1|Page

A
RESEARCH REPORT
ON
"TO ANALYZE THE PRESENT
PERFORMANCE APPRAISAL SYSTEM OF NTPC LTD."

REPORT SUBMITTED FOR THE REQUIREMENT OF

THE DEGREE OF
MBA (IV SEM) (AFFILIATED TO U.P. TECHNICAL
UNIVERSITY, LUCKNOW)
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DECLARATION

I , do declare that the research report being submitted to the U.P.

Technical University for the partial fulfillment of the requirement for
the degree of Master of Business Administration is my own endeavors
and it has not been submitted earlier to any institute for any degree
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ACKNOWLEDGMENT

A research is incomplete and task is not accomplished if a note and mentioning of

the persons involved is not made, without whom the project would have not been
completed.
To begin with I am indebted to , my project guide, for his valuable guidance &
help throughout my work. I am also thankful to all the faculty members for the
inspiration and discussion provided by them, which led to the present shape of the
project. It has been an honour to work on the project under the supervision of
these people.
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PREFACE

It gives me great pleasure to bring out this project study entitled- “To analyze the
present performance appraisal system of National Thermal Power
Corporation Ltd.”. It is interesting and at the same time, challenging also to
analyze the performance appraisal system of such a large organization.
This project study contains necessary information related to the company viz. - its
journey from the year it was founded to the present year, total capacity, product
profile, market share, sales figure, functions of various departments etc.
It covers the opinions and expectations of the employees in the form of findings.
Recommendations to improve the appraisal system have also been included. The
procedure adopted to conduct the survey and collection of information is also
described in the study.
It is hoped that the suggestions recommended in the study would be welcomed
and implemented by the management of the organization after proper
consideration.
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TABLE OF CONTENTS

CHAPTER 1- EXECUTIVE SUMMARY

CHAPTER 2- PROFILE OF THE COMPANY

(A) INTRODUCTION
(B) HUMAN RESOURCE POLICY
(C) FUNCTIONS OF VARIOUS SECTIONS
OF HR DEPARTMENT
(D) HISTORY
(E) PRODUCT PROFILE
(F) SALES FIGURES/ MARKET SHARES
(G) ORGANISATION CHART
CHAPTER 3- PERFORMANCE APPRAISAL
CHAPTER 4- RESEARCH METHODOLOGY
(A) OBJECTIVE OF STUDY
(B) SCOPE OF STUDY
(C) RESEARCH PROCEDURE
(D) TYPE OF DATA
(E) DATA COLLECTION
(F) STATISTICAL TOOLS USED
(G) LIMITATIONS OF STUDY
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CHAPTER 5- FINDINGS AND ANALYSIS

CHAPTER 6- CONCLUSION AND SUGGESTIONS

ANNEXURE
1. BIBLIOGRAPHY
2. QUESTIONNAIRE
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EXECUTIVE SUMMARY

In my project, entitled-“To analyze the present performance appraisal system

of National Thermal Power Corporation Ltd.”, I have studied the present

appraisal system of NTPC by analyzing the details of the appraisal system,

articulate the organizational, functional, departmental & individual objectives ,

factors in business dynamics to grade employees on objectives & transparent

productivity parameters, self appraisal followed by reporting officer & higher

authority’s assessment , link between rewards and performance to increase

motivation level of employees , assessment of training & developmental needs of

the individuals and make them aware about the parameters used to evaluate their

performance.

In my own style, I have tried to find out whether the present appraisal system is

effective enough to serve the purpose of performance appraisal i.e. to understand

the needs of employees and provide them formal & regular feedback related to

their performance. For this purpose, I used questionnaires to get the opinions of

employees at different levels. I also went through different books, websites and

magazines to gather material related to the topic. After collecting the information,

I analyzed the data and provide the necessary suggestions to improve the system.
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PROFILE OF THE
COMPANY

INTRODUCTION

National Thermal Power Corporation Limited (NTPC)

is the largest thermal power generating company of

India. A public sector company wholly owned by

Government of India, it was incorporated in the year

1975 to accelerate power development in the country. Within a span of 30 years, NTPC

has emerged as a truly national power company; with power generating facilities in all

the major regions of the country. Based on 1998 data, carried out by Data monitor UK,

NTPC is the 6th largest in terms of thermal power generation and the second most

efficient in terms of capacity utilization amongst the thermal utilities in the world.
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NTPC's core business is engineering, construction and operation of power generating

plants and also provides consultancy to power utilities in India and abroad. As on date
the installed capacity of NTPC is 21,749 MW through its 13 coal based (17,480 MW), 7
gas based (3,955 MW) and 3 Joint Venture Projects (314 MW). NTPC acquired 50%
equity of the SAIL Power Supply Corporation Ltd. (SPSCL). This JV company operates
the captive power plants of Durgapur (120 MW), Rourkela (120 MW) and Bhilai (74
MW). NTPC is also managing Badarpur thermal power station (705 MW) of
Government of India. NTPC's share on 31 Mar 2004 in the total installed capacity of the
country was 19.4% and it contributed 27.1% of the total power generation of the country
during 2003-04.

