effectiveness of performance appraisal system in seshasayee paper

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SCHOLARS WORLD -INTERNATIONAL REFEREED MULTIDISCIPLINARY JOURNAL
OF
CONTEMPORARY RESEARCH
Online: ISSN 2320-3145, Print: ISSN 2319-5789
EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN
SESHASAYEE PAPER AND BOARDS LIMITED, ERODE
G.YOGANANDAN,
R. DIVYA,
Assistant Professor
Management Studies (MBA)
K.S.R College of Arts and Science (Autonomous)
Tiruchengode, Tamil Nadu, India
Research Scholar
[Management Studies]
K.S.R College of Arts and Science (Autonomous)
Tiruchengode, Tamil Nadu, India
ABSTRACT
The study aimed at finding out the effectiveness of performance appraisal system of
employees in Seshasayee Paper and Boards Limited, Erode. For this purpose, a sample
size of 313 was selected among the total population of employees working in the
organization through stratified random sampling technique. The study found that there is a
significant relationship between designation of the employees and their perception on the
rewards given for good performance and there is no significant relationship between
designation of the employees and the punitive action taken for poor performance. The
study suggested the appraiser or the supervisor of the employee working in different
department must identify the performing employee and such employees shall be given
with both monetary and non-monetary rewards.
Keywords: Performance appraisal, effectiveness, designation and performance appraisal
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Volume. III, Issue II, April 2015 [71]
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INTRODUCTION:
The paper industry in India is more than a century old. At present there are over 600 paper mills
manufacturing a wide variety of papers required by the consumers. These paper mills are manufacturing
industrial grades, cultural grades and other specialty papers. The paper industry in India could be classified
into 3 categories according to the raw material consumed namely Wood based, Agro based and Waste paper
based. While the number of wood based mills is around 20 and balance 580 mills are based on nonconventional raw materials. In 1925, Bamboo Paper Industry (Protection) Act and in 1931, Indian Finance
(Supplementary and Extending) Act came into existence which provided the protection, and some more
mills appeared on the scene. Rohtas Industries Ltd., Dalmianagar; Orient Paper Mills, Brajraj Nagar; Mysore
Paper Mills Ltd., Bhadravati; Star Paper Mills Ltd., Saharanpur; and Sirpur Paper Mills, Kagajnagar, Sirpur;
were set up just before the outbreak of the Second World War. Indian paper Industry made remarkable
progress during the war period. In 1925, Punjab Paper Mills was started with an annual capacity of 6000
tons. By 1930-1931, the total capacity of paper production in India was increased to 45,600 tons as against
33,000 tons in 1925. The share of indigenous production in national consumption was now 71 % as against
54% in 1925. Seshasayee Paper and Boards Limited (SPB), the flagship company belonging to 'ESVIN
GROUP', operates an integrated pulp, paper and paper board Mill at Pallipalayam, Erode-638 007,
Namakkal district, Tamilnadu, India.
NEED FOR THE STUDY:
The need of the research is to test the association of the independent variables such as age, gender, income,
educational qualification and experience regarding performance appraisal system with dependent variables
like performance level, training, feedback and evaluation system especially employees working in
Seshasayee Paper and Boards ltd, Erode.
OBJECTIVES OF THE STUDY:
1. To study the effectiveness of performance appraisal system in Seshasayee Paper and Boards Limited,
Erode.
2. To find out whether both managers and workers getting equal rewards and penalty for their good and
poor performance through the performance appraisal system.
3. To assess the relationship between the managers and workers on their performance appraisal system.
4. To find out the employees’ satisfaction towards the performance appraisal system used in the
Seshasayee Paper and Boards Limited, Erode.
RESEARCH METHODOLOGY:
When the population is heterogeneous or of different segments or strata with respect to the variable or
characteristics under study, then it is stratified. First the population is divided into a number of groups
or strata. In this research the total population is divided into two strata namely, managers and workers.
