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INTRODUCTION
An organization’s 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.
Appraising the performance of individuals, groups and organizations is a common practice of all societies.
While in some instances these appraisal processes are structured and formally sanctioned, in other instances
they are an informal and integral part of daily activities. In social interactions, performance is conducted in a
systematic and planned manner to achieve widespread popularity in recent years.

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

performance being measured against such factors as job knowledge, quality and quantity of output,
initiative, leadership abilities, Supervision, dependability, cooperation, 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.

Performance appraisal is also known as employee evaluation, merit rating, employee assessment, etc. It is a
systematic process of appraising an employee’s current and past performance relative to his/her
performance parameters. The employee’s performance should be based on organizational expectations and
employee’s actual performance. The idea that performal evaluation improves employee’s performance is
not a new one but it is seen in the roots of development of mankind. Each person is motivated when he is
told about his actual performance and accepts what were his/her previous mistakes. Performance appraisal
process may be held annually or monthly as per needed.
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MEANING OF PERFORMANCE APPRAISAL

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

CONCEPT OF PERFORMANCE APPRAISAL

Virtually all organizations have some sorts of means of appraising their employees. Performance Appraisal is
one of the oldest, natural and most universal practices of Management. The basic purpose of Performance
Appraisal is to ascertain the behaviour of an employee anchored to performance and integrate with the
organizational performance. It helps both the employers and employees to understand the responsibility in
the organization. Performance appraisal system is focused to integrate the expectations i.e., performance,
which gives a total clarity between the appraiser and appraisee. It is an instrument to create a conducive
atmosphere in the organization. The purpose of any management is to build a very competitive and
Congenial work culture, which builds healthy competition, gives a sense of achievement to the employees
and the stakeholders. Performance appraisal system is the right instrument that plays a vital role directly or
indirectly in achieving the above. It improves the interpersonal relationship among the employees and
employers in the organization. It reflects an evaluative judgment of the traits, characteristics and the work
performance of the employees on jobs. It is a continuous process to reach the desirous goal of not only the
organization but also the employees.

Flippo (1976) defines performance appraisal as, “performance appraisal is the systematic, periodic and an
impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for
a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an
employee during a given period of time and planning for his future.

Performance appraisal may be defined as a structured formal interaction between a subordinate and
supervisor, that usually takes the form of a periodic interview (annual or semiannual), in which the work
performance of the subordinate is examined and discussed, with a view to identifying weaknesses and
strengths as well as opportunities for improvement and skills development.

According to Levinson (1976), Performance Appraisal has three functions:

a) It seeks to provide an adequate feedback to each individual for his or her
performance.

b) It purports to serve as a basis for improving or changing behaviour toward some more
effective working habits.

c) It aims at providing data to managers with which they may judge future job assignments
and compensation.

In the light of the above definitions, we understand that a performance appraisal system is used to evaluate
the traits or qualities of an employee systematically at regular intervals.Adequate and ample opportunities
are provided to the employees to enable them to the maximum utilization of their strong qualities Thus
performance appraisal plays a vital role such as “unity in Diversity” in the utilization of organisation. It
contributes indirectly to the growth of GDP and per capita income through the development of employee
as well as organisation. It is the powerful instrument of the Human Resource personnel’s to take right
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decisions with respect to labour turnover and other related aspects. It helps the organisation in the 3 ‘R’
process like Recruitment, Retention and Retirement.

Performance Appraisal is a new HR management model that takes away the management from command
and control approach to a facilitation model of leadership. This shift in style has emerged from the
realization that it is very critical for the employees and the business to relate to the work performance of
employees to the long term goals and mission or the organization as a whole. The process of PM provides an
opportunity for the managers to discuss the developmental goals of the organization with the employees
and jointly draw a path to achieve those goals. Such a collaborative approach fosters ownership among the
employees at the level where the work is done for the chosen path and to that extent it makes achievement
of goals simple

OBJECTIVES OF PERFORMANCE APPRAISAL

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

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

 To help the management in exercising organizational control.

 Help to strengthen the relationship and communication between superiors, subordinate and
management –employees.

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

 To provide feedback to the employees regarding their past performance.

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

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

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

 To reduce the grievances of the employees.

 Provide information to assist in the HR decisions like promotions, transfers etc.

 Provide clarity of the expectations and responsibilities of the functions to be performed by the
employees.
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NEED FOR PERFORMANCE APPRAISAL

 Provide information about the performance ranks basing on which decision regarding salary fixation,
confirmation, promotion, transfer and demotion are taken based on performance in India Rayon.

 Provide feedback information about the level of achievement and behavior of subordinates. This
information helps about the level of achievement and behavior of subordinates. This information
helps to review the performance of the subordinate, rectifying performance deficiencies and to set
new standards of work, if necessary.

