1. Appendix – I
A
Major Project Report
On
“A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC
SECTOR”
Submitted for partial fulfillment of requirement for the award of degree
Of
Master of Business Administration
CHHATTISGARH SWAMI VIVEKANAND TECHNICAL UNIVERSTY
BHILAI (C.G.)
Session 2010-2012
Supervision By Submitted by
Miss Swati Shukla Nazeesh Ali
Lecture (G.D.R.C.E.T) Roll No.: 5423610015
MBA department EnrollmentNo.:AG8065
MBA IV Semester
DEPARTMENT OF MANAGEMENT
G.D.RUNGTA COLLEGE OF ENGINEERING &TECHNOLOGY
approved by AICTE,New Delhi
Kohka Kurud Road, Bhilai 490024 (C.G.)
1

2. Appendix – II
DECLARATION
I am undersigned solemnly declare that the report of the project work entitled “A
STUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC SECTOR”, is
based my own work carried out during the course of my study under the supervision of Miss
Swati Shukla.
I assert that the statements made and conclusions drawn are an outcome of the project
work. I further declare that to the best of my knowledge and belief that the project report
does not contain any part of any work which has been submitted for the award of any other
degree/diploma/certificate in this University or any other University.
(Signature of the Candidate)
Nazeesh Ali
Roll No.:5423610015
Enrollment No.:AG8065
2

3. Appendix – III
CERTIFICATE BY GUIDE
This to certify that the report of the project submitted is the outcome of the project work entitled
“A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC SECTOR” carried
out by Monali Vaidya, Roll No.:5423610015 & Enrollment No.: AG8065 carried by under my
guidance and supervision for the award of Degree in Master of Business Administration of
Chhattisgarh Swami Vivekanand Technical University, Bhilai (C.G), India.
To the best of the my knowledge the report
i) Embodies the work of the candidate him/herself,
ii) Has duly been completed,
iii) Fulfils the requirement of the ordinance relating to the MBA degree of the University
and
iv) Is up to the desired standard for the purpose of which is submitted.
(Signature of the Guide)
Miss Swati Shukla
Lecture (G.D.R.C.T)
MBA department
The project work as mentioned above is hereby being recommended and forwarded for
examination and evaluation.
3

4. Appendix –IV
CERTIFICATE BY THE EXAMINERS
This is to certify that the project entitled
“A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN PUBLIC SECTOR”
Submitted by
Nazeesh Ali Roll No.: 5423610015 Enrollments No.: AG8065
Has been examined by the undersigned as apart of the examination for the award of Master of
Business Administration degree of Chhattisgarh Swami Vivekanand Technical University, Bhilai
(C.G.).
Name & Signature of Name & Signature of
Internal Examiner External Examiner
Date: Date:
Forwarded by
Academic Head
Department of Management
4

5. Appendix – V
ACKNOWLEDGEMENT
In order to complete any project successfully, functional environment & proper
guidance of the expert on the subject is inevitable. It is often the result of valuable contribution of a
number of individual in direct and indirect manner that helps in shaping and achieving the objective.
I take the opportunity to extend my sincere thanks to my guide respect Miss Swati Shukla.
Member MBA department.
I believe that this endeavor of support has greatly boosted my morale and will help in
a long way to reach. Further mile stone and greater height.
(Signature of the student)
Nazeesh Ali
Roll No.: 5423610015
MBA IV th Semester
5

6. Title page i
Declaration ii
Certificate by guided iii
Certificate by the examiner iv
Acknowledgement v
TABLE OF CONTENTS
Chapter No. Topic Name Page No.
1. Declaration
2. Certificate by examiner
3. Certificate by the guide
4. acknowledgement
Chapter 1 Introduction
1.1 introduction of topic
1.2 objectives of the study
Chapter 2 Literature review
Chapter 3 Problem identification
Chapter 4 Research methodology
Chapter 5 Data analysis & interpretation
Chapter 6 Result &discussion
Chapter 7 Findings& conclusion
Chapter 8 Annexure
6

7. CHAPTER –I
INTRODUCTION
7

8. 1.1 INTRODUCTION OF PERFORMANCE APPRAISAL
performance appraisal is a method of evaluating the behavior of employees in a work place,
normally including both the quantitative & qualitative aspects of job performance, performance
here refers to the degree of accomplishment of the tasks that make up individual’s job.
Performance is measured in terms of results. thus, performance appraisal is the process of
assessing the performance or progress of an employee, or a group of employees on the given job,
as well as his potential for future development .
Thus ,performance appraisal comprises all formal procedures used in organizations to evaluate
contributions, personality & potential of individual employees . in other words performance
appraisal includes the comparison of performance scales of different individuals holding similar
areas of work responsibilities & relate to determination of worth of the scale for the achievement
of organizational objective.
The Performance appraisals are essential for the effective management and evaluation of staff.
Appraisals help develop individuals, improve organizational performance, and feed into business
planning. Formal performance appraisals are generally conducted annually for all staff in the
organization. Each staff member is appraised by their line manager. (Directors are appraised by
the CEO, who is appraised by the chairman or company owners, depending on the size and
structure of the organization).
Annual performance appraisals enable management and monitoring of standards, agreeing
expectations and objectives, and delegation of responsibilities and tasks. Staff performance
appraisals also establish individual training needs and enable organizational training needs
analysis and planning. Performance appraisals data feeds into organizational annual pay and
grading reviews, and coincides with the business planning for the next trading year. Performance
appraisals generally review each individual’s performance against objectives and standards for
the trading year, agreed at the previous appraisal meeting. Performance appraisals are also
essential for career and succession planning.
Performance appraisals are important for staff motivation, attitude and behavior development,
communicating organizational aims, and fostering positive relationships between management
and staff. Performance appraisals provide a formal, recorded, regular review of an individual’s
performance, and a plan for future development. In short, performance and job appraisals are
vital for managing the performance of people and organizations.
DEFINITION
“Performance appraisal is the systematic, periodic & an impartial rating of an employee’s
excellence in matters pertaining to his present job & his potential for a better job.
8

9. APPROACHS OF PERFORMANCE APPRAISAL
_____________________________________________________________
TRADITIONAL APPROAH MODERN APPROACH
 Straight ranking method Assessment centre
 Paired comparison technique Appraisal by results or(m.b.o)
 Man to man comparison method Human asset accounting method
 Grading Behavioral anchored rating
 Graphic rating scale
 Forced choice description method
 Forced description method
 Check list method
 Free essay method
 Critical incidents method
 Group appraisal method
 Field review method
TRADITIONAL METHOD
STRAIGHT RANKING METHOD
This is one of the oldest and simplest techniques of performance appraisal. In this method,
the appraiser ranks the employees from the best to the poorest on the basis of their overall
performance. It is quite useful for a comparative evaluation.
PAIRED COMPARISON
A better technique of comparison than the straight ranking method, this method compares
each employee with all others in the group, one at a time. After all the comparisons on the
basis of the overall comparisons, the employees are given the final rankings.
CRITICAL INCIDENTS METHODS
In this method of Performance appraisal, the evaluator rates the employee on the basis of
critical events and how the employee behaved during those incidents. It includes both
negative and positive points. The drawback of this method is that the supervisor has to note
down the critical incidents and the employee behaviour as and when they occur.
9

10. FIELD REVIEW
In this method, a senior member of the HR department or a training officer discusses and
interviews the supervisors to evaluate and rate their respective subordinates. A major
drawback of this method is that it is a very time consuming method. But this method helps to
reduce the superiors’ personal bias.
CHECKLIST METHOD
The rater is given a checklist of the descriptions of the behaviour of the employees on job.
The checklist contains a list of statements on the basis of which the rater describes the on the
job performance of the employees.
GRAPHIC RATING SCALE
In this method, an employee’s quality and quantity of work is assessed in a graphic
scale indicating different degrees of a particular trait. The factors taken into consideration
include both the personal characteristics and characteristics related to the on the job
performance of the employees. For example a trait like Job Knowledge may be judged on the
range of average, above average, outstanding or unsatisfactory.
FORCED DISTRIBUTION
To eliminate the element of bias from the rater’s ratings, the evaluator is asked to distribute
the employees in some fixed categories of ratings like on a normal distribution curve. The
rater chooses the appropriate fit for the categories on his own discretion.
MODERN METHOD
Assessment centre method: This method was used for the first time in 1930 by the
German army and then in 1960’s by the British army. This method tests a candidate in
different social situations using a number of assessor and procedures. The performance of
an employee an also his potential for a new job is evaluated in this method by assessing his
performance on job related simulations. Characteristics that the concerned managers feel
are important for the success of a particular job are included in these simulations.
Techniques like business games role playing and in basket exercises are used in this
method. The employees are evaluated individually as well as collectively on job related
characteristics. Personal interview and projective tests help in assessing the motivation,
career orientation and dependence on others of an employee. To measure the intellectual
capacity written tests are used. The evaluators in this method consist of experienced
manager working at different levels who prepare a summary report for the management as
well as for the employees. This technique usually measures the planning ability
interpersonal skills and organizational skills of an employee.
10

