Performance Appraisal System of Milma

Categories: Business
About this essay

Introduction to the study

In the business world. Investment is made in machinery, equipments and services. Quite naturally time and money is spent ensuring that they provide what their suppliers claim. In other words, the performance is constantly appraised against the results expected. When it comes to one of the most expensive resources companies invest in, namely people, the job appraising performance against results is often carried out with the same objectivity. Each individual has a role to play and management has to ensure that individuals objective translate to overall corporate objective of the organization.

The process of HRD helps the employees to acquire and or develop technical, managerial and behavioral knowledge, skills and abilities and moulds the values, beliefs and attitudes necessary to perform present and future roles.

The process of performance appraisal helps the employee and the management to know the level of employee’s performance compared to the standard/ pre- determined level. Performance appraisal is essential to understand and improve the employee’s performance through HRD.

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It was viewed that performance appraisal was useful to decide upon employee promotion/transfer, salary determination. However, the recent developments in human resource management indicate that performance appraisal is the basis for employee development. Human Resource (or personnel) management, in the sense of getting things done through people, is an essential part of every manager’s responsibility, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently.

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“People are our most valuable asset” is a cliché, which no member of any senior management team would disagree with. Yet, the reality for many organizations is that their people remain undervalued, under trained and underutilized. Performance Appraisal is the process of assessing the performance and progress of an employee or a group of employees on a given job and his / their potential for future development. It consists of all formal procedures used in the working organizations to evaluate personalities, contributions and potentials of employees.

HRM practices mostly depend upon strategy adapted by the company. Similarly, performance appraisal practices also depend on the strategy. Traditional technique of performance appraisal is appropriate for the stability and sustainable growth strategy. Similarly, appraisal by superior is appropriate for these strategies. Modern performance appraisal technique is sustainable for growth strategies like expansion, diversification, joint venture, merger and acquisitions. These strategies helps the company to meet competition, built competencies, acquire strength, enhance market share, innovate and create new, market, new product and new technologies.

Performance appraisal was formerly used for the purpose of evaluating the employee’s performance and controlling the performance against the set standard. This technique was used to control the employee ignoring the human aspect. However, with the emergence of human resource concept, organizations are using this technique to analyze employee’s performance and to further improve or develop it. Thus, this technique is used as an enabling and motivating tool to improve the performance.


The problem selected for research is to make an in depth study of performance appraisal system of MILMA at THRISSUR. Performance appraised is the systematic description of an employee’s job relevant strength and weakness. It is aimed at knowing how the employees feel about the system that is prevailing in the firm, their suggestions if any for making system effective and to know whether it satisfies the need of company and employee. Thus the main problem behind is to make the performance appraisal an effective tool to improve employees work level and their productivity


The study entitled “ a study on performance appraisal system at supervisory level of Milma in Thrissur


In every business organization, the most important asset is its employees in all level. The performance appraisal is a systematic process consisting of number of steps to be followed for evaluating an employee’s strength and weakness. It is a systematic and objective description of an employee’s strength and weakness in terms of job. The appraisal is continuous and ongoing process where the evaluation is arranged periodically according to definite plan. This study would provide valuable suggestion to management. The presented study related to the survey including the office staff of various departments.


Performance appraisal have been considered as the most significance as indispensible tool for an organization. For an organization, information it provides is highly useful in making decisions regarding various personnel aspect such as promotion and merit increases. Performance measure also link information gathering and decision making processes, which provides a basis for judging the effectiveness of personnel sub divisions such as recruiting, selection, training and compensation. Accurate information plays a vital role in the organization as a whole. They help in finding out weakness in the primary area. Formal performance appraisal plans are designed to meet three needs of the organization and other two of individual namely: They provide systematic judgments to back up salary increase, transfers demotion or termination They are the means of telling a subordinate how he is doing and suggesting needed change in his behavior attitude skill or job knowledge. They let him know where he stands. Superior uses them as basis for coaching and counseling the individual