 Provide information which helps to counsel the subordinate.

 Provide information to diagnose deficiency in employees regarding skill, knowledge. Performance

appraisals determine training and developmental needs.

 To prevent grievances and in disciplinary activities.

POTENTIAL RATING SCALE APPRAISAL PROBLEMS

Potential rating scale appraisal problems are discussed as follows:

(1) The Halo Effect

(2) Contrast Error
(3) Rater Bias
(4) Central Tendency Error
(5) Leniency or Severity
(6) Sampling Error
(7) Primary and Recency

POSITIVE RESULT OF PERFORMANCE APPRAISAL

Followings are the main positive results of performance appraisal:

1. The person whose performance is appraised may develop an increased motivation to perform effectively.
2. The self-esteem of the person being appraised may increase.
3. The job of the person being appraised may be clarified and better defined.
4. Valuable communication can take place among the individuals taking part (that also include
communication between the subordinate and the superior).
5. Rewards such as pay and promotion can be distributed on a fair and credible basis.
6. Organizational goals can be made clearer, and they can be more readily accepted.
7. Valuable appraisal information can allow the organization to do better manpower planning, test
validation, and development of training programmes.
8. Better and timely service provision, thus greater citizen satisfaction.
9. Makes bureaucrats more accountable for their actions. So it is a change of attitude from the old notions of
public administration.
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NEGATIVE RESULTS OF PERFORMANCE APPRAISAL

Followings are the main negative results of performance appraisal:

1. The self-esteem of the person being appraised and the person doing the appraisal may be damaged.
2. Large amount of time may be wasted.
3. The relationship among the individuals involved may be permanently worsened there by creating
organizational conflicts.
4. Performance motivation may be lowered for many reasons, including the feeling that poor performance
measurement means no rewards for performance (i.e. biased evaluation including favoritism towards some
employees).
5. Money may be wasted on forms, training, and a host of support services.

PROCESS OF PERFORMANCE APPRAISAL

The process of performance appraisal involves several steps and they are delineated as follows:

1. Preparation – Preparation of all materials, noting down agreed tasks and recording of performance,
achievements, incidents, reports etc - anything pertaining toperformance and achievement - obviously
include the previous performance appraisal documents and a current job description. A good appraisal form
will provide a good natural order for proceedings. If the organization doesn't have a standard appraisal form
then one has to locate standard appraisal form, or has to download and/or adapt the appraisal forms from
standard websites. Whatever has been used, one has to ensure the necessary approval from his/her
organization, and understand how it works. The paperwork to reflect the order of the appraisal and write
down the sequence of items to be covered has to be organized.

2. Intimation – One has to inform the appraisee and ensure that appraisee is informed of a suitable time and
place (change it if necessary), and clarify purpose and type of appraisal – he has to be given and give a
chance to the appraisee to assemble data and relevant performance and achievement records and
materials. If the appraisal form does not imply a natural order for the discussion then an agenda of items to
be covered should be provided.

3. Venue – One has to ensure a suitable venue, which is planned and available - private and
free from interruptions - as with recruitment interviewing the same rules should be observed – One has to
avoid hotel lobbies, public lounges, canteens - privacy is absolutely essential.

4. Layout - room layout and seating are important elements to preparation also – One should not simply
accept whatever layout happens to exist in a borrowed or hired room - layout has a huge influence on
atmosphere and mood - irrespective of content, the atmosphere and mood must be relaxed and informal -
remove barriers – One should not sit in the boss's chair with the other person positioned humbly on the
other side of the desk; one must create a relaxed situation, preferably at a meeting table or in easy chairs -
sit at an angle to each other, 90 degrees ideally - avoid face to face, it's confrontational.

5. Introduction – One has to relax the appraisee - open with a positive statement, smile, be warm and
friendly - the appraisee may well be terrified; it's one’s responsibility to create a calm and non-threatening
atmosphere. One has to set the scene - simply explain what will happen - encourage a discussion and as
much input as possible from the appraisee - tell them it's their meeting. The timings have to be confirmed,
especially finishing time. If helpful and appropriate, one should begin with some general discussion
about how things have been going, but one should avoid getting into specifics.
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6. Reviewing and measurement – One has to review the activities, tasks, objectives and achievements one
by one, keeping to distinct separate items one by one - avoid going off on tangents or vague unspecific
views. If the person has done your preparation correctly he will have an order to follow. If something off-
subject comes up then it should be noted down. He has to concentrate on hard facts and figures, solid
evidence – avoid conjecture, anecdotal or non-specific opinions, especially about the appraisee. Being
objective is one of the greatest challenges for the appraiser - as with interviewing, and he has to resist
judging the appraisee in his own image, according to his own style and approach - facts and figures are the
acid test and provide a good neutral basis for the discussion, free of bias and personal views. For each item a
measure of competence should be agreed, and according to whatever measure or scoring system is built
into the appraisal system.

