SUMMER TRAINING REPORT

ON

EFFECTIVENESS OF
PERFORMANCE APPRAISAL
SYSTEM IN ESCORTS AGRI-
POWERTRAC LTD,
FARIDABAD

SUBMITTED IN THE PARTIAL FULFILLMENT OF THE DEGREE

OF BACHELOR OF BUSINESS ADMINISTRATION (2006-
2009).

SUBMITTED TO: SUBMITTED

BY:
CONTROLLER OF EXAMINATION Nupur Singh
M.D. UNIVERSITY, 2405
ROHTAK BBA 5TH
SEMESTER

D.A.V INSTITUTE OF MANAGEMENT

INDEX

2
Sr. No. Particulars
Chapter -1 INTRODUCTION OF THE
TOPIC
Man power planning
Objectives of HRM
Scope of HRM
Role of HRM
Managerial function of HRM
Team Effectiveness
Objectives of the study
Chapter-2 COMPANY PROFILE
History of Insurance
Insurance sector in India
Important Milestone
History of ICICI Insurance
Different Plans of ICICI
Vision and mission
Research methodology
Methods of data collection
Primary data
Secondary data

Chapter-3 ANALYSIS AND

INTERPRETATION
Surveys of customers
Limitations of the study
Chapter-4 CONCLUSIONS AND
RECOMMENDATION
Annexure
Bibliography

3
ACKNOWLEDGEMENT

This project report prepared by me is a result of the joint effort of several

helping hands of the Personnel Department of Escorts Ltd., Farmtrac Division,
Faridabad. The knowledge of our theoretical studies is absolutely incomplete without
its proper implementation and application in the diversified corporate world of today.
I have been really opportunistic to be a part of the Escort Group during my summer
training, which is one of the leading business houses in today’s scenario.

An undertaking of study like this is never an outcome of efforts put in by a

single person, rather it bears imprint of number of persons who directly or indirectly
helped me in completing the study.

At the outset I would like to extend my sincere gratitude to Mr. K. S. Yadav,

(Head of Personnel Department, Farmtrac Division) for providing the opportunity to
carry out the research & for providing guidance during the preparation of the report
whenever needed.

I would like to thank Mr. VISHAL SINGH Personnel Manager-I.R. for

providing the basic knowledge on personnel management, project topic & the
methodology to be used for preparing the report. I am also thankful to Mr. S.P
Tyagi, (HR Manager), for sharing his knowledge.

4
 Last but not the least, I am thankful to the MS. SURBHI KAPOORlecturer
who has provided me the necessary guidance and shared her experiences without
which it was not possible for me to complete this project.

I am once again, thankful to members of ESCORTS Group for their co-operation.

(NUPUR SINGH)

PREFACE

The study conducted in Farmtrac division of Escorts was aimed at finding

out the effectiveness of performance appraisal system and to give suggestions to
improve the system.

For the purpose of collection of the information the mode of

communication of survey adopted was the collection of primary data through
questionnaire with personal interview of the junior managers.

I have measured the effectiveness of performance appraisal system on the

basis of certain aspects. These are:-

 How regularly appraisal is done.

 Is appraisal system has the scope for communicating top management

objectives.

 Is appraisal system also helpful in explaining what is expected from the

employee?

 Is appraisal system focuses on individual development for better results.

 To what extent appraiser helps appraisee to plan performance in advance.

 Are appraisal system helps employees to plan their performance well in

advance?

5
  Is counseling helps in communicating the support needed by the
employees from their superiors.

 True feedback is there or not. And if it is there then whether it helps in

getting insights into employees’ weaknesses and strengths.

 Whether management is serious for the appraisal outcomes and follow-up

with the training needs identifies during performance appraisal.

CHAPTER-1

INTRODUCTION TO THE
“ESCORTS LIMITED
(FARMTRAC)”

6
 THE ESCORTS SYMBOL

The Escorts symbol means more than a seen by the eye. It has been prepared
with certain objective in mind and is symbolic in more then one way.

The philosophy behind Escorts and the ‘E’ in the Escorts is “Enterprise”. The
Hexagon is a symbol of productivity, precision when interposed as a nut. It
symbolizes a craftsmanship, and mending productivity. The sprains superimposed on
the Hexagon represent the workers and the people of the Escorts. This forms the letter
‘E’ the first of Escorts a company even on the more changing unveiling the future.

7
ESCORTS AGRI MACHINERY GROUP

The Vision
We shall strive to be the Numero Uno in the Indian
tractor industry and top five tractor manufacturers
in the world.

We shall continuously strive to meet the ever rising

expectations of our valued customers at the
lowest internal cost.

8
 We shall aim to offer the farming community a
range of innovative products and services, which
shall enable them to improve their productivity
and
competitiveness.

We shall achieve a turnover of RS. 20 Billion And

profit of RS. 2 Billion By the year 2000.
Transcending national boundaries, we shall strive
to attain exports of one tenth of our total tractor
production by the year 2000.

MISSION

We will achieve leadership in market share & profitability in the domestic

tractor market by the year 2004-2005 and shall be the world's largest supplier of
sub 100 HP tractors. We shall proactively contribute to the prosperity of the rural
economy by defining a larger role for ourselves in the Food and Agriculture sector.

9
 COMPANY PROFILE

ESCORTS LIMITED are the holding company of Escorts groups. Post restructuring,
Agri Machinery or tractors has become the focus area of operations. Other businesses
like I.T., construction equipment are controlled through subsidiaries and joint
ventures.

