CHAPTER-1 INTRODUCTION

1.1 BACKGROUND OF THE STUDY The concept of the different HR functions has now become a strategic alliance to the organisation in taking key decisions, HR department was once looked as a cost centre but now they involve in taking key strategic decisions for the management. The human resource

department devise the key factors which need to be included in the appraisal system. Making the employee to work effectively and increase their motivational level at the work place is the key issue which is now in the hands of the human resource managers. With the current economic crisis many organisation are sending pink slips to their existing employees, this has caused a panic in the minds of the other employees and it affects greatly in the productivity front. Therefore, companies are now identifying various ways in increasing the motivational level of the employees and to retain their key talents. One such method is to devise a friendly and accepted appraisal system which enables the employees to identify their key potential and can display their talents for mutual benefits. The underlying talent of the employees and their knowledge will lead to have a cutting edge over their competitors for the firms which are operating in the service industry. Therefore, firms are now working hard to retain and motivate their employees. The key challenge for the future is to manage the dynamic work force which is purely driven by the loyalty of the employees towards the organisation and the heavy competition prevailing in the market place to retain the key talents. The HR department must take a crucial part in devising various strategies for employee retention, but the real challenge lies in making this thought in to a real one. This study aims in identifying the impact of performance appraisal systems in retaining and motivating the employees. These are the current factors which must be given a detailed thought to shape the future of the business for the firms which operates in the service industry.

1.2 AIM AND OBJECTIVES OF THE STUDY The research has primary and secondary objectives Primary objective: The primary objective of the research is to have an investigation on the impact of performance appraisal systems on employee motivation and retention in the Insurance industry. Secondary objectives: y To learn and identify the importance and need of performance appraisal in the Insurance industry. y To analyze suitable performance appraisal systems which facilities and contributes to the employee motivation and retention. y How the players in the Insurance industry can improve employee retention and motivation through their performance appraisal methods. y y To examine on the motivation and motivational techniques in the Insurance industry. To identify the importance of employee retention and factors facilitating employee retention in the Insurance industry. 1.3. SIGNIFICANCE OF THE STUDY The investigator inspiration in choosing this topic area arrives from the principle that this subject is particularly imperative in the insurance industry, since a service organisations mainly depend on the services provided to their customers and a very little dependence is on the product which they make, therefore this formulates them to exclusively rely on their employees' mind-set and their motivation level inside the organisation- and also on the policies framed in managing the human resources inside the organisation. Consequently human resources manager plays a very important position in motivating the people mainly in the insurance industry. Applying regressive human resources exercises the managers aims to create a sense of commitment, motivation and morale which bridges the Services-Returns procession in the service sectors, it declares that the fulfilled, faithful and creative employees will always strive to provide outstanding service, and this in turn creates more value to the clients of the organisation, and these clients will in turn become more faithful, which generates more revenues and profits for the entire organisation.

The main theme of the current study is great importance in identifying the changing trends in the human resources management from the traditional functional activity towards the strategic effects in the services industry. Dave Ulrich has presented about the changing faces of the current human resources values and also presented a tough point on the future of the various functions carried out by the human resources team, the author has presented the various human resources capabilities and the changes that are available to the department. As we mentioned in the introduction the human resource management in the Insurance is different in nature than other human resource management concepts. The researcher found that employee retention and motivation in this industry has a unique relationship with the performance appraisal systems in the organization study. The performance appraisal system, evaluates the performance of the employees in the organization. The back ground of this research is that the lack of motivation in the Insurance industry leads the employees in job dissatisfaction and under performance. The inaccurate and in correct performance appraisal from the higher management cause to the motivation and employee lay off in the industry. So the research would like to go deep to the need of accurate performance appraisals system in the industry which facilitates the employee motivation and retention. The researcher considers that the ever changing position of the human resources department is now moving in the direction of a extra planned activity in the current dynamic environment and it is considered to be a major significance in the changing business in the present context since the human resources department is now the connecting bridge between the top executive and the operational executives , and in the current context of the insurance industry it facades a tough decisive business challenges day to day which requires the organisations to create and build new type of competences so as to achieve higher competitive advantage and to create sustainable growth inside the organisation. Some of the key challenges faced by the industries are tough competition on a global scale, increased profitability and growth, adaptability to new technologies, retaining the intellectual capital, and managing and implementing change. The most traditional types of competitiveness are on the expenses, supply chain management, new type of technology, and unique product kinds. However, to develop new type of strategies and to implement them inside the organisation, the human resources department must first create a good environment to display the leadership

