A PROJECT REPORT

ON A COMPARITIVE STUDY ON

Performance Management and Appraisal

A PROJECT REPORT SUBMITTED TO OSMANIA UNIVERSITY,

HYDERABAD IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
THE WORD OF DEGREE OF

PERFORMANCE MANAGEMENT AND APPRAISAL

MASTER OF COMMERCE
Submitted by,
KADALI RAHUL

( H.T. NO.117620684017)

UNDER THE GUIDANCE OF

XXXXXXXXXXX

DEPARTMENT OF COMMERCE

SAI- SUDHIR DEGREE & PG COLLEGE

“VIDWAN SARVATRA SHOBITHE”
B-8/2, E.C, ECIL Cross Roads, Hyderabad, Telangana 500062.
A

1
 PROJECT REPORT
ON
A COMPARITIVE STUDY ON

PERFORMANCE MANAGEMENT AND APPRAISAL

by,
KADALI RAHUL
(H.T.NO:117620684040)

PROJECT REPORT SUBMITTED IN FULFILLMENT FOR THE AWARD OF

THE
MASTER’S IN COMMERCE
UNDER THE GUIDANCE OF XXXXXXXXXX

SAI- SUDHIR DEGREE & PG COLLEGE

Vidwan Sarvatra Shobhite
B-8/2, E.C, ECIL Cross Roads, Hyderabad, Telangana 500062.
2018-2020.

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 STUDENT DECLARATION

I hereby declare that the project work entitle as”(PERFORMANCE

MANAGEMENT AND APPRAISAL )” , work done and submitted by me
in partial fulfillment for the award of Masters Degree in Commerce
(Osmania university). I also declare that this project has not been
submitted earlier in any other university or institution.

Name of the student:

KADALI RAHUL

Signature of the student

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 CHAPTER 1

INTRODUCTION

INTRODUCTION

ABOUT PERFORMANCE MANAGEMENT AND APPRAISAL

Performance management and appraisal are important tools

used by organizations to evaluate and improve the performance
of their employees. Performance management refers to the
process of setting expectations, measuring progress, and
providing feedback to employees to improve their performance.
It involves aligning individual goals with organizational
objectives, providing ongoing coaching and feedback, and
recognizing and rewarding good performance.

Appraisal, on the other hand, is a formal evaluation of an

employee's performance over a specific period of time. It is
usually conducted annually or bi-annually and involves a review
of the employee's accomplishments, strengths, weaknesses,
and areas for improvement. The appraisal process is often used
to determine compensation and promotion decisions, as well as
to identify training and development needs.

Together, performance management and appraisal help

organizations ensure that their employees are meeting
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expectations and contributing to the overall success of the
organization. By providing ongoing feedback and support,
organizations can help employees improve their performance,
develop new skills, and achieve their full potential.
BACKGROUND STUDY
ABOUT PERFORMANCE MANAGEMENT AND APPRAISAL

Performance management and appraisal have been studied

extensively in the field of human resource management (HRM).
The concepts of performance management and appraisal have
evolved over time, from a focus on purely quantitative measures
such as production output and efficiency to a more holistic
approach that considers both qualitative and quantitative
factors.

Early research in performance appraisal focused on identifying

the most effective methods for measuring employee
performance. This research led to the development of various
appraisal methods, such as graphic rating scales, behaviorally
anchored rating scales, and 360-degree feedback.

More recent research has focused on understanding the factors

that contribute to effective performance management and
appraisal. Studies have shown that effective performance
management and appraisal require a supportive organizational
culture, clear performance expectations and feedback, and a
focus on continuous improvement and development.

Other research has focused on the impact of performance

management and appraisal on employee outcomes such as job
satisfaction, motivation, and turnover. Studies have found that
when done well, performance management and appraisal can
improve employee motivation and job satisfaction, and reduce
turnover.

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Overall, the research on performance management and
appraisal has highlighted the importance of a comprehensive
approach that considers both quantitative and qualitative
factors, and emphasizes ongoing feedback and development.
SUMMY ABOUT PERFORMANCE MANAGEMENT AND
APPRAISAL

Performance management and appraisal are essential tools

used by organizations to evaluate and improve the performance
of their employees. Performance management involves setting
expectations, measuring progress, and providing feedback to
employees to improve their performance. Appraisal, on the
other hand, is a formal evaluation of an employee's
performance over a specific period of time.