HISTORICAL BACKGROUND

Escorts came into being with a vision and a mission. A vision that led two
brothers YUDI NANDA and HARI NANDA to branch out from their family’s
prospering transport business and institute ventures that were to become the
foundation of ESCORTS Ltd. Escorts agents limited was born at Lahore on 17th Oct,
1944 with YUDI NANDA as managing director and HARI NANDA as the chairman.
After that owning to the opportunities lying in the Indian villages Escorts

10
(Agricultural Machines) Ltd., was launched in 1948 with YUDI NANDA as the
director. Tragically, he died in an accident in 1952. Then Escorts Agents Ltd. And
Escorts (Agricultural Machines) Ltd. Was merged in 1953 to create a single entity
Escorts Agents Pvt. Ltd. The company’s incorporation in its present name, Escorts
Ltd. was effected on 18th January 1960.

Having initially started with a franchise for vesting house domestic

appliances, Escorts has come a long way in manufacturing and marketing a large
range of products. It has pioneered farm mechanization in India through import and
distribution of agricultural tractors.

The manufacturing operations commenced in 1954, and since then the

following range of products have been introduced in the country:-
1954: Piston rings and Cylinder liners
1960: Pistons
1961: Assembly of tractors
1962: Motorcycles and railway couplers
1963: Automotive shock absorbers
1965: Agricultural tractors under Escorts brand name
1969: Agricultural tractors under Ford brand name
1971: Industrial and construction equipment
1979: Excavator loaders
1981: 100cc motorcycles
1985: Electronic PABXs
1991: Harvester combines
1992: VSAT Satellite Communication System
1993: Mobile communications
1995: Fork lift trucks
1996: Disengagement of joint venture collaboration with New Holland and launch of
FARMTRAC Tractor.

11
 The single word completely described the character philosophy and success
of the company, which grew from a small beginning to one of the ever-changing
dimensions. For five decades Escorts has been in the core sectors like Agriculture,
Transportation, Construction & Resources for Engineering change through optimum
product performance.

Today Company is running with nearly 10,000 employees, 19 modern

manufacturing plants and a turnover exceeding Rs. 400 crores. The Escorts group
ranks among India’s leading Engineering Conglomerates.

From its inception Escorts has firmly believed that success inspiring on being
close to the customer thus every corporate endeavor addresses it to end used,
adjusting to ever changing markets.

At every step of the way, Escorts had inducted the latest technology by
forming alliances with the world’s most advanced Engineering and Electronic
companies, constantly adopting their technology according to India’s need and
situation.

To make sure the finished product delivers on its promise the company had
created an extra-ordinary distribution and service network that stays with the
customer.

Escorts came into its own with a far reaching vision for the future to stay over
close to the customers with products made in India to international standards. The
source of Escorts consistent growth is commitment and contribution to the core needs
of the country. Escorts have firmly believed that success depends on being close to
the customers. As early as in 1944 while others were concentrating on selling their
goods. Escorts sought to “Escorts” its merchandise right up to the customer’s
doorstep. This meant staying close to the customer, understanding their needs, giving
them a product that met these needs ensuring that it worked smoothly thereafter.

12
 Today with Mr. Rajan Nanda as a Chairman and Mr. Anil Nanda as a Vice-
Chairman the ideals have not changed. Thus, every corporate endeavor addresses to
the end users and the ever-changing market, substantial man-hours are being devoted
to planning a new range with the objective of consistently offering greater value to
the customer.

“In every area we touch our task has always remained one of engineering
change” Rajan Nanda. In every step, Escorts has induced the latest technology to
make products that are not merely “better” but those meet international standard. For
Escorts, these are two benchmarks of industrial achievements, the distinct, undisputed
edge of technology and the internationalization of business.

In five decades Escorts has grown to become one of the top industrial
conglomerates in the country.

FIVE DECADES OF ENGINEERING CHANGE

THE DECADE OF CREATION: 1944-1954

The launch of Escorts Agents Pvt. In Lahore and setting it all up again in
Delhi after the country’s partition. The beginning of an industry legend, with a tractor
franchise, followed by India’s first institute of farm mechanization and the
company’s first industrial venture, Goetze (India) Ltd., at Patiala, in equity
collaboration with Goetze of Germany.

13
THE DECADE OF AUTOMATION: 1955-1964
Escorts goes public. A full-fledged manufacturing orientation takes roots with
the commencement of Escorts’ own brand of tractors and next major field of
operation: motorcycles. The company joins hands with Mahle to produce India’s
most advanced pistons.

THE DECADE OF CONSOLIDATION: 1965-1974

The foundation of the Ford-Escorts alliance for India’s finest tractors, soon to
make the group the largest selling tractor manufacturing. Escorts Employees
Ancillaries Ltd., a unique venture in industrial democracy, comes into being.

Escorts receives FICCI Award for outstanding contribution to Indian

agriculture. The company crossed national boundaries with its first export of 400
tractors to Afghanistan, won in a global tender. A triumph of Escorts quality and
competitiveness, this was perhaps the world’s largest ever commercial airlift of its
kind.

THE DECADE OF DIVERSIFICATION: 1975-1984

One with Knorr Bremse follows an epoch-making alliance with JBC for
India’s first Excavator-loaders for railway breaks. With the Yamaha collaboration,
Escorts become the country’s largest motorcycle manufacturer. Acknowledged
leadership in automotive ancillaries- Mahle pistons and Goetze rings.

THE DECADE OF GLOBALISATION: 1985-1995

Escorts enters into joint venture with buy back arrangement with Class
(Harvester Combines) and Herion (Hydraulic valves) providing an entry to world
markets. A tie-up with Faun, powers the company to supremacy in hydraulic mobile
cranes. Escorts fights an epic battle against a corporate raid, the ultimate victory
providing the unshakable confidence of the company’s small shareholders
countrywide. Escorts Heart Institute commissioned, hailed as among Asia’s most
advanced. Escorts turnover crosses Rs. 15 billion. In the sunrise telecom sector,

14
alliances with JS telecom, a Bosch company, and Hughes Network systems, world
leaders in VSAT networks.

