A study on performance appraisal management in dr. Reddy’s laboratories ltd


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A STUDY ON PERFORMANCE APPRAISAL MANAGEMENT IN Dr. REDDY’S LABORATORIES LTD

PROJECT REPORT

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE
MASTER OF BUSINESS ADMINISTRATION

BY

S.POOJITHA

A30601908080



AMITY GLOBAL BUSINESS SCHOOL
2009

ACKNOWLEDGEMENT

I avail this opportunity to express my deep sense of gratitude to all the people who have helped me to carry out and complete this project in partial fulfillment of my MBA degree curriculum

I am deeply indebted to Dr. G. Prasad Rao, Director, AMITY GLOBAL BUSINESS SCHOOL for the valuable support and gave me an opportunity to do my project work.

I wish to express my hearty thanks to my faculty guide Prof. Latha Chakravarthy of AMITY GLOBAL BUSINESS SCHOOL, for the help she provided to carry out this project.

It has been of inestimatable pleasure and privilege to express my heartful gratitude, admiration and sincere thanks to Dr. V. Narayana Reddy, HR, Dr. Reddy’s Laboratories Limited, CTO-UNIT III

I also wish to thank all the employees of Dr. Reddy’s Laboratories Limited, who helped me by sharing their knowledge and I offer a word of thanks to the almighty who gave me strength, courage and blessing to carry out a successful study
S.POOJITHA

INTRODUCTION

In this 21st century scenario, one can easily identify the rapid changes in the world in various things. The human person started thinking differently from past. Each one strives to do better than the past.
Person’s mind started working in thinking about his status where he works and where he wants to be i.e., his future goal. Every one wants to be specially identified from the other. For this he strives to do better than others. He wants to be recognized as better than others.
In this context we have a word of performance appraisal of the individuals and groups in the organization. It is the individuals or employees who are considered to be the backbone of any organization.
In this work one can notice the importance of performance appraisal and how it helps in molding the employees in achieving organizational goals. For our convenience the work has been divided into various chapters each one dealing with different aspect of the work.
Performance appraisal is the method of appraising employee’s activities in order to make him to work towards achieving organizational goals. Appraising an employee is one of the fundamental jobs of human resource management. It is done by knowing the strengths and weaknesses of employees thus correcting them wherever necessary and molding them by training if necessary.
This also helps in giving rewards to those who contribute in the development of the organization. Before understanding the meaning of performance appraisal, let us consider where and how it started.

1.1 History of Performance Appraisal:
Once the employee has been selected and placed, he is then appraised for his performance. Performance appraisal is the step where the management finds out how effective is has been in selecting employees. Performance appraisal is a process of evaluating an employee’s performance on the job in terms of its requirements. It is the process of evaluating the performance of the employee in terms of the requirements of the job for which he is employed, for placement, selection promotion, financial reward and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally.

Performance appraisal technique is said to be used, for the first time during the First World War, by the US army. It has adopted “man-to-man” rating system for evaluation military personnel during those periods.
Performance of individuals of an organization would chance over a period of time. It could happen in order to adapt to the changing requirements and the changing working conditions. By performance appraisal one can bring together or abolish the gap between the expected performances an actual performance.
So, the main objective of performance appraisal is to understand the needs of employees, to correct those who deviate from the organizational goals, through training, counseling. This also help to prevent grievances, and in disciplinary activities of employees. Thus, making each and every employee happy on his job and help them to develop their skills and talents.



Figure 1: Employee Happiness
1.2 What is Performance?

Performance is synonymous with behavior; it is what people actually do. Performance includes those actions that are relevant to the organizational growth and can be measured in terms of each individual’s proficiency (level of contribution).

1.3 How is Performance managed?

Good performance by the employees creates a culture of excellence, which benefits the organization in the long run. The activity includes evaluation of jobs and people both, managing gender bias, career planning, and devising methods of employee satisfaction etc. The efforts are to make to generate the individual’s aspirations with the objectives of the organization. Organization has to clear the way of career advancements for talented and hardworking people. Fear of any kind from the minds of the employees should be removed so that they give best to their organization. Allow free flow of information. Communication network should be designed in such a way no one should be allowed to become a hurdle. This enables the managers to take correct decisions and that too quickly.

1.4 Why Performance Appraisal?

Today’s working climate demands a great deal of commitment and effort from employees, who in turn naturally expect a great deal more from their employers. Performance appraisal is designed to maximize effectiveness by bringing participation to more individual level in that it provides a forum for consultation about standards of work, potential, aspirations and concerns. It is an opportunity for employees to have significantly greater influence upon the quality of their working lives. In these times of emphasis on “quality”, there is a natural equation: better quality goods and services from employees who enjoy better quality “goods and services” from their employers.
Performance appraisal must be seen as an intrinsic part of a manager’s responsibility and not an unwelcome and time-consuming addition to them. It is about improving performance and ultimate effectiveness.
Performance appraisal is a systematic means of ensuring that managers and their staff meet regularly to discuss post and present performance issues and to agree what future is appropriate on both sides.