To study the performance appraisal system in MILMA DIARY THRISSUR To know the employees awareness of performance appraisal system To know the satisfaction level of employees with current performance appraisal system To suggest measures for improving current system



Research design gives the outline of a research work that involves planning for data and analyzing the collected data. The research design is the conceptual structure within which research is conducted. There are 2 type of research design

Exploratory research designs

Conclusive research design

Descriptive research design

Causal research design

Tools and techniques

The tools and technique involve various accounting technique and statistical tools like percentage, which are used as a device to analyze and interpret the performance appraisal of Milma. Graphs, tables figures, pie and bar diagram are used as it helps in presenting facts and figures in simple and easy way so as to get a clear idea.


  • Primary data
  • Secondary data

Primary data: the primary data was collected through personal interview and questionnaire given to the staff at supervisory level. Each individual employee in the sample was separately interviewed and asked to fill the questionnaire

Secondary data: Data, which are not originally collected but rather obtained from published or unpublished. Secondary data used in study are project reports and records.

Questionnaire Construction

Questionnaires were constructed based on the following types:

  • Open ended questions
  • Close ended questions
  • Multiple choice questions

Sampling method

Survey is used as a sampling method. Out of total employees, 50 employees are selected as samples. And data was collected through questionnaire method.

FIELD OF STUDY: Milma at Thrissur



Employees were reluctant to reveal their problem freely before students Personal bias and prejudice of the respondent could have affected the result of study Most of the respondents seem to be very busy with their jobs and are not interested in answering the questionnaire



Milk and milk based industries plays an important role in the world. Internationalization remains a key focus for almost all of the world’s leading dairy farm. The entire world’s largest dairy farm operates in more than one country and some of them are truly international with the activities in every part of the world. The availability of milk and milk product, in the modern world is blend of the centuries old knowledge of traditional milk product with the application of modern science and technology. Diary is a place where handling of milk and milk product is done.



The internal diary federation, with its head quarter brissels, was established in 1903 and consists of 32 member countries throughout the world. UNICEF has been the motivating force for establishing diary industry in many under developed countries. One of these in India, where large processing plant have been set up to process locally produced milk or to reconstitute milk from donated or purchased milk fat and powder. Domestic milk production has increased in India and a part of the pasteurized milk is provided free to children in the larger cities through UNICEF. The first co-operative artificial breeding association was organized in Denmark in 1936. There are now many such association which helped the diary industries. After 1950, diary industry faced a wide range of development throughout the world.



Indian diary sector has come a long way during the past independence era of acute milk shortage and depended on foreign aid in the form of milk powder to meet the growing milk demand. India’s milk production in 1950-1951 was low as million tones. The diary sector in India has shown remarkable development in past decades and India has shown now become one of the largest producer of milk and the value added milk product in the world. Today Company has emerged as the second largest milk producer in the world currently there are over 275 diary plants and 83 milk products factories in co-operative, public and private sector.

The world famous ‘Anand Milk Union Limited’ popularly known as Amul was established in 1946 and the National Dairy Development Board was set up in 1965. Kerala Cooperative Marketing Milk Federation (KCMMF) popularly known as Milma was established in April 1980. Diary co-operative accounts major share of processed liquid milk marketed in the country. Milk is processed and marketed by 170 milk producers’ co-operative unions, which federated into 15 state Co-operative milk marketing federation. By the end of the third phase of operation flood programme about 72700 dairy co-operative societies with 93 million farmer member where organization. The company has at present one lakh organized primary village diary co-operative with an aggregate membership of 1.1 crore producers.

The co-operative milk procurement crossed 20-millon kg/day in 2004-05. Over the years, brand created by cooperatives have become synonymous with quality and value. In Kerala there are 3243 dairy co-operative includding2404 Anand pattern society functioning under KCMMF. Milam represents more than 7.63 lakh diary framers who have organized 2404 Anand pattern diary cooperative diary societies. It also represents 10 diaries, handling 9.96 lakh liters milk/ day chilling plant, 2 cattle plant, a milk powder plant, an established training center and 5000 distribution outlets.