THE DECADE AHEAD: 1996-

The Mission is Globalization and the emphasis will be on core sector
investments. Escorts is going in for a global network and for mega projects in the
21st century.

ESCORTS: RESTRUCTURING

Escorts Limited is all set to meet the future by drawing on its 50-year equity gained
from its inherent strengths, a strong presence in the Core Sector providing
complementary product lines and a vast marketing network; combining them with
India’s intrinsic cost advantages to become a global source point for high value
engineering products.

In order to meet the challenge of the future and to leave an indelible mark on
industrial scenario, Escorts has restructured the group along 4 business lines, each
headed by an independent CEO. The business groups are as follows:-

1) Agri Machinery Group

2) Construction Equipments
3) Automotive Ancillaries
4) Financial Services

15
ESCORTS – THE GROUP INFRASTRUCTURE

The flagship of the Escorts group is Escorts Ltd. in the words of Mr. Rajan
Nanda. Chairman Escorts Limited., “in the last 50 years Escorts has been more than
merely one of India’s largest Engineering Companies. It has been a prime mover on
the industrial front; at every stage introducing products and technologies that helped
take the country forward in key areas. Today as the nation engages in its most
momentous economic transformation ever, we are once again adapting ourselves
towards being catalysts for qualitative growth by Engineering Change with a global
perspective.”

The group infrastructure comprises:-

 23 main associates/subsidiary companies

 12 manufacturing locations

 A full-fledged R&D facility

 Nearly 10,000 employees

 24 regional marketing offices

 Nearly 500 ancillaries forming the vendor base

16
  4 financial services companies

 Asia’s best training institute of Farm Mechanization with 100 acre

demonstration farm.

 EDDAL
Escorts Dealer Development Association providing management and
financial support to dealers.

THE ESCORTS GROUP

• THE FLAGSHIP COMPANY

Escorts Limited

• OPERATING DIVISIONS
o Agri machinery division
o Engineering division
o International business division

• SUBSIDARY COMPANIES
o Escorts construction equipment Ltd.
(Cranes, excavators, truck loaders)
o Esconet services
o Escorts Automotives
(Investment)
o Escosoft technologies
o Escortal tele communication ltd.
o Cellnext solutions
o Automatrix India
o Escorts heart institute & research center
o Escorts hospital & research center

17
 Medical care (erstwhile division of Escorts lived off 100% subsidy

• ASSOCIATE COMPANIES
o India Ltd. GOETZE (India) Ltd.
o GOETZE TP (India) Ltd.
o GOETZE (India) assets management Ltd.
o Escorts securities ltd.
o Escorts Mahle Ltd.
o Escorts Employees Ancillaries Ltd.
o Escorts Finance Ltd.
o IFS India Escorts
o Hughes Escorts communication ltd.
o Carraro (India) ltd.

ESCORTS GROUP CORE BUSINESSES

BUSINESS GROUPS PRODUCTS

Agri-Machnary  Tractors
Construction equipment  Earth moving Machines
 Vibratory Rollers
 Material Handling Equipments
Automotives  Pistons, Piston Rings
 Aluminum Cylinders
 Shock Absorbers
 Carburetors
 Magnetos
 Clutches
Railways  Air Brakes
 Couplers
 Electro-Pneumatic Brakes

18
  Shock Absorbers
Telecom  Cellular Telephone services
 VSAT Services (satellite
communication system)
Financial Services  Automobile Financing
 Consumer Finance
 Mutual Funds
 Fixed Deposits
Manufacturing Facilities  Machining
 Painting
 Assembly
Product Units(Pus)  Engine PU
 Transmission PU
 Rear Axle PU
 Assembly/tractor PU
Departments  Personnel & HRD
 Finance
 Manufacturing Engineering
 Plant Engineering & Machine
Maintenance
 Information Systems

19
 THE BIRTH OF FARMTRAC

The Escorts Tractors Ltd, (ETL) came in existence as a separate company in

1969, after a collaboration of Escorts Ltd. with R.J.Hampson, executive vice
president, Ford Motor Company, USA and Mr. H.P.Nanda, President ETL. The
company entered to a capital market with a public-cum-right issue of partly
convertible debentures of 40.89 crores.

The Escorts group initiated the business reconstruction exercises in order to

strengthen its business in the face of reemerging challenges. New Holland the
international partner too was looking for ways to independently pursue its business
goals in this country. This lead to an amiable agreement between escorts and Ford
Motors to end their joint venture association. Escorts acquired the entire equity stack
of its international partner whereby the company is now the subsidiary of Escorts Ltd.

This acquisition has taken its logical conclusion on 1st April 1996 with the
emergence of Farmtrac division, which produces Farmtrac tractors with Escorts Ltd.
This led to the emergence of Escorts Agri-Machinery Group.

The parting of ways with New Holland also meant saying goodbye to Ford, a
brand name that has stood the company in excellent stead over two decades and half.
The brand name has also been changed from Ford to Farmtrac and the name of the
Md. models Ford 3600, 3610 and 3620 has been changed to Farmtac 50 and Farmtrac
60.

20
A TRADITION OF TRUST
Economy range 27 - 35 HP
The very first range of tractors introduced by Escorts range of tractors has a
tradition of service and trust behind them. They are farmer year round dependable
friends.

MODELS
Escorts 325
Escorts 335

THE SUPER DIESEL SAVER

Value range 30- 47HP
The Powertrac range of tractor is designed to give spectacular diesel
economy. They act as ambrosia during there trying times of rising diesel costs.

