

effect. These work for a while and then need to be repeated, increased or reinforced to secure

further movement. The term motivation may be defined as the managerial function of

ascertaining the motives of subordinates and helping them to realize those motives.

According to Dubin motivation could be defined as the complex of forces starting and keeping

a person at work in an organization. Motivation is something that moves the person to action,and continues him in the course of action already initiated. Motivation refers to the way a

person is enthused at work to intensify his/her desire and willingness to use and channelize

his/her energy for the achievement of organizational objectives. It is something that moves a

person into action wand continue him in the course of action enthusiastically. The role of

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motivation is to develop and intensify the desire in every member of the organization to work

effectively and efficiently in his position.

In the words of Dalton E. McFarland, motivation is the way in which urges, desires, aspiration,

striving or needs direct, control or explain the behavior of human being. Motivation has veryclose relationship with the behavior. It explains how and way the human behavior is caused.

According to McFarland motivation is a form of tension occurring within individual, with

resulting behavior aimed at reducing, eliminating or diverting the tension. Understanding the

needs and drives and their resulting tensions helps to explain and predict human behavior

ultimately providing a sound basis for managerial decision and action. Thus, motivation is the

term, which applies to the entire class of urges, drives, desires, needs and similar forces.

1.7 Significance of Motivation

Motivation involves getting the members of the group to pull weight effectively, to give their

loyalty to the group, to carry out properly the purpose of the organization. The following results

may be expected if the employees are properly motivated.

1. The workforce will be better satisfied if the management provides them with opportunities to

fulfill their physiological and psychological needs. The workers will cooperate voluntarily with

the management and will contribute their maximum towards the goals of the enterprise.

2. Workers will tend to be as efficient as possible by improving upon their skills and knowledge

so that they are able to contribute to the progress of the organization. This will also result in

increased productivity.

3. The rates of labors turnover and absenteeism among the workers will be low.

4. There will be good human relations in the organization as friction among the workers

themselves and between the workers and the management will decrease.

5. The number of complaints and grievances will come down. Accident will also be low.

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6. There will be increase in the quantity and quality of products. Wastage and scrap will be less.

Better quality of products will also increase the public image of the business.

1.8 TYPES OF MOTIVATION

1.8.1 Achievement Motivation

It is the drive to pursue and attain goals. An individual with achievement motivation wishes to

achieve objectives and advance up on the ladder of success. Here, accomplishment is important

for its own shake and not for the rewards that accompany it. It is similar to Kaizen approach of

Japanese Management.

1.8.2 Affiliation Motivation

It is a drive to relate to people on a social basis. Persons with affiliation motivation perform

work better when they are complimented for their favorable attitudes and co-operation.

1.8.3 Competence Motivation

It is the drive to be good at something, allowing the individual to perform high quality work.

Competence motivated people seek job mastery, take pride in developing and using their

problem-solving skills and strive to be creative when confronted with obstacles. They learn from

their experience.

1.8.4 Power Motivation

It is the drive to influence people and change situations. Power motivated people wish to create

an impact on their organization and are willing to take risks to do so.

1.8.5 Attitude Motivation

Attitude motivation is how people think and feel. It is their self confidence, their belief in them,their attitude to life. It is how they feel about the future and how they react to the past.

1.8.6 Incentive Motivation

It is where a person or a team reaps a reward from an activity. It is You do this and you get

that, attitude. It is the types of awards and prizes that drive people to work a little harder.

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1.8.7 Fear Motivation

Fear motivation coercions a person to act against will. It is instantaneous and gets the job done

quickly. It is helpful in the short run.

1.9

1.10 INTRINSIC AND EXTRINSIC MOTIVATION

Motivation may be intrinsic when one is involved in an activity without any external help. A

very good example of intrinsic motivation is a hobby. Presently there are no theories that

determine the source or origin of intrinsic motivation.