11. Human Resource Accounting Method: Human resources are a valuable asset for any
organization and it can be valued in monetary terms. This method evaluates the
performance of an employee in terms of costs and contributions. HR costs include
expenses incurred on HR planning recruitment selection induction and training. The
difference between this costs and the contribution by an employee reflects the performance
of that employee. This method is still developing hence is not very popular at present.
Behaviorally anchored rating scale (BARS): This method combines the graphic rating
scale and the critical incident method. It determines in advance the critical areas of the
performance and the most effective behavior to achieve the results. Then the actual job
behavior of an employee is evaluated against the predetermined behavior.
Appraisal through management by objectives (MBO): This concept was introduced by
Peter Drucker in 1954 who named it management by objectives and self control. It is an
effective way it is also known as goal setting approach to appraisal .In this process the
supervisor and subordinate members jointly identify the common goals of the organization
and set the areas of the responsibility of each individual in terms of results expected from
that person. These measures are use for operating the unit as well as for appraising the
performance of the employees.
The 360 degree appraisal: The 360 degree method of performance appraisal is used to
make the appraisal process more transparent, objective and participative. It introduced the
concepts of self appraisal subordinates appraisal, peer appraisal and appraisal by
customers. It is called a 360 degree method because it involves the evaluation of an
employee by persons above him, below him and alongside him. Structured questionnaires
are used to collect information from the seniors, subordinates and peers. The employee to
be evaluated thus acquires a central position and everyone around him participates in the
appraisal process in the 360 degree method. The following four are the main components
of 360 degree appraisal :
Self appraisal: It allows an employee complete freedom in accessing his or her strengths
objectively and identifying the areas of development. The employees get a chance to share
the development areas with their seniors based on their self appraisal and jointly worked
out a plan in tune with the organizational realities like the availability of resources and
time. It also gives a chance to the employee to express his career plans which is in the
interest of the organization as it knows beforehand the aspirations of its employee.
11

12. Appraisal by superiors: An appraisal by superiors involves providing constructive,
feedback about the performance of any employee as well as his development areas during
the review period. It helps in setting goals for the employees that help in achieve the
organizational goals and improve the performance of the employee. The career aspirations
of an employee are also put in proper prospective.
Appraisal by subordinates: This is a unique feature of the 360 degree method of
appraisal. As the subordinates play an important role in the performance of the employee.
The feedback by the subordinates gives firsthand account of how they look at their
superior in terms of working style. The capability of a superior in motivating, delegating
the work, building a team and communicating with them effectively form the basis of
appraisal by the subordinates.
Peer appraisal: It also plays an important role in 360 degree appraisal as the role of peers
is quite important in life of an employee. Selecting the right peers is very important and
peers from the departments that are directly related with the department of the employee
should also be included. It mainly focuses on feedback about the style of functioning of the
employee under review and can also include his ability to work as team leader besides his
co-operation and collaboration.
Potential appraisal: It is different from performance appraisal as it refers to the abilities
of the employees that are not being used at the time of appraisal. It searches for the latent
abilities of the employee in discharging higher responsibilities in future. The potential of
the employees is judged on the basis of his present performance, personality traits, past
experience and age and qualification. It also looks at the unused skills and knowledge of
an employee. It aims at informing the employee their future prospectus and helps the
organization in drawing your suitable successions plan. It also requires updating the
training efforts regularly and advised the employees on things which they can do to
improve their career prospectus.
12

13. 1.2 OBJECTIVE
1. To evaluate the performance of employees.
2. Its help to identify the strength & weakness of employees.
3. Its provide feedback to employees regarding their performance.
4. Its help to identify the necessary training & development programmes.
13

14. CHAPTER –II
LITERATURE REVIEW
14

15. 2.1 LETRATURE REVIEW
The objectives of the Improving Public Sector Performance Project for Honduras are to
strengthen the management of public finances and to establish a more efficient, effective and
transparent public procurement system through: (i) upgrading the public financial management
system; (ii) upgrading the e-procurement platform; (iii) enhancing the internal control systems
over personnel expenditures; and (iv) building capacity of the central administration. There are
five components to the project. The first component is strengthening and consolidating financial
management systems. The objective of this component is to upgrade the technological platform
of the financial management system (SIAFI) and to strengthen its conceptual and functional
framework in order to provide a more efficient processing and effective access to financial
management information. The second component is to strengthening the public procurement
system. The objective of this component is to support the government's initiative to create a
regulatory body with specific goals and objectives, thus strengthening overall governance in the
public procurement system and to improve transparency and compliance. The third component is
improving public sector human resource management. This component has the objective to
improve human resource management (HRM) in the public sector through: (i) enhancing
controls over personnel expenditures, and (ii) improving the attraction and retention of qualified
personnel to gradually. The part of the economy concerned with providing
basic government services. The composition of the public sector varies by country, but in most
countries the public sector includes such services as the police, military, public roads,
public transit, primary education and healthcare for the poor. The public sector might provide
services that non-payer cannot be excluded from (such as street lighting), services
which benefit all of society rather than just the individual who uses the service (such as public
education), and services that encourage equal opportunity. Public sector organizations include all
those financed by public money. For example: all the Departments of central government and its
agents, local authorities and regional assemblies, the NHS, police and the emergency services,
schools and universities, publicly funded arts venues and organizations. The sector includes
many organizations that are extremely large and complex. In most areas of the country, for
example, the NHS and the local council are by far the largest employers.
15

16. The last decade or so has seen a growing interest amongst both academics and
practitioners in the alleged emergence of a post-Fordist production paradigm. It is depicted as
the fulcrum on which the UK’s move towards a knowledge driven economy should turn
and is similarly as one of the ways to address theUK’s perennial productivity lag. Any change
to the organization of work has wide ranging micro and macro implications. Unsurprisingly,
therefore, the purported transformation has stimulated a plethora of research from a variety
of academic disciplines ranging from political economy to ethnographic sociology. This review
seeks structure to this somewhat variegated discourse. By invoking a multidisciplinary
perspective, it attempts to offer a succinct and critical summary of the key theoretical debates
surrounding new forms of work organisation.The paper is structured as follows. First, in order to
locate and clarify the precise terrain of the phenomenon under review, the conceptualization of
the reconfigured production model is explored. As will become clear, this remains an area of
some dissent and indeed controversy. The paper will then review the principal theoretical issues
surrounding the emergent paradigm. For analytical purposes, these will be subdivided in to three
research streams: (a) the potential for the consolidation of the news production regime within
liberal market economies; (b) issues relating to organisational performance and; (c) the
implications of changing organizational practices vis-à-vis employees. As will become evident,
at present research in this area is hampered by both insufficient data and inadequate conceptual
tools. In the final section, therefore, in line with the intellectual thrust of the CLMS Learning as
Work project, the synergies and complementary between the high performance and
learning at work literatures are briefly explored.
While the increased demand for executive coaching in the marketplace has opened up, the
increasing number of coaches of every type, training, and perspective has also grown (Brotman
et al., 1998; Joo, 2005; Kampa-Kokesh, & Anderson, 2001;Wasylyshyn, 2003). It is surprising
that with the increased use of executive coaching and the rising number of coaches, there has not
been a professional association formed to develop and monitor the standards, requirements, and
competency validation solely for executive coaches (Brotman et al., 1998; ICF,
2006;Wasylyshyn, 2003). This need has brought reactions from executives, coaches, and clients
who suggest standardized methods. Executives have recognized the significance of executive
coaching in their professional performance, both personally and organizationally (Effron et al.,
2005;Joo, 2005; Kampa-Kokesh, & Anderson, 2001; Turner, 2006; Wasylyshyn, 2003).During
the beginning years of executive coaching, it was seen as an executive crutch to assist non-
performers. Today, executive coaching is looked upon as a necessary tool and in some cases
reserved only for senior executives (Joo, 2005; Kampa-Kokesh, & Anderson, 2001;
Stevens, 2005; Turner, 2006; Wasylyshyn, 2003). One reason for the about face attitude could be
the value executive coaching brings as a “time-out" break, from the unyielding demands of the
corporate world, for inner-thought, assessment, positive criticism, and a co-development of
strategies (Bacon &Spear, 2003; Brotman et al., 1998; Joo, 2005; Kampa-Kokesh & Anderson,
2001;Kilburg, 1996a; Orenstein, 2002; Stevens, 2005; Turner, 2006; Wasylyshyn, 2003).One of
the premier uses of executive coaching is to deliver "just-in-time" strategies for increasing one's
personal performance and effectiveness by transforming weaknesses into strengths (Bacon &
Spear, 2003; Kampa-Kokesh, & Anderson, 2001;Kilburg, 1996a; Orenstein, 2002; Wasylyshyn,
2003). Due to this increase in personal ROI, corporate America is enamored with executive
coaching and the benefits it has brought in recent years (Bacon & Spear, 2003).With many
corporate incomes decreasing over the past few years, corporations have reevaluated their
training and development practices, to include the use of external sources (Joo, 2005; Kampa-
16