MODELS
Escorts 430 powertrac- 30 HP
Escorts 435 powertrac- 35 HP
Escorts 440 powertrac- 40 HP
Escorts 450 powertrac- 47 HP

THE WORLD CHAMPIONS

Premium range 30- 75HP
Exported to the most advanced markets in the world, they are sophisticated
machines designed for the world demanding requirements of the progressive farmers.
This range is accepted very well in abroad. The farmtrac range is the ultimate icon in
the tractor technology with the advanced features for scientific farming and other
applications.

MODELS
Farmtrac30- 30HP

21
 Farmtrac35- 35HP
Farmtrac45- 42HP
Farmtrac50- 45HP
Farmtrac60- 50HP
Farmtrac70- 60HP
Farmtrac80- 75H

FARMTRAC DIVISION – A PROFILE

1) MANPOWER : 1659
MANAGERS : 162
SUPERVISORS : 156
TEAM MEMBERS : 1341

2) PRODUCTION CAPACITY
120 Tractors per day

3) CURRENT PRODUCT RANGE

 FT 30
 FT 35
 FT 45
 FT 50
 FT 55
 FT 60
 FT 70
 FT 80

4) TURNOVER
Rs. 400 CRORES

5) EXPORTS

22
 EXPORTED TO USA, TURKEY
TRACTORS EXPORTED IN 2001-02:
PLANNED FOR 2002-03 :

6) ISO 9000 CERTIFIED

ISO 9001 CERTIFIED

THE PLANT

The plant is equivalent with the following units:-

 Engine Productive Unit (EPU)
 Transmission Productive Unit (TPU)
 Rear Axle Productive Unit (RAPU)
 Tractor Productive Unit (TPU)
 Paint Shop
Now transmission productive unit and rear axle productive unit have been
merged and now it is one productive unit known as transmission and rear axle
productive unit.

The plant is equipped with the following facilities:-

MACHINE SHOP: EPU, RAPU AND TPU have separate machine shops equipped
with several purpose machine (SPM) as well as Computerized Numerically
Controlled (CNC machine).

The different components machine in these shops with their

respective sections are listed below:
 Cylinder Head, Cylinder Block and Connecting Rod.
 Case Transmission.
 Center Housing & Trumpet Housing.

23
  Tool Room.
 Turning, CNC, Gear Cutting, Grinding & Heat Treatment.

In heat treatment shop following facilities are available:

 Gas Carbonizing, Hardening & Tempering
 Induction Hardening
Following facilities are available in the various productive units:
 Transmission assembly
 Rear axle assembly
 Engine assembly and testing
 Tractor assembly and testing

QUALITY POLICY

We shall strive to continuously

Improve to meet the ever rising
Expectations of our customers
At the lowest cost.

Each one of us must fulfill the

Need of our customers, both
Internal and external, with the
Highest degree of commitment,
Thereby creating a quality
Organization geared to ensure
Total customer satisfaction and
The sustained health and
Prosperity of our business.

24
QUALITY OBJECTIVES

Escorts Limited – AMG Plant-II Quality Objectives are derived for the
quality policy and are intended to provide quality direction to employees in the day to
day operation of the plant.

The quality objectives are applicable to AMG Plant-II is approved by Plant

Head. The approved quality objectives are below:

 Escorts Limited- AMG Plant Quality Objectives are derived from the Quality
policy and are intended to provide Quality Director to Employees in the day
to day operations of the company.

 We will attempt to give our Customers the best value for their money by
supplying products to match customer specifications/needs.

 We will attempt full customer satisfaction by monitoring customer

perceptions and brand image of our product through market surveys and
periodic direct customer contact in the market place.

 We will pursue continuing improvement in Product Quality and Productivity

by suitable indicators to measure the trends of improvement resulting from
our efforts.

25
  We will strive to ensure full commitment and conformance to the Escorts
Limited – AMG Plant-II Quality Management System in all areas of work
and take prompt corrective action on any problem that may occur.

 We will work together as a team across departments and organizational levels

using Task Forces to develop a common focus and greater effectiveness in
solving problems.

 Specific Corporate and Departmental Objectives for a particular year will be

derived from the above used to monitor and control company operations.

Best value for money, customer satisfaction, continued improvement in product

quality, productivity conformance to quality management system in each area of
work, prompt corrective action and team building are the major focus areas of quality
objective of AMG Plant-II.

PERFORMANCE MEASUREMENT

Yearly quality objectives business objectives for Plant-II are finalized on

yearly basis to achieve the Corporate Business Objective and ensure continual
improvement in Quality Management System.

Plant objectives are further sub divided for each PU/Department and key
result area are identified for measurement of performance for each process.

PU/Department Head Monitors the performance and reviews the actual

performance as compared to the objective. Finalizes corrective/preventive action plan
to achieve laid down objective on monthly basis for continual improvement.

26
MANAGEMENT REVIEW

FEEDBACK OF Department review is forwarded to MR as input to

management review.
Formal management review covering all aspects of review input & output.
Agenda in line with ISO 9001:2000 takes place once in six months frequency. The
frequency may be increased or decreased based on the level of effective
implementation.
Head of AMG Plant-II or PU Head authorized by him in his absence conducts
Management Review to ensure continued suitability, adequacy and effectiveness of
the Quality Management System.
All the PU Heads, Departmental Head of Manufacturing Operations of AMG
or their nominated representatives attend the Management Review.

ISO 9001

The international organizational organization for standardization (ISO) is a

specialized international agency for standardization, presently comprising the
national standard bodies of 91 countries including India.

The objective of ISO is to promote development of standardization with a

view to facilitate international exchange of goods, services and also develop a
cooperation in the sphere of intellectual scientific, technological and economic
activities.

The Escorts Tractors Ltd. enjoys a formidable reputation in the market solely because
of its unrivaled quality. It is because of the company’s entirely uncompromising
commitment to quality improvement and maintenance that in the course of the year it

27
became the first tractor company in the country to receive the highly coveted and
prestigious ISO-9001 certification under the revised rules of 1994.