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Since the 1970s, intrinsic motivation has been dealt with by educational psychologists who have

found out it is essentially associated with high educational achievement and is therefore enjoyed

by students at large. Combining Bernard Weiner's attribution theory, Bandura's work on self-

efficacy and other studies, it has been found out that students are likely to be intrinsically

motivated if they

Feel that their results have an important bearing on internal factors that they can control like

the amount of effort they put in

Believe that they themselves are the primary agents to reach their goals and no other factors

like luck has any role to play in it

Think that it is more important to have an in-depth understanding of a subject rather than

engage in simple rote-learning to achieve good grades.

Altruistic reasons often serve as the motivation for people while participating in knowledge-

sharing communities and other organizations. Such reasons may include sentiments like

contribution for a good cause, a moral obligation or simply giving back to society. In work

environments, however, extrinsic motivation is more powerful than intrinsic motivation. Here

the external motivating factor is, of course money.

Coercion or force is seen as the most obvious form of motivation as escaping pain or negative

consequences is a common human instinctive action, which leads to immediate effects.

Successful coercion, supposedly can take priority over other types of motivation at times.

However, when coercion is used in its extreme form leads to slavery, which is rejected by many

philosophies. It is in use for prisoners, students in mandatory schooling, on children in a nuclear

family unit and in the form of conscription.

Although many capitalists such as Ayn Rand have raised their voice against coercion, critics

argue that wage slavery is unavoidable in the absence of proper social safety networks.

1.11 EFFECTS OF MOTIVATION

There can be several effects of motivation and one of the most significant efforts is the direct

behavior toward particular goals that at the same time can lead to increased effort and energy as

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well as increase initiation of, and persistence in, activities and also enhance cognitive

processing. At the same time this can also determine what consequences are reinforcing and

hence lead to improved performance. A fact that should be kept in mind is that the students are

not always internally motivated. This fact has been clearly proved by both Abraham Maslow's

theory of motivation and Douglas McGregor's Theory. A recent research done of Maslow theory

clearly shows that he has placed money at the lowest level of the hierarchy while at the same

time he has shown other needs are better motivators to staff. Similarly the other experts on

motivation McGregor places money in his Theory X category while he places praise and

recognition on the Theory Y category. As a consequence it can be hence determined that these

are the people who need situated motivation. This often is found in environmental conditions

that the teacher creates. In fact there can be several kinds of motivation and one of the prime

among them is the intrinsic motivation, which occurs when people are internally motivated to do

something. This is because such a form of motivation either brings them pleasure, they think it

is important, or they feel that what they are learning is morally significant and hence it is much

different from extrinsic motivation that comes into play when a student is compelled to do

something or act a certain way because of factors external to him or her. Money is also a great

motivator that allows people to drive themselves to the limit. What sets this apart if that the

motivating effect of money that lasts only for a short period and in fact in higher levels of the

hierarchy, praise, recognition, and a sense of belonging are far more powerful motivators thanmoney.

1.12 BENEFITS OF MOTIVATION

A basic benefit of motivation is that the motivated employees always look for better ways to do

a job and at the same time they are more quality oriented, apart from being more productive.

What is significant is that the workplace is about midway between the extremes of high threat

and high opportunity. Motivation by threat is a dead-end strategy. This thus basically makes the

staff more attracted to the opportunity side of the motivation curve than the threat side.

A good manager understands the need for motivation and for this it is a must for them to

comprehend how company employees see them. This thus helps them to manage the impression

they make, not just their intentions. Many researchers however agree that a worker's motivation

is solely determined by pay thus making it must for the management to take care of

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psychological or social aspects of work. Thus to sum up the scientific research clearly ensures

that human motivation is based completely on extrinsic rewards; nonetheless many still believe

that workers could not be motivated by the mere need for money, though money could be used

as an indicator of success for various motives. Other researchers have emphasized that the social

contacts a worker has at the workplace are very important and that boredom and repetitiveness

of tasks lead to reduced motivation; thus leading many to believe that workers could be

motivated by acknowledging their social needs . This at the same time made them feel important

and hence when employees were given freedom to make decisions on the job and greater

attention was paid to informal work groups the productivity was more; this model was later

named as the Hawthorne effect. However this model has a basic drawback and that is that the

model places is undue reliance on social contacts at work situations for motivating employees.