activity so as to develop the organisation in order to meet the growing challenges from both internal and external factors. The human nature ultimately does not like the supreme power of others, and this is relevant in the organizational structure as well. So the industry needs a good performance appraisal which facilitates the employee motivation and retention which are the basic elements of an organization with competitive advantage in the employee management .Both the employee motivation and employee retention is important terms in the enterprises. On the mean time performance appraisal is the system which evaluates the performance appraisal of the employees and secrets in the organizational successes. It is now crucial for the researcher to identify and create a new awareness about the different suggestions of the various types of HR functions inside the organisation and attempt to understand the importance of the performance appraisal system implemented so that it creates a direct impact in retaining and motivating the employees. Because, these factors will have strategic proposition inside the organisation and will create implications on the success of the business in the Insurance industry. 1.5 STRUCTURE OF THE DISSERTATION The following study is divided in to five main parts. Their detailed description is as follows Chapter one provides the basic introduction to the topic taken for the research about the impact of the performance appraisal methods in retaining and motivating employees. Different issues are taken up for discussion, the researcher then highlights a short introduction of the organisation and then provides a detailed account of choosing the topic, the author cites certain examples in the significance of the study on the importance of the appraisal system in motivating employees and also about the changing faces of the human resources activities in the services industry. The author then concludes with the importance of the performance appraisal system in the insurance industry and how it is intended in retaining the key talents inside the organisation Chapter two, discusses about the various current issues and subject matter of the performance appraisal in the light of retaining and motivation of the employees. The author highlights the various articles and other research works to present a detailed account on the thesis, the first part provides the various motivational theories and a short introduction of the performance appraisal systems and the various performance appraisal systems implemented by various organisation, the

second part of the literature review concentrates in providing the recent trends in the human resource development particularly in the insurance industry. This section provides a detailed account of the various human resources practices and trends in the current scenario with special reference to the Insurance industry. Chapter three provides a detailed account on the various research methodologies used by the author to carry out the assigned task. There are various methods to carry out the research on the current topic they are classified into quantitative analysis and qualitative analysis; these are used based upon various factors. The author has intended in using different approaches to collect the required information for the research, primary data are collected from the employees of the chosen organisation. The author also attempts to discuss on the various sources of data collection like primary data collection and secondary data collection. The fourth part of the analysis covers the various analysis and methods applied by the author; in this researcher attempts to apply various statistical methods to carry out a detailed analysis on the primary data. Different statistical methods like percentage rate method, chi square test are available to test the sourced data. Later part of the chapter portrays the key result findings of the research and is grouped under different heads. The last chapter is dedicated to the final conclusion and suggestion depending upon the analysis. The conclusion is prepared based upon the detailed analysis and indications from the last parts and from other research papers and the recommendation is offered in order to help the human resource department of the organisation.

1.6 CONCLUSION In the Insurance industry the performance appraisal, motivation and employee retention are closely and mutually related. So the researcher found that this is more relevant and essential in the Insurance industry. The employee motivation and employee retention are the two challenges in the Insurance industry. So the employers must have good systems to develop these two terms in the organization. In an organizational atmosphere performance appraisal is one of the most important terms and is the key factor in the performance management of the employees in the organization. The major conclusion in the research is that the three above mentioned terms are

always mutually inter related each other and works like a chain in the organization. The researcher expects the research is relevant and the research will get a good support from the organization and the participants in the research.