CHAPTER-2

REVIEW OF
LITERATURE

28
 PERFORMANCE APPRAISAL

People differ in their ability and aptitudes. These differences are natural to a
grate extent and cannot be eliminated even by giving the same basic education and
training to them. There will be some differences in the quality and quantity of work
done by different employees even on the same job. Therefore, it is necessary for
management to know these differences so that the employees having better abilities
may be rewarded and the wrong placements of employee may be rectified through
transfers. The individual employee may also like to know the level of his
performance in comparison to his fellow employees so that he may improve upon it.
Thus there is grate need to have suitable performance appraisal system to measure the
relative merit of each employee.

The basic purpose of performance appraisal is to facilitate orderly

determination of an employee’s worth to the organization of which he is a part.
However, a fair determination of the worth of an employee can take place only by
appraising numerous factors some of which are highly objective, as for instance,
attendance, while others are highly subjective, as for instance, attitude and
personality.

PERFORMANCE APPRAISAL

29
 Performance appraisal means systematic evaluation of the personality and
performance of each employee by his supervisor or some other person trained in the
techniques of merit rating. “Performance appraisal includes all formal procedures
used to evaluate personalities and contributions and 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.”

Performance appraisal is the systematic evaluation of the individual with

respect to his performance on the job and his potential for development. Performance
appraisal is concerned with determine the differences among the employees working
in the organization.

PURPOSES OF PERFORMANCE APPRAISAL

1) Promotions:- promotion is the most important objective of performance

appraisal. It is to the common interests of both the management and
employees to promote employees into positions where they can most
effectively utilize their abilities. It is mismanagement to promote employees
into positions where they cannot perform effectively at the time in question.
A properly developed and administered performance appraisal system can aid
in determining whether individuals should be considered for promotion or
not. The system should rate the individual for the present job and his
potentialities for the higher job. A person performing his job well does not
necessarily mean that he is fit for promotion.

2) Human resource planning: - Performance appraisal generates significant,

relevant and useful information about the promo ability and potential of
employees. This information is used to assess the organization’s internal
supply of human resources and availability of managerial personnel for
succession planning.

30
 3) Recruitment and selection: - Evaluation made in performance appraisal can
be used to find out the particular areas of knowledge, skills and experience
which successful performer’s posses. This information can be used to review
effectiveness of recruitment and selection procedures and practices so that
right type of candidates can be selected.

4) Training and development: - Performance appraisal helps in identifying

development needs of employees. This information can be used to advise
suitable training and development programmes to enable employees to
overcome their weaknesses and improve their strengths.

5) Compensation: - Information gathered through performance appraisal

provides inputs for making decisions concerning salary administration,
financial incentives, appreciations, additional responsibilities etc.

PERFORMANCE APPRAISAL PROCESS

• Establishing performance standards

• Communicating the standards to employees

• Evaluating actual performance

• Comparing actual performance with standards

• Discussing the appraisal results with the employees

• Taking corrective action, if necessary

31
METHODS OF PERFORMANCE APPRAISAL

• Written essay

• Critical incidents

• Checklist

• Graphic rating scale

• Behaviorally anchored rating scales (BARS)

• Group order ranking

• Individual or straight ranking

• Paired comparison

• MBO (result oriented appraisal method)

• Group appraisal of subordinates

• Peers appraising the colleague

• Subordinates appraising the boss

• 360 degree feedback method

32
 • Assessment centers method

ERRORS IN PERFORMANCE APPRAISAL

• Leniency or severity error

• Central tendency

• Halo effect/error

• Similarity error

• Contrast error

• Shifting standards

• Influence of recent events

• Tendency to give high rating

• Length of service bias

• Personal bias

HOW TO MINIMISE ERRORS

• Clearly defined performance dimensions and standards

• Performance appraisal only for providing feedback

33
 • Combination of methods for appraising performance

• Continuous feedback

• Many appraisers rating backed up with examples

• Appraisal of subordinates on the same performance dimensions

• Appraiser with ability to appraise

• Training of appraisers

PERFORMANCE APPRAISAL IN ESCORTS LIMITED

PREFORMANCE APPRAISAL
In today’s competitive environment it is essential to harness individual
aspiration and potential and gear them suitably to meet business objectives. To make
this happen, both you and the organization would like to know how you have been
performing and your potential for growth.

THE OBJECTIVES OF PERFORMANCE APPRAISAL

• To be developmental in nature where individuals grow with the organization.

34
 • To integrate individual performance and contributions to larger
organizational goals and needs.
• To open greater communication between superior and subordinate.
• To ensure a realistic link between performance, recognition and reward.
• To provide core data for human resource development / organizational
development efforts.
• To encourage innovativeness through unique contribution.
• To focus on employee contribution and not on efforts.

APPRAISAL CYCLE

The appraisal cycle for DGM and above is 1st June to 30th June. Increments /
promotions are effective from 1st July every year.

The appraisal cycle for employees in grades M2 to M8 grade become

effective from 1st Jan. each year and from M8 to DGM from 1st April. Consequently,
the appraisal period in respect of such employees after promotion is of 15 month for
the first year i.e. the next review would be on 1 st April or 1st July, as the case may be,
of the following year.

APPRAISAL OF EMPLOYEES ON DEPUTATION

In case the employees are working on deputation in a different

company/division of Escorts, the parent company division shall carry out employees’
appraisal. This is not applicable to employees in the categories of DGM and above
and their cases will continue to be processed as usual from the chairman / vice
chairman’s office as is being done at present.