17. Kokesh, & Anderson, 2001; Turner, 2006; Wasylyshyn,2003). As a result, executive coaching
focuses on ensuring alignment with corporate strategy (Bluckert, 2005b; Brotman et al., 1998;
Edwards, 2003; Levinson, 1996; Joo,2005; Orenstein, 2006; Peterson, 1996; Saporito, 1996;
Turner, 2006). In this changing corporate setting, executive coaching must be used in a laser-
focused manner, rather than a liberally used improvised solution (Orenstein, 2006). Those
corporations who have identified the need and usefulness of executive coaching have created an
inner coaching environment to facilitate coaching through internal coaches(Turner, 2006).It is in
the new corporate coaching culture of companies employing their own coaches(internal) where
the chemistry of the coaching relationship takes a back measures in the coaching protocol (Joo,
2005; Kampa-Kokesh & Anderson,
2001; Stevens, 2005; Turner, 2006; Wasylyshyn, 2003). The internal coach, unfortunately, finds
him or herself in a dilemma of possibly losing one of his most prized outcomes, which is,
assisting clients to become masters of change management (Wasylyshyn, 2003). Another
downturn of this "commoditization" of executive coaching is to put a limit on the use of
coaching, and to what extent, documenting the benchmarks, stages, and action steps. Doing so,
realistically, diminishes the coaching process to a cookie cutter approach including a preset
number of sessions and strategies rather than a co-developed strategic plan developed over the
course of going relationship.
The amount of research regarding the topic “Performance Appraisal” is so vast. The topic is
literally not new; it is as old as the formation of the organizations. Before the early 1980’s,
majority of theoretical studies emphasized on revamping the rating system within the
organization. The actions were a great thing to reduce the chaotic of employee’s performance
appraisal (Feldman, 1981). With the passage of the time the methods and rating system among
the employees got enhanced and received an immense appreciation and attentions of the
managers.
Behavioral Observation Scale (BOS) is one of the best techniques utilized by the managers to
arte the employees. The dilemma was on the peak in the 1960s and 1970s. In the same period
couple of new innovated rating scales were introduced, which was Behaviorally Anchored
Rating Scale (BARS) and the Mixed Standard Scale (MSS). The innovations were dominant one
which condensed the errors and improved the observation skills from the performance appraisal
practice. According to the research of Avery and Murphy (1998), there were hundreds of
thousands of researches had been taken place between the periods of 1950 to 1980, which merely
focused on the different types of rating scales? Landy and Farr (1980) reviewed and researched
the methods of performance appraisal in totally a different manner, in which they understand the
rater and process in an organizational context. Other Performance appraisal reports include the
rater characteristics in their report like race, gender and likeability.
After the year 1980 the biasness among the performance appraisal system occurred outrageously
and appraisal had been granted on the favoritism or race and gender basis rather examined the
knowledge, skills and style of the work of the employee. The accuracy criteria among the
performance appraisal system clutched its grip in the start of the 1980s, where the researches
were emphasized on common psychometric biases which include the diversified rating errors
like leniency, central tendency and halo, which were termed as rating errors in the appraisal
method. It has been observed that the bias free appraisals were inevitably true or more precisely
we can say more accurate, but the concept was totally refused by the research of Hulin in 1982.
17

18. According to them the biasfree appraisals were not necessarily accurate (Murphy & Balzer,
1989).
Researches which had been done in the year 1980 were found the most dominating one which
contributed the appraisal system in a great deal. The researches of the1980 also helped out to
clarify some presumed assumptions regarding the performance appraisal, just like the work of
Murphy (1982). Research has included the measure of employee attitudes towards the system of
performance appraisal and its acceptance (Roberts, 1990). Bernardian and Beatty (1984),
suggested in their research that behavioral and attitudinal kinds of measure ultimately prove to be
better anticipator as compared with the traditional psychometric variables, which we have
declared earlier as well, like leniency, halo and discriminability. A Performance Appraisal
system is totally ineffective in practice due to the dearth of approval from the end users (Roberts,
1990).
According to a number of researchers, the enhanced and upgraded performance appraisal
procedure and method will enhance the satisfaction level of the employees and definitely will
improve the process of goal setting within the organization.
Performance Appraisal has been considered as the most significant an indispensable tool for an
organization, for an organization, for the information it provides is highly useful in making
decisions regarding various personnel aspects such as promotion and merit increases.
Performance measures also link information gathering and decision making processes which
provide a basis for judging the effectiveness of personnel sub-divisions such as recruiting,
selection, training and compensation. Accurate information plays a vital role in the organization
as a whole. They help in finding out the weaknesses in the primary areas .public sector is leading
the pack in performance management innovation was confirmed about a year ago, when I signed
on as subject-matter expert for the national benchmarking study on best practices in performance
appraisal sponsored by the American Productivity and Quality Center, DDI, and Linkage, Inc.
My first task was to identify the companies that are doing really innovative stuff in performance
management. But many of these companies turned out not to be “companies.” Many of them
were government agencies, and two of them — the Air Force Research Laboratory and the
Minnesota Department of Transportation — made the final cut as best practice models.
Performance management is the handy umbrella term for all of the organizational activities
involved in managing people on the job. Performance appraisal, of course, is the one we think of
first, and people often use the terms “performance management” and “performance appraisal”
interchangeably. But other activities also find room under the performance management
umbrella — discipline systems, for example. In addition to creating some novel approaches to
assessing and evaluating just how well Charlie and Jane are doing their jobs — performance
appraisal, obviously — government agencies at all levels are reacting in entirely new ways when
Charlie and Jane drop the ball and create problems on the job. Discipline procedures are another
type of performance management system. And what happens when it’s management that drops
the ball? Charlie’s upset because he feels he shouldn’t have been assigned to work overtime;
Jane’s indignant over what she sees as an undeserved written warning. Grievance procedures too
are performance management devices.
In each of these areas, government agencies at all levels are developing and installing
performance management procedures and systems that can appear revolutionary to anyone who’s
locked into old ways of managing people. Historically, performance appraisal has been seen as
merely an event—the painful annual exercise where the manager rates the performance of her
18

19. subordinates over the past 12 months. Operating independently all by itself, the performance
appraisal system was rarely linked directly to the stated mission of the organization or to any
other programs and processes designed to maximize human efforts and intellectual capital.
Independence has now been replaced by integration. At the organizations our
APQC/DDI/Linkage project team examined, public and private alike, the performance appraisal
system is no longer an organizational loose cannon. Items on the performance appraisal are
directly tied to the agency’s strategic plan. The system is designed to forge a visible link between
organizational and individual goals and to reinforce predetermined core competencies.
Moreover, organizational expectations of the performance appraisal system have been upgraded.
Where in the past the system may have been used merely to tell old Joe how he was doing
and justify his annual step increase, organizations now realize that their performance appraisal
system has enormous power to genuinely transform the agency’s culture. One of the major
findings of the national benchmarking study was that best-practice organizations are using their
performance appraisal process as the primary driver in forcing culture change. What’s the
change? It’s the shift from being a best-effort results-driven climate. culture into a truly This
drive to focus organization members on results and not tenure has placed a new requirement on
performance appraisal’s shoulders: the expectation that performance appraisal must help muscle-
build the organization. Government agencies are coming to see that traditional approaches to
people development—like promotion from within based almost exclusively on job tenure—are
no longer good enough. An agency that uses time in grade as its organizational hardening of the
arteries. fundamental criterion for getting ahead is encouraging One of the first organizations to
emerge as a genuine model of best practices in the national benchmarking study was the Air
Force Research Laboratory in Dayton, Ohio, an organization of 3000 people. Their appraisal
system completely designed by their scientists and not by the personnel department, makes the
novel assumption that everyone is performing at a competent level. The appraisal system, they
argue, needs to focus not on the quality of an individual’s performance but on the degree of the
job’s contribution. AFRL deliberately builds jobs big and loads each person with as much
responsibility as possible. When a person can’t handle a job, they ratchet the responsibilities
down to where he can handle the demands. People migrate to the jobs they can handle. Pay is
determined less by the individual’s performance and more by the contribution his or her job
makes to the overall mission. Focusing on results clearly indicates whether an employee is doing
the job for which he is paid. That’s why AFRL's performance management system evaluates
employees' contributions / outputs / results. As a result, AFRL pay raises are based on
contributions to the organization’s mission. The system does not appraise performance or
behavior, only contribution. All employees have variable pay to motivate their performance
toward achieving results that will impact the organization. The new employee has the incentive
to contribute at or above the expected level because next year’s pay may be lowered or the
employee removed if the contribution does not meet or exceed expectations. More specifically,
AFRL's Contribution-based Compensation System (CCS) delineates six key factors:
‰ Technical Problem Solving
‰ Communications/Reporting
‰ Corporate Resources Management
‰ Technology Transition / Transfer (Taking technology out of the laboratory
environment and put it to real-world use)
‰ R&D Business Development
‰ Cooperation and Supervision
19