7. Agreeing an action plan - An overall plan should be agreed with the appraisee, which should take an
account of the job responsibilities, the appraisee's career aspirations, the departmental and whole
organization's priorities, and the reviewed strengths and weaknesses. The plan can be staged if necessary
with short, medium and long term aspects, but importantly it must be agreed and realistic.

8. Agreeing on specific objectives - These are the specific actions and targets that together form the action
plan. As with any delegated task or agreed objective these must adhere to the SMARTER rules - specific,
measurable, agreed, realistic, time-bound, enjoyable, recorded. If not, one should not bother. The objectives
can be anything that will benefit the individual, and that the person is happy to commit to. When helping
people to develop, one should not be restricted to job-related objectives, although typically most
objectives will be.

9. Agreeing on necessary support - This is the support required for the appraise to achieve the objectives,
and can include training of various sorts such as external courses and seminars, internal courses, coaching,
mentoring, shadowing, distance learning, reading, watching videos, attending meetings and workshops,
workbooks, manuals and guides; anything relevant and helpful that will help the person develop towards the
standard and agreed task. Also one should consider training and development that relates to 'whole-person
development' outside of job skills. This might be a hobby or a talent that the person wants to develop.
Developing the whole person in this way will bring benefits to their role, and will increase motivation and
loyalty.

10. Inviting any other points or questions – One must make sure to capture any other concerns.

11. Becoming close - Thanking the appraisee for their contribution to the meeting and their effort through
the year, and commit to helping in any way one can.

12. Recording main points, agreed actions and follow-up – One must swiftly follow-up the meeting with all
necessary copies and confirmations, and ensure documents are filed and copied to relevant departments,
(HR and one’s own line manager typically).
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METHODS OF PERFORMANCE APPRAISAL

One can classify the methods of performance appraisal under two categories-vis-à-vis, traditional
and modern methods. Each method has been described briefly in the following paragraphs.

1. Traditional method
Followings are the main traditional methods:
(i) Essay appraisal method
(ii) Straight ranking method
(iii) Paired comparison
(iv) Critical incidents method
(v) Field review
(vi) Checklist method
(vii) Graphic rating scale
(viii) Forced distribution

2. Modern Methods (New concepts)

(i) Assessment centers
(ii) Behaviorally anchored rating scales
(iii) Human resource accounting method
(iv) 360 Degree performance appraisal
a. Self appraisal
b. Superior’s appraisal
c. Subordinate’s appraisal
d. Peer appraisal.

BENEFITS OF PERFORMANCE APPRAISAL SYSTEM

The benefits typically claimed by those who defend or advocate performance appraisal
systems include the following:

1.Feedback: Performance appraisals provide employees with feedback regarding their performance, usually
at least once a year and often on an interim basis during the year. This leads to reduced errors and waste,
increased productivity, improved quality and service for customers, as well as enhanced employee
motivation, commitment, and a sense of ownership.

2. Goal setting: Performance appraisal sessions provide an opportunity for discussions that include setting
work related goals and objectives for the individual as well as aligningindividual and organizational goals.

3. Career management: Performance appraisal sessions also provide opportunity for identifying training and
development needs and discussing career progression opportunities.

4. Objective assessment: Performance appraisals are made objective through uniform processes and
criteria. This also results in a fair, valid, and legally defensible basis for rewarding and recognizing individual
performance.

5. Legal protection: Performance appraisals afford the corporation legal protection against employee
lawsuits for discrimination and wrongful termination. A candid and perhaps blunt observer might add a final
benefit: The formal performance appraisal system buttresses the organization's hierarchical authority
system. It gives the supervising manager control over some of the carrots and sticks in what is essentially a
carrot-and-stick management system.
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The list of benefits above must be balanced against the costs of performance appraisals. Some of these are
"hard" costs that can be measured and expressed in dollars and cents. Others are "soft" costs, best gauged
in terms of their drawdown on human and political capital.

NEED FOR PERFORMANCE APPRAISAL

 Provide information about the performance ranks basing on which decision regarding salary fixation,
confirmation, promotion, transfer and demotion are taken based on performance in India Rayon.

 Provide feedback information about the level of achievement and behavior of subordinates. This
information helps about the level of achievement and behavior of subordinates. This information
helps to review the performance of the subordinate, rectifying performance deficiencies and to set
new standards of work, if necessary.

 Provide information which helps to counsel the subordinate.

 Provide information to diagnose deficiency in employees regarding skill, knowledge. Performance

appraisals determine training and developmental needs.