This meeting should be based on clear and mutual understandings of the job in question the standards and outcomes, which are a part of it. In normal circumstances, employees should be appraised by their immediate managers on one to one basis. Often the distinction between performance and appraising is not made. Assessment concerns itself only with the past and the present. The staff is being appraised when they are encouraged to look ahead to improve effectiveness, utilize strengths, redress weaknesses and examine how potentials and aspirations should match up.
It should also be understood that pushing a previously prepared report across and desk cursorily inviting comments, and expecting it to be neatly signed by the employee is not appraisal - this is merely a form filling exercise which achieves little in terms of giving staff any positive guidance and motivation.

1.5 The appraisal of performance should be geared to:

  • Improving the ability of the jobholder;

  • Identifying obstacles which are restricting performance

  • Agreeing a plan of action, that will lead to improved performance.



It is widely accepted that the most important factor in organization effectiveness is the effectiveness of the individuals who make up the organization. If every individual in the organization becomes more effective, then the organization itself will become more effective. The task of reviewing situations and improving individual performance must therefore be a key task for all managers.
For appraisal to be effective, which means producing results for the company, each manager has to develop and apply the skills of appraisal.
These are: -

  • SETTING STANDARDS

  • MONITORING PERFORMANCE

  • ANALYZING ANY DIFFERENCES

  • INTERVIEWING




  • Setting standards on the performance required, which will contribute to the achievement of specific objectives.




  • Monitoring performance in a cost–effective manner, to ensure that previously agreed performance standards are actually being achieved on an ongoing basis.




  • Analyzing any differences between the actual performance and the required performance to establish the real cause of a shortfall rather than assume the fault to be in the job holder.




  • Interviewing having a discussion with the jobholder to verify the true cause of a shortfall, a developing a plan of action, which will provide the performance, required.


Appraisal can then become a way of life, not concerned simply with the regulation of rewards and the identification of potential, but concerned with improving the performance of the company. The benefits of appraisal in these terms are immediate and accrue to the appraising manager, the subordinate manager/employee, and to the company as a whole.

Performance appraisals actively involve employees in understanding what is expected of them. By setting agreed objectives — and later reviewing the results — each employee is responsible for his or her own performance.

Performance appraisals are applicable for all categories of employees in the enterprise. Sometimes self appraisal schemes are implemented for top management cadre. In most cases employees are appraised by their superiors. The modern way of appraising is by superiors, subordinates, peers and others which is 360 degree appraisal.

It is good to discuss the outcome of appraisal with the employee. The objective of appraisal is not to blame the employee but to bring an improvement in the employee. Appraisal needs to be objective and not subjective. The actual performance of the employee is to be appraised and not the employee as a person. It gives a qualitative judgment as to indicate how well or how bad the employee is doing the job, whether the employee is able to complete the job assigned to him and to what extent the achievement is possible, whether the performance is affected by the reasons beyond the control of the employee and whether the employee has utilized his strengths in performing the job.
At Dr. Reddy’s, sustainability is a multi-dimensional aspiration, which has its roots in the every purpose of our existence – providing affordable medicines to people around the world and meeting medical needs through innovation. Our business, by its very nature, serves a social good, so we have a far deeper reason than profits alone to drive our performance.

For Dr. Reddy’s, building a sustainable organization is not a trend that blindly follow; it is intrinsic to how they have operated for decades. To Dr. Reddy’s, a commitment to sustainability means a commitment to fulfilling the obligations to all the stakeholders – the customers & partners, employees, shareholders and society. Thus, while optimizing profitability may be one measurement of the performance, they also judge the success by the performance with regard to the communities in which they live and work, the environment and the employees. They understand that it is only by increasing value to all of these stakeholders that can build an ever flourishing and lasting organization.

While sustainability thinking was always woven into the fabric of the organization, they formally declared their intent to institutionalize it in 2004, when they first began to publicly report their sustainability practices.  They annually publish their Sustainability Report with direction from the guidelines recommended by Global Report Initiative G3, covering social, ethical, and economic, safety and environmental aspects of our business.
1.6 Purpose of Performance Appraisal:
Organizations use the performance appraisal for three purposes:


  1. Administrative: It commonly serves as an administrative tool by providing employers with a rationale for making many personnel decisions, such as decisions relating to pay increases, promotions, demotions, terminations and transfers.