The dairy program called operation flood was launched in 1970 under the aegis of NDDB. NDDB. Functional as technical consultant and the rest while Indian diary co-operation as the funding agency as the ideology followed by the operation flood was the remuneration linking of rural milk producing centered with the demand centers so as to build up a viable dairy industry. STATE SCENARIO


The operation flood in Kerala was included in the second phase of operation flood (1981-87) the 8th southern district from Trivandrum to Thrissur were included in the area of the project which has a total outlay of Rs. 99 crores. The uncovered northern area from Palakad to Kasargod was thus brought under the co-operative umbrella with the inspection of north Kerala Dairy Project.

KERALA CO-OPERATIVE MILK MARKETING FEDERATION LIMITED (KCMMF) The Kerala Co-operative Milk Marketing Federation (KCMMF) popularly called ‘Milma’ was established in April 1980 as a part of operation flood 2nd program, with head office at Thiruvananthapuram. It was started under the indo Swiss project. The project was launched in 1963 based on a bilateral agreement execute between the Swiss Confederation and the Government of India. The project was made great strides in the improvement of livestock farming in the state. One of them is the development of Swiss brown a cross bread suited for the state condition.

The project is now Kerala livestock board. Its main motive was to implement the operation flood program started by NDDB in Kerala. KCMMF has played a major role in the development of dairying in the state. It has a strong presence in the market. With an ever-increasing demand for the entire product manufactured by KCMMF, it is necessary that efforts be taken to fill in the gaps arising out of inadequate supply. The KCMMF is a three-tier system with the primary milk co-operative societies at village level, regional milk producers union at middle level and an apex body at the state level. At present there are three regional co-operative unions operating. They are:

  1. Trivandrum regional Co-operative Milk Producers Union limited (TRCMPU)
  2. Ernakulum Regional Co-operative Milk Producers Union Limited (ERCMPU)
  3. Malabar Regional Co-operative Milk Marketing Producers Union Limited (MRCMPU)


Brand household name, ‘MILMA’ stands for milk and a whole variety of milk products, which enjoy the confidence of each Keralite, for their unmatched quality and standard. The name also signifies the vast organization Kerala Co-operative Milk Marketing Federation (KCMMF) with it units of procurement, processing and sale spread over all the villages and towns of the state, giving employment and prosperity to a large number of small and marginal farmers including women and the landless, processing employees and sellers. KCMMF was established in 1980 with its Head Office at Thiruvananthapuram for the successful implementation of the dairy programme ‘Operation Flood’ under NDDB. Over the years, MILMA has developed a long-term health perspective about the people of the state, who suffer from life style diseases including diabetes and obesity, albeit economic prosperity.

So, MILMA has attuned its products to ensure balanced nutrition as well as reduced cost of healthcare and also launched new beverages other than milk products. Founded because of the great democratic principle ‘of the People, by the People and for the People’, the dominant concern of MILMA is to render true service to society while ensuring that it does not incur losses. Organizational study is conducted in the Kerala Co-operative milk marketing federation popularly known as Milma at Thrissur diary is under the control of ERCMPU ltd Edapilly. This regional union was registered 12/09/1985 and is an ISO: 9001:2000 certified company.

The company aims in the socio-economic progress of dairy farmer by procuring their milk at most remunerative price around the year and by ensuring consumer Satisfaction through prompt satisfaction of prompt supply of pasteurized milk products. Now 142 APCOS are functioning and milk from these societies are collected twice per day by diary around the year. By providing input facilities such as veterinary services, cattle feed supply, insemination facilities, support for folder department activities and manpower training on scientific aspect of clean milk providing to dairy farmers. The capacity of Thrissur plant is 60000liter/day. Every day they procure 34000-liter milk from primary society twice per day by milk routs. In this unit, they produce ghee, buttermilk and milk.

Thrissur dairy have seven departments. Among this, one is handled directly from the head office. The departments are Procurement and input section
Quality control
Procurement and administration
For procuring milk from primary society, vehicles are used on basis of contract with the owners. Three-tier system is followed for this purpose. If any one of them could not meet the requirement, then it is given to the third party. In each department one assistant manager is been appointed.