NTPC has set new benchmarks for the power industry both in the area of power
plant construction and operations. It is providing power at the cheapest average tariff in
the country. With its experience and expertise in the power sector, NTPC is extending
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consultancy services to various organizations in the power business. NTPC has entered
into a joint venture with Alstom, Germany for renovation and modernization of power
plants in India.

NTPC is committed to the environment, generating power at minimal

environmental cost and preserving the ecology in the vicinity of the plants. NTPC has
undertaken massive afforestation in the vicinity of its plants. Plantations have increased
forest area and reduced barren land. The massive afforestation by NTPC in and around
its Ramagundam Power station (2100 MW) has contributed reducing the temperature in
the areas by about 3°c. NTPC has also taken proactive steps for ash utilization. In 1991,
it set up Ash Utilization Division to manage efficient use of the ash produced at its coal
stations. This quality of ash produced is ideal for use in cement, concrete, cellular
concrete, building material.

A "Centre for Power Efficiency and Environment Protection (CENPEEP) has been
established in NTPC with the assistance of United States Agency for International
Development. (USAID). CENPEEP is efficiency oriented, eco-friendly and eco-
nurturing initiative - a symbol of NTPC's concern towards environmental protection and
continued commitment to sustainable power development in India.

As a responsible corporate citizen, NTPC is making constant efforts to improve the

socio-economic status of the people affected by its projects. Through its Rehabilitation
and Resettlement programmes, the company endeavors to improve overall socio-
economic status of Project Affected Persons.

NTPC was among the first Public Sector Enterprises to enter into a Memorandum of
Understanding (MOU) with the Government in 1987-88. NTPC has been Placed under
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the 'Excellent category' (the best category) every year since the MOU system became
operative.
Recognizing its excellent performance and vast potential, Government of the
India has identified NTPC as one of the jewels of Public Sector 'Navratnas'- a potential
global giant. Inspired by its glorious past and vibrant present, NTPC is well on its way to
realize its vision of being "one of the world's largest and best power utilities, powering
India's growth".
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HUMAN RESOURCE POLICY

POWERING INDIA’S GROWTH: THROUGH PEOPLE

NTPC strongly believes in achieving organizational excellence through Human

Resources and follows "People First" approach to leverage the potential of its

23,500 employees to fulfill its business plans. Human Resources Function has

formulated an integrated HR strategy which rests on four building blocks of HR

viz. Competence building, Commitment building, Culture building and Systems

building. All HR initiatives are undertaken within this broad framework to

actualize the H R Vision of "enabling the employees to be a family of committed

world class professionals making NTPC a learning organization". To induct talent

and groom them into a dedicated cadre of power professionals "Executive

Trainee" Scheme was introduced in the year 1977 for recruitment in the

disciplines of Mechanical, Electrical, Civil, Control & Instrumentation and now

encompasses Computer Science, Chemistry, HR and Finance disciplines also.

Besides a comprehensive one year training comprising theoretical inputs as well

as on-the-job training, the new recruits are attached with senior executives under

a systematic and formal 'Mentoring System' of the company to integrate them

into the Culture of the company. As part of post employment training and
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development opportunities, a systematic Training plan has been formulated for

ensuring minimum seven man days training per employee per year and includes

level-wise planned intervention designed to groom people for assuming positions

of higher responsibility, as well as specific need-based interventions based on

scientific Training Needs Analysis. NTPC has created 15 project training centres,

2 simulator training centres and an apex institute namely 'Power Management

Institute' (PMI). While the project training centres (Employee Development

Centres) have specialized in imparting technical skills and knowledge, PMI

places emphasis on management development. Besides opportunities for long

term education are also provided through tie ups with reputed Institutions like

IIT, Delhi, (M.Tech in Power Generation Technology), MDI, Gurgaon

(Executive MBA programme), BITS, Pilani (B.Tech) etc.

In order to realize the HR Vision of making NTPC a learning Organization by

providing opportunities to continually learn new capabilities a number of

initiatives have been taken. NTPC Open Competition for Executive Talent

(NOCET) is organized every year in which teams of executives compete

annually through oral and written presentation on a topical theme. Similarly

"Professional Circles" have been formed department-wise where Executives of

the department meet every fortnight to share their knowledge and experiences

and discuss topical issues. In order to tap the latent talent among non executives
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and make use of their potential for creativity and innovation, Quality Circles

have been set up in various units/offices in NTPC. Besides a management journal

called "Horizon" is published quarterly to enable the employees to share their

ideas and experiences across the organization. Demonstrating its high concern for

people, NTPC has developed strong employee welfare, health & well-being and

social security systems leading to high level of commitment. NTPC offers best

quality of life through beautiful townships with all amenities such as educational,

medical and recreational opportunities for employees and their family members.