 To prevent grievances and in disciplinary activities.

OVERVIEW OF (IT) INDUSTRY

Information technology (IT) is defined as the design, development, implementation and management of
computer-based information systems, particularly software applications and computer hardware. Today, it
has grown to cover most aspects of computing and technology. The reason why it has catapulted in
importance is due to the improving accessibility, awareness and utility of technology. It is a common fact
that a country’s IT potential is paramount for its march towards global competitiveness, healthy GDP and
defense capabilities. The strong demand for electronic hardware and software in India has been fuelled by
a variety of drivers including the high growth rate of the economy, emergence of a vast domestic market
catering to the new generation of young consumers, a thriving middleclass populace with increasing
disposable incomes and a relatively low-cost work force having advanced technical skills. The industry
continues its drive to set global benchmarks in quality and information security through a combination of
provider and industry-level initiatives and strengthening the overall frameworks, creating greater
awareness and facilitating wider adoption of standards and best practices
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PERFORMANCE APPRAISAL SYSTEM IN IT INDUSTRY

Armstrong and Baron (1998) defined Performance Appraisal System as a “strategic and integrated approach
to increasing the effectiveness of companies by improving the performance of the people who work in them
and by developing the capabilities of teams and individual contributors.” It may be possible for the goal
congruence i.e., reconcile the employee’s personal goals with the organizational goals and thereby increase
the productivity and profitability of the organization. Managing the employee performance facilitates the
effective delivery of strategic and operational goals. Performance management aims at developing
individuals with the required commitment and competencies for working towards the organizational
objectives. Performance management frameworks are designed with the objective of improving both the
individual and organizational performance by identifying performance requirements, providing regular
feedback and assisting the employees in their career development. Its focus is on enabling goal clarity for
making people do the right things in the right time. The main goal of performance management is to ensure
that the organization as a system and its subsystems work together in an integrated fashion for
accomplishing optimum results. There are certain components for an effective Performance management
system. These include performance planning, appraisal and reviewing, feedback on performance, rewarding
good performance and performance improvement plans. Performance planning has to be done jointly by the
appraise and reviewer in the beginning of a performance session and during this period the employees
decide upon the targets and key performance areas. Normally the appraisals are performed twice in a year.
In this process, the appraise first offers the self-appraisal forms and then final ratings are provided by the
appraiser for the quantifiable and measurable achievements of the employee being appraised. Feedback and
counseling is given a lot of importance in the performance management process. At this stage the employee
receives an open and a very transparent feedback and along with this the training and development needs of
the employee is also identified. The appraiser adopts all the possible steps to ensure that employee meets
the expected outcomes for an organization through effective personal counseling and guidance, mentoring
and representing the employee in training programs which develop the competencies and improve the
overall productivity. Rewards will be a vital component for work motivation of an employee. An employee is
publicly recognized for good performance and is rewarded. Any contribution duly recognized by an
organization helps an employee in coping up with the failures successfully and satisfies the need for
affection. If the employee shows poor performance then again fresh set of goals are established for that
employee and new deadline is provided for accomplishing those objectives. The employee is clearly
communicated about the areas in which the employee is expected to improve and a stipulated deadline is
also assigned within which the employee must show the improvement. Performance improvement plans are
also jointly developed by the appraise and the appraiser and is mutually approved. The performance
management approach has become an indispensable tool in the hands of the corporate as it ensures that
the people will uphold the corporate values and tread in the path of accomplishment of the ultimate
corporate vision and mission. It is a forward looking process as it involves both the supervisor and also the
employee in a process of joint planning and goal setting in the beginning of the year.
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IT SECTOR IN INDIA
INFORMATION technology (IT) industry in India has played a key role in putting India on the global map. IT
industry in India has been one of the most significant growth contributors for the Indian economy. This has
projected India‘s image as a global player in providing world class technology solutions and business
services. The transformation from an agriculture based country to a knowledge based country has high
credentials to IT sector.
IT-ITeS sector in India, with the main focus on increasing technology adoption, and developing new delivery
platforms, has aggregated revenues of USD 124-130 billion. The top 10 IT companies (based on revenue-
2014 report) which includes– TCS, Infosys, Wipro, Tech Mahindra, HCL Technologies, Mphasis, Oracle
Financial Services, Mindtree, Polaris Technology and Rolta India are the trend setters of the market in many
aspects.