The name Milma represents

2568 primary milk co-operative societies
7.5 lakh farmer members
3 regional co-operative milk producers union
11 dairies capable of handling 9- 90 lakh liters of milk per day 13 milk chilling centers
2 cattle feed plant with cumulative capacity of 600 MT per day One milk powder plant of 10 MT/ day
A well established training centers
5200 retail outlets
Over 32000 people working directly or indirectly for the functions of Milma apart from these Milma serve millions of consumer day in and day out.


To channelize marketable surplus milk from rural area to urban deficit area to maximize the return to the producer and provide quality milk and milk products to the consumer. To carry out activities for promoting production, procurement, processing and marketing of milk and milk products for the economic development of farming community To build up a viable diary industry in the state

To provide constant market and stable price to the diary farmers for their producers.

The motto of co-operative “of the people, by the people, and for the people” is the three-tier structure followed by the organization. At the village level, they have the village milk co-operatives societies, which have the local milk producers as its members. The village co-operative unit at the regional level form regional co-operative milk producer unions. These unions are federated at the state level to form state federated namely Kerala Co-operative Milk Marketing Federation (KCMMF).


Milma is in constant touch with other organization in this sector. It is namely through this tremendous change that Milam grew from a small diary co-operative to the position it holds today.

National diary development board
NDDB under Dr. Kurien’s guidance set up KCMMF in 1980. Ever since they, there has been a very close co-operation between NDDB and the federation. NDDB are the originator of the operation flood programme and have been funding agent for the operation flood project in Kerala.


The diary co-operative of Gujarat have been the inspiration of the development of such a vast network of diary co-operative in Kerala. Among the co-operative in Gujarat, the kaira district co-operative milk producer union (AMUL) is the first in this sector. Its cooperative is called “Anand Pattern Co-operative Societies” following the illustrious lineage of AMUL.

The phenomenal success of dairy co-operatives in Kerala could not have been achieved without the foundation of animal husbandry activities, led by animal husbandry department and Kerala livestock department development board of the government of Kerala.




Junior Assistant A/c officer Assistant Technical TS dairy Dairy Supervisor PO Marketing Supervisor Chemist Officer

Junior Senior Junior Marketing Junior Plant Lab Assistant Supervisor Supervisor Organizer Assistant Operator Technician

Junior Junior Marketing Technician Plant attender Lab Supervisor Assistant Assistant Assistant

Attender Attender

Provides staff management functions to support its units and regional milk unions. KCMMF head office has a well established marketing, quality control, production , finance, HRD.


Brand management
Lean flush management
Bulk trading of surplus products
Institutional supply contracts
Co-ordinate promotional activities
Packaging and product development
Procurement and consumer pricing


Centralized purchase of dairy consumables.
Purchase of raw materials for cattle feed plants
Purchase function of KCMMF head office


Render technical and legal assistance to primary dairy co-operatives and regional milk unions. Liaison and maintain quality of milk and milk products as per the standards Liaison with statutory authorities for bringing in suitable amendments in statutes Attend to consumer complaints on quality problem


Financial management of KCMMF and its units.
Liaison with financial institutions for availing loan for creation of infrastructure. Liaison with government for availing government financial assistance Long term repayment and scheduling of loans

Capital management scheme for primary co-operative societies. Recommend remunerations of APCOS employees.


Milma family has 2098 skilled, efficient and qualified personnel and has an excellent labour relationship. Take active role in farming personnel policies and service rules. Finalize long-term wage settlement, bonus etc.


Rationale of performance appraisal

Performance appraisals are one of the most important requirements for successful business and human resource policy (Kressler, 2003). Rewarding and promoting effective performance in organizations, as well as identifying ineffective performers for developmental programs or other personnel actions are essential to effective to human resource management (Pulakos, 2003). The ability to conduct performance appraisals relies on the ability to assess an employee’s performance in a fair and accurate manner. Evaluating employee performance is a difficult task. .