There are 1100 employees consisting of 650 managers and 450 workers. The questionnaires were
distributed to 350 employees but finally only 313 filled-in questionnaires were accepted by the
researcher as full and valid response. Therefore, the sample size for the study is 313, whereas the total
population of Seshayee paper and boards private ltd 1100, which includes all the category of the
employees. The collected data are analysed with the help of statistical tools like percentage analysis,
Chi-square analysis and regression analysis.
LIMITATIONS OF THE STUDY:
The data were collected by issuing the questionnaire to the employees in a short period of time, therefore the
time and cost played a critical role in limiting the conduction of the research. The study is limited only to
Seshasayee Paper and Boards Limited, Erode which is a paper manufacturer. Hence, the results of the study
shall not be generalized to all the other industries which may exhibit different characteristics.
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REVIEW OF LITERATURE:
Performance appraisal is the process of evaluating how well employees perform their jobs when compared
to a set of standards, and then communicating that information to those employees. Performance appraisal is
also called as employee rating, employee evaluation, performance review, performance evaluation and
results appraisal (Mathis & Jackson, 2005). Performance appraisal means analysis, review or evaluation of
performance or behavior analysis of an employee. It may be formal or informal, oral or documented, open or
confidential. However, in organizations we find the formal appraisal system in a documented form
(Bhattacharyya, 2006). According to Wayne Fcascio, “Performance appraisal has many facts. It is an
exercise in observation and judgement, it is a feedback process, and it is an organisational intervention. It is
a measurement process as well as an intensely emotional process. Above all, it is an inexact, human process.
While it is fairly easy to prescribe how the process should work, descriptions of how it actually works in
practice are rather discouraging” (Dwivedi, 1997). According to W.D.Scott, R.C.Clothier and W.R.Spreigel,
“Performance appraisal is the process of evaluating an employee’s performance of a job in terms of its
requirements” (Narayana, 1996).
Venkatesh (2014) in his article “Performance Measurement and Management System – Inter Company Case
Study Approach - Tamilnadu, India” identified that service quality had a direct and significant effect on
customer satisfaction. Customer satisfaction had a direct and significant effect on customer loyalty. The
study recommended that the innovation in service quality or by improving the quality of service the hotels
become more able to satisfy the customers. Savneet Kaur (2013) in his article “360 Degrees Performance
Appraisal- Benefits & Shortcoming” identified that some employees give poor remarks to the managers they
don’t like and vice-versa. Subordinates don’t have proper expertise to rate their manager. The study
suggested that this system needs to be coordinated with other developmental activities so that it yields better
results. Jansirani (2013) in her research “A Study on Performance Appraisal System at Wipro Infrastructure
Engineering Pvt Ltd” found that there was no significant relationship between the effectiveness of appraisal
& development programme and satisfaction of present appraisal done by organisation. The author suggested
that the technique used for performance appraisal is very traditional which is to be modernized in future for
good prospect of the employees. Venclova Katerina (2013) in her article “Identification of Employee
Performance Appraisal Methods in Agricultural Organizations” identified that there was no dependency
between the facts whether an opinion of the direct superior is required in the process of formal employee
appraisal and the fact whether predefined goals based performance appraisal is applied as a method of
formal employee appraisal.
Sivaramakrishnan (2013) in his article “Effectiveness of Potential Appraisal Metrics of Managerial &
Non Managerial Cadre in Malabar Cements Ltd., Walayar, Palakkad” identified that there was an effort
in discovering employee’s potential for higher responsibility through performance appraisal at MCL
and employee’s were satisfied with the performance appraisal system. The author suggested potential
appraisal as an alternative tool in Malabar Cements which helps to identify the prospective talent,
contribute to the organization and promote sustainable growth of the organization through talent
retention. Waheed Ullah (2013) in his research “Performance Appraisal of Mobilink Orascom by Using
360° Feedback - A Case Study of Mobilink Regional Office Peshawar-Pakistan” found that the
correlation between 360° rating and boss rating was significant and also the relationship between 360°
rating and subordinate was significant. The author suggested that services business should focus on
sales related activities as it counts for their high gains. Muhammad Adeel Arshad (2013) in his article
“Effects of Performance Appraisal Politics on Job Satisfaction, Turnover Intention and Loyalty to
Supervisor Study with Reference to the Telecom Organizations of Pakistan” identified that perceived
performance appraisal politics was negative and weakly correlated to job satisfaction and loyalty to
supervisor. The author recommends that in order to reduce the political factors during performance
appraisal, organization must observe the complete appraisal process keenly at every level and this
information should be shared to the appraisers as if they know that the whole process is under
observation there are very less chances of politics involvement.