APPRAISAL OF TRAINEES. (All categories)

Only trainees who have been regularized (confirmed on or before 30 th

September) shall be eligible for performance appraisal for that block of appraisal

35
period. Trainees regularized there shall be eligible for confirmation appraisal
according to the rules laid there under.

CONFIRMATION APPRAISAL

Trainees on completion of the training period and employees on completion

of probation period shall be appraised for regularization / confirmations. During
confirmation / regularization, incumbents are evaluated for:-
1. Group performance
2. Personal performance
3. Supervision and leadership qualities
4. Developmental needs

Employees are covered for superannuating only after confirmation but with effect
from their date of joining.

MANAGERIAL PERFORMANCE APPRAISAL PROCESS

OBJECTIVE:
To identify and categorize employees of managerial cadre, in three distinct
contributory levels based on performance review against last year’s KRAs and
assessment of competencies.

HOW TO FILL APPRAISAL FORM:

The managerial appraisal form consists of the following sections.

Section A: Review of goals achieved against KRA’s

36
 Section B: Feedback on managerial competencies.

Section C: Development Needs

Section A: Review of goals achieved against KRAs

This section consists of 70 points. In this section appraisee is required to fill

details of KRAs, objectives and achievements and assign weightages against each
KRA, agreed in the beginning of the review period. Appraiser is required to capture
his/her observations and score each KRA.

Section B: Feedback on managerial competencies

This section consists of 30 points. In this section appraiser is required to give

feedback on the listed managerial competencies indicating the performance factor
that best describes the appraisee, substantiating it with actual events/behaviour.

Section C: Development needs

In this section the appraiser is required to fill in the strengths/areas of

improvements relevant to appraisee in carrying out his current job or higher
responsibilities.

REVIEW PROCESS:

The review discussion should take place on a one-to-one basis in an

uninterrupted manner and it is expected that typically such a meeting would last for
about 60 to 120 minutes. This discussion would be based on performance plan
documents (KRA’s) agreed last year. Sequence of the process would be as described
below:-

37
Step 1: Appraiser to gather adequate data on the appraisee’s performance against
predefined KRAs.

Step2: Appraiser to schedule a meeting for performance review with the appraisee.

Step3: Appraiser to give feedback to appraisee based on his observations with

emphasis on performance aspects where appraisee can improve. Appraiser
should avoid loaded / judgmental terms that may lead to emotional setbacks.

Step4: Towards conclusion, the appraiser should complete the form. This would
form the summary of discussions that took place between appraisee and
appraiser.

Step5: The performance against KRAs is to be quantified and scored out of a

maximum of 70 points. In addition, the appraiser needs to give score against
competencies defined out a maximum of 30 points. Thus each appraisee will
have a total score received out a maximum of 100 points.

Important
Since the subject under discussion is highly sensitive, the details of the
discussions should remain confidential between the two.

Step6: The completed format with total score assigned based on the review may be
forwarded to the reviewer for his concurrence.

Step7: Reviewer to review appraisals of all manager’s in his/her area to ensure that a
fair process has taken place and no biases have crept into the assessment.

Step8: Thereafter, the data is to be collected at DMG / Department level for each
area. If the strength is less, appropriate aggregation at Divisional / Functional
level may be done. For example, in R&D center, aggregation may be done at
a divisional level. All managers’ have to be ranked from top to bottom on a

38
 relative basis to arrive at the final ratings at this level as defined below.
Concerned HR manager would help the DGM / MANCOM member in
finalizing the ratings.

Step9: HR would summarize the data for whole of AMG and present before business
head for his concurrence before issuing letters to individuals.

PERFOMANCE RATING:

The three performance rating categories and expected distribution pattern, as

a percentage is as under.
Rating Category %age Distribution Description
Cat-1 20% top 20 percentile
Cat-2 70% next 70 percentile
Cat-3 10% bottom 10 percentile

39
 CHAPTER-3

SYNOPSIS

40
 OBJECTIVES OF THE STUDY

The objectives of doing work on the performance appraisal in the escorts ltd company
are as follows:

1. To study the effectiveness of appraisal system in the escorts ltd company.

2. To study the performance appraisal process of Junior Managers in the escorts ltd
company.

3. To study, whether the system is helpful for both the employer (to communicate the
organizations plans, expectations, etc.) and employees (to express the training &
development needs).

41
4. To study the employees view points on their performance appraisal.

LIMITATIONS OF THE STUDY

With the proper due care this study has been conducted but it consists of some of its
limitations also which are as follows:

1. Sample size was small i.e. 40Junior Managers.

2. The time limit is also one of the major constraints in conducting study.

3. Biases may creep in the information given by the respondents.

4. Main root of this research study was questionnaire & interview, which has its own
limitations, for example we can’t measure the reliability, enthusiasm dissonance
etc.

42
 SCOPE OF THE STUDY

I have chosen the topic “PERFORMANCE APPRAISAL in Escorts LTD”.

Keeping in mind the company nature of work, with a hope that the company is
benefited from its findings by modifying its existing performance appraisal rules if
felt necessary.

The study has immensely helped in understanding the various steps of the process of
performance appraisal as well as the various process of the motivation. I had the
privilege to gain practical experience by working in the Escorts Ltd.

43
 RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY

The research methodology is a way to solve the research problem in a

systematic manner. It depends upon the various steps like objectives of the study,
how the data is collected, how much is the sample size required and the limitations
of the study. Properly conducted study is a valuable tool for the top management in

44
 making some decisions. Good study reduces the uncertainty. Effective research
methodology leads to good research.