[Motivation, thus is a must and it has been well established that a learned behavior will not

occur unless it is energized. Over the ages the psychologists have tried to find out if changes in

behavior better explained by principles of environmental/ecological influences, perception,

memory among other factors

1.13 THEORIES OF MOTIVATION

1.13.1 Contribution of Robert Owen:

Though Owen is considered to be paternalistic in his view, his contribution is of a considerable

significance in the theories of Motivation. During the early years of the nineteenth century,

Owens textile mill at New Lanark in Scotland was the scene of some novel ways of treating

people. His view was that people were similar to machines. A machine that is looked after

properly, cared for and maintained well, performs efficiently, reliably and lastingly, similarly

people are likely to be more efficient if they are taken care of. Robert Owen practiced what he

preached and introduced such things as employee housing and company shop. His ideas on this

and other matters were considered to be too revolutionary for that time.

1.13.2 Jeremy Benthams The Carrot and the Stick Approach:

Possibly the essence of the traditional view of people at work can be best appreciated by a brief

look at the work of this English philosopher, whose ideas were also developed in the early years

of the Industrial Revolution, around 1800. Benthams view was that all people are self-interested

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and are motivated by the desire to avoid pain and find pleasure. Any worker will work only if

the reward is big enough, or the punishment sufficiently unpleasant. This view - the carrot and

stick approach - was built into the philosophies of the age and is still to be found, especially in

the older, more traditional sectors of industry.

The various leading theories of motivation and motivators seldom make reference to the carrot

and the stick. This metaphor relates, of course, to the use of rewards and penalties in order to

induce desired behavior. It comes from the old story that to make a donkey move, one must put

a carrot in front of him or dab him with a stick from behind. Despite all the research on the

theories of motivation, reward and punishment are still considered strong motivators. For

centuries, however, they were too often thought of as the only forces that could motivate people.

At the same time, in all theories of motivation, the inducements of some kind of carrot arerecognized. Often this is money in the form of pay or bonuses. Even though money is not the

only motivating force, it has been and will continue to be an important one. The trouble with the

money carrot approach is that too often everyone gets a carrot, regardless of performance

through such practices as salary increase and promotion by seniority, automatic merit

increases, and executive bonuses not based on individual manager performance. It is as simple

as this : If a person put a donkey in a pen full of carrots and then stood outside with a carrot,

would the donkey be encouraged to come out of the pen ?

The stick, in the form of fearfear of loss of job, loss of income, reduction of bonus, demotion,

or some other penaltyhas been and continues to be a strong motivator. Yet it is admittedly not

the best kind. It often gives rise to defensive or retaliatory behavior, such as union organization,

poor-quality work, executive indifference, failure of a manager to take any risks in decision

making or even dishonesty. But fear of penalty cannot be overlooked. Whether managers are

first-level supervisors or chief executives, the power of their position to give or with hold

rewards or impose penalties of various kinds gives them an ability to control, to a very greatextent, the economic and social well-being of their subordinates.

1.13.3 Abraham Maslows Need Hierarchy Theory:

One of the most widely mentioned theories of motivation is the hierarchy of needs theory put

forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a hierarchy,

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ascending from the lowest to the highest, and he concluded that when one set of needs is

satisfied, this kind of need ceases to be a motivator.

As per his theory this needs are :

(i) Physiological needs:

These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep,

medicine and education are the basic physiological needs which fall in the primary list of need

satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to

maintain life, no other motivating factors can work.

(ii) Security or Safety needs: These are the needs to be free of physical danger and of the fear of

losing a job, property, food or shelter. It also includes protection against any emotional harm.

(iii) Social needs:

Since people are social beings, they need to belong and be accepted by others. People try to

satisfy their need for affection, acceptance and friendship.