India, the fourth largest base for young businesses in the world and home to 3,000 tech start-ups, is set to
increase its base to 11,500 tech start-ups by 2020, as per a report by Nasscom and Zinnov Management
Consulting Private Ltd.
Emerging technologies present an entire new gamut of opportunities for IT firms in India.
The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI)
inflows worth US$ 13,788.56 million between April 2000 and December 2014, according to data released by
the Department of Industrial Policy and Promotion (DIPP).
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APPRAISAL METHODOLOGY POPULAR IN IT INDUSTRY

There are several performance appraisal methods used by IT sector as a whole. But this paper focuses only
on the methods used by the top ten IT companies, as they are the market leaders of this sector. Amidst the
high competition in the market, the top ten IT companies uses either of two methods – 360 degree
feedback or balanced score card. Hencethis paper throws light on the two methods used by the top most IT
companies.

I) 360 DEGREE FEEDBACK

The 360 evaluation feedback method was first used in the 1940s. It is a system or process in which
employees receive confidential, anonymous feedback from the people who work around them. Analogous to
the multiple points on a compass, the 360 method provides each employee the opportunity to receive
performance feedback from his or hersupervisor, peers, staff members, co-workers and customers.
Usually, this tool is used for employees at middle and senior level. The complexity of their roles enables the
organization to generate sufficient data from all stakeholders for a meaningful assessment.
Most organizations that focus on employee development use the 360-degree tool to assess performance
and potential of staff and enable the employees to map their career path based on the feedback.
Organizations take 360-degree feedback about an employee before taking a major decision about the
professional's career.
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Features of 360 degree feedback system

 Comprehensive feedback
 Highly effective performance evaluation tool
 Very reliable
 popular
 Realistic evaluation.

Advantages of 360 Degree Feedback

The 360 feedback system automatically tabulates the results and presents them in a format that helps
the feedback recipient create a development plan. Individual responses are always combined with
responses from other people in the same rater category (e.g. peer, direct report) in order to preserve
anonymity and to give the employee a clear picture of his/her greatest overall strengths and weaknesses.
When done properly, 360 degree feedback is highly effective as a development tool. The feedback
process gives people an opportunity to provide anonymous feedback to a coworker that they might
otherwise be uncomfortable giving. Feedback recipients gain insight into how others perceive them and
have an opportunity to adjust behaviors and develop skills that will enable them to excel at their jobs.
360 degree feedback is the most comprehensive appraisal where the feedback about the employees’
performance comes from all the sources that come in contact with the employee on his job.360-degree
Feedback, or multi-rater feedback, is used by 90% of Fortune 500 companies (Carruthers, 2003).
360 degree appraisal has four integral components:

• Self appraisal

• Superior’s appraisal

• Subordinate’s appraisal

• Peer appraisal.

Self appraisal is the best way to analyze one’s strength and weakness, performance standards, areas of
improvement; whereas the superior’s appraisal form is the traditional part of the 360 degree feedback
method where the employee’s performance is evaluated by the superior. Subordinates appraisal gives a
chance to judge the employee on the parameters like communication and motivating abilities, superior’s
ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct
feedback given by peers can help to find employees’ abilities to work in a team, co-operation and
sensitivity towards others.

Disadvantages of 360 Degree Feedback

It is difficult to properly structure a 360 feedback process that creates an atmosphere of trust when you use
360 evaluations to measure performance.360 degree feedback focuses on behaviors and competencies
more than on basic skills, job requirements, and performance objectives.
Feedback tied to merit pay or promotions. Comments traced to individuals causing resentment between
workers. Excessive number of surveys are required of each worker with few tangible results provided to
individuals (Clark, S., Whittall, A., 2003)
360 degree feedbacks that get driven by HR without much attention from the boss are not effective.
Whatever the boss gives importance to gets the attention of his/her reports. The boss has to be a believer
that this stuff helps the team.
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People offer comment that are personal in nature rather than constructive.360 degree feedback data is only
helpful to the extent that it gets acted upon and used.
One of the major drawbacks is that the evaluating process will be too much focused on weakness of the
employee. Forgetting the strengths and only focusing on weaknesses de-motivates employees.
The entire process depends solely on the Rater. If the Rater is inexperienced and ineffective the process
becomes invalid.
Paperwork/Computer data entry overload also acts as a disadvantage.
Businesses willing to implement this comprehensive method of assessment should be willing to spend the
time and effort necessary to train each anonymous evaluator in the process as well as correct and incorrect
ways to interpret questions. Failure to properly train feedback providers will most likely result in inaccurate
results or a total failure of the process to produce relevant information. The system will fail if it is an add-on
rather than a supporter of your organization’s fundamental direction and requirements. It must function as a
measure of your accomplishment of your organization’s big and long term picture.