20. Employees certainly recognize the results-driven nature of the system. AFRL’s leaders admit it:
Fear of being held accountable for results was apparent in some AFRL employees upon the
deployment of the Contribution-based Compensation System. Some employees who didn’t fare
well under the new system have left the organization; others have noticeably worked to improve
their level of contribution. The majority of employees, however, embraced the system because
they recognized the equitable nature of CCS.
REINFORCING CORE COMPETENCIES
Over the past several years, one of the significant developments in the technology of
performance management has been the identification of specific “core competencies” by
organizations. Competencies define for all members of the organization the behaviors, skills,
attributes, performance factors and proficiencies that every organization member is expected to
possess and display. They are limited in number and critical to organizational success. The
performance appraisal system plays several roles here. First, it is the mechanism that helps the
organization highlight and communicate the small number of critically important behaviors and
skills against which every single employee will be assessed. In addition, creating a new
performance appraisal system may help force the organization to define just what attributes or
factors are actually at the organization’s core. Finally, the appraisal system can guarantee that
these competencies are fully understood and institutionalized. The senior management of the
Minnesota Department of Transportation defined its mission, vision and values several years ago
in response to a 1996 employee survey. Seven core competencies and a dozen individual
characteristics expected of every Mn/DOT employee were also identified as part of that process.
Top management realized that determining the core competencies — as difficult as doing that
had been — was in fact the easy job. The hard job would be communicating them to every
Mn/DOT employee. Even harder would be making sure that they showed up, day in, day out, in
everybody’s job performance. That’s where performance appraisal came in. In early 1998
Mn/DOT’s senior management commissioned a performance appraisal implementation team.
They put together a group representing a diagonal slice of the organization: managers and
professional employees, supervisors, and technicians from different levels and functions and
geographical locations throughout the agency. This twenty-member task force was made
responsible for creating a performance appraisal system that directly related Mn/DOT’s mission,
vision and values to each employee’s job. In addition, top management demanded that the
system reinforce the importance of all employees’ demonstrating the core competencies and
individual characteristics they had identified
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT
To begin, “Positive Contacts” are included as a formal element of the system. Making
recognition a formal part of the system reminds managers that reinforcing good performance is
just as important as confronting poor performance. It also makes employees aware that the
organization expects that they will be recognized when they perform well. Most important, it
makes recognition of good performance a policy expectation of the organization, not merely an
easily ignored piece of prosaic advice dispensed in a management-training program.
20

21. Now consider the other end of the chart. Another major difference between the conventional and
positive models is the new approach’s recognition that the discipline process actually involves
only three steps, not four. Termination is not the final step of the discipline system, as the
traditional progressive-discipline model would have it. More accurately, termination represents
the failure of the discipline system. A commonly used metaphor holds that “Discharge is the
capital punishment of organizational life.” That metaphor is nonsense. The proper metaphor for
discharge is that it is a no-fault divorce. “You’re a good person,” the organization says to the
individual when all the steps of disciplinary action have proved fruitless, “and we’re a good
employer. But your goals and needs and our goals and needs can’t be reconciled. You need to
find a place to work where you can be happy; we need to find someone to fill this job who can
meet our expectations. We now must go our separate ways.”
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT
THE INITIAL STEPS OF FORMAL DISCIPLINARY ACTION:
REMINDERS I AND II
When informal coaching sessions and performance improvement discussions are unsuccessful in
solving a performance or behavior problem, the first level of formal disciplinary action is a
REMINDER I. The supervisor discusses the problem, reminds the employee of his
responsibility to meet the organization's standards, and gains the employee’s agreement to return
to fully acceptable performance. If the problem continues, the supervisor moves to a
REMINDER II. Again the supervisor talks to the employee and gains his or her agreement to
solve the problem. After the meeting, the supervisor formally documents the discussion in a
written memo to the employee. The term Reminder is chosen deliberately. Unlike a warning or
reprimand, we are in fact reminding the employee of two things. First, we’re reminding him of
the specific gap between his existing performance and the performance we expect. Second, we
are reminding him that it is his responsibility to deliver the goods and do the job that he is being
paid to do. Using Reminders I and II eliminates another nagging annoyance generated by the
traditional system: the issue of “oral” and “written.” If a supervisor gives a subordinate a “Verbal
Reprimand” or an “Oral Warning,” is that action documented? Of course. Is the documentation
written down? Of course. So doesn’t that turn an “Oral Warning” into a “Written Warning”?
Don’t fight that battle. Call it a Reminder I or a Reminder II to indicate simply the level of the
step, and describe the documentation procedures separately.
THE FINAL STEP: DECISION MAKING LEAVE
When the initial steps of formal disciplinary action are unsuccessful in convincing an individual
to solve a performance problem, the need for a dramatic, final-step gesture arises. The positive
discipline approach now provides an unexpected, authoritative, and counterintuitive final step:
the Decision Making Leave. The employee is suspended for one day. He is told to return the on
following day with a final decision: either to solve the immediate problem and make a total
performance commitment to fully acceptable performance in every area of the job, or to resign
and seek more satisfying employment elsewhere.
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT
21

22. The employee is paid for the day to demonstrate the organization’s good faith desire to see him
change and stay. He is also specifically advised that if another problem requiring disciplinary
action arises, he will be terminated. The unconventional aspect of a paid disciplinary
suspension is the element of the non-punitive approach that immediately attracts the most
attention. But the organizations that have adopted the process report significant benefits:
IT DEMONSTRATES GOOD FAITH.
Most organizations see themselves as decent and enlightened employers; they want everything
that they do in their employee relations practices to reflect and confirm this view. Paying the
employee for the day allows them to send the message that when we say we want the individual
to use the time seriously to think through whether this is the right job for him, we’re serious.
IT TRANSFORMS ANGER INTO GUILT.
Test your experience: most employees who receive an unpaid suspension are irate; many return
embittered by the experience. But our intent, even with the old system, is not primarily to punish
an individual for his transgressions. It is to send a wake-up call, to get him to take responsibility
for his own behavior and performance. But docking his pay makes the agency’s words hollow.
Paying the employee, on the other hand, routinely eliminates the anger that commonly results
from final step disciplinary transactions.
IT’S APPROPRIATE FOR ANY JOB
Traditional approaches to discipline are typically seen as appropriate only for employees in
operational, direct-labor, blue-collar jobs. But people problems arise throughout the organization.
Public sector organizations often reject tradition al approaches to discipline for professional,
exempt, managerial employees but find no satisfactory alternative. A decision making leave is an
appropriate transaction for any individual whose performance violates organizational norms.
IT MAKES LIFE EASIER FOR SUPERVISORS.
Most supervisors hate having to take disciplinary action. Many supervisors themselves havecome
up from the ranks and know their subordinates better as peers than as bosses. Using a decision
making leave allows supervisors to handle even the most serious disciplinary problems without
feeling the need to apologize.
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT
IT GETS RID OF MONEY AS AN ISSUE.
While the employee is away, we want him to be thinking about the requirements of his job, his
own occupational goals, and whether the two can be reconciled. Forcing the employee to worry
about how he will make up for the pay he has lost dilutes the chances that the more important
issues will be seriously considered.
IT REDUCES HOSTILITY AND THE RISK OF WORKPLACE VIOLENCE.
IT REINFORCES YOUR VALUES.
Most public sector organizations take pride in being fair employers and want to be seen as highly
desirable places to work — an employer of choice. But traditional, punitive discipline systems
violate the spirit of the organization’s values. Using a decision making leave and focusing on
22