(iv) Esteem needs:

According to Maslow, once people begin to satisfy their need to belong, they tend to want to be

held in esteem both by themselves and by others. This kind of need produces such satisfaction as

power, prestige status and self-confidence. It includes both internal esteem factors like self-

respect, autonomy and achievements and external esteem factors such as states, recognition and

attention.

(v) Need for self-actualization:

Maslow regards this as the highest need in his hierarchy. It is the drive to become what one is

capable of becoming, it includes growth, achieving ones potential and self-fulfillment. It is to

maximize ones potential and to accomplish something.

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As each of these needs is substantially satisfied, the next need becomes dominant. From the

standpoint of motivation, the theory would say that although no need is ever fully gratified, asubstantially satisfied need no longer motivates. So if you want to motivate someone, you need

to understand what level of the hierarchy that person is on and focus on satisfying those needs or

needs above that level.

Maslows need theory has received wide recognition, particularly among practicing managers.

This can be attributed to the theorys intuitive logic and ease of understanding. However,

research does not validate this theory. Maslow provided no empirical evidence and other several

studies that sought to validate the theory found no support for it.

1.13.4 Theory X and Theory Y of Douglas McGregor:

McGregor, in his book The Human side of Enterprise states that people inside the

organization can be managed in two ways. The first is basically negative, which falls under the

category X and the other is basically positive, which falls under the category Y. After viewing

the way in which the manager dealt with employees, McGregor concluded that a managers

view of the nature of human beings is based on a certain grouping of assumptions and that he orshe tends to mold his or her behavior towards subordinates according to these assumptions.

Under the assumptions of theory X:

Employees inherently do not like work and whenever possible, will attempt to avoid it.

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Because employees dislike work, they have to be forced, coerced or threatened with punishment

to achieve goals.

Employees avoid responsibilities and do not work fill formal directions are issued.

Most workers place a greater importance on security over all other factors and display little

ambition.

In contrast under the assumptions of theory Y:

Physical and mental effort at work is as natural as rest or play.

People do exercise self-control and self-direction and if they are committed to those goals.

Average human beings are willing to take responsibility and exercise imagination, ingenuity andcreativity in solving the problems of the organization.

That the way the things are organized, the average human beings brainpower is only partly

used.

On analysis of the assumptions it can be detected that theory X assumes that lower-order needs

dominate individuals and theory Y assumes that higher-order needs dominate individuals. An

organization that is run on Theory X lines tends to be authoritarian in nature, the word

authoritarian suggests such ideas as the power to enforce obedience and the right to

command. In contrast Theory Y organizations can be described as participative, where the

aims of the organization and of the individuals in it are integrated; individuals can achieve their

own goals best by directing their efforts towards the success of the organization.

However, this theory has been criticized widely for generalization of work and human behavior.

1.13.5 Contribution of Rensis Likert :

Likert developed a refined classification, breaking down organizations into four management

systems.

1st System Primitive authoritarian

2nd System Benevolent authoritarian

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3rd System Consultative

4th System Participative

As per the opinion of Likert, the 4th system is the best, not only for profit organizations, but also

for non-profit firms.

1.13.6 Frederick Herzbergs motivation-hygiene theory:

Frederick has tried to modify Maslows need Hierarchy theory. His theory is also known as two-

factor theory or Hygiene theory. He stated that there are certain satisfiers and dissatisfiers for

employees at work. In- trinsic factors are related to job satisfaction, while extrinsic factors are

associated with dissatisfaction. He devised his theory on the question : What do people want

from their jobs ? He asked people to describe in detail, such situations when they feltexceptionally good or exceptionally bad. From the responses that he received, he concluded that

opposite of satisfaction is not dissatisfaction. Removing dissatisfying characteristics from a job

does not necessarily make the job satisfying. He states that presence of certain factors in the

organization is natural and the presence of the same does not lead to motivation. However, their

nonpresence leads to demotivation. In similar manner there are certain factors, the absence of

which causes no dissatisfaction, but their presence has motivational impact.