II) BALANCED SCORE CARD

Balanced Score Card is a strategic planning and management system that is used extensively in business and
industry, government, and nonprofit organizations worldwide to align business activities to the vision and
strategy of the organization, improve internal and external communications, and monitor organization
performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and
David Norton as a performance measurement framework that added strategic non-financial performance
measures to traditional financial metrics to give managers and executives a more 'balanced' view of
organizational performance. The balanced scorecard has evolved from its early use as a simple performance
measurement framework to a full strategic planning management system.
Balanced scorecard method addresses four business perspectives, which are as follows:

• Financial Perspective

• Customer Perspective

• Learning and Growth Perspective

• Business Process
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There are four processes in which balanced score card relies on. They are translating the vision,
communicating and linking, business planning and feedback and learning.
The first new process: translating the vision—helps managers build a consensus around the organization’s
vision and strategy. Despite the best intentions of those at the top, lofty statements about becoming “best in
class,” “the number one supplier,” or an “empowered organization” don’t translate easily into operational
terms that provide useful guides to action at the local level. For people to act on the words in vision and
strategy statements, those statements must be expressed as an integrated set of objectives and measures,
agreed upon by all senior executives, that describe the long-term drivers of success.
The second process: communicating and linking—lets managers communicate their strategy up and down
the organization and link it to departmental and individual objectives. Traditionally, departments are
evaluated by their financial performance, and individual incentives are tied to short-term financial goals. The
scorecard gives managers a way of ensuring that all levels of the organization understand the long-term
strategy and that both departmental and individual objectives are aligned with it.
The third process: business planning—enables companies to integrate their business and financial plans.
Almost all organizations today are implementing a variety of change programs, each with its own champions,
gurus, and consultants, and each competing for senior executives’ time, energy, and resources. Managers
find it difficult to integrate those diverse initiatives to achieve their strategic goals—a situation that leads to
frequent disappointments with the programs’ results. But when managers use the ambitious goals set for
balanced scorecard measures as the basis for allocating resources and setting priorities, they can undertake
and coordinate only those initiatives that move them toward their long-term strategic objectives.
The fourth process: feedback and learning—gives companies the capacity for what we call strategic learning.
Existing feedback and review processes focus on whether the company, its departments, or its individual
employees have met their budgeted financial goals. With the balanced scorecard at the center of its
management systems, a company can monitor short-term results from the three additional perspectives—
customers, internal business processes, and learning and growth—and evaluate strategy in the light of
recent performance. The scorecard thus enables companies to modify strategies to reflect real-time
learning.

Advantages of Balanced Score Card

The balanced scorecard transforms an organization’s strategic plan from an attractive but passive document
into the "marching orders" for the organization on a daily basis. It provides a framework that not only
provides performance measurements, but helps planners identify what should be done and measured. It
enables executives to truly execute their strategies.
Without a balanced scorecard, most organizations are unable to achieve a similar consistency of vision and
action as they attempt to change direction and introduce new strategies and processes. The balanced
scorecard provides a framework for managing the implementation of strategy while also allowing the
strategy itself to evolve in response to changes in the company’s competitive.
Managers using the balanced scorecard do not have to rely on short-term financial measures as the sole
indicators of the company’s performance. The scorecard lets them introduce four new management
processes that, separately and in combination, contribute to linking long-term strategic objectives with
short-term actions.
Companies are using the scorecard to

• Clarify and update strategy;

• Communicate strategy throughout the company;

• Align unit and individual goals with the strategy;

• Link strategic objectives to long-term targets and annual budgets;

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• Identify and align strategic initiatives; and

• Conduct periodic performance reviews to learn about and improve strategy.

Disadvantages of Balanced Score Card

It takes time to adapt to balanced scorecard strategic system. So this will require a lot of motivation from the
management to be able to successfully complete the process.
Balanced scorecard gives you an extensive overview of the company. It will give you facts about your
company's execution and performance. But it will not give you recommendations on how to amend
strategies and policies to overcome discrepancies. Therefore, for attainment of a complete analysis of a
company's performance, a more magnanimous strategy will be required.
While the balanced scorecard gives you an overall view of the four areas for concern in business growth and
development, these four areas do not paint the whole picture. The financial information included on the
scorecard is limited. Instead, to be successfully implemented, the balanced scorecard must be part of a
bigger strategy for company growth that includes meticulous accounting methods.
Many companies use metrics that are not applicable to their own situation. It is vitally important when using
balanced scorecards to make the information being tracked applicable to their needs. Otherwise, the metrics
will be meaningless.

TREND OF SALARY HIKE IN LAST 5 YEARS IN IT INDUSTRY

For the past five years, average salary hikes in Indian IT sector have been
around 10 percent
 Regional practices in the economy
 Industry/company performance
 Compensation policy of the institution
 Supply and demand of labour,and
 Individual’s job performance

TREND AND SALARY REVISION FOR NEXT THREE YEARS

 Employee with skill in verticals like cloud, mobility, social media and analytics will get huge
compensation
 Salary rate and incentives will be high for top performers
 Average Industry salary is expected to grow at an annual rate of 6-9%
 Sales force employee salary could be determined by the revenue they bring from client

LINKAGE BETWEEN APPRAISAL SYSTEM AND ATTRITION RATE IN

IT INDUSTRY

 Attrition management has become the strategic focus and compelling necessity of business today.