23. individual responsibility allows the discipline system to be the most visible evidence of the
organization’s bone-deep commitment to assuring that its values are practiced, even in the most
difficult situations.
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT
Since TDMHMR lead the way, dozens of other public sector organizations have adopted a non
punitive procedure for dealing with the everyday problems of failure to maintain regular
attendance, poor performance, and unacceptable conduct. Their implementations of the system
are always met with the same initial concerns and misconceptions: that somehow, by not making
the employee suffer financially, we are somehow rewarding misbehavior. That employees will
intentionally misbehave in order to get a free day off. That employees will view the system as a
joke or management gimmick. Their concerns have been checked, tested and proven unfounded.
One of the greatest advantages of the non-punitive approach, organizations report, is that it shifts
the responsibility for performance management from the supervisor to the employee. Instead of
reprimanding the employee for his misdeeds, the supervisor now insists that the individual make
a choice: change and stay with the organization, or leave and find greener pastures elsewhere.
The dignities of both parties are preserved, but the demand that everyone adhere to the
organizations standards is reinforced. When Mecklenburg County implemented the
DISCIPLINE
WITHOUT PUNISHMENT system a few years ago, the first person to reach the point of a
decision making leave was a young man who functioned as the department receptionist. “He was
everything you didn’t want in an employee — arrogant, insolent and unconcerned with anyone
but himself,” his supervisor explained later. He went through the reminder steps and quickly
reached the decision-making leave level. He returned the following day, chagrined. He told his
supervisor that while on the decision making leave he realized that all his life he’d really wanted
to be a barber. He had called all the barber schools in the county, had found one with a class
starting in three weeks, and asked if he could resign voluntarily and work the three weeks until
his class started. She instantly agreed. “His performance during those three weeks was
excellent,” she reported. “And just before he left he wrote a memo to every county employee he
had worked with, telling them he was leaving to go to barber school, and asking that in six
months, when they needed a haircut, to look him up!” Not every story has that happy
ending. But public sector organizations that adopt the positive approach discover that problems
get resolved faster, supervisory stress decreases, and challenges to discipline and discharge
action are significantly reduced.
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT
THE STATE OF GEORGIA STUDY
In 1996 the State of Georgia decided to implement the DISCIPLINE WITHOUT
PUNISHMENT system in every agency throughout the state. Late in 1998 a major study was
completed of the results of DISCIPLINE WITHOUT PUNISHMENT in the first five agencies to
implement the approach. In addition to other research, 282 supervisors in these five agencies
were surveyed about their experiences with the new system. In his November 13, 1998 letter to
23

24. every state agency executive, Dana Russell, Commissioner of the State Merit System of
Personnel Administration, wrote: “A little over a year ago five Georgia State agencies
streamlined their ability to handle disciplinary action by installing DISCIPLINE WITHOUT
PUNISHMENT as their discipline policy. “Last June, surveys were sent to the personnel
officers and supervisors of those five agencies to learn how well the program had served them. A
glance at the results reveals that the overwhelming majority of managers and supervisors report
very positive results. For example, out of 282 supervisors, 63% report that the Performance
Improvement Discussion prevented disciplinary action “every time.” That alone represents a
significant savings of time and productivity.
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT
PEER REVIEW
One of DISCIPLINE WITHOUT PUNISHMENT’S great benefits is that it makes you look good
to a jury. But even better than looking good to a jury is avoiding facing a jury — or an
arbitrator, or administrative law judge, or EEOC hearing officer — at all. Peer Review is a
formal management system — an Alternative Dispute Resolution system — for resolving the
everyday complaints and disputes that arise in all companies. It is a grievance procedure for an
organization's non-union work force that can prevent problems from ever getting to court. Most
government agencies that have adopted the approach follow a similar procedure. When an
employee can't get a problem solved by talking to his or her boss and following the normal chain
of command, he or she can elect to use the Peer Review procedure for a final and binding
resolution of the complaint. The employee presents his case to a panel made up of both trained
employee volunteers — people just like himself — and managers. He explains the problem and
tells the panel what he feels should be done to solve it. Panel members (typically three peers and
two managers) ask questions, interview witnesses, research precedents and review policy. When
the panel feels sufficiently well informed, each member casts a secret ballot to grant or to deny
the employee's grievance. Majority rules. A letter explaining the panel's decision is sent to the
employee. All panel members sign; no minority opinions are permitted. Everyone gets back to
work. The issue is settled. Organizations that have implemented Peer Review report that it
creates a problem solving partnership between employees and managers. It builds employee
respect for management and the tough decisions managers are often required to make. It
demonstrates management's genuine belief in decision-making at the lowest possible level. Peer
Review proves management's conviction that employees are trusted partners in the enterprise.
But isn’t giving employees the power to overturn management’s decisions just turning theasylum
over to the inmates? No, experienced organizations report. With Peer Review, complaints are
heard, investigated and resolved by people who know your organization. Outside arbitrators and
mediators, judges and juries don't care about your company. Your employees do. And forget
“open door” policies — they just don't do the job. Employees are usually skeptical; courts rarely
uphold them. Open door systems can't work well when managers are expected to back each other
up.
PUBLIC SECTOR ORGANIZATION — TODAY’S INNOVATIVE LEADERS IN
PERFORMANCE MANAGEMENT Any organization implementing a peer review complaint
procedure maintains a lot of control over the process. It decides what complaints are appropriate
for a panel to hear and which fall outside its jurisdiction. Management decides who’s eligible to
24

25. serve as a panelist, how the pool of potential panelists will be trained, and how individuals will
be selected when a case comes up for review. When the City of Carrollton, Texas installed its
system several years ago, they provided for the city manager in conjunction with personnel to
decide who will be panelists. Panelists can volunteer others, volunteer themselves, and
supervisors can recommend. They ended up with more volunteers than they were able to train
.They decided to train a total of thirty panelists — six Department/Division Managers, six
supervisors, and 18 non-management employees. Kathryn Usrey, Carrollton’s director of
personnel, acts as the panel's facilitator. She insures that all documentation and witnesses are
available to the panel. While she doesn’t have a vote, she does have the authority to advise the
panel about the boundaries of their roles. Besides getting employee complaints resolved, Ms.
Usrey reports another benefit — it helps keep supervisors from making illogical decisions. It’s
easy to get a supervisor to rethink his position by asking, “How do you think this will play out if
he takes it to a jury of his peers?” "The hardest part is selling the system to supervisors,” Usrey
said. “They fear that you're turning control of the workplace over to the employees." To
counteract that, the City held a series of "massive" employee meetings chaired by the City
Manager. Peer Review is efficient and inexpensive. Once an employee becomes an adversary,
costs balloon. With Peer Review, salary and travel costs are typically the only expenses. The
atmosphere of a panel meeting is businesslike with no complicated rules of evidence, no
courtroom trappings, no lawyers. Issues get surfaced, explored and resolved. Finally, your
employees can be trusted. Peers don't automatically stick together; there's no “us vs. them” on
the panel. Your employees are just as concerned about fairness and justice as you are. Three-to-
two splits between peers and managers are rare. But the best part of Peer Review is its ability to
keep unions at bay and problems out of court. The only benefit union organizers can still deliver
is an impartial grievance system. Peer Review removes the organizer's last tool and can keep a
company union-free.
.
IN PERFORMANCE MANAGEMENT, PUBLIC SECTOR LEADS THE
PACK
Innovative performance management systems are no longer found exclusively in private sector
organizations. The evidence is clear — America’s cities, state and federal agencies, and other
public sector organizations are taking a leading role in creating and implementing novel and
highly effective approaches to managing people on the job.
INTEGRATING MISSION, VISION AND VALUES INTO
PERFORMANCE APPRAISAL
The performance appraisal implementation team created one of the most sophisticated
performance management systems of any organization in the country. To begin, they took each
of the core competencies — Leadership, Learning and Strategic Systems Thinking, Quality
Management, Organizational Knowledge, Technical Knowledge and People Management — and
developed a unique twist on conventional appraisal techniques. Instead of defining what each of
those terms meant, they instead described the behavior one would likely see exhibited by a true
master performer.
25