Once the supervisor understands the nature of the job and the sources of information, the information needs to be collected in a systematic way, provided as feedback, and integrated into the organization’s performance management process for use in making compensation, job placement, and training decisions and assignments (London, 2003).

After a review of literature, a performance appraisal model will be described in detail. The model discussed is an example of a performance appraisal system that can be implemented in a large institution of higher education, within the Student Affairs division. The model can be applied to tope level, middle-level and lower level employees. Evaluation instruments (forms) are provided to assist you with implementation the appraisal system.

Introduction to performance appraisal

Performance evaluations have been conducted since the times of Aristotle (Landy, Zedeck, Cleveland, 1983). The earliest formal employee performance evaluation program is thought to have originated in the United States military establishment shortly after the birth of the republic (Lopez, 1968). The measurement of an employee’s performance allows for rational administrative decisions at the individual employee level. It also provides for the raw data for the evaluation of the effectiveness of such personnel- system components and processes as recruiting policies, training programs, selection rules, promotional strategies, and reward allocations (Landy, Zedeck, Cleveland, 1983).

In addition, it provides the foundation for behaviorally based employee counseling. In the counseling setting, performance information provides the vehicle for increasing satisfaction, commitment, and motivation of the employee. Performance measurement allows the organization to tell the employee something about their rates of growth, their competencies, and their potentials. There is little disagreement that if well done, performance measurements and feedback can play a valuable role in effecting the grand compromise between the needs of the individual and the needs of the organization (Landy, Zedeck, Cleveland, 1983). Performance appraisals should focus on three objectives:

Purpose of performance appraisal system

Performance, not personalities; valid, concrete, relevant issues, rather than subjective emotions and feelings; reaching agreement on what the employee is going to improve in his performance and what you are going to do (McKirchy, 1998). Both the supervisor and employee should recognize that a strong relationship exists between training and performance evaluation (Barr, 1993). Each employee should be allowed to participate in periodic sessions to review performance and clarify expectations. Both the supervisor and the employee should recognize these sessions as constructive occasions for two-way communication. Sessions should be scheduled ahead of time in a comfortable setting and should include opportunities for self-assessment as well as supervisor feedback.

These sessions will be particularly important for new employees who will benefit from early identification of performance problems. Once these observations have been shared, the supervisor and employee should develop a mutual understanding about areas for improvement, problems that need to be corrected, and additional responsibilities that might be undertaken. When the goals are identified, a plan for their achievement should be developed. The plan may call for resources or support from other staff members in order to meet desired outcomes. In some cases, the plan might involve additional training. The supervisor should keep in contact with the employee to assure the training experiences are producing desired impact (Barr, 1993). A portion of the process should be devoted to an examination of potential opportunities to pursue advancement of acceptance of more complex responsibilities. The employee development goals should be recognized as legitimate, and plans should be made to reach the goals through developmental experiences or education (Barr, 1993).

Encouraging development is not only a supervisor’s professional responsibility, but it also motivates an employee to pursue additional commitments. In addition, the pursuit of these objectives will also improve the prospect that current employees will be qualified as candidates when positions become available. This approach not only motivates current performance but also assists the recruitment of current employees as qualified candidates for future positions (Barr, 1993). How to arrive? Reasons why need to be done Benefits of productive performance appraisals.

  • Employee learns of his or her own strengths in addition to weaknesses.
  • New goals and objectives are agreed upon.
  • Employee is an active participant in the evaluation process.
  • The relationship between supervisor and employees is taken to an adult-to-adult level.
  • Work teams may be restructured for maximum efficiency.
  • Employee renews his or her interest in being a part of the organization now and in the future.
  • Training needs are identified.
  • Time is devoted to discussing quality of work without regard to money issues.
  • Supervisor becomes more comfortable in reviewing the performance of employees.
  • Employees feel that they are taken seriously as individuals and that the supervisor is truly concerned about their needs and goals. (Randi, Toler, Sachs, 1992).