 The toughest concern for an HR manager is however the high attrition rate
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 IT industry has one of the highest attrition rate. Appraisal should be done fairly so that conflict ,
dissatisfaction and attrition rate gets reduced.

 The share of attrition due to dissatisfaction in appraisal is also growing as techie are finding better
opportunities at mushrooming startups and poaching is always there.

REVIEW OF LITERATURE
According to the Clevelan, Murphy, and Williams (1989) explained that every employee has to be reviewed
according the time intervals and he explain about various organizational characteristics which support and
develops the organizations towards profits. The relationship between the organizational characteristics and
the performance appraisal systems are inter link with the employee in the organization.
According to the Stonich (2009), stated that performance measurement in an organization should be in tune
with its culture and values and structure according to the organizational strategy. The nature of the
enterprises of an industry is engages with the organizational type, business policy, internal and external
environment in the corporate organizations.
According to the Edwards and Ewin (1996), Explain that feedback methods has to collected once the
performance appraisal system completed in the organization. In the feedback system, multiple sources, like
superiors, peers, subordinates and top management has to include for the accurate judgment for motivating
employees in the organization.

About Tata Consultancy Services Limited (TCS): Tata consultancy Services Limited is known as TCS and it is
an Indian Multinational Software company which is providing the services, consulting and business solutions
in India. The head office of TCS is located in Mumbai, Maharashtra, India. TCS operating in 46 countries like
India, Africa, Asia, Australia, Europe, North America, South America with 230 offices across 46 countries and
147 delivery centers in 21 countries across global. TCS is one of the largest private sector employers in India
and second largest employer among listed Indian companies after coal India limited in

India. TCS has a total of over 3, 00,000 employees as on March’2015, of which 31% were women employee
in organization. The number of non-Indian nationals was 21,282 as at March 31, 2014 (7.7%).

TCS is a subsidiary of the Tata Group and is listed on the Bombay Stock Exchange and the National Stock
Exchange of India. TCS is one of the largest India Companies by Market Capitalization ($80 billion) and is the
largest India-based IT services company by 2013 revenues. TCS is now placed among the Big Four most
valuable IT services brands worldwide. In 2013, TCS is ranked 57th overall in the Forbes World’s most
innovative companies ranking, making it both the highest-ranked IT services company and the first Indian
company. It is the world’s 10th largest IT services provider, measured by the revenues.
Methods and Techniques used for Performance Appraisal: The various methods and techniques used for
performance appraisal can be categorized as the following traditional and modern methods.

J of Advances in Business Management /eISSN-2395-7441/pISSN-2395-7328/ Vol. 1/ Issue 3/ July-Sept. 2015

Page 191

TCS is a subsidiary of the Tata Group and is listed on the Bombay Stock Exchange and the National Stock
Exchange of India. TCS is one of the largest India Companies by Market Capitalization ($80 billion) and is the
largest India-based IT services company by 2013 revenues. TCS is now placed among the Big Four most
valuable IT services brands worldwide. In 2013, TCS is ranked 57th overall in the Forbes World’s most
 17

innovative companies ranking, making it both the highest-ranked IT services company and the first Indian
company. It is the world’s 10th largest IT services provider, measured by the revenues.
Methods and Techniques used for Performance Appraisal: The various methods and techniques used for
performance appraisal can be categorized as the following traditional and modern methods.

Performance Appraisal Traditional Method 1. Essay Method

2. Straight ranking method
3. Paired Comparison
4. Critical incident method
5. Field review method
6. Checklist Method
7. Graphic rating method
8. Force Distribution method

Modern Methods 1.Management by objective

2. 360 degree Appraisal
3. Assessment Center
4. Behavioral Anchor rating
scale
5. Human resource accounting

The Performance Appraisal Method followed in Tata Consultancy Service in Bangalore: Tata consultancy service is
the world top software companies and providing the services in developing and outsourcing and business process
outsourcing that envisioned and pioneered the global business practices. Tata consultancy service are conducts the
appraisals in two ways.

Performance Appraisal Methods Practices At the end of the Year

At the end of the Project

In Tata consultancy service are adopted a Balanced Scorecard method which is tracks the performance of the
employees in the organization and balance scorecard are targeted in to four levels.

