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Performance Appraisal Basics

A Performance Appraisal is a method by which the job performance of an employee is documented and evaluated. Performance appraisals are a part of career development and consist of regular reviews of employee performance within Organizations.

Performance appraisal is a formal interaction between an employee and manager. This process benefits both employers and employees. It provides an efficient way of evaluating employee performance against previously stated goals, such as company mission statements, task descriptions, procedures and policies.

Few Objectives of Performance Appraisal:

·         Assessment of Employee Performance

·         Planning the employee goals (setting expectations) for the next Performance cycle which are mutually agreed between employee and Manager

·         To align employee development goals with the Organizational strategy/goals

·         Help Manager understand employee’s personal aspirations, and identify the right track (may lead to Advancement in same team, Transfers and sometimes moving out of Company).

·         Appreciate all the good work done and motivate employee for advancement of greater responsibilities.

·         Development Opportunities, Promotions and compensation benefits

·         Identification of gaps in skills and competencies, Training needs.

  For employees to meet performance expectations, the Managers need to:

·         Set Performance expectations at the beginning of the Performance cycle.

·         Clearly explain employees on what is to be done (set right expectations)

·         Goals need to be tangible (measurable) and if possible it is better to provide approximate weight age for each goal.

·         Update Employees on how the Organization has been performing and what is it planning to focus in the coming year.

·         Explain Employees on how the Performance will be measured

·         Inform what results will represent “Success”

·         Maintain Transparency in the entire process

Benefits of the Performance Appraisal

·         Clear expectations set right at the beginning – The Employees have clear understanding of what is expected which helps them plan their work.

·         Right Direction to work towards goals – When the expectations are clearly defined and understood, it becomes easier for employees to work towards achieving their goals in the stipulated time.

·         Self-Analysis – Helps employee to do a self-analysis of his weakness and strengths.

·         Better Communication – It helps in improving the communication between the employee and Manager.

·         No Conflicts – Since the goals are measurable and mutually agreed upon, there would rarely be any chances of conflicts.(MBO)

·         Transparency – If the goals are clearly discussed and documented, this helps Managers build trust among the employees.

·         Less Supervision – Employees are aware of what needs to be done and what leads to success, so they would manage themselves. The Managers would not be required to supervise the work and micromanage.

·         Opportunity to Develop – Once the weak areas are identified, this would be an opportunity to develop through trainings and mentoring

·         Good results – When employees understand what would represent “success” they would constantly work towards their goals which in turn would get good results.                                                                             

                   

*** For directors to meet the performance expectations of the stakeholders, the board needs to:

·         Set Performance expectations at the beginning of the Performance cycle.

·         Clearly explain directors on what is to be done (set right  expectations)

·         Goals need to be tangible (measurable) and if possible it is better to provide approximate weight age for each goal.

·         Update stakeholders on how the Organization has been performing and what is it planning to focus in the coming year. 

                                           

In accordance with the provisions of the companies act 2013 and the amendment to the listing agreement, first time in the history of India, all directors which includes independent directors of listed companies are subject to a  formal  appraisal from the conclusion of the financial year 2014-15.

section 134(3)  clause (e) of companies act 2013

Disclosures on performance evaluation of the Board, its committees and individual directors [Section 134(3)(p) of the Act], Criteria for determining qualifications, positive attributes and independence of a Director [Section 134(3)(e) of the Act]

These provisions will provide a constructive feedback to all the directors their overall improvement required in the specified areas which will indirectly  ac t as an improvement in the corporate governance.

The methodology  of presentation of the results of performance appraisal  in the annual reports will be totally different from that of  the employees who are subject to star ratings on individual heads basics. The annual report will only state the manner in which evaluation is done and will give an overall results and not individual directors results..

Arthashastra deals in detail with the qualities and disciplines required for a Rajarshi – a wise and virtuous king.

"In the happiness of his subjects lies the king's happiness, in their welfare his welfare. He shall not consider as good only that which pleases him but treat as beneficial to him whatever pleases his subjects" – Kautilya.

The board is compared with that of a king and the citizens with shareholders.

In India it is the first year of mandatory requirement of appraisal of directors, so companies have the flexibility to choose the evaluation methods, tools, and techniques that they can best adopt to suit their companies philosophy.

In the first year of mandatory requirement many companies have opted for internal evaluation with the help of external human resources experts.Board evaluation is a new concept to India and in the first few years they will be under learning curve with the help of professionals service firms.

What is exactly the right evaluation technique?

Same technique used for employees ??  which are always biased and based on whim and fancy of the appraiser !!!!!  used as a tool to settle scores !!  

A) BAJAJ HOLDINGS AND INVESTMENT LTD,

    70th  ANNUAL  REPORT  2014-15,page NO:41

                      Company Secretary: CS Vallari Gupte 

 Company has given   detail report regarding performance  appraisal of directors:

Pursuant  TO THE PROVISIONS OF THE COMPANIES ACT 2013 AND clause 49 OF THE LISTING AGREEMENT ,the board has carried out an annual evaluation of its own performance and its committees  and individual directors .Manner in which such formal annual evaluation was made by the board is given below:

Performance evaluation Pursuant to the provisions of the Companies Act, 2013 and clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, and that of its Committees and individual directors. Manner in which such formal annual evaluation was made by the Board is given below:

1) Performance Evaluation criteria for board committees of the board and directors were approved by the board at its meeting ...check the criteria on www.bhil.in

2) Based on the said criteria ratings sheets were filled by each of the directors towards the end of the year with regard to evaluation of performance of the board, its committees and Directors for the year under review

3) A Consolidated summary of the ratings given by each of the director was then prepared, based on which a report on the performance evaluation was prepared by the chairman in respect of the performance of the board, its committees and  its directors during the year under review

4) As per the report of  Performance Evaluation, the board is required  to determine ,inter alia, whether  to continue the tern of appointment of the independent director. During the year under review, there was no such occasion to decide on the continuance of the term of appointment of any of the directors and hence the question of taking a decision on their re-appointment did not arise.

B) Persistent systems limited,

 25th annual report ,2014-15  page 103

Company Secretary: CS Amit  Atre

The Company conducted the annual performance evaluation of the board, its various committees and the Directors individually. This was conducted in march and April 2015 by External Management Consultant and the findings of the evaluation were presented at the meeting of the nomination and the governance committee and the Board of directors RECOMMENDATIONS AND SUGGESTED AREAS OF IMPROVEMENT FOR THE BOARD,ITS VARIOUS COMMITTEES AND THE INDIVIDUAL DIRECTORS WERE CONSIRED BY THE BOARD

c) Thermax Ltd 

34th annual report ,2014-15  page 72

                          Company Secretary: CS  Gajanan Kulkarni 

ONLY ONE SENTENCE ON page no: 72 point no:3

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