Pitfalls to Avoid performance appraisal
When conducting performance appraisals on any level, it is important to keep in mind the common pitfalls to avoid. These pitfalls may include but are not limited to :

  1. Bias/prejudice. Race, religion, education, family background, age and/or sex.
  2. Trait assessment. Too much attention to characteristics that have nothing to do with job and are difficult to measure.
  3. Over-emphasis on favorable or unfavorable performance of one or two task, which could lead to an unbalanced evaluation of the overall contribution.
  4. Relying on impression rather than on facts.
  5. Holding the employees responsible for factors beyond his/her control.
  6. Failure to provide each employee with an opportunity for advance preparation (Maddux 1993


Any performance appraisal system used to make employment decisions about a member of a protected class (i.e. Based on age, race, religion, gender, or national origin) must be a valid system (an accurate measure of performance associated with job requirements). Otherwise, it can be challenged in the courts based on Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1991 and the Age Discrimination in Employment Act of 1975 (London, 2003). Uniform Guidelines on Employee Selection 1978 is the controlling federal law in the area of performance appraisals. The Equal Employment Opportunity Commission (EEOC) requires that any measurement used to differentiate between employees must be valid and fairly administered. The Americans with Disabilities Act (ADA) suggests that performance appraisals for people with disabilities for people with disabilities will not be conducted any differently than those for other employees. Another important aspect to consider is the employee’s right to privacy. Employees must have complete access to their personnel files, but others should have controlled access. The records should be accurate, relevant, and current.


Effective reward systems are often hard to establish when creating performance appraisals. The question of how specific the reward, when the reward should be given, and how to reward group efforts can be a tricky subject to master. Our advice on this is to keep it simple. It is important to have an established reward system. However, rewards can be as simple as more autonomy on the job, praise for progress, additional professional development funding, and vacation time. The important aspect to remember when establishing reward systems is to be consistent. If two employees are being evaluated in the same way, their reward opportunities should reflect their evaluation outcomes.



Performance appraisal system is a method of evaluating the behavior of employees in the work spot normally including both the qualitative and quantitative and qualitative aspect of job performance. Performance here refers to the degree of accomplishment of the task that makes up an individual’s job. It indicates how well an individual is fulfilling the job demand. Some of the important features of performance appraisal may be captured thus Performance appraisal is the systematic description of employee’s job relevant strength and weakness.

The basic purpose is to find out how well the employee is performing the job and establish a plan of improvement Appraisals are arranged periodically according to a definite plan. Performance appraisal is not job evaluation. Performance appraisal refers to how well someone is doing the assigned job. Job evaluation determines how much a job is worth to the organization and therefore what range of pay should be assigned to the job. Performance appraisal is a continuous process in every large-scale organization.


Performance appraisal is needed in order to:
Provide information about the performance ranks basing on which decision regarding salary fixation, confirmation, promotion, transfer and demotion are taken. Provide feedback information about the level of achievement and behavior of subordinate. The information helps to review the performance of subordinates, rectifying performance deficiencies and to set new standards of work, if necessary. Provide information, which helps to counsel the subordinates. To prevent grievances and in disciplinary activities.


360-degree performance appraisal: the appraiser may be any person who has thorough knowledge about the job content, contents to be appraised standards of content, and who observers the employee while performing a job. Typical appraisers are supervisors,

employees themselves,
user of service
Performance appraised by all these parties is called 360-degree performance appraisal.

Supervisors include superiors of the employee, other supervisors having knowledge about the work of the employee and department head or manager. General practice is that immediate superiors appraise the performance, which in turn is reviewed by the departmental head/manager. This is because supervisors are responsible for managing their subordinates and they have the opportunity to observe, direct and control the subordinates continuously. On the negative side, immediate supervisors may emphasize certain aspect of employee performance to the neglect of others. In addition, managers, have been manipulate evaluation to justify their decision on pay increase and promotions.