Levels for evaluation of Performance Appraisal Financial

Methods practices (Balance Score Card)
Customer

Internal

Learning and Growth

The financial perspective explains the employee’s contributions in terms of revenue growth and cost reduction and
improves the companies’ strategies in Tata Consultancy Service in Bangalore. The customer perspective looks at the
value proposition that offered by the employee according to the internal perspective and employee contribution in
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creating and sustaining values in the organization, the learning process by the employees in the organization and
growth for the self explanatory by the employee. The maximum weight age given to individual attributed based on the
functions of the employees performance in the organization.

STATEMENT OF PROBLEM : This project aims to study the performance appraisal system (by considering
certain important dimensions) followed in organizations today. The study aims to highlight the significance of such
performance appraisal system in the corporate context.

RESEARCH OBJECTIVE:

 To study performance appraisal system in the corporate context.

 To highlight the significance of performance appraisal system in the corporate context and establish
the link between performance appraisal system and organizational effectiveness.

NEED OF THE STUDY

 Provide information about the performance ranks based on which decision regarding salary fixation,
confirmation, promotion, transfer and demotion are taken based on performance appraisal in the
corporate context.(10)

 Provide feedback information about the level of achievement and behavior of subordinates in the
corporate context.

 To provide information which helps to counsel the subordinate.

 To prevent grievances and in disciplinary activities in the corporate context.

SCOPE OF THE STUDY

 To provide employees with a better understanding of their role and responsibilities in the
corporate context.

 To increase confidence through recognizing strengths and also identifying training needs to
minimize weaknesses in the corporate context.

 To improve working relationships and communication between supervisors and subordinates.

 To increase commitment to organizational goals and to develop employees into future

supervisors in the corporate context.

 To assist in personnel decisions such as promotions or allocating rewards.

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LIMITATIONS OF THE STUDY

 The study is constrained only to performance appraisal system in TCS.

 The study is limited to the Bangalore city only.

 Analysis of primary data is done on the assumption that the answers given by the respondents
are true and correct.

 Time and Resource constraints.

RESEARCH METHODOLOGY
Descriptive Research: This research is the most commonly used and the basic reason for carrying out
descriptive research is to identify the cause of something that is happening. The research is primarily
quantitative in nature. The study is based on data collected through structured questionnaire from the
respondents and interviews conducted with the respondents.

Sampling Technique/Method: The research technique used is Random Sampling method:

 Data Collection: Data is the fact of an event. Data is the base for every research work. The data is
mainly classified into two groups.

 Primary Data: These data are gathered for our research purpose. This is first hand information, for
this purpose a structured type of questionnaire was designed and administered.

 Secondary Data: Books, journals, websites etc., have been consulted for obtaining related
information, and also for crosschecking of primary data.

Tools and Techniques of Data Collection:

a. To get the response, the questionnaire method was used.

b. The questionnaire used in this study was a structured one.

c. Here the questions were arranged in a specific order and were logically interconnected for the research
study

d. The advantage of the structured questionnaire lies in the reduction of bias.

e. Questionnaire containing of both open-ended questions and close-ended questions.

Contact Method: Personnel Interview: The respondents were contacted personally interviewed them
and collected their views, opinions and suggestions given by them.

Sample Size: we used 100 respondents who are working in TCS.

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Sample Procedure: The study required probability method since the sample was chosen at random.
Hence the study was dealt with simple random tool.

CONCLUSION
Human resources are the vital source of every organization. Every employee in an organization increases the
productivity and goodwill of every company. An employee, being an individual is treated as assets in the
organization. So the organization should mainly emphasis performance appraisal techniques and its
development program. Both the appraiser and appraise should realize the principle and use the tool of
appraisal system in a constructive way for the prosperity of the organization.
Both 360 degree feedback and balanced score card has its own loopholes, though these methods are being
used by top IT companies. The satisfaction level of employees towards these appraisal methods are very low
(source: discussions in the HR forums like citeHR.com) and there is a need of a new appraisal method which
prevents these errors and have the advantages of these methods.

The study was based on the evaluation of effectiveness of performance appraisal in IT industry i.e,
TCS . The study was conducted through survey analysis conducted with the employees of Tata Consultancy
Service Ltd. On the basis of statistical analysis, it has been concluded that performance appraisal is linked
with the employee performance outcomes in IT Industry. In addition to this, the results also reflect that all
study variables are significant except relationship among peers and supervisors regarding performance
appraisal process.
The results of the study provide sound understanding about that employees have fair perception about
performance appraisal. This also reveals that respondents think that performance appraisal outcomes are
accurate and significant towards employee performance. In addition, the study outcomes also reflect that
performance appraisal impacts performance level of employees in organizations.
The future prospects of study reveal that its generalizability is low because of a small sample. Therefore,
future researchers have option of expanding the scope of study by using the large and diverse sample.
In addition, they can also highlight differences in performance appraisal followed in different IT
industry.

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