Question 1.

After a thorough evaluation of the revised performance appraisal system, these are the
major areas where the current system is better than the previous one:-

The current performance appraisal system got rid of the 13 point scale rating
and got a more refined 5 rating scale. This system also had a rating known as
PR (Progressing) designed for employees who are new to the job and due to
get a comprehensive evaluation.
One of the biggest leap the current system had taken from the previous one
was shifting to a relative grading system. This helped in making the employee
performances more competitive, as in this case, you were directly compared to
the amount of effort that you had put compared to others and not merely just
the work that was required to be completed.
This system also rates the employees based on the quantitative (e.g. Sales vs
plan, operating expenses) as well as qualitative (timeliness of work, quality
and consistency of work) measures.
This system would first time rate managers and supervisors based on their
performance in hiring, training and development, performance feedback, etc.
The appraisals under this system are being carried out in the month of January
only rather than the old system wherein the appraisals continued throughout
the year. This helps save a lot of time.
With the outstanding performers being identified easily and separated from
others, the salary increase also is being given more in this system than the
previous one.

The major areas where the current system lacks than the previous one are :-

The targeted distribution of having only a fix number of employees within a

particular rating category makes the whole system very less flexible. With this
kind of constraints, many good performers would be left without the credit
they deserve.
Also with the fixed targets, many employees are also being ranked the EX
category even if they havent performed just to meet the targets.
With current systems, a person cannot be moved up through small rewards.
The older system with a lot of gradations helped in this cause.
A differentiation between the line and staff people. Since the line people are
given most of the higher ratings, nothing is left for the staff people who work
equally hard.
The managers didnt use the appraisal system in the manner it was desired by
the company and hence there was a lot of inconsistency in the rating system.

Question 2

1. The relative nature of the new appraisal system can be considered to be a very
important step in gauging the performance of the employees. The relative grading of
the employee performance helps create a competitive environment amongst the
employees. From the management perspective, the rewards pool can be better
managed once the performance is graded relatively.
In the absolute grading system, the employees are rated based on their individual
performance. They are being evaluated on a set amount of tasks assigned to them and
how effectively they perform their tasks. The only drawback with this kind of rating
system is that the employees who perform beyond the assigned tasks and who add
more value to the organisation are not being given the due credit and are not being
rewarded accordingly. It also provides the veteran employees complacency to not
think beyond the defined tasks and help innovate their particular work. Hence, the
absolute system is not desirable when you want the organisation to keep innovating
and stay a step ahead of its competitors.

Contrary to the absolute grading system, the relative grading system provides a clear
picture with respect to which employees is a value addition to the organisation and
which employees are hindrance to the progress of the organisation. This system
grades the employees based on their performance compared to other employees. This
creates a sense of competitiveness and keeps each employee on its toes to keep
performing better than others. The only drawback with the relative grading system
can be when an organisation has to evaluate employees from different verticals. With
each vertical having its own criteria for work and different evaluation of each tasks,
it becomes highly difficult to rate the performance of 2 employees from different
verticals.

Question 3

Though the current appraisal system seems to be much better than the previous
system, there are still a few problems which need to be fine-tuned. A few of them are :

One of the common complaints of the employee focus group has been that the
managers have been biased while giving the ratings. The its her turn syndrome
wherein a person is given higher rating every alternate year seems to be unfair. To
avoid that, the performance rating should not only be done by the direct manager, but
also by the higher level manager in order to keep a transparent process.
Also, the notion that the new employees necessarily need to be rated PR seems
illogical. Rather all the employees, new or old, should be rated solely based on their
performance, and hence motivate the newcomers also to perform well.
Another area where the company needs to work is on the fix targets for each rating
category. The company should have flexible rating targets wherein if a person is
performing exceedingly well, he should not be deprived of the higher rating due to the
constraints of limit being set for the rating category.