RESEARCH DESIGN
Research design is the arrangement of the condition for collection and analysis of
data in the manner that aims to combine relevant to the research purpose with the
economy in the procedure.
Research design of the study is Exploratory Research Design
Exploratory research design’s major emphasis is on the discovery of ideas and
insights. In this research problem is transformed into one with more precise meaning.
Methods of explorative research design -:
1. Depth Interviews

2. case study

3. surveys

Sample Size for the study was 50 employees and managers

COLLECTION OF DATA

The data collection is mainly of two types:

1) primary data

2) secondary data

Primary Data was collected by conducting

(a) Questionnaire and

45
(b). By conducting personnel interview of the managers

Different methods of collecting primary data

1. Questionnaire Method: A questionnaire is means of elicting the
feeling, beliefs, experience, perception & attitude of sample of the individual.
As a data collecting instruments. It could be:-

a) Structured

b) Unstructured

2. Interviews: Finally, for the purpose of additional information all the

respondents were personally interviewed. In addition, classification and

To know about the performance appraisal, the QUESTIONNAIRE, INTERVIEW

method has been used.
I have prepared a list of questions regarding recruitment process of Escorts Agri –
Powertrac Ltd., Faridabad and distributed it to the respondents.

This questionnaire has 17 questions, which are aimed to achieve the objectives of the
study. All the questions are close ended with two to five options.

For the purpose of analysis, various tables and charts were prepared with numbers
and percentages of the employees in different choices.

Along with primary data collected through questionnaire-interview, I also have used
secondary data, which include theory part from some books and the performance
appraisal process in Escorts from its own policies.

46
Sample size for the study was 40 Junior Managers.

Secondary Data was collected from websites, company reports, company manuals
and management books.

47
 CHAPTER-4

DATA
COLLECTION AND
ANALYSIS

48
 TABLE 1

Awareness of performance appraisal system in employees

AWARE NOT AWARE

40 0
Number of employees aware
of performance appraisal
100% 0%
system in escorts.

AWARENESS OF APPRAISAL SYSTEM

49
 YES
NO

From above it is clear that all the employees of the escorts ltd. are aware of appraisal
system

50
 TABLE 2

HOD Immediate Any other

Appraisal is done by: superior
15 12 3

52% 43% 5%

51
 BY WHOM APPRAISAL IS DONE

Thus, we can say that mostly performance appraisal is done by Immidiate superior

HOD
IM
Any other

52
 TABLE 3

Objectives of performance appraisal

Pay hikes Promotion Training needs Any other

15 15 11 9
Objectives of
performance
30% 30% 22% 18%
appraisal in Co.

Objectives of performance appraisal

53
 PH
P
ITN
AO

PH- Pay Hikes, P- Promotion

ITN- Identify training needs, AO- Any Other
Therefore it can be concluded that according to employees the main objective of
appraisal system is to increase their pay and to increase their promotion.

TABLE 4

54
 Methods of performance appraisal

Superior 360 degree MBO Any other

Methods of a

performance p

appraisal used in p

escorts. r
a
i
s
e
s
37 0 13 0

74% 0% 26% 0%

55
 Methods of performance appraisal

SA
360
MBO
AO

SA- superior appraises, 360- 360 degree, AO- any other

Maximum number of employees agrees with the method of superior appraisal.
As a tool for performance appraisal of employees.

56
 TABLE 5

Understanding of objectives of management &

performance appraisal

SA A N D SD
19 26 3 1 1
Clarity about objectives of
performance appraisal
38% 52% 6% 2% 2%
to employees
19 23 5 2 1
view of employees towards
the scope for 38% 46% 10% 4% 2%

communicating top
management objectives in
appraisal system

48% 44% 2% 2% 4%
Provision of opportunity to
employees to have a clear
understanding of what is
expected from them.

57
Understanding of appraisal objectives

SA
A
N
D
SD

Majority of employees agree that the objectives of performance appraisal

are clear to them.

58
 Understanding of management objectives
. Maximum number of employees agrees with the fact that Appraisal system has
scope for communicating top

SA
A
N
D
SD

management objectives with employees.

59
Clear understanding of the expectations

SA A N D SD

60
Therefore maximum number of employees strongly agrees that appraisal system
provides an opportunity to them to have a clear understanding of what is expected
from them.

TABLE 6

Effectiveness of counseling

SA A N D SD
Counseling provides an
19 28 0 1 2
opportunity to communicate
the support employee need
with their superior to
38% 56% 0% 2% 4%
perform their job well

Counseling provides 19 29 1 1 0
opportunity for discussion
between employee & their
appraiser on the
expectations, achievements
and the area of improvement
required

38% 58% 2% 2% 0%

61
Counseling provides opportunity for communicating the
support needed

SA
A
N
D
SD

From above we can conclude that many employees agrees that counseling provides
an opportunity to communicate the support employee need with their superior to
perform their job well

62
Counseling provides opportunity for discussion on the
expectations, achievements and the area of improvement
required

SA
A
N
D
SD

Maximum number of employees agrees that counseling provides opportunity for

discussion between them & their appraiser on the expectations, achievements and the
area of improvement required

63
 TABLE 7

Feedback helps to get insight into weaknesses & strengths

SA A N D SD
Appraisal system gives the
22 24 3 1 0
clear understanding of job &
factors affecting employee’s
performance to appraiser &
44% 48% 6% 2% 0%
appraisee.
Feedback helps employees
to get insight into their 18 25 5 1 1
weakness and strengths.
36% 50% 10% 2% 2%

64
 Clear understanding of job

SA
A
N
D
SD

48% of employees agree that appraisal system gives the clear understanding of job &
factors affecting their performance to appraiser & appraisee.

Insight into weaknesses & strengths

SA
A
N
D
SD

65
Maximum number of employees agrees with the fact that feedback helps them to get
insight into their weakness and strengths.

66
FINDING OF THE
STUDY

67
Findings of the Study

Finding of the study on the basis of collection and analysis of the

data are as follows-:

1) All the employees at junior manager level in the company have the awareness
of the performance appraisal system.