Asamu Festus Femi (2013) in his study “Perception of Performance Appraisal and Workers’
Performance In Wema Bank Headquarters, Lagos” found that there was a significant relationship
between performance appraisal and worker’s performance. The study recommends that for appraisals to
yield the desired outcomes the management should ensure that performance appraisal is carried out
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continuously, not only when it is time for promotion. Nadeem Iqbal (2013) in his research “Impact of
performance appraisal on employee’s performance involving the Moderating Role of Motivation” found
that there was positive relationship between performance appraisal and employee’s performance. The
author concluded that the basic purpose of an appraisal system should be to improve the employee
performance that will leads towards the organization success. Mahdieh Darehzereshki (2013) in his
study “Effects of Performance Appraisal Quality on Job Satisfaction in Multinational Companies in
Malaysia” found that high quality performance appraisal positively influences employees` job
satisfaction. This research demonstrates that organizations pay a price for letting low quality
performance appraisal experiences.
ANALYSIS AND DISCUSSION:
TABLE: 1. DISTRIBUTION OF EMPLOYEES ON THE
BASIS OF SOCIO-ECONOMIC CHARACTERISTICS
Demographic variables
Male
Gender
Female
20-30 years
31-40 years
Age
40-50 years
Above 50 years
Managers
Designation
Workers
SSLC-HSC
Diploma
Educational
Qualification
UG
PG
Married
Marital Status
Unmarried
Production
Personnel
Stock preparation
Departments
Accounts
Godown
Laboratory
Below 5 years
5-10 years
Working Experience
10-15 years
Above 15 years
10001-20000
20001-30000
Salary
30001-40000
Above 40000
Source: Primary data
Respondents
270
43
112
109
60
32
202
111
74
106
101
32
230
83
231
27
29
8
6
12
85
62
62
104
194
98
9
12
Percentage
86.3
13.7
35.8
34.8
19.2
10.2
64.5
35.5
23.6
33.9
32.3
10.2
73.5
26.5
73.8
8.6
9.3
2.6
1.9
3.8
27.2
19.8
19.8
33.2
62.0
31.3
2.9
3.8
The table 1 shows that 35.8% of employees belong to the age group between 20-30 years, 73.5% of
employees are married, 33.9% of employees are qualified with diploma, 73.8% of employees are working in
the production department, 33.2% of employees have more than 15 years of experience in the industry,
62.0% of employees are getting the salary (in rupees) between 10001 - 20,000 per month and, 64.5% of
employees are managers in the organization.
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TABLE: 2 EMPLOYEES PREFERENCE OF REWARD AND PUNISHMENT
Personal counseling
Issue of show cause notice
Action for poor
performance
Warning
Termination
Increment
Promotion
Rewards for good
performance
Gifts & coupons
Cash rewards
156
26
128
3
40
56
98
119
49.8
8.3
40.9
1.0
12.8
17.9
31.3
38.0
The table 2 shows that 49.8% of employees believe that personal counseling is the best remedy for poorly
performing employees and, 38.0% of employees opine that cash rewards are the best ways of motivating
good performance of the employees.
Chi-square analysis is used by the researcher in this research in order to find out the association between the
designation of the employee and their perception on action taken for poor performance.