Examples of Hygiene factors are:

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Security, status, relationship with subordinates, personal life, salary, work conditions,

relationship with supervisor and company policy and administration.

Examples of Motivational factors are :

Growth prospectus job advancement, responsibility, challenges, recognition and achievements.

1.13.7 Contributions of Elton Mayo:

The work of Elton Mayo is famously known as Hawthorne Experiments. He conducted

behavioral experiments at the Hawthorne Works of the American Western Electric Company in

Chicago. He made some illumination experiments, introduced breaks in between the work

performance and also introduced refreshments during the pauses. On the basis of this he drew

the conclusions that motivation was a very complex subject. It was not only about pay, workcondition and morale but also included psychological and social factors. Although this research

has been criticized from many angles, the central conclusions drawn were :

People are motivated by more than pay and conditions.

The need for recognition and a sense of belonging are very important.

Attitudes towards work are strongly influenced by the group.

1.13.8 Vrooms Valence x Expectancy theory:

The most widely accepted explanations of motivation have been propounded by Victor Vroom.

His theory is commonly known as expectancy theory. The theory argues that the strength of a

tendency to act in a specific way depends on the strength of an expectation that the act will be

followed by a given outcome and on the attractiveness of that outcome to the individual to make

this simple, expectancy theory says that an employee can be motivated to perform better when

their is a belief that the better performance will lead to good performance appraisal and that thisshall result into realization of personal goal in form of some reward. Therefore an employee is :

Motivation = Valence x Expectancy.

The theory focuses on three things :

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Efforts and performance relationship

Performance and reward relationship

Rewards and personal goal relationship

This leads us to a conclusion that :

1.13.9 The Porter and Lawler Model:

Lyman W. Porter and Edward E. Lawler developed a more complete version of motivation

depending upon expectancy theory.

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Actual performance in a job is primarily determined by the effort spent. But it is also affected by

the persons ability to do the job and also by individuals perception of what the required task is.

So performance is the responsible factor that leads to intrinsic as well as extrinsic rewards.

These rewards, along with the equity of individual leads to satisfaction. Hence, satisfaction of

the individual depends upon the fairness of the reward.

1.13.10 Clayton Alderfers ERG Theory:

Alderfer has tried to rebuild the hierarchy of needs of Maslow into another model named ERG

i.e. Existence Relatedness Growth. According to him there are 3 groups of core needs as

mentioned above. The existence group is concerned mainly with providing basic material

existence. The second group is the individuals need to maintain interpersonal relationship with

other members in the group. The final group is the intrinsic desire to grow and develop

personally. The major conclusions of this theory are :

1. In an individual, more than one need may be operative at the same time.

2. If a higher need goes unsatisfied than the desire to satisfy a lower need intensifies.

3. It also contains the frustration-regression dimension.

1.13.11 McClellands Theory of Needs :

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David McClelland has developed a theory on three types of motivating needs:

Need for Power

Need for Affiliation

Need for Achievement

Basically people for high need for power are inclined towards influence and control. They like

to be at the center and are good orators. They are demanding in nature, forceful in manners and

ambitious in life. They can be motivated to perform if they are given key positions or power

positions.

In the second category are the people who are social in nature. They try to affiliate themselves

with individuals and groups. They are driven by love and faith. They like to build a friendly

environment around themselves. Social recognition and affiliation with others provides them

motivation.

People in the third area are driven by the challenge of success and the fear of failure. Their need

for achievement is moderate and they set for themselves moderately difficult tasks. They are

analytical in nature and take calculated risks. Such people are motivated to perform when they

see atleast some chances of success.

McClelland observed that with the advancement in hierarchy the need for power and

achievement increased rather than Affiliation. He also observed that people who were at the top,

later ceased to be motivated by this drives.

1.13.12 Equity Theory:

As per the equity theory of J. Stacey Adams, people are motivated by their beliefs about the

reward structure as being fair or unfair, relative to the inputs. People have a tendency to use

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subjective judgment to balance the outcomes and inputs in the relationship for comparisons

between different individuals. Accordingly:

If people feel that they are not equally rewarded they either reduce the quantity or quality of

work or migrate to some other organization. However, if people perceive that they are rewarded

higher, they may be motivated to work harder.