The motivation to perform and excel is further enhanced through comprehensive

NTPC Rewards and Recognition system.

In order to institutionalize a strong Culture based on Values a number of

initiatives are taken to actualize the Vision and Core Values (COMIT) across the

company. A culture of celebrating achievements and a strong focus on

performance are a way of life in NTPC. NTPC has institutionalized

"Development Centers" in the company to systematically diagnose the current

and potential competency requirements of the employees with the objective of

enhancing their development in a planned manner. These Centers give a good

insight to the employees about their strengths and weaknesses, the gaps in their

competencies which they can bridge through suitable support from company. Due

to innovative people management practices there is a high level of pride and

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commitment amongst employees as reflected in the "Best Employers in India-

2003" survey by Hewitt Associates in which NTPC bagged coveted third rank.

Further continuous efforts are being made by HR function to leverage the

potential of its employees and become a strategic business partner.

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FUNCTIONS OF VARIOUS SECTIONS OF H.R.

DEPARTMENT
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FUNCTIONS OF HR-EB (EMPLOYEE BENEFIT)

SECTION

1. ESTABLISHMENT

(A) Verification of characters & antecedent as per govt. directions (procedure

being followed in C & D categories).

(B) Checking of Submission of relevant and complete document before joining.

(C) Check whether the personal file is complete in all respect, especially
nomination papers, joining formalities etc.

(D) Extent of annual assessment being done in case of employees (i.e. no. of
complete reports received & total no. of employees).

(E) Review discussion with executive before annual assessment.

(F) Appoint appraising authorities for different levels.

(G) Communication of adverse remarks.

(H) Test for promotion of steno typist & stenographer.

(I) Promotion of W 2 to W 3 & W 6 to S 1 employees.

(J) How is period of unauthorized absence being treated in promotion cases.

(K) Promotion of employees against whom disciplinary action has been taken.

(L) Promotion in different categories in time with promotion policy/ channel of

promotion.

(M) Period for which leave is credited in advance for both executive & non-
executives.

(N) Calculation of amount of salary deducted during HPL.

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(O) Grant of study leave as per rules. Number of employees who have been
granted study leave.

(P) Diseases for which quantitative leave is sanctioned.

2. ADVANCES

(A) House building advance / conveyance advance sanctioned strictly as per

rules.

(a) Eligibility
(b) Amount of house building advance.
(c) 2nd advance in case of conveyance.

(B) Penal interest being charged in case of default under conveyance advance
scheme.

(C) System of check in case surety resigns in HBA.

(D) Hypothecation of vehicle being ensured or not.

(E) Commencement of recovery of HBA.

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FUNCTIONS OF HR-ES (EMPLOYEE SERVICE)

SECTION

1. EMPLOYEE SERVICES & OFFICE MANAGEMENT

SYSTEM

(A) To fulfill the requirements of furniture in different departments of the

company.
(B) Issuance & entitlement of different items to various employees with in the
company.

(C) To ensure proper allotment of office space for officer’s cabins.

(D) To manage all activities related to VVIP’S visits.

2. TOWNSHIP ADMINISTRATION

(A) Allotment of quarters to employees according to the availability of quarters &

priority of the employee.

TYPES OF QUARTERS

A type - For all employees

B type - For W8 & above
C type - For E3 & above
D type - For E5 & above

(B) Regarding education policy NTPC provides only infrastructural help like
building, furniture etc. for education institute.

(C) Responsibility of security of plant & township both. For plant security CISF
personnel are deployed while for township security private guards are used.
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(D) Welfare activities include ladies clubs, canteen, resident’s welfare

associations etc.

(a) Company provides Rs. 1100 for marriage & a car for 3 days to the employee.

(b) Picnics upto 180 kms. are organised by the company for employees.

(c) Company also pays 90 % of the tour to the employee once in a year.
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FUNCTIONS OF HR-IE (INDUSTRIAL ENGINEERING)

SECTION

1. RECRUITMENT

(A) IE section is responsible for recruitment of trainees/apprentices (ITI, diploma

and certificate holders).

(B) They also engage visiting doctors for the dispensary of the company on
temporary basis.

(C) There is a provision of recruitment of fixed number of physically

handicapped employees in the company.

2. MANPOWER PLANNING

(A) Redeployment of employees like draftsman, operator etc. to other

departments, where they are required.

(B) IE section also look after the complete Human Resource Management System
of the company.

(C) They address the grievances of the employees and provide information to the
management.

(D) They are engaged in the transfers of the employees with in the project i.e.
BTPS.

(E) They give incentives to the employees for their good performance.
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TYPES OF INCENTIVES

(a) ‘Meritorious productivity award’ given on 26th January & 15th August in the
form of cash.
(b) ‘Star of the month award’ given on monthly basis in non monetary form.
(c) ‘Badarpur Bhushan award’ given yearly to those employees whose last 3
years performance is outstanding.