TABLE: 3 ASSOCIATIONS BETWEEN DESIGNATION AND PERCEPTION ON THE
ACTION TAKEN FOR POOR PERFORMANCE OF THE EMPLOYEES (CHI-SQUARE)
Pearson chi-square
Calculated Value
2.546
DF
3
Table value
7.815
It is evident from the table 3 that the calculated value is less than the table value. Hence, the null hypothesis
is accepted. Therefore, it is inferred that there is no significant relationship between designation of the
employees and their perception on the (punitive) action taken for poor performance.
Chi-square analysis is used by the researcher in this research in order to find out the association between
designation of the employees and their perception on the rewards given for good performance.
TABLE: 4 ASSOCIATIONS BETWEEN DESIGNATION AND PERCEPTION
ON THE REWARDS GIVEN FOR GOOD PERFORMANCE (CHI-SQUARE)
Pearson chi-square
Calculated Value
12.564
DF
3
Table value
7.815
It is evident from the table 4 that the calculated value is more than the table value. Hence, the study fail to
accept null hypothesis and the alternative hypothesis is accepted. Therefore, it is inferred that there is a
significant relationship between designation of the employee and their perception on rewards given for
good performance.
FINDINGS:
The study found that majority (35.8%) of employees belongs to the age group between 20-30 years, majority
(73.5%) of employees is married, and majority (33.9%) of employees is diploma holders. The study found that
majority (73.8%) of employees are working in the production department, majority (33.2%) of employees have
more than 15 years of experience in the industry, majority (62.0%) of employees are getting the salary (in
rupees) between 10001 - 20,000 per month, majority (49.8%) of employees are saying that personal counseling
for employees are given for poor performance of the employees and, majority (38.0%) of employees are saying
that cash rewards are given for good performance of the employees. The study also found that there is
significant relationship between designation of the employees and their perception on rewards given for good
performance of the employees and there is no significant relationship between designation of the employees
and their perception on punitive action taken for poor performance of the employees.
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SUGGESTIONS:
The employees working in the organization are qualified with diploma; the organization can motivate the
employees to the development of their career by acquiring higher educational qualification. Self appraisal
forms can be provided to the employees so that they may get a chance to rate their own performance. The
appraiser or the supervisor of the employee working in different department must identify the performing
employee and they may be given both monetary and non-monetary rewards. This will motivate the
employees to work much better and also enhance employee satisfaction. The employees perceive that the
action taken for the poor performance was same for both managers and workers in the organization but on
the other hand, they perceive that the rewards given to workers was not same as the managers for their good
performance. The organization has to take steps so that both managers and workers do not feel that the
organization is biased in their approach towards reward management.
CONCLUSION:
The study aimed at finding out the effectiveness of performance appraisal system of employees in
Seshasayee Paper and Boards Limited, Erode. The study gives the following suggestions to the company to
improve the performance of the employees. Evaluation of training can be made transparently for the
satisfaction of employees and to increase their performance. The study concludes by suggesting that the
organization has to take steps so that both managers and workers do not feel that the organization is biased
in their approach towards reward management.
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universityof science and technology,Kumasi,Ghana. International Journal of Social Science &
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International journal of human resource studies , 1 (1), 41-51.
3. Arshad, M. A. (2013). Effects of performance appraisal politics on job satisfaction, turnover intention
and loyalty to supervisor study with reference to the telecom organisation of Pakistan. International
review of management and business research , 2 (3), 653-673.
4. Aswathappa, K. (2002). Human Resource and Personnel Management (3 ed.). Delhi: Tata Mcgraw-hill.
5. Bhattacharyya, D. K. (2006). Human Resource Planning. New Delhi: Excel books.
6. Dab, T. (2006). Human Resource Development Theory and Practice. NewDelhi: Ane books India.
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compaies in Malaysia. International journal of enterprise computing and business systems , 2 (1).
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Publishing House.
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headquarters, Lagos. Global journal of Arts, Humanities and Social sciences , 1 (4), 89-101.
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Study Approach - Tamilnadu, India. Journal of Business and Management (IOSR-JBM) , 16 (1), 1-12.
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effectiveness of performance appraisal system in seshasayee paper

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