Performance management and appraisal have evolved over

time, from a focus on purely quantitative measures to a more
holistic approach that considers both qualitative and quantitative
factors. Effective performance management and appraisal
require a supportive organizational culture, clear performance
expectations and feedback, and a focus on continuous
improvement and development.

Research has shown that when done well, performance

management and appraisal can improve employee motivation
and job satisfaction, and reduce turnover. Therefore, it is
essential for organizations to implement comprehensive
performance management and appraisal systems that align
individual goals with organizational objectives, provide ongoing
feedback and support, and recognize and reward good
performance.

Performance management and appraisal are critical elements

of human resource management (HRM) in modern
organizations. Performance management involves a process of
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setting expectations, measuring progress, and providing
feedback to employees to improve their performance. Appraisal,
on the other hand, is a formal evaluation of an employee's
performance over a specific period of time.

The objective of performance management and appraisal is to

ensure that employees are meeting expectations and
contributing to the overall success of the organization. It is
essential to provide employees with ongoing feedback and
support, help them improve their performance, develop new
skills, and achieve their full potential.

This essay will explore the concepts of performance

management and appraisal in detail, discussing their history,
theories, implementation, and impact on employees and
organizations. It will also discuss the challenges associated with
implementing performance management and appraisal systems
and strategies to overcome them.

History of Performance Management and Appraisal:

The concept of performance management and appraisal has

evolved over time, reflecting changes in organizational
structures, management theories, and societal expectations.
The history of performance management and appraisal can be
divided into four main eras:

1. Early Era: The early era of performance management and

appraisal was marked by a focus on efficiency and
productivity. During the early 20th century, industrialists and
management theorists such as Frederick Taylor and Henri
Fayol developed principles of scientific management,
emphasizing the importance of standardization and

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 efficiency in work processes. Performance appraisal during
this era focused on measuring employee output and
efficiency, using methods such as piece-rate pay and time
and motion studies.

2. Behavioral Era: The behavioral era of performance

management and appraisal emerged in the 1950s and
1960s. During this era, the focus shifted from purely
quantitative measures of performance to a more holistic
approach that considered employee behavior and attitudes.
Behavioral scientists such as Douglas McGregor and
Abraham Maslow developed theories of human motivation,
emphasizing the importance of job satisfaction, employee
participation, and self-actualization. Performance appraisal
during this era focused on assessing employee behavior
and attitudes using methods such as rating scales and
behaviorally anchored rating scales.

3. Results Era: The results era of performance management

and appraisal emerged in the 1980s and 1990s. During this
era, the focus shifted from assessing employee behavior
and attitudes to assessing results and outcomes. The rise of
Total Quality Management (TQM) and Business Process
Reengineering (BPR) emphasized the importance of
measuring and improving organizational performance.
Performance appraisal during this era focused on assessing
employee contributions to organizational goals and
objectives using methods such as management by
objectives and goal setting.

4. Strategic Era: The strategic era of performance

management and appraisal emerged in the 21st century.
During this era, the focus shifted from purely performance
management and appraisal to a more comprehensive

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 approach that aligned individual performance with
organizational strategy. Performance management during

this era focused on integrating individual performance with

organizational goals, providing ongoing feedback and
coaching, and recognizing and rewarding good
performance.

Theories of Performance Management and Appraisal: Theories

of performance management and appraisal provide a
framework for understanding the principles and practices that
underpin effective performance management and appraisal.
The following are some of the most prominent theories of
performance management and appraisal:

1. Expectancy Theory: Expectancy theory is a motivation

theory that emphasizes the relationship between effort,
performance, and outcomes. The theory suggests that
individuals will be motivated to perform well if they believe
that their efforts will lead to good performance and that good
performance will lead to desirable outcomes such as
recognition, rewards, and promotions. Performance
management and appraisal can be used to reinforce
expectancy theory by providing employees with clear
expectations, feedback, and rewards for good performance.