3. EMPLOYEE DEVELOPMENT

(A) There is a suggestion scheme for employees in which they can give their
suggestions to the management of the company.

(B) Company also has job rotation policy for the employees.

(C) IE section also carry out a quarterly magazine called ‘Sankalp’ in which
different informations are included.

4. PROMOTION

(A) Promotions of non executive employees are carried out by IE section.

(B) They provide information to the corporate office regarding promotion of

executive employees.
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FUNCTIONS OF HR-ER&W (EMPLOYEE RELATION

& WELFARE) SECTION

Badarpur Thermal Power Station has two tier system of working-

(A) General staff (from 8.30 a.m. to 5.00 p.m )
(B) Operation staff (work in 3 shifts)

The powerhouse runs on 24 hrs. basis and different operational activities are
carried out continuously. For general staff Sundays are weekly off while for the
operational staff every 4th day is off.
Regarding welfare activities of the employees, both statutory & non statutory
facilities are provided.

STATUTORY FACILITIES

(A) Canteen facility for breakfast, lunch & dinner is provided to the employees.

(B) Rest rooms for the purpose of relaxation are also available for employees.
(C) There are separate toilets for ladies & gents in the company.
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NON STATUTORY FACILITIES

(A) Accommodation facility is provided to the employees of the company.

(B) There is a provision of education facility to the wards of the employees.

(C) Balbhavan for small childrens for the purpose of their development.

(D) Ladies club & NTPC club for recreation purpose of the employees

(E) Company also provides personal accident insurance to the employee.

(F) House building and conveyance advances are given to the employees.
.
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COMPANY PROFILE

November, 1975

Foundation laid for NTPC.

December, 1976,

The first super thermal power project at Singrauli was cleared by Government of
India. A modest beginning with strong determination and high spirits, moving
ahead, gathering pace and heading on to what is today projected as a benchmark
in the power generation sector. NTPC - An organization symbolizing reliability,
strength and a responsible growth was born. The expansion and advancement of
the company was continuous and speedy.

Year 1978

The year saw the initiation of a lot of developmental activities.

Implementation of Ramagundam and Korba Projects was cleared by Government
of India. Construction of the Singrauli-Kanpur line of 400 kV initiated. Another
opportunity came across in the form of the handover of Badarpur to NTPC by
Central Government for better management and improved performance. The
Farakka project was also approved by the Government

Year 1982

Steering ahead with times, by this year, the first unit of 200 MW of Singrauli,
was successfully commissioned on February 13. The Rihand project was also
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cleared by Government of India with British assistance. The first unit of the
Korba project was commissioned and the Ramagundam project began
commercial operation by 1983.

Year 1984

A technological revolution - a breakthrough in power transmission. for the first

time, the HVDC (High Voltage Director Current) technology employed for
power transmission from Rihand to Delhi. The World Bank agrees to provide $
485 million for three combined cycle projects at Kawas, Auraiya and Anta.

Year 1986

NTPC entered into the 500 MW era by synchronizing its first 500 MW unit at
Singrauli in 1986. Farakka also entered operational phase.

Year 1987

The first bud sown by NTPC burst full bloom. The Singrauli project achieved the
full capacity of 2000 MW. The Korba project added first 500 MW Unit. Keeping
in line with all the developmental activities, the first 210 MW unit of
Vindhyachal project, which now has a capacity of 2260 MW, also came on
stream. The first unit of 500 MW at Rihand was also commissioned by year 1988.

Year 1989

To serve the power sector in India and abroad - the Consultancy Wing was
launched... acting as a window for the globalization of NTPC operations. A
capacity addition of 3,234 MW was made at Korba, Ramagundam, Vindhyachal,
Rihand, Auraiya and Anta together.
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Year 1990

NTPC's first gas based combined cycle power plant at Anta, Rajasthan achieves
full capacity. Year 1991 saw the commissioning of the first unit of the Dadri
project.

Year 1992

Unchahar project with a capacity of 420 MW was taken over from the Uttar
Pradesh Rajya Vidyut Utpadan Nigam (UPRVUN). NTPC achieved a complete
turnaround in the operation of the station. Two units with a capacity of 210 MW
each were commissioned by NTPC after take over. Kahalgaon Project went on
stream by synchronizing its first unit. The Kawas project with a capacity of 645
MW became fully operational by year 1993.

Year 1994

The first unit of Jhanor-Gandhar Gas Project was synchronized. The Centre for
Power Efficiency and Environmental Project (CENPEEP) was set up.