1.13.13 Reinforcement Theory:

B.F. Skinner, who propounded the reinforcement theory, holds that by designing the

environment properly, individuals can be motivated. Instead of considering internal factors like

impressions, feelings, attitudes and other cognitive behavior, individuals are directed by what

happens in the environment external to them. Skinner states that work environment should be

made suitable to the individuals and that punishment actually leads to frustration and de-motivation. Hence, the only way to motivate is to keep on making positive changes in the

external environment of the organization.

1.13.14 Goal Setting Theory of Edwin Locke:

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Instead of giving vague tasks to people, specific and pronounced objectives, help in achieving

them faster. As the clarity is high, a goal orientation also avoids any misunderstandings in the

work of the employees. The goal setting theory states that when the goals to be achieved are set

at a higher standard than in that case employees are motivated to perform better and put in

maximum effort. It revolves around the concept of Self-efficacy i.e. individuals belief that he

or she is capable of performing a hard task.

1.13.15 Cognitive Evaluation Theory:

As per this theory a shift from external rewards to internal rewards results into motivation. It

believes that even after the stoppage of external stimulus, internal stimulus survives. It relates to

the pay structure in the organization. Instead of treating external factors like pay, incentives,

promotion etc and internal factors like interests, drives, responsibility etc, separately, theyshould be treated as contemporary to each other. The cognition is to be such that even when

external motivators are not there the internal motivation continues. However, practically

extrinsic rewards are given much more weight age.

1.14 APPRAISALS AS EMPLOYEE MOTIVATION MECHANISM

Keeping in mind the growing attrition rates and the employee dissatisfaction among the

employees, the HR professionals are approaching and using the performance appraisal as a fuelto motivate employees. The latest trend being followed by the HR professionals is to use the

performance appraisal and review process as a motivating mechanism. Various surveys and

studies have testified the relationship between performance review, pay and motivation.

Other than the traditional goal of accessing the performance of the employees, Performance

appraisals and reviews can be used as a tool to reinforce the desired behaviour and competent

performance of the employees.

One of the most motivating factors for the employees, in the Performance appraisal processes is

to receive a fair an accurate assessment of their performance. Inaccurate evaluation is one reason

because of which most employees dread going through performance appraisals. An employee

always expects his appraiser to recognize and appreciate his achievements, support him to

overcome the problems and failures.

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The discrepancies and the inaccuracies in the performance review can demotivate the

employees, even if there has been an increase in the salary. Such inaccuracies can kill the

innovating and risk taking enthusiasm and spirit in the employees. Similarly, inaccurate reviews

with no hike in compensation can increase the attrition rate in the organisation, forcing the

employees to look out for other options.

An employee prefers an accurate performance review with no increase in the salary over

inaccurate performance review with an increase in salary.

Employees, who receive both accuracy and a pay increase during their performance review, are

likely to be the most motivated. Therefore, performance appraisal (review and its consequence

in the form of compensation adjustments) has the potential of motivating employees and

increasing their job satisfaction.

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CHAPTER 2

RESEARCH

METHODOLOGY

2.1 Research Methodology

Research Methodology in common parlance refers to a search for knowledge. One can also

define also research as a scientific and systematic research for pertinent information a specific

topic. Research is an art of systematic investigation. Some people consider research as a

movement, a movement to the known to the unknown.

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According to Clifford Woody: - Research comprises defining and redefining problems,

formulating hypothesis or suggested solutions, collecting, organizing and evaluating data,

making deductions mil reaching conclusion, and at last carefully testing the conclusion to

determine whether they fit the formulating hypothesis.

According to Clover and Basley, it is the process of systematically obtaining accurate answers

to significant pertinent questions by the use of scientific method gathering and interpreting

information.