2. Goal Setting Theory: Goal setting theory suggests that

setting specific, challenging goals can improve employee
motivation and performance. Performance management
and appraisal can be used to reinforce goal setting theory
by aligning individual

EXAMPLES ABOUT PERFORMANCE MANAGEMENT AND

APPRAISAL

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Here are some examples of how performance management and
appraisal can be implemented in different organizations and
contexts:

1. Performance management in a sales organization: A sales

organization may use performance management to track
sales performance, set sales targets, and provide sales reps
with ongoing feedback and coaching. Performance metrics
may include sales revenue, number of deals closed, and
customer satisfaction ratings. Regular sales performance
reviews may be conducted to assess progress, identify
areas for improvement, and set new goals.

2. Performance appraisal in a healthcare organization: A

healthcare organization may use performance appraisal to
evaluate clinical performance, patient outcomes, and
adherence to best practices. Performance metrics may
include patient satisfaction ratings, mortality rates, and
readmission rates. Regular performance appraisals may be
conducted to assess the quality of care, identify areas for
improvement, and provide feedback and support to
clinicians.

3. Performance management in a technology company: A

technology company may use performance management to
track project performance, set project goals, and provide
project teams with ongoing feedback and coaching.
Performance metrics may include project completion rates,
quality of deliverables, and adherence to project timelines.
Regular project performance reviews may be conducted to
assess progress, identify areas for improvement, and set
new project goals.

4. Performance appraisal in a government agency: A

government agency may use performance appraisal to
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 evaluate employee performance, adherence to regulations
and policies, and customer service skills. Performance
metrics may include completion of assigned tasks,
compliance with regulations and policies, and customer
satisfaction ratings. Regular performance appraisals may be
conducted to assess employee performance, identify areas
for improvement, and provide feedback and support to
employees.

5. Performance management in a retail organization: A retail

organization may use performance management to track
store performance, set sales targets, and provide store
managers with ongoing feedback and coaching.
Performance metrics may include store revenue, number of
customers served, and customer satisfaction ratings.
Regular store performance reviews may be conducted to
assess progress, identify areas for improvement, and set
new sales targets.

These examples demonstrate how performance management

and appraisal can be tailored to fit the specific needs and
objectives of different organizations and industries. Effective
performance management and appraisal require a supportive
organizational culture, clear performance expectations and
feedback, and a focus on continuous improvement and
development.

CHAPTER 2 REVIEW OF

LITERATURE

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REVIEW OF LITERATURE PERFORMANCE MANAGEMENT
AND APPRAISAL

Performance management and appraisal have been the subject

of extensive research and literature over the past few decades.
Here is a brief review of some of the key findings and themes
from the literature on performance management and appraisal:

1. Traditional performance management processes have

limitations: Research has shown that traditional
performance management processes, which rely on annual
or bi-annual performance reviews, are often ineffective and
can lead to negative outcomes such as demotivation, low
job satisfaction, and high turnover. These processes also
tend to focus on past performance rather than future
development and growth.

2. Ongoing feedback and coaching are essential: A

growing body of literature emphasizes the importance of
ongoing feedback and coaching in performance
management. Studies have shown that employees who
receive regular feedback and coaching are more engaged,
motivated, and productive, and that ongoing feedback can
be more effective than infrequent reviews.

3. Goal setting is critical: Setting clear, measurable, and

achievable goals is a key element of effective performance
management. Research has shown that goals can increase
motivation and performance, but that they must be
challenging yet attainable, and that employees must have
the resources and support they need to achieve them.
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4. Employee engagement is key: Employee engagement
is a critical component of effective performance
management. Studies have shown that engaged employees
are more productive, loyal, and committed to their
organization, and that performance management processes
that prioritize employee engagement can lead to positive
outcomes such as increased innovation, customer
satisfaction, and profitability.

5. Bias and fairness are important considerations:

Research has shown that performance management
processes can be subject to biases, including gender, race,
and age biases. Organizations must take steps to ensure
that their performance management processes are fair and
unbiased, including using objective criteria for evaluating
performance, providing training and awareness programs,
and monitoring the process for potential biases.