• To acquire state-of-the-art technologies and practices to optimize

performance by plants.
• To improve efficiency and profitability, aimed at reducing environmental
pollution.
• To achieve a synergy between environmental concerns and utility needs.
The centre proved a great help in minimizing the environmental impacts of
the stations and also preserving the natural ecology in the vicinity of the
stations.
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Year 1995

The first 500 MW unit of Talcher Super Thermal Power Project commissioned.
By the year 1997, the Government also approved the Simhadri project with a
1000 MW capacity and the Faridabad Gas project with a capacity of 430 MW.

Year 1998

By this year, the first Naphtha based plant of the country at Kayamkulam with a
capacity of 350 MW came on stream. NTPC has been declared worlds sixth
largest thermal power producer during 1998, by Data monitor, U.K.

Year 2000

The power generation capacity of this premier organization reaches a towering

high of 19,435 MW capacities moving towards substantial 40,000 MW capacities
by year 2012. Pursuing its major objectives of

planning, promoting and organizing an integrated development of thermal power

in India.

NTPC's foray in the Hydro sector. A beginning made with Koldam, the first
Hydro Electric Power Project with a capacity of 800 MW in Himachal Pradesh.
NTPC also took over Tanda Thermal Power Station (440 MW) of Uttar Pradesh
State Electricity Board (UPSEB).

Building up well defined, short and long term plans, with committed time
schedules, evolving planned and organised functioning and ensuring dedication,
loyalty and promptitude of those involved. Developing a participative
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management culture. Duly recognizing the socio-economic needs and aspirations

of its employees and undertaking full scale efforts to meet them. All these moves
leading to industrial harmony and progress of the company. NTPC-A globally
recognized organization for commitment to Quality in works and services.

Keeping pace with its ongoing mission of constant, responsible development and
continuous progress and growth, the organization strove towards, improvement
everyday. Venturing out, innovating, leading on and reaching pinnacles of
success. Winning laurel, acclaim and appreciation and above all assuming the
role of a market leader in the field of power generation.
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PRODUCT PROFILE

NTPC is engaged in generating power through its different power stations

viz. - coal based, gas/liquid fuel based & joint ventures. Its total commissioned capacity

including the joint ventures is 22,249 MW. It is also managing Badarpur Thermal Power
Station (705 MW) of Government of India. In total it has 13 coal based, 07 gas/ liquid
fuel based & 03 joint ventures with Steel Authority of India Limited. The complete
station wise list with respective capacity is given below-:

Power Stations Managed by NTPC

Category No. of stations Capacity(MW)
Coal Based Stations 14 22395
Gas Based Stations 7 3955
Joint Ventures 4 1054
Total 25 27,404

ESTABLISHMENT
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SALES FIGURES AND MARKET SHARES

NTPC has shown a remarkable performance in the areas of operation and

maintenance. It once again surpassed all MoU targets for the year 2002-03 in the
Excellent category. Some of the highlights of its excellence are-:

1. Turnover of Rs.19,984.58 crore and Net Profit after tax Rs.3607.57 crore.

2. With 19% of the country’s installed capacity, NTPC contributed 26% of

electricity.

3. Generated 140.85 Billion Units (BUs), an increase of 5.76% over previous

year’s generation of 133.19 BUs. This is besides the generation of the NTPC
SAIL joint venture companies.

4. Achieved all MoU targets in the excellent rating during the year 2002-03 for
the 16th consecutive year.

5. Return On Capital Employed (ROCE) and Return On Net Worth (RONW)

10.88% and 12.13% respectively.

6. Total dividend paid for 2002-03 is Rs. 708 crore.

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7. 1000 MW capacity added during 2002-03. The fourth 500 MW unit at Talcher-
Kaniha has also been synchronized in October, 2003.

8. Capacity addition of over 9370 MW planned for 10 th plan and about 11210
MW for 11th plan. Projects totaling 5300 MW capacity under various stages of
construction.
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GM

DGM (HR)

SR.MGR. SR.MGR. SR.MGR. SR.MGR. SR.MGR. MGR.

(HR-EDC) (HR-ES) (HR-EDC) (LAW) (HR-EB) (PR)
Exec.&W/M Trg. Also look after Also look after
ED activities ER functions welfare functions

ASTT.OFF. MGR. MGR. DY.MGR. DY.MGR. OFF. SR.OFF.

(CSR) (HR-ES) (Rajbhasha) (HR-ES) (HR-ER)W.F (HR-EB) (HR-EB/IE)

A.E. MGR. (HR-ES) DY.MGR. (HR-ER)

(HR-EDC) Schools & G.H. Discp.Matters

ASTT.OFF. OFF. ENGR. ASTT.OFF

(HR-ER&W) (HR-EB) (HR-IE) (HR-IE)

ORGANISATION CHART OF HR DEPARTMENT AT BADARPUR THERMAL

POWER STATION
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PERFORMANCE APPRAISAL

DEFINITION

Performance appraisal includes all formal procedures used to evaluate

personalities, contributions & potentials of group members in a working
organization. It is a continuous process to secure information necessary
for making correct and objective decisions on employees.
In simple words, performance appraisal is the systematic evaluation of
the individual with respect to his performance on the job and his
potential for development.
PURPOSES OF PERFORMANCE APPRAISAL