  2. Employee development: It provides feedback on an employee’s performance. Appraisal data can also be used for employee development purposes in helping to identify specific training needs of individual.




  1. Programme Assessment: Programme assessment requires the collection and storage of performance appraisal data for number of uses. The records can show how effective recruitment, selection and placement have been in supplying a qualified workforce.


People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Performance appraisals of Employees are necessary to understand each employee’s abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance.

Performance appraisals are widely used in the society. Performance appraisal is considered as most significant and indispensable tool for organization because it provides highly useful information in making decisions regarding employee placements and promotions. Accurate information plays a vital role in organization as a whole. It helps pinpoint weak areas in employees and provides need bases training programmes.

Performance appraisal is very important but equally delicate and sensitive area in Human Resource Management. Periodical performance appraisal is a common practice in mist of the enterprises. It is a tool for the up-gradation of performance of the employees.

1.7 Benefits of performance appraisal:


  • It serves as a means of telling a subordinate how he is doing and suggesting necessary changes in his behavior and attitudes.




  • It thus provides information which helps to counsel the subordinate. It also serves to stimulate and guide employee’s development.



  • It is useful in analyzing training and development needs. These needs can be assessed because performance appraisal reveals people who require further training to remove their weaknesses.




  • Performance appraisal serves as a means for evaluating the effectiveness of devices used for the selection and classification of employees.



  • It is therefore helps to judge the effectiveness of recruitment, selection, placement and orientation systems of the organization.




  • Performance appraisal facilitates human resource planning and career planning. Permanent performance appraisal records of employees help management to do human resource planning without relying upon personal knowledge of supervisors.




  • Performance appraisal promotes a positive work environment, which contributes to productivity. When achievements are recognized and rewards on the basis of objective performance measures, there is improvement in the work environment.


1.8 Need and Importance of the Study:

This work on performance appraisal helps, one to understand the methods adopted at Dr. Reddy’s Laboratories Ltd in appraising the employees, which makes or motivates them to work towards achieving organizational goals.
1.9 Objectives of the Study:

1. To study on Performance Appraisal System.

2. To study the design of Performance Appraisal System existing in Dr. Reddy’s Laboratories Limited.

3. To know the satisfaction level of existing Performance Appraisal System of the organization.

1.10 Scope of the Study:

This study is confined to the performance appraisal system of Dr. Reddy’s Laboratories Ltd. It analysis the different appraisal methods adopted by the organization and tries to bring out the importance and use of appraisal method to employees and also its drawbacks if any.
1.11 Methodology of the Study:

The study of performance appraisal in Dr. Reddy’s Laboratories Limited is made with the help of Primary and Secondary Data.

1.12 Sources of Data:

The study is based on both Primary and Secondary data.

  • Primary Data:

Primary data is collected through a well structured questionnaire circulated to 50 employees working in the organization.

Personal discussions were held with the officials to elicit relevant information for the purpose of the study.

  • Secondary Data:

Secondary data was some times collected from more than one source. The secondary data is collected from the official records of the company.
1.13 Limitations: ­

  1. Since the number of employees selected is limited therefore the findings may not represent the entire organization.

  2. The duration of the study is limited.

  3. Gathering required information through oral communication also.



“The latest mantra being followed by organizations across the world being – "get paid according to what you contribute" – the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. If the process of performance appraisals is formal and properly structured, it helps the employees to clearly understand their roles and responsibilities and give direction to the individual’s performance. It helps to align the individual performances with the organizational goals and also review their performance.”


Figure 2: Appraisal of the employee by the supervisor
REVIEW OF LITERATURE

In any organization performance appraisal plays a vital role in developing the skills of the employees. It is a systematic evaluation of subordinates by their superiors of their performance. Generally, the superiors wish to know the performance of their subordinates. On the other hand, the employees like to know their positions in the organization.

Performance appraisal of the groups, individuals and organizations has become a common practice in all societies. It can be a structured form or unstructured form. This appraising of performance helps one to know where and how an individual or groups are performing the work.

2.1 Meaning:



Performance appraisal is a method of evaluating the behavior of employees in the work spot. In general, one can understand that performance refers to the degree of accomplishment of the tasks that make up an individual’s job. It means that whether the person has fulfilled the demands of the job, which are expected of him or of the job.

2.2 Definitions:

"Performance appraisal is a systematic and objective way of evaluating an employee's performance in terms of his job requirements".
"Performance Appraisal is the process of evaluating the performance and qualifications of the employees, in terms of the requirements of the job for purposes of administration including placement, selection for promotions, providing financial rewards and other actions which require: differential treatment among the members of a group as distinguished from actions affecting all members equally".