2) Most of the employees say that their immediate superior does their appraisal,
60% of the respondents says this. Performance appraisal is done annually in
Escorts. In actual MBO method of performance appraisal is used but 70% of
the respondents said that their immediate superior does the appraisal. Only
26% of the employees said that the method of performance appraisal in
Escorts is MBO.

3) 80% of the employees have the clear understanding of the objectives of the
performance appraisal. 80% of the employees were strongly agree/agree with
the statement “objectives of performance appraisal are clear to you”.

4) 30% of the respondents said that the pay hikes (annual increments) is the
main objective of performance appraisal. While other 30% respondents said
the objective of performance appraisal is promotion. 22% said that the
identification of training needs is the main objective. But in actual all of these
three and many more the objectives of the appraisal.

5) The immediate superiors do appraisal in Escorts. Assessment centers are also

used in Escorts but for promotions only.

68
6) Appraisal system in the company has the grate scope for communicating top
management objectives to the employees. 84% of the respondents were
strongly agree/agree that appraisal system helps in understanding top
management objectives.

7) 90% of the respondents were strongly agree/agree with the statement, which
state that appraisal system provides an opportunity for understanding what is
expected from the employees.

8) Counseling part of the appraisal system is good enough in Escorts. 94% of the
respondents were strongly agree/agree with the statement which states that
counseling provides an opportunity to communicate the support needed from
superior to perform the job well.

9) Most of the respondents were satisfied with the counseling done by the
superiors. They said that counseling facilitates discussion between appraiser
and appraisee, by which appraisee come to know about their areas where they
need improvements, what is expected from them, what is their job all about
and what factors affect their performance.

10) 86% of the respondents were satisfied with the feedback given to them and
they also accepted that true feedback helps to get insight into their
weaknesses and strengths.

69
CHAPTER-5

70
CONCLUSION AND
SUGGESTION

71
 CONCLUSIONS

Based on the analysis, through the observation process, through the questionnaire
responses, following in the conclusions of the study:-

• The employees are up to some extent is satisfied with the existing

performance appraisal system process.

• Performance appraisal system in escorts ltd is highlighting employee

needs and opportunities for personal growth and development.

• Promoting understanding between the supervisor and his subordinates.

• Counseling facilitates discussion between appraiser and appraisee, by

which appraisee come to know about their areas where they need
improvements, what is expected from them, what is their job all about and
what factors affect their performance.
• It has identified training and development needs and to evaluate
effectiveness of training and development programmes.

• This has encouraged the innovativeness of employees through unique

contribution.

To conclude we can say that performance appraisal system in Escorts Limited is an

effective method. Most of the employees are satisfied with the appraisal process and
the criteria of the appraisal. Counseling associated with the appraisal is the most
motivating factor for the employees to give their best.

72
 SUGGESTIONS

The purpose of performance appraisal is to reward the employees, give them

recognition, and help them in career growth.
o The production managers or the personnel managers should interact more
directly with their subordinates and try to know their needs, their problems
and help or suggest them to overcome those difficulties.

o The feedback process should be made more sound and effective so that the
employees could know the areas where their performance is low so that they
could make it better in the future.

o Special training sessions should be organized besides regular training

programmes for low performance areas.
o There should be more transparency in awarding marks to the employees. It
should be effectively based on the merit and performance of the employees
and not on the basis of any personal contacts, blood relation or any affection.

o A small committee should be found that will keep a close watch on the whole
exercise and make ensure that it should be a fair process.

73
ANNEXURE

74
 QUESTIONNAIRE

Q.1 Are you aware of the employees appraisal system in Escorts Limited system.
a) Yes b) No

Q.2 Who does the appraisal?

a) HOD b) Immediate supervisor
c)Any other, specify…

Q3. What are the objectives of performance appraisal in Escorts Limited?

a) Pay hikes b) Promotion
c) Identify training need d) Any other, specify…

Q4. What methods of performance appraisal are used?

a) Superior appraises the employee.
b) 360 Degree

75
 c) MBO

Strongly Agree neutral Strongly Any other,

Disagree specify
Agree
Q5. Are objectives of
performance appraisal
clear to all employees

Q6.Do you think that

appraisal system
has scope for
communicating top
management
objectives to the
employees.?

Q7.According to you
does appraisal
system provides an
opportunity to you
to have a clear
understanding of
what is expected
from you.

Q8. Is Counseling an
affective measure to get
a boost from the
superiors?

76
Q9.Does Counseling provides
opportunity for discussion
between you & your appraisal on
the area of improvement
required?

Q10. Is appraisal system giving

the clear understanding of job
and factors affecting your
performance to appraiser and
appraisee?

Q11. Does Feedback helps you to

get insight into your weaknesses
& strengths?

77
 BIBLIOGRAPHY

 GUPTA, C.B., HUMAN RESOURSE MANAGEMENT, SULTAN

CHAND & SONS, NEW DELHI-2006.

 ASHWATHAPA, K.-HUMAN RESOURSE & PERSONNEL

MANAGEMENT, TATA MC GRAW HILL CO. LTD,NEW
DELHI-2005.

 DESSLER ,GARY -HUMAN RESOURSE MANAGEMENT, I0

EDITION, TATA MCGRAW HILL CO. LTD., NEW DELHI.

 STEPHEN P. ROBINSON- MANAGING HUMAN

RESOURCES, 4TH EDITION, TATA MC GRAW HILL CO.
LTD., NEW DELHI.

OTHER RESOURCES:-
WEBSITES;-

 www.google.com
 www.escortsgroup.com
 www.wikipedia.com

MANUALS:-

78
 PERSONNEL MANUAL, ESCORTS LIMITED, CORPORATE HR
& IR, FARIDABAD

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