1. Promotions
2. Transfers
3. Wage and Salary Administration
4. Training and Development
5. Personnel Research
6. Self Improvement
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METHODS OF PERFORMANCE APPRAISAL

TRADITIONAL METHODS

1. Unstructured Appraisal
2. Employee Ranking
3. Forced Distribution
4. Graphic-Rating Scales
5. Check-Lists
6. Critical Incidents
7. Field Review

MODERN METHODS

1. Management by Objectives
2. Behaviorally Anchored Rating Scales
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BENEFITS OF PERFORMANCE APPRAISAL

EMPLOYER’S PERSPECTIVE

1. Despite imperfect measurement techniques, individual differences in

performance can make a difference to the company’s performance.

2. Documentation of performance appraisal and feedback may be needed

for legal defense.

3. Performance appraisal dimensions and standards can help to

implement strategic goals and clarify performance expectations.

4. It provides a rational basis for constructing a bonus or merit system.

5. Providing feedback is a part of the performance management process.

6. Despite traditional focus on the individual, appraisal criteria can

include teamwork and teams can be the focus of teamwork.
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EMPLOYEE’S PERSPECTIVE

1. Performance feedback is needed and desired by the individual

employee to improve his/her performance.

2. Fairness requires that differences in performance levels across

workers be measured and have an effect on the outcomes.

3. Assessment and recognition of performance levels can motivate

workers to improve their performance.

PROBLEMS AFFECTING THE VALIDITY OF

PERFORMANCE APPRAISAL SYSTEM

1. HALO EFFECT
This type of error occurs when the rater allows one aspect of a man’s
character or performance to influence his entire evaluation.

2. CENTRAL TENDENCY
This error occurs when the rater is in doubt about the subordinates or has
inadequate information about them or is giving less attention and effort
to the rating process.
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3. LENIENCY ERROR
Some supervisors have a tendency to be easy raters. Lenient raters
consistently assign high values to their subordinates. This type of error
results in wrong evaluation of the performance of subordinate.

4. STRICTNESS ERROR
Some other types of supervisors have a tendency to be harsh in their
ratings. They continuously give low ratings to their subordinates.

5. RECENCY EFFECT
Often some raters evaluate persons on the basis of their performance in
recent few weeks, average constant behaviour is not checked.
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RESEARCH
METHODOLOGY

OBJECTIVES OF STUDY

• To identify factors in business dynamics to grade employees on

the objectives & transparent productivity parameters.
• To study about the system of self appraisal, appraisal by reporting
officer, by reviewing officer and final assessment by moderation
committee.
• To study about create a direct link between rewards &
performance to increase the motivation level of employees.
• To study about assessment of training & developmental needs of
individual employees.
• To study and make employees completely aware about the
parameters used for evaluation of their performance.
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SCOPE OF STUDY

In Badarpur Thermal Power Station, managed by National Thermal

Power Corporation Ltd., there is still sufficient scope for improvement in
the performance appraisal system below E7 level.

1 .Below this level no weightages are assigned to different attributes

which differ according to their importance.

2. Below E6 level “Management By Objectives” is not followed and

hence the employees are not clear about their functions based on these
objectives.

3. There is no direct link between the rewards and performance of

individual employee.

4. Formal feedback is not provided to the employees on regular basis.

5. They are not aware about the parameters on which their performance
is measured.

6. There exist communication gap between superiors & their

subordinates.

All the above mentioned problems need immediate improvement and

attention of the management of the company.
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RESEARCH PROCEDURE
STEPS IN RESEARCH
1. Understanding the nature & scope of business, the organizational &
departmental structure.

2. Study the existing review system of the company.

3. To collect information from functional heads about the technicalities

involved in performance appraisal viz. KRA’s & suggested weightages.

4. Discussion with senior officers to understand the expectations of the

company.

5. Meetings with employees of different departments to incorporate their

views.

6. Prepare questionnaires on the basis of above information.

7. Obtaining the opinions & expectations of employees at different levels

of the company.

8. Gather information from different sources like books, magazines,

internet etc. about performance appraisal.
42 | P a g e

9. On the basis of responses from the employees and the information

gathered from other sources, prepared the report with mentioning the
necessary changes required in the appraisal system.

RESEARCH DESIGN

Research design was adopted for the “Exploratory Research Study”.

The main purpose of the study was to formulate the problem in appraisal
system for investigation. The major emphasis was on the discovery of
ideas & opinions of the employees at different levels to improve the
existing appraisal system. Two methods were used for the study-:

1. The survey of concerning literature.

2. The experience survey

SAMPLING DESIGN

The sampling design used for the study was “Stratified Sampling”. The
different strata or homogeneous groups formed were-:

1. Executives
2. Supervisors
3. Workman’s
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SAMPLING UNIT

The sampling unit was “Badarpur Thermal Power Station”, Badarpur,

New Delhi.