26. For example, for their core competency of “Organizational Knowledge,” instead of defining
what was meant by the phrase, they described how you could spot somebody who knows the
organization perfectly
LEARNING AND STRATEGIC SYSTEMS THINKING:
Accepts responsibility for continued improvement/learning. Appreciates and can explain the
mission of each individual work unit and the importance of the tie between them to make the
entire operation whole. Acquires new skills and competencies and can explain how they benefit
Mn/DOT. Regularly takes all transportation forms (i.e., bicycle, light rail, highways, etc.) into
account in planning and problem solving. Seeks information and ideas from multiple sources.
Freely and intentionally shares ideas with others. By describing the performance that one might
observe in someone who has mastered this area instead of just providing a dictionary-style
definition, the implementation team made the lives of Mn/DOT appraisers much easier. Now,
when an employee asks her boss what it is that the agency expects of her in the various
competency areas, all the boss has to do is hand her a copy of the appraisal form and
say, “Here. Read this. And then just do what it says.”
A BETTER RATING SCHEME
As clever as their descriptions of mastery performance are, the Mn/DOT team ingeniously solved
still another perpetual performance appraisal dilemma when they constructed the rating scale for
appraisers to use in evaluating people’s performance in each competency area. Instead of forcing
raters to use absolute judgments for their assessment of the individual’s performance,instead they
asked how often Sally performed as a master would in each area. In other words, rather than ask
appraisers to judge the quality of a subordinate’s performance — was Susie Marginal or
Competent or Distinguished; did Joe Fail to Meet Standards, Meet Standards or Exceed
Standards — the new Mn/DOT process instead asks the rater to indicate how frequently Susie or
Joe performs at a mastery level .The scale values for this part of the Mn/DOT process are
Occasionally, Sometimes, Frequently, and Regularly. This approach greatly increases the
effectiveness of coaching and lowers the recipient’s defensiveness when bad news has to be
delivered. The manager no longer has to confront Mary with his judgment that in the area of
quality she is “Unacceptable” or “Below Standard” or a “2.” The manager can now say, “Mary,
in the competency area of Quality, occasionally I see you acting the way the form says a master
performer would act. What do you need to do so that 12 months from now I can say that I see
that kind of performance frequently or regularly?” For those areas that don’t lend themselves to
a behavioral frequency rating system, Mn/DOT incorporated two other inventive techniques.
First, they recognized that the label for the middle position on the rating scale — the place where
most people’s performance usually falls — is typically felt to connote average or mediocre.
Nobody wants to be seen as a “—” student; nobody likes that middle rating. Their solution was
to abolish language that suggested that performing in a fully acceptable manner was tantamount
to mediocrity. Instead the term they came up with for the middle rating was, “Fully Successful:
Totally competent performance; Good solid contributor.” Who can complain about being called
fully successful, even if two higher categories of “Clearly Superior” and “Truly Distinguished”
are available for those who have genuinely earned them? Finally, on the appraisal form itself
Mn/DOT specifically indicated the ratings distribution likely to show up in a large organization.
Thus the form tells appraisers that typically less than 5% of people fall into the categories of
“Truly Distinguished” or “Unsuccessful”; about 15% might be “Somewhat Successful” with
26

27. 30% or so demonstrating “Clearly Superior” performance. Finally, the form tells raters and
ratees alike to expect about 50% or more to qualify for the middle “Fully Successful” rating.
MAKING THE APPRAISAL PROCESS POSITIVE
Research on performance appraisal, going back to some of the first studies conducted at General
Electric and published in 1954, confirm that criticism has little effect on producing lasting
behavioral change. Reinforcement of strengths, talents, and positive behaviors however, can
generate an increase in their frequency. How do we put a positive spin on performance appraisal,
the most scorned and derided of all management processes? The National Security Agency found
a simple and unpretentious way to create a positive tone for its new appraisal process that it
incorporated into its formal appraisal procedures. At NSA, all raters are told to ask their ratees, a
few weeks before the writing of the annual evaluation, to send in a list of all of the contributions
and accomplishments the subordinate has made over the past 12-month appraisal period.Only
include the positives, supervisors are instructed to tell their subordinates. And keep it informal,
too — just send me an email or write it on the back of an envelope and drop it on my desk?
So what’s the big deal? First, asking the subordinate to compile a list of successes and send it to
the boss before the formal appraisal is written certainly reinforces the organization’s message
that it wants the appraisal process to be an affirmative, constructive and positive process. This
notion is even more strongly reinforced when the appraiser goes on to explain that he doesn’t
want a balanced picture. “If you’ve had any failures over the year,” he’s told to tell his
employees, “or a project that didn’t go right, or anything else that doesn’t reflect you at your
best, leave it off the list. I only want a list of things that you’re genuinely proud of.” More
important, and more subtle, is the other reason for asking for the accomplishments list. Probably
nothing is more embarrassing to an appraiser than having an employee finish reading her annual
review and moan, “You didn’t even mention the Thompson contract I landed last February!” It’s
easy to overlook the triumphs and achievements of others; we rarely disregard our own. By
asking appraisers to request an accomplishments list from subordinates, it is helping to assure
that the appraiser will not be embarrassed by inadvertently ignoring a success that should be
recorded on the annual review. The City of Irving, already a model of innovation for its
development of a unique approach to the assessment of competencies, took NSA’s ideas of the
accomplishments list one valuable step further. As annual appraisal time approaches, each city
employee is asked to fill out a short questionnaire that kicks off the process. The form consists
only of four open-ended questions:
1. In appraising your performance, are there any other persons you work with or around with
whom your supervisor should speak to get a more complete picture of how you do your work /
get results?
2. Of what accomplishments and skills acquired during the last appraisal period are you
particularly proud?
3. What can be done to make you more effective in your job?
4. What can be done to help you provide better service to your customers?
INCORPORATING TECHNOLOGY INTO PERFORMANCE APPRAISAL
Technology can make the performance management process simpler. It is far easier for an
appraiser to access an electronic form on her company’s Intranet than to labor with pencil and
paper. Sophisticated software can allow senior managers to see both the distribution of
performance ratings across the entire organization and view pay inequities instantaneously.
27

28. Course enrollment to meet development needs can be done without forms and phone calls. Most
sophisticated organizations today, and all of the best-practice models in the national
benchmarking study, are seeking ways of using technology to reduce the administrative burden
of performance management, a burden that grows as the performance management system is
increasingly linked with compensation, development, and perhaps even an agency’s 360-degree
feedback system. Many are also finding innovative ways to use technology for just-in-time (JIT)
feedback and training.
No organization today is using technology better than the Air Force Research Laboratory —
again, an example of a public sector organization leading the pack. AFRL's advantage comes
from their highly sophisticated point-and-click software. In addition to allowing supervisors to
more efficiently create job descriptions and complete employee assessments, the software helps
the organization automate what would otherwise be administratively difficult pay changes while
simultaneously ensuring pay equity. Their computer-based, paperless process permits
performance management system administrators to ensure equity throughout AFRL by graphing
employee positions based on the relationship between pay and performance. Both supervisors
and system administrators are provided with instant information. Furthermore, they can
manipulate pay variables and instantly see the effect on the overall distribution, thus allowing
them to make decisions that are more informed. Their software links ten geographically
disbursed sites, walks managers through the complete appraisal process and allows all
assessment and pay data to be hierarchically rolled up throughout the organization.
FROM PERFORMANCE APPRAISAL TO PERFORMANCE
IMPROVEMENT
Performance appraisal is only one example of the lead public sector organizations are taking in
performance management innovation. The purpose of performance appraisal is to identify the
quality of an individual’s job performance. What happens when that quality is unacceptable?
One of the most innovative performance management procedures public sector organizations are
installing is a non-punitive, DISCIPLINE WITHOUT PUNISHMENT approach when informal
conversations fail to solve problems of absenteeism, poor performance and shabby attitudes.
Organizations as varied as the Charlotte (NC) Housing Authority, Florida’s Pinellas County and
North Carolina’s Mecklenburg County, the Congressional Budget Office, the University of
Illinois, the City of San Angelo (TX), the Houston Department of Aviation and the entire State of
Georgia have rejected traditional adversarial disciplinary responses. In these organizations,
reprimands, warnings, demotions, and unpaid disciplinary suspensions are a thing of the past.
Instead, they have adopted an approach that requires errant employees to take personal
responsibility for their behavior and commit to fully satisfactory performance as a condition of
continued employment.
THE TRADITIONAL APPROACH TO DISCIPLINE
Since the 1930s, public and private organizations alike have settled on a common procedure to
handle organizational lapses from grace: “progressive discipline.” This traditional progressive
discipline system was developed seventy years ago when unions demanded that companies
eliminate summary terminations and develop a progressive system of penalties that would
provide a worker with a brand new benefit — protection against losing his job without first being
fully aware that his job was at risk. This traditional, progressive-discipline model instructs the
supervisor to begin the problem solving process by conducting ill defined “coaching and
28