Marketing research is defined as a systematic gathering and analysis of the data concern with an

objective. The whole activity is divided into various parts and after compilation of that we reach

at certain findings, which enable us to marketing decision. It involves the diagnosis of

information needed and the selection of the relevant and inter-related variables.

2.2 INTRODUCTION

An organizations goals can be achieved only when people put in their best efforts. How to

ascertain whether an employee has shown his or her best performance on a given job? The

answer is performance appraisal. In simple terms, performance appraisal may be understood as

the assessment of an individual's performance in a systematic way, the performance being

measured against such factors as job knowledge, quality and quantity of output, initiative,leadership abilities, supervision, dependability, co-operation, judgment, versatility, health, and

the like. Assessment should not be confined to past performance alone. Potentials of the

employee for future performance must also be assessed.

2.3 STATEMENT OF THE PROBLEM

This study investigates the methods of performance appraisal and its impact on employee

motivation. Thus a research titled Impact of performance appraisal on employee motivation

was carried on.

2.4 OBJECTIVE OF THE STUDY

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i.. To examine the method of performance appraisal used in the organization

ii.. To analyze the significance and benefits of having a strong performance management

iii. To understand the concept in detail of how a good performance appraisal leads to employee

motivation

iv. To analyze the impact of motivation on employee productivity

2.5 SCOPE OF THE STUDY

It will help the company in understanding its employees.

It will help in understanding that which method of performance appraisal is effective

It will help in understanding to know as to how to motivate its employees through

Performance appraisal.

2.6 LIMITATIONS OF THE STUDY

Sample size is small because of the time constraint

Respondent may provide data from their memory recall, there may only be through

rough

estimates.

Survey will be limited in particular area

The sample size is small hence arriving at an overall opinion is difficult

2.7 RESEARCH METHODOLOGY

Research design

Research design is a detailed blue print used to guide the research study towards its objectives.

Descriptive research is used for this study. The major purpose of descriptive research is

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description of the state of affairs, as it exists as present. Which means asking questions to people

who are believed to possess the desired information.

2.8 SAMPLING DESIGN

SAMPLING TECHNIQUE

Stratified random sampling

Under this sampling design item has an equal chance of inclusion in the sample. All choices

being independent of one another. It gives each possible sample combination an equal

probability of being chosen. In this technique the population is stratified in to a number of non

overlapping sub population or strata and sample items are selected from each stratum. Items

selected from each stratum are based on simple random sampling. First stratification and thensimple random sampling is known as stratified random sampling.

Sample size

100 Respondents

2.9 SOURCE OF DATA COLLECTION

Primary Data: Primary data was collected through questionnaire administration

Secondary Data: Secondary data were collected from company resources, internet resources,

books.

2.10 TOOLS OF ANALYSIS

Data collected were analyzed by using quantitative tools and techniques

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CHAPTER 3

COMPANY PROFILE

3.1 INTRODUCTION

Tata Consultancy Services (TCS) is a leading IT services, consulting and business solutions

organization that delivers real results to global businesses, ensuring a level of certainty no other

firm can match. We offer a consulting-led, integrated portfolio of IT and IT-enabled services

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delivered through our unique Global Network Delivery Model, recognized as the benchmark of

excellence in software development.

A part of the Tata group, Indias largest industrial conglomerate, TCS has over 186,500 of the

worlds best-trained IT consultants in 42 countries. The company generated consolidatedrevenues of over US $6.3 billion for fiscal year ended March 31, 2010 and is listed on the

National Stock Exchange and Bombay Stock Exchange in India.

3.2 FINANCIAL HIGHLIGHTS

Fiscal Year End: March 2010

Revenue (2010): 6669.40 M

Revenue Growth (1 yr): 25.10%

3.3 KEY PEOPLE

Chairman: Ratan N. Tata

CEO and Managing Director: N. (Chandra) Chandrasekaran

CFO and Executive Director: Seturaman (Maha) Mahalingam

3.4 BOARD OF DIRECTORS

Non-Executive Board Members

Rata

Documents

dips HR proje t