SAMPLE SIZE

In total 34 employees were interviewed during the study.

DATA COLLECTION METHODS

In the survey two types of data were collected-:

1. PRIMARY DATA

Primary data are those which are collected for the first time and therefore
original in nature.

2. SECONDARY DATA

Secondary data are those which have already been collected by someone
else and hence passed through the statistical process.

For the collection of primary data following methods were used-:

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(A) OBSERVATION METHOD

In observation method, I observed the behaviour & tone of the

employees while giving the answers. But the style of observation was
unstructured.

(B) INTERVIEW METHOD

I took personal interviews of the employees at different levels to get their

opinions & expectations. And the interviews were structured in nature.

(C) QUESTIONNAIRE METHOD

I prepared a structured questionnaire on the basis of information

collected from different sources. The questionnaire contains both open &
closed ended questions.

2. SECONDARY DATA COLLECTION

Secondary data were collected from the following sources-:

(A) Books related to the topic

(B) Company documents

(C) Magazines

(D) Websites

STATISTICAL TOOLS USED

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Statistical tools used in the project study are-:

1. TABLES

2. PIE CHARTS

3. BAR GRAPHS

4. LINE GRAPHS
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LIMITATIONS OF STUDY

1. Some of the documents of the company were not accessible due to

confidentiality.

2. Many employees didn’t have time to give interviews.

3. Some of the employees were not very forthcoming in their responses

& reluctant to answer the questionnaire.

4. Responses of few of them were biased due to fear of the management.

And some are influenced by the opinions of their colleagues.

5. Night shift employees were unapproachable due to odd timings of

their job.

6. Some of the employees were inaccessible as they were absent during

the period of survey.

7. The organization was very large, so it was not possible to cover all the
departments.
47 | P a g e

FINDINGS AND ANALYSIS

Q1. The present appraisal system, according to you, is an effective one.

12%

38%
Yes
No
Can’t say

50%

Q2. Do you feel comfortable with your reporting officer while discussing
your KRA’s/ performance?

29%

Yes
No
Can’t say
12% 59%
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Q3. Are you aware of the criteria used for your 3performance appraisal?

Q4. Is this criterion sufficient to judge your performance?

6%
4

47% Yes
No

38% 24% Can’t say

47%

Yes
No
Can’t say

38%
49 | P a g e

Q5. The formal appraisal done by the organization matches your self
assessment.

21%
24%
Q6. Monetary & non monetary rewards are given to you are based on
your performance appraisal rating. Yes
No
Can’t say
6%
29%
55% Yes
No
Can’t say

65%
50 | P a g e

Q7. The formal feedback and development of new or better job related
skills are in accordance with your performance appraisal.

26%
32%
Yes
No
Can’t say

42%
Q8. In case of adverse entry, is it properly and timely communicated to
you and do you get sufficient opportunity to appeal to the higher
authorities?

44% 21%

Yes

No

Can’t say

35%
 51 | P a g e

Q9. Formal appraisal system helps in discovering your true potential for
higher responsibilities.

21%
32%
Yes
No
Can’t say

47%

Q10. Do you think sufficient time has been given to you for discussion
and guidance to improve your performance?

9%
38%
Yes
No
Can’t say

53%
52 | P a g e

Q11.The performance appraisal system helps superiors to know their

employees in better way.

15%

Yes
No
Can’t say
50%
35%

Q12. Performance appraisal system helps in reducing the communication

gap between the superiors and subordinates.

24%
29%

Yes
No
Can’t say

47%
53 | P a g e

Q13. Mid-term review (after 6 months) of employee’s performance,

below E6 level, instead of annual review is beneficial.

32%

Yes
No
Can’t say
9% 59%

Q14. Introduction of a computerized system will make the performance

appraisal system more effective.

32%

Yes
No
Can’t say
9% 59%
54 | P a g e

FINDINGS AND ANALYSIS

On the basis of the survey conducted, following points has emerged out
which require the attention of the management-:

1. The present performance appraisal system below E7 level is not

effective enough to serve the purpose of employee’s appraisal.

2. Below E6 level the “Management by Objectives” approach is not

followed and hence the employees are not clear about their functions
based on these objectives.

3. Proper weightages are not assigned to different attributes which differ

in their importance.

4. Many employees are not aware about the criterion used for their
appraisal.

5. According to those who know about the criterion, it is not sufficient to

judge their performance.

6. There is a wide gap between the self assessment by the employee and
the formal appraisal done by the organization.
55 | P a g e

7. There is no provision of incentives to the individual employee based

on his/her performance appraisal rating.

8. Formal feedback is not provided to the employees on regular basis.

9. The appraisal system does not help the employees to discover their
true potential for higher responsibilities.

10. Employees do not get sufficient opportunity to appeal to the higher

authorities in case of adverse entry.