29. counseling” sessions. When coaching and counseling fail, the supervisor then is told to move
into formal disciplinary action, almost always described as a four-step process. An Oral Warning
is followed by a Written Warning. If the problem continues, the supervisor then suspends the
employee for a period of several days without pay, or writes a final warning notice, or places the
employee on probation. If the individual still does not correct his performance, termination
follows.
WHAT’S WRONG WITH THIS TRADITIONAL APPROACH?
Traditional progressive-discipline is America's criminal justice system brought into the
workplace. The basic premise of this traditional discipline system is that crime must be followed
by punishment. With its constant quest to “make the punishment fit the crime,” it attempts to
provide an awkward mix of retribution and rehabilitation. A growing number of public-sector
organizations have found a variety of problems with the traditional approach to discipline that
have caused them to examine and revise their practices and approach. 1930s and foisted on
unwilling companies and agencies who resisted having a discipline system at all. As a result, our
traditional system reflects the adversarial, labor vs. management, us vs. them assumptions that
prevailed in those hostile times. In fact, the discipline system that most organizations use today is
probably the only remaining vestige of the acrimonious 1930s approach to people-management
that still remains in our managerial toolkit.
IT MAKES THE SUPERVISOR THE BAD GUY
Most supervisors hate having to take disciplinary action. With its criminal justice mechanism,
the system forces the supervisor to become the employee’s adversary. The supervisor feels like
he’s the bad guy, the one who’s wearing the black hat.
IT’S NOT A CORRECTIVE PROCESS
Organizations often discover that their supervisors don’t see their discipline procedure as a
corrective devise. To them, it’s the procedure they must follow to generate enough paperwork to
justify discharge once they’ve decided that an employee’s termination is in order. They view the
steps of the discipline system merely as the hoops put up by the personnel department for them
to jump through in order to effect a problem employee’s firing. As a result, they don’t even
begin the discipline process until they have given up hope of ever correcting the problem.
THE TRADITIONAL DISCIPLINE SYSTEM OFTEN CLASHES WITH THE
ORGANIZATION’S VALUES
A large number of public sector organizations today have carefully-drafted, formal statements of
their vision and values. They have considered carefully what kind of organization they are and
what they aspire to be. But these values are often in direct conflict with organizational practices
when the time comes for disciplinary action.
THE TRADITIONAL APPROACH SIMPLY ASKS TOO LITTLE
The traditional progressive-discipline approach is certainly unpleasant. It breeds resentment and
hostility. But the traditional system is flawed by more than just its exclusive reliance on
punishment: it is insufficiently demanding. Punishment — warnings, reprimands, suspensions
without pay — seems like a tough way of assuring compliance with organizational standards. If
someone fails to meet expectations, we punish that individual until he complies. But compliance
29

30. is all that the traditional system can produce, and public sector organizations today need more
than mere compliance.
We can punish people into compliance. But we cannot punish people into commitment. And
genuine commitment to the organization is the primary impetus driving innovative public sector
organizations to seek a more effective approach.
HOW DOES THE POSITIVE DISCIPLINE APPROACH WORK?
Like traditional discipline systems, the DISCIPLINE WITHOUT PUNISHMENT approach
starts with informal discussions. Like conventional approaches, it then moves to a series of
progressive disciplinary steps when these informal conversations fail to produce results. But the
differences between positive discipline and conventional disciplinary practices are dramatic.
To begin, “Positive Contacts” are included as a formal element of the system. Making
recognition a formal part of the system reminds managers that reinforcing good performance is
just as important as confronting poor performance. It also makes employees aware that the
organization expects that they will be recognized when they perform well. Most important, it
makes recognition of good performance a policy expectation of the organization, not merely an
easily ignored piece of prosaic advice dispensed in a management-training program. Now
consider the other end of the chart. Another major difference between the conventional and
positive models is the new approach’s recognition that the discipline process actually involves
only three steps, not four. Termination is not the final step of the discipline system, as the
traditional progressive-discipline model would have it. More accurately, termination represents
the failure of the discipline system. A commonly used metaphor holds that “Discharge is the
capital punishment of organizational life.” That metaphor is nonsense. The proper metaphor for
discharge is that it is a no-fault divorce. “You’re a good person,” the organization says to the
individual when all the steps of disciplinary action have proved fruitless, “and we’re a good
employer. But your goals and needs and our goals and needs can’t be reconciled. You need to
find a place to work where you can be happy; we need to find someone to fill this job who can
meet our expectations. We now must go our separate ways.
30

31. CHAPTER –III
PROBLEM IDENTIFICATION
31

32. 3.1 PROBLEM IDENTIFICATION
The research comprises of defining and redefining problems, formulating hypothesis or
suggested solutions; collecting, organizing and evaluating data, making deductions and
reaching conclusion; and at last carefully testing the conclusions to determine whether they
fit formulating hypothesis. The research process is carried out to a series of step, which are
required to be taken in chorological order. The major marketing research steps are as follows:
 Problem identification.
 Research design.
 Fieldwork.
 Data analysis & interpretation.
 Report Presentation.
The first and foremost step in this research is to identify the problem chosen for
investigation. The step has very significance, once it is said “A Problem well identified is
half way to solution”. On the other hand if the problem identified vaguely, a wrong problem
is identified, or research is not clarified, then the research result may be completely useless
for the management, and the research effort of the investigation will be a futile exercise.
32

33. CHAPTER –IV
RESEARCH METHODOLOGY
33

34. 4.1 RESEARCH METHODOLOGY
“Research Methodology is a way to systematically solve the research problem.” It is a science of
studying how research is done scientifically. We study the various steps that are generally
adopted by a researcher in studying his research problem along with logic behind them.
This study has used an exploratory design to analyze the effectiveness of training and
development for retaining the employees of BSP.
Research Methodology may be summarized in following steps:-
1. Defining Research Objective.
2. Preparing Research Design.
3. Implementation of Research Design.
“Research Design is arrangement of condition for collection & analysis of data in a manner that
aims to combine relevance to research purpose with economy in procedure.”
Methods of Data collection
Questionnaire:-
A Questionnaire consists of a number of questions printed or typed in a definite order on a form.
Questionnaire is mailed to respondents who are expected to read & understand the questions &
write down the reply in the space meant for purpose in questionnaire itself. Questionnaire
contains simple & straight forward questions for the respondents.
Survey:-
Survey are concerned with describing, recording, analyzing & interpreting conditions that either
existed or exist. Surveys are example of field research.
Sample Unit
Sample is the representative unit of the population .It is neither feasible nor desirable to cover
entire population so; the sample size is taken 50.
34

35. Sources of Data
Primary Data :
“The Primary Data are those which are collected afresh & for the first time & thus happen to be
original in character.”
Secondary Data :
“The Secondary Data are those which have already been collected by someone else & which
have already been passed through statistical process.”
Population :
“Population refers to total of items about which information is desired.” Population is said to be
finite if it consist of fixed number of elements to enumerate it in totality.
Sample Unit :
“The elementary units or group or cluster of such units form the basis of sampling process they
are called as Sample Units.”
RESEARCH METHODOLOGY IN NUTSHELL:-
Universe - Employees
Sample size - 50
Sampling Method - Convenient Sampling
Sampling unit - Employees of public sector
Source of data - Primary, secondary
Data collection tool - Questionnaire
Sample location - Bhilai
35

36. 4.2 Hypothesis:-
Null Hypothesis (H0):-
Employees are aware with performance appraisal system in organization.
Alternative Hypothesis (H1):-
Employees are not aware with performance appraisal system in organization.
Q1. In your Opinion Performance Appraisal is?
Evaluation of employees 20
Promotion of employees 10
Job satisfaction of employees 10
Motivation 10
Sales
10
20 Evaluation of employees
10 promotion of employees
job satisfaction of employees
10
Motivation
INTERPRETATION—
While conducting the research project it is found that 20% of employees said performance
appraisal is evaluation of employee,10% employees said promotion of employees, 10% said job
satisfaction of employee, where as 10% said motivation of employees.
36

37. CHAPTER –V
DATA ANALYSIS & INTERPRETATION
37

38. TABULATION, INTERPRETION
AND
PIE PRESENTATION OF DATA
Q1. In your Opinion Performance Appraisal is?
Evaluation of employees 20
Promotion of employees 10
Job satisfaction of employees 10
Motivation 10
Sales
10
20 Evaluation of employees
10 promotion of employees
job satisfaction of employees
10 Motivation
INTERPRETATION—
While conducting the research project it is found that 20% of employees said performance
appraisal is evaluation of employee,10% employees said promotion of employees, 10% said job
satisfaction of employee, where as 10% said motivation of employees.
38

39. Q2. Do you receive any increment in your salary after performance Appraisal?
Yes 35
No 15
Sales
15
Yes
35 No
INTERPRETATION—
While conducting the research work it is found that 35% employees are receive any increment in
their salary after performance Appraisal & 15% are not receive.
39

40. Q3. Do you think that performance Appraisal help to provide an atmosphere where all are
encouraged to share one another burden.
Yes 30
No 20
Sales
20
Yes
30
No
INTERPRETATION—
30% employees are say yes that performance Appraisal help to provide an atmosphere where all
are encouraged to share one another burden,& 20% employees say no.
40

41. Q4. Do you think performance appraisal helps people to set and achieve the meaningful goals?
Yes 35
No 15
Sales
15
Yes
35 No
INTERPRETATION—
While conducting the research work it is found that 25% employees think that performance
appraisal helps people to set and achieve the meaningful goals & 10% employees are not set and
achieve the meaningful goals.
41