Peers appraisal may be reliable if the work group is stable over a reasonably long period and performs tasks that require interaction. However, little research has been conducted to determine how peers establish standard for evaluating others or the overall effect of peer appraisal on the group’s attitude.

Subordinates: the concept of having superior rated by subordinates is being used in most of the organizations especially in developed countries. Such a navel method can be useful in other organizational setting too provided the relationship between superior and subordinates are cordial. Subordinates rating in such cases can be quite useful in identifying competent superiors.

Self-appraisal: if individuals understand the objective they are expected and the standards by which they are to be evaluated, they are largely in the best position to appraise their own performance. In addition, since employee development means self-development, employees who appraise their own performance may become highly motivated.

User of services, customers: The customers or user of services can better judge Employee’s performance in service organization relating to behavior, promptness, speed in doing the job and accuracy.

Consultant: sometimes consultant may be engaged for appraisal when employees or employer do not trust supervisor appraisal and management does not trust self appraisal or peer appraisal or subordinates appraisal. In this situation, consultants are trained and they observe the employee at work for sufficiently long time for the purpose of appraisal.


With the evolution and development of appraisal system a number of methods and techniques of performance appraisal have been developed. Some of them are TRAIT METHOD

Trait method to performance appraisal measures the extent to which employees possess trait or characteristics like dependability, creativity, initiative, dynamism, ability to motivate and leadership. Trait method is based on job description and job specification. Graphic rating scale: graphic rating scale compares individual performance to absolute standards. In this method, judgments about performance are recorded on a scale. This is oldest and widely used technique. One of reason for the popularity of the rating scale is its simplicity, which permits many employees to be quickly evaluated. Such scales have relatively low design cost and high in case of administration. The major drawback to these is their subjectivity and low reliability Ranking method: Under this method, employees are ranked from best to worst on some characteristics.

The rater first finds the employee with the highest performance and the employee with the lowest performance in that particular job category and rates the former as best and the later as the poorest. One important limitation of the ranking method is that the size of the difference between individual is not well defined. Paired comparison method: this method is relatively simple. Under this method, appraiser ranks the employee by comparing one employee with all other employees in the group, one at a time. Forced distribution method: forced distribution method is developed to prevent the rater from rating too high or too low. Under this method, the rater after assigning points to the performance of each employee has to distribute his rating in a pattern to confirm to normal frequency distribution. This method eliminates central tendency and leniency biases.

Essay or free form appraisal: this method requires the manager to write a short essay describing each employee’s performance during the rating period. This format emphasizes evaluation of overall performance, based on strength and weakness of employee performance, rather than specific job dimensions. The time involved in writing separate essay about each employee can be formidable. Group appraisal: under this method, a group of appraisers appraises an employee. This group consists of the immediate supervisors of the employee, to other supervisors who have close contact with the employees work, manager or head of the department and consultants.

The group appraises the performance of the employee, compared the actual with the standards of performance, find out deviations, discusses the reason therefore, suggest ways for improvements of performance, prepare action plans, study the need for change in the job analysis and standards and recommends change if necessary. Confidential report: assessing the employee’s performance confidentially is a traditional method of performance appraisal. Under this method, superior appraises the performance of the subordinates based on his observation, judgment and intuitions. The superior keeps his judgment and report confidentially. In other words, the superior are not allow the employee to know his report and performance.


While trait measures various characteristics, behavioral methods measures employee behavioral skill on a continuum. Behavioral checklist method: a checklist is designed with the list of statements that describe the behavior essential for employee performance. The appraiser checks whether the appraise possess them or not. Employee’s performance is rated based on the behavioral skills that the employee possesses to the total statements. Critical incident method: employee are rated discontinuously, i.e. once in a year or six months under the earlier methods. The performance rated may not reflect real and overall performance as the rater would be serious about the appraisal about two or three weeks before the appraisal.