11. There is considerable amount of communication gap between the

superiors & subordinates.

12. No emphasis is given on the behavioral aspect of the employees

which affect their performance considerably.

13. Training is not provided to the employees on the basis of his/ her
performance appraisal rating.
56 | P a g e

CONLUSION AND SUGGESTIONS

1. “Management by objective” approach should be introduced below E6

level and upto E1 level, so that executives at lower levels should also be
aware about their functions based on these objectives.

2. Before setting the KRA’s, the employees should prepare themselves

by reviewing their work beforehand, identifying barriers they faced in
doing their jobs and refamiliarise themselves with their job descriptions,
job responsibilities etc.

3. Appraise should be allowed to present their own opinions and

perceptions freely but in a calm and factual manner.

4. Performance appraisal should not be concentrated to forms only but

on its purpose of performance improvement by removing barriers to job
success.

5. Both appraiser & appraise should combinedly set realistic targets that
can be achievable, otherwise the procedure of setting KRA’s is wastage
of time.

6. Weightages should be assigned to different attributes according to

their importance.
57 | P a g e

7. Formal feedback should be provided on regular basis to the

employees, so that problems can be prevented in their early stages. It’s a
two way communication process, therefore a subordinate can also
initiate the process.

8. Reporting officer should make the employees aware about the

criterion used for their performance appraisal.

9. Monetary & non monetary incentives should be given to the

individual employee on the spot, by the manager, based on their
performance. It will motivate the employee.

10. Behavioral aspect of the employee should be given due importance

while reviewing his performance.

11. Training should be provided to the employee on the basis of his/ her
performance appraisal rating. It will help him/her to get new skills.

12. The procedure of performance appraisal should be transparent in the

sense that the employee should be aware about his/her appraisal rating.

13. Communication gap between the appraiser & appraise should be

reduced by means of performance appraisal & regular meetings.

14. Make employees more accountable towards their duties and

responsibilities.
58 | P a g e

15. After the level of manager, there should not be fixed time limit for
promotion and employees get higher responsibilities on the basis of their
potential and aptitude. So, there should be potential appraisal along with
performance appraisal at this level and above.

16. A computerized system should be introduced to fill the forms and

submission at supervisor level and above. It will reduce the time required
to do appraisal and at the same time bring transparency between the
appraisers and appraise, as he/she can see his/her ratings on the computer
whenever they want. A password should also be assigned to the
employee to keep his/her ratings confidential.
59 | P a g e

BIBLIOGRAPHY
BOOKS

 Human Resource Management - T. N. Chhabra

 Human Resource Management - Gary Dessler

 Human Resource & Personnel Management - K.Ashwathappa

 Research Methodology - C.L.Kothari

 Marketing Research - Harper W. Boyd, Ralph Westfall, Stanley F.

Stasch

MAGAZINES
 Business World
 Business Today
 Outlook
 The Times of India

 The Hindu Business Standard Line

WEBSITES

 www.ntpcindia.com
 www.ntpc.co.in
 www.google.com
 www.toolpack.com
60 | P a g e

 www.bpubs.com

QUESTIONNAIRE

1 The present appraisal system, according to you, is an effective one.

YES NO CAN’T SAY

2 Do you feel comfortable with your reporting officer while discussing

your KRA’s/performance?

YES NO CAN’T SAY

3 Are you aware of the criteria used for your performance appraisal?

YES NO CAN’T SAY

4 Is this criterion sufficient to judge your performance?

YES NO CAN’T SAY

5 The formal appraisal done by the organization matches your self

assessment.
YES NO CAN’T SAY

6 Monetary and non monetary rewards given to you are based on your
performance appraisal rating.

YES NO CAN’T SAY

61 | P a g e

7 The formal feedback and development of new or better job related

skills are in accordance with your performance appraisal.

YES NO CAN’T SAY

8 In case of adverse entry, is it properly and timely communicated to you

and do you get sufficient opportunity to appeal to the higher authorities?

YES NO CAN’T SAY

9 Formal appraisal systems help in discovering your true potential for

higher responsibilities.

YES NO CAN’T SAY

10 Do you think sufficient time has been given to you for discussion and
guidance to improve your performance?

YES NO CAN’T SAY

11 The performance appraisal system helps superiors to know their

employees in better way.

YES NO CAN’T SAY

62 | P a g e

12 Performance appraisal system helps in reducing the communication

gap between the superiors and subordinates.

YES NO CAN’T SAY

13 Mid-term review (after 6 months) of employee’s performance, below

E6 level, instead of annual review is beneficial.

YES NO CAN’T SAY

14 Introduction of a computerized system will make the performance

appraisal system more effective.

YES NO CAN’T SAY

Reasons: 1
2
3

15 Your valuable suggestions to further improve the performance

appraisal system.

Suggestions: 1
2
3

Category: Supervisor/ executive