42. Q5. Do you think performance appraisal give constructive criticism in a friendly and positive
manner?
Yes 35
No 15
Sales
15
yes
35 no
INTERPRETATION—
35% employees said yes to the performance appraisal give constructive criticism in a friendly
and positive & 15% employees said no.
42

43. Q6. Do you think that performance of employees improve after process of performance
appraisal?
Yes 30
No 20
Sales
20
Yes
30
No
INTERPRETATION—
35% said yes to the performance of employees improve after process of performance appraisal &
10% employees said no.
43

44. Q7. Do you think performance appraisal improves motivation and job Satisfaction?
Yes 45
No 5
Sales
5
Yes
No
45
INTERPRETATION—
While conducting research project it is found that 45% employees improves motivation& job
satisfaction where as 5% employees not improves.
44

45. Q8. Is the top level management partial in Performance Appraisal?
Yes 10
No 40
Sales
10
Yes
No
40
INTERPRETATION—
While conducting the research project it was found that 10% employees said yes the top level
management partial in Performance Appraisal where as 40% said no
45

46. Q9. Do you think performance appraisal helps to change behavior of Employees?
Yes 39
No 11
Sales
11
Yes
39 No
INTERPRETATION—
While conducting the research project it was found that 39% of employees said change behavior
of Employees through performance appraisal whereas 11% of employees said no.
46

47. Q10. In your opinion Performance Appraisal system of your organization is related to which of
the following?
Retention of employees 10
Recruitment system 10
Organizational culture 12
Motivation 18
Sales
10
18 Retention of employee
Recruitment system
10
Organisational culture
12
Motivation
INTERPRETATION—
While conducting the research project it was found that 10% of employees said Performance
Appraisal system of organization is related to retention of employee, 10% of said Recruitment
system, 12 % of employee said Organizational culture whereas said motivation.
47

48. CHAPTER –VI
RESULT & DISCUSSION
48

49. 6.1 HYPOTHESIS
Null Hypothesis (H0):-
Employees are aware with performance Appraisal system in organization.
Alternative Hypothesis (H1):-
Employees are not aware with performance Appraisal system in organization
Q1. In your Opinion Performance Appraisal is?
Evaluation of employees 20
Promotion of employees 10
Job satisfaction of employees 10
Motivation 10
Sales
10
20 Evaluation of employees
10 promotion of employees
job satisfaction of employees
10
Motivation
INTERPRETATION—
While conducting the research project it is found that 20% of employees said performance
appraisal is evaluation of employee,10% employees said promotion of employees, 10% said job
satisfaction of employee, where as 10% said motivation of employees.
49

50. 6.2 HYPOTHESIS TESTING
My major research report involves the z test. The z test is used for testing hypothesis of mean
and the statistic z.
Z test
SAMPLE SIZE (n) = 50
SAMPLE = 50/4 = 12.5 or 13
POPULATION SIZE = 200 ( assumed)
POPULATION MEAN = 10 (assumed)
Sample dx dx2
20 -30 900
10 -40 1600
10 -40 1600
10 -40 1600
50 5700
Null hypothesis = H0 : µ= 50
Alternative hypothesis = H0 : µ≠ 50
σ=
=
= 37.74
Standard deviation of sample mean =
=
= 37.7/7.70
= 5.338
Z test =
= 13 -10 / 5.338
= 3/5.338
=0.562
The table value of z at 99% level of significant =1.645
Thus, null hypothesis is accepted
DECISION-
Employees are aware with performance Appraisal system in organization.
50

51. CHAPTER –VII
FINDING & CONCLUSION
51

52. 7.1 FINDINGS
1. Most of the employees said performance appraisal is the evaluation of the employees.
2. It has been found that performance Appraisal help to provide an atmosphere where all are
encouraged to share one another burden.
3. Most of the employees set & achieve the meaningful goals through the performance
appraisal.
4. Most of the employees think that improve their performance after the process of
performance appraisal.
5. Most of the employees think that performance appraisal improve their motivation & job
satisfaction.
6. Most of the employees think that performance appraisal help to change the behavior of
Employees.
7. Most of the employees receive any increment in their salary after performance Appraisal.
52

53. 7.2 LIMITATIONS
A. Mental status of the respondent: - The respondents do not provide information whole
heartedly as they are convinced for our project but when we asked to fill the
questionnaire some sort of hesitations comes in mind to not to disclose their secrets,
As these secrets are disclosed to others or they are used to completely remove from their
business.
B. Mismatch of time: - Respondents did not want to give a time for filling the questionnaire.
C. Difficulty to approach: - There is proper hierarchy to approach
53

54. 7.3 SUGGESTION
1. Training Appraisers: Training appraisers are essential for achieving better results with
performance appraisal. The training should be designed to improve appraiser’s capabilities to:
observe, conduct constructive feedback, listen, support, counsel, set objectives and ask
appropriate questions. Some benefits that can be achieved by using appraiser training are as:
• Improve understanding of the system, the forms and terminology to be applied.
• Increase accuracy and reduce common judgment errors.
• Enhance appraiser’s self confidence about his rating skills and improve the skill level through
practice and feedback.
2. Developing a positive culture: Changing culture requires leaders to understand the learning
process dynamics and how the learning and unlearning of assumptions and beliefs can be
manipulated to modify behavior. Cultural aspects could be one of the areas of training.
An organization’s leadership has the responsibility to develop a positive culture to facilitate the
acceptance of performance appraisal among managers and their employees.
3. Providing performance feedback: Employees naturally like to know how they are performing
relative to what is expected from them. Performance feedback lets employees know how well
they have performed in comparison with the performance standards. Having day-to-day
employee-manager interaction, through which the appraise is provided with constructive
feedback.
4. Avoiding unequal performance standards: Effective performance appraisal requires equal
54

55. standards against which employees are assessed. In the absence of equal standards, employees
are assessed with subjectivity, which may destroy the process of appraisal and leave it as a body
without soul.
Therefore, the problem of unequal standards can be minimized by ensuring that the appraisal
criteria are job-oriented, communicating performance expectations to the employees before the
appraisal review.
5. Avoiding multi-purpose programme: One performance appraisal programme should not be
designed to serve a myriad of purposes, administrative and developmental, as it can be vague and
is difficult & results into failure. The solution is to separate assessment from development in
appraising employees.
55

56. 7.4 CONCLUSION
With rewards being directly linked to achievement of objectives goals setting & performance
appraisal assumes utmost importance the performance appraisal system has been professionally
designed & it is monitored by HRD. The implementation is the responsibility of each & every
employee along with their supervisor, there should be adequate training to the evaluator that will go
a long way in answering the quality of performance appraisal. In conclusion performance appraisal
is a very important tool used to influence employees. A formal performance review is important as it
gives an opportunity to get an overall view of job performance & staff development. It encourages
systematic and regular joint stocking & planning for the future good performance reviews therefore
do not just summarize the past they help determine future performance.
56

57. CHAPTER –VIII
ANNEXUR
57

58. 8.1 QUESTIONAIRE
Respected Sir/ Madam,
I am student of “GD RUNGTA COLLEGE ENGINEERING &
TECHNOLOGY” bhilai is conducting the survey on the topic “ A STUDY ON
PERFORMANCE APPRAISAL SYSTEM IN PUBLIC”. I need you help in conducting the
study.
Kindly provide me your valuable opinion to fill this questionnaire your information will
be kept confidential and will be exclusively used for academic purpose.
Q1. In your Opinion Performance Appraisal is?
a. Evaluation of Employees ( )
b. Promotion of Employees ( )
c. Job Satisfaction of Employees ( )
d. Motivation ( )
Q2. Which method of performance appraisal is implemented in the organization?
a. Merit ( )
b. Grading ( )
c. Other ( )
Q3. Do you receive any increment in your salary after performance Appraisal?
a. Yes ( )
b. No ( )
Q4. Do you think that performance Appraisal help to provide an atmosphere where all are
encouraged to share one another burden.
a. Yes ( )
b. No ( )
Q5. Do you think performance appraisal helps people set and achieve meaningful goals?
a. Yes ( )
b. No ( )
Q6. Do you think performance appraisal give constructive criticism in a friendly and positive
manner?
a. Yes ( )
b. No ( )
58

59. Q7. Do you think that performance of employees improve after process of performance
appraisal?
a. Yes ( )
b. No ( )
Q8. Do you think performance appraisal improves motivation and job Satisfaction?
a. Yes ( )
b. No ( )
Q9. Is the top level management partial in Performance Appraisal
a. Yes ( )
b. No ( )
Q10. Do you think performance appraisal helps to change behavior of Employees?
a. Yes ( )
b. No ( )
Q11. In your opinion Performance Appraisal system of your organization is related to which of
the following?
a. Retention of Employees ( )
b. Recruitment System ( )
c. Organizational Culture ( )
d. Motivation ( )
59