Hence, a continuous appraisal method, i.e. critical incident method was developed. Under this method, the supervisor continuously records the critical incident of the employee performance or behavior relating to all characteristics in a specially designed notebook. The critical incident method has the advantage of being objective because the rater considers the record of the performance rather than the subjective point of opinion. Behaviorally anchored rating scale (BARS): the BARS method combines elements of the traditional rating scale and critical incident methods. Using BARS, job behavior from critical incidents- effective and ineffective behaviors are described more objectively. This method employs individuals who are familiar with a particular job to identify its major components.

They then rank and validate specific behaviors for each of the components. Behavior observation scale (BOS): the appraiser, under this method, measure how frequently each of the behavior has been observed. Appraiser plays the role of observer rather than a judge and provides the feedback to the appraise continuously. Assessment centre: in this approach, individual from various departments are brought together to spend two or three days, working on an individual or group assignment similar to ones they would have been handling when promoted. Observers rank the performance of each participant in order of merit.


Organizations of contemporary period evaluate employee performance based on accomplishments they achieve rather than based on the behavioral factors/traits. Employee accomplishments include sale turnover, number of units produced, and number of customers served, number of complaints settled and the like. Productivity measures: under the productivity measures of performance appraisal, employees are appraised based on the ratio of output they turned out to the input they used. The balanced scorecard: it brings the linkage among financial, customer, processes and learning. Learning and people management contribute to the enhancement of internal processes. Internal processes are critical for enhancing customer satisfaction and loyalty. The balanced scorecard can be used to appraise employee performance.

The following recommendations ensure the successful application of balanced scorecard to performance management. Human resource accounting: human resource accounting deals with cost and contribution of human resource to the organization. Cost of the employee includes cost of work force planning, training, development, wages etc. employee contribution is the money value of employee service, which can be measured by labour productivity, or value added by human resource. Management by objectives: MBO is a process whereby the superior and subordinate manager of an organization jointly identifies its common goals, define each individual’s major areas of responsibility in terms of results expected of him, and use these measures of guides for operating the unit and assessing the contribution of its members.


Establish performance standards
Communicate standards/ expectations to employee.
Measure actual performance by following the instructions.
Adjust the actual performance due to the environmental influence Compare the adjusted performance with that of others and previous Compare the actual performance with standards and find out deviations, if any. Communicate the actual performance to the employee concerned. Suggest changes in job analysis and standards, if necessary. Follow – up performance appraisal report.


Performance appraisal has several uses. The important among them are: Performance improvement: performance feedback allows the employees, manager and personnel specialist to intervene with appropriate actions to improve performance Compensation adjustment: A performance evaluation helps decision-makers determine who should receive pay raises. Many firms grant part or all of their pay increases and bonuses based upon merit, which is determined mostly through performance appraisal. Placement decisions: promotions, transfers and demotions are usually are based on past or anticipated performance. Often promotions are reward for past performance. Training and development needs: poor performance may indicate the need for retraining. Likewise, good performance may indicate untapped potential that should be developed.

Career planning and development: performance feedbacks guide career decision about specific career paths one should investigate. Staffing process deficiencies: good or bad performance implies strength and weakness in the personnel departments staffing procedure. Informational inaccuracies: poor performance may indicate error in job analysis information, human resource plans, or other part of personnel management information system. Reliance on accurate information may led to inappropriate hiring, training, or counseling decisions. Job design errors: poor performance may be a symptom of ill- conceived job design. Appraisals help diagnose these errors.


  1. The major problem of performance appraisal is-
    Rating biases
    Halo effect
    The error of central tendency
    The leniency and strictness
    The recency effect
  2. Failure of the superiors in conducting performance appraisal nad post performance appraisal interviews
  3. Most part of the appraisal is based on subjectivity
  4. Les reliability and validity of the performance appraisal techniques
  5. Negative rating affect interpersonal relations and industrial relation system
  6. Influence of external environmental factors and uncontrollable internal factors
  7. Feedback and post appraisal interview may have a setback on production
  8. Relationship between appraisal rates and performance after promotions was not significant
  9. Absence of inter –rater reliability
Cite this page

Performance Appraisal System of Milma. (2016, Mar 26). Retrieved from

Performance Appraisal System of Milma
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