2.3 Features:

1. Performance appraisal is the systematic description of an employee’s job relevant strengths and weaknesses.

2. The basic purpose is to find out how well the employee is performing the job and establish a plan of improvement.

3. Appraisals are arranged periodically according to a definite plan.

4. Performance appraisal is not job evaluation. It refers to how well some one is doing the assigned job.

5. Performance appraisal is continuous process in every large-scale organization.
2.4 Need for Performance Appraisal:

The following explains the need for performance appraisal in any organization.

1. Performance appraisal Provides information about the performance ranks basing on which decision regarding salary fixation, conformation, promotion, transfer, and demotions are taken.

2. It Provides feedback information about the behavior of sub-ordinate.

3. It helps in counseling employees who are deviated from the objectives.

4. It is a tool to detect the skill, knowledge of employees.

5. It also needed to prevent grievance and in disciplinary activities.
2.5 Purpose of Performance Appraisal:

Basically the performance appraisal aims at attaining the different purposes.

They are: -

  • To create and maintain a satisfactory level of performance.

  • To contribute to the employee growth and development through training, self and management development program.

  • To help the supervisors to have a proper understanding about their subordinates

  • To guide the job changes with the help to continuous ranking.

  • To facilitate fair and equitable composition based on performance.

  • To facilitate for testing and validating selecting tests interview technique through comparing their scores with Performance Appraisal System Ranks.

  • To provide information for making decision regarding lay of retrenchment etc…

  • To ensure organizational effectiveness through correcting employee for standard and improved performance, and suggesting to change employee behavior.


2.6 Who Appraises:

It is important to know the persons who are responsible for appraising. The appraiser can be any person who has thorough knowledge about the job content, contents to be appraised, standards of contents, and who observes the employee while performing the job.


  • The Typical Appraisers are as under:

  • The supervisor

  • peers

  • subordinates

  • Employees themselves

  • consultants

  • Users of service.




  • Contents to be appraised:

Generally, the following qualities of the person are appraised. They are:

  • Technical skills.

  • Integrity.

  • Honesty.

  • Sincerity.

  • Judgment skills.

  • Creativity

  • Ability to accustom to new things area of interest.

  • Quantity of work.

  • Knowledge of the job.

  • Punctuality.

  • Good housekeeping.

  • Intelligence.

  • Attendance.

  • Cooperation.

  • Initiative.

  • Accuracy.


Performance appraisal plays a useful role in understanding and identifying the potential of the employees. It focuses on the aspects like whether the strengths and capabilities of the employee can be developed to match the specific requirements of the jobs at higher levels. It also helps to understand which other jobs can be assigned to him. Thus, the appraisal is the analysis of the employee. It suggests as how to strengthen the strengths and overcome the weaknesses so that he can become a better asset for the organization.

Performance appraisal is an important tool applied at the time of giving salary increase to the employees. Often, the performance of an employee is so extraordinary that the organization plans to reward the employee with a special increase in salary over and above the routine increase. These employees contribute valuably to the organization and giving extra benefits make them not to leave the organization. Thus performance appraisal is an integral part of the human resource development effort.

2.7 Process of Performance Appraisal System:

The major steps in the process of performance appraisal are diagrammatically represented below.

Figure 3: Steps Involved in The process of performance appraisal


2.8 The Evaluation Process:
This process of performance appraisal follows a set pattern viz., a means performance is periodically appraised by his superiors. Questions are raised. Is his potential the greatest as a manager or as a staff specialist? What are his strengths and weakness?
The process of evaluation begins with the establishment of performance standards. At the time of design a job and formulate a job description, performance standards are usually develop for the position. Theses standards should be clear and vague and objective enough to be understood and measured.
These standards should be discussed with supervisors to find out which different factors are to be incorporated, weights and points to be indicated on the appraisal form and later on used for appraising the performance of the employee.
The next step is to communicate theses standards to the employees, for the employees left to them, would find it difficult to guess what is expected of them. To make communication effective feedback is necessary from the subordinate to the manager.
The third step is the measurement of performance. To determine what actual performance is necessary to acquire information about it. We should be concerned with how we measure and what we measure.
The fourth step is the comparison of actual performance with standards. The employee is appraised and judged of his potential for growth and advancement. Attempts are made to note deviations between standard performance and actual performance.
The next stage is the results of appraisal are discussed periodically with the employee where good points weak points and difficulties are indicated and discussed so that performance is improved. Conveying good news is considerably less difficult for both the manager and subordinate than when performance has been below expectations.
The final step is the indication of corrective action when necessary immediate corrective action can be two types. One is immediate and deals predominately with symptoms, the other basic and devices into causes. Attempts may also be made to recommend for salary increases promotions.



Figure 4: Evaluation process

APPRAISAL METHODS





TRADITIONAL METHODS MODERN METHODS
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