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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
a feed back will be helpful