6. Performance management and appraisal process:

The literature identifies that the performance management
and appraisal process typically involves setting goals,
monitoring and evaluating performance, providing feedback,
and making decisions about rewards and recognition. This
process is often formalized and typically occurs annually,
although many organizations are moving towards more
frequent and ongoing feedback mechanisms.

7. Benefits of performance management and appraisal:

The literature suggests that effective performance
management and appraisal can lead to several benefits,
including increased employee engagement and satisfaction,
improved performance, and better alignment of individual
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and organizational goals. Additionally, performance
management and appraisal can also serve as a basis for
identifying training and development needs, as well as
succession planning.

8. Challenges with performance management and

appraisal: The literature also identifies several challenges
associated with traditional performance management and
appraisal processes. These include the time-consuming
nature of the process, a lack of transparency and fairness,
and concerns about the accuracy and reliability of
performance ratings.

9. New approaches to performance management and

appraisal: Given these challenges, many organizations are
moving towards new approaches to performance
management and appraisal that emphasize ongoing
feedback and coaching, goal setting, and development
planning. These new approaches are often facilitated by
technology tools that enable employees and managers to
communicate more effectively and track progress towards
goals.

10. The role of leadership in performance management

and appraisal: The literature also highlights the critical role
of leadership in performance management and appraisal.
Effective leaders can create a culture that values feedback
and continuous improvement, and can model the behaviors
they want to see in their employees.

11. The importance of clear goals and expectations:

Several studies have found that setting clear goals and
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expectations is essential for effective performance
management and appraisal. When employees understand
what is expected of them and have a clear sense of what
they need to achieve, they are more likely to be productive
and engaged in their work.

12. The need for ongoing feedback: Traditional annual or

biannual performance reviews have been criticized for being
too infrequent and lacking in specificity. Many researchers
have argued that ongoing feedback and coaching are
essential for effective performance management and
appraisal, as they allow employees to receive real-time
guidance and support on their performance.

13. The role of employee engagement: Employee

engagement has been identified as a critical factor in
effective performance management and appraisal. Engaged
employees are more likely to be productive, motivated, and
committed to their work, and are therefore more likely to
benefit from performance management and appraisal
processes.

14. The importance of fairness and equity: Several

studies have highlighted the importance of fairness and
equity in performance management and appraisal
processes. This includes using objective criteria for
evaluating performance, addressing any biases or
disparities that may exist, and providing opportunities for
employees to provide feedback
on their performance and the performance management
process itself.

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 15. The impact of technology: The use of technology in
performance management and appraisal has been the
subject of much research in recent years. Technology can
help streamline performance management processes, make
feedback more timely and accessible, and provide
opportunities for data-driven decision-making.

16. Define clear performance expectations: Organizations

should define clear performance expectations for each role
and communicate them to employees. This can include
specific goals and objectives, as well as key performance
indicators (KPIs) that will be used to measure performance.

19. Establish ongoing feedback and coaching: Instead of relying

on an annual or bi-annual performance review,
organizations should encourage ongoing feedback and
coaching between managers and employees. This can
include regular check-ins, one-on-one meetings, and
feedback sessions that provide employees with real-time
feedback and guidance on their performance.

17. Use technology to facilitate performance management:

Organizations can use technology to streamline
performance management and appraisal processes,
including automated performance tracking, goal setting, and
feedback tools that enable employees and managers to
communicate more effectively and track progress towards
goals.

18. Focus on development and growth: Performance

management and appraisal should be seen as a tool for
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 employee development and growth, rather than simply a
way to evaluate performance. Organizations can invest in
training and development programs that help employees
acquire new skills and competencies and provide
opportunities for career advancement.

19. Ensure fairness and equity: Organizations should ensure

that performance management and appraisal processes are
fair and equitable, with objective criteria for evaluating
performance and addressing any biases or disparities that
may exist.

Overall, the literature suggests that effective performance

management and appraisal is critical to achieving organizational
goals and improving employee performance and engagement.
However, traditional approaches to performance management
and appraisal may not be effective, and organizations should
consider adopting new approaches that emphasize ongoing
feedback and development planning.
Additionally, effective leadership is critical to creating a culture
that values feedback and continuous improvement.

CHAPTER 3 INDUSTRY

PROFILE

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