An analytical study of performance appraisal in the Indian Software Industry

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1 AMERICAN JOURNAL OF SOCIAL AND MANAGEMENT SCIENCES ISSN Print: , ISSN Online: , doi: /ajsms , ScienceHuβ, An analytical study of performance appraisal in the Indian Software Industry Dr. Gaurav Sankalp Contact I.D.- ABSTRACT Performance appraisal is the step where the management evaluates the effectiveness of recruitment & selection of its employees, so that the right person can be at right place. It is a process of evaluating an employee s performance of a job in terms of its requirements. Performance appraisal is used as a tool to make an organization, a learning organization, because if an organization learns faster, it grows faster, and is able to come up to expectations of the industry and also compete with its competitors. A major goal of performance evaluation is to assess accurately an individual s performance contribution as a basis for making rewards allocations decisions. If the performance evaluation process emphasis the wrong criteria or inaccurately appraising actual job performance employees will be over rewarded or under rewarded. The present research paper is an effort to study the application and relevance of the performance appraisal methods adopted by the software companies and also to reveal the present human resource practices in the software industry. Keywords: Performance Appraisal, Performance Appraisal Methods, Evaluation of performance INTRODUCTION Performance appraisal is a process of evaluating the performance and qualification of the employees in terms of the requirements of the job for which he is employed, for purpose of administration including placement, selection for promotion providing financial rewards and other action which requires differential treatment among the member of a group as distinguished from action affecting all members equally. The methods of performance appraisal may be grouped into two broad categories of traditional and modern methods. The traditional methods lay emphasis on the rating of the individual s personality traits, such as initiative, dependability, drive, intelligence, judgments, organizational ability, etc. The modern method place more importance on the evaluation of work result-job achievements then on personality traits. Result oriented appraisals are more objective and worthwhile, especially for counting and development purpose. Every method of Performance appraisal has its own strength and weakness. Different software companies apply different methods of performance appraisal and which in turn gives sometimes shocking and sometimes wonderful results. This very research paper is a step in this regard which helps to study the application and relevance of the performance appraisal methods adopted by the software companies and also to reveal the present human resource practices in the software industry. MATERIALS AND METHODS The study under review is based on both primary and secondary data. The primary data was collected through a standard questionnaire based on HR practices of Indian software companies. The sample size consists of four leading software companies of India i.e. TCS, Infosys, Wipro and Satyam. The companies were selected on the basis of following criteria: All four companies had manpower of more than 25,000 employees The annul revenue of all companies exceeds 650$mm. All companies are multinationals operating in more than 20 nations. The selected companies combined together holds 80% of market revenue The questionnaire has been sent to 250 employees of the selected software companies out of which the total number of respondents were 123. The data collected also includes the observation method carried out in the various software companies

2 of the sample constituted. During the collection of primary data certain information were incorporated which were not disclosed so far by the software companies. The secondary data consists of the information received from various newspaper, magazines, journals, internet, annual reports of companies and organizations HYPOTHESIS The hypothesis tested is Indian software companies are adopting the latest Performance Appraisals methods Table 1 -corelation between selected software companies AREA OF STUDY The area of study is limited up to the boundaries of India. RESULTS TCS - INFOSYS TCS- WIPRO TCS-SATYAM INFOSYS- WIPRO Drawing the conclusion based on both primary and secondary data. The primary data is used to test the hypothesis. Karl Pearson Method of Co-relation method had being used. INFOSYS- SATYAM WIPRO- SATYAM The Co-relation between TCS- Infosys, TCS-Wipro and Infosys-Wipro is positive and very high. The Co Relation between TCS-Satyam, Infosys-Satyam and Wipro- Satyam is negative moderate. It proved that the methods used for performance appraisal are latest except in case of Satyam. It had been observed that the companies under the sample are implementing the latest HR practices. Hence hypothesis had been accepted. DISCUSSION The following interpretations are drawn from the analysis In software companies most of the employees are in favor of appraisals (Exhibit 1). The main reason behind this is the level of education. Appraisals are done to measure the performance of individual employees and improve it (Exhibit 2) as in software companies employees want to enhance their competencies the attributes mentioned in Performance Appraisal Form is being uniformly applied to all people. (Exhibit 3). Frequent appraisal helps to improve performance and a better control on the work (Exhibit 4). This enhances organization s understanding and weak points are noticed The most liked method for appraisals are 360 degree and Management by objectives, these methods help to give a over all result of the employees, if any change is required then these methods helps to know the area of emphasis (Exhibit 5). CONCLUSION A major goal of performance evaluation is to assess accurately an individual s performance contribution as a basis for making rewards allocations decisions. If the performance evaluation process emphasis the wrong criteria or inaccurately appraising actual job performance employees will be over rewarded or under rewarded. To create an environment that is conductive for a good performance management software companies can ponder on the following points. Create a culture of excellence that inspires every employee. Match organizational objectives to individual aspirations. Equip people with the skills necessary to perform their duties. Clear growth path for specially talented individuals. Provide new challenges to rejuvenate pattering careers. Empower employees to take decisions without fear of failing. Embed team work in all operational process. 20

3 Different appraisal at different levels: There should be different appraisal method for different jobs at different levels. There are certain attributes, which are different for different jobs at different levels, and only when the different appraisal methods are used at different levels it can give the approx appraisal results. Objectively based evaluation of performance: It should be clarified, whether the evaluation is individual based, or team based. If it is individual based then the employee knows that his whole performance is centered around him, and if it is team based then the employees approach towards his work would differ. Feedback at regular intervals: Feedback should be given to employees at regular intervals, If not formal the informal chats and interaction telling them about their performance, so that they can make out Exhibit 1. Are you in favor of appraisal? whether they are approaching their Key result areas or not. Career Planning and Development: Performance appraisal, should be used for career planning and development, as this helps us to know what are the needs of the employees. Performance appraisal is a means to know about the capabilities, intelligence, potential and other factors, which would help the organization to select a suitable job for the employee i.e. putting the right person at the right at place and at right job. It also helps to tell the employee, what better opportunities are there for him in the organization and it also gives a clear picture about his future, which the employee is looking forward to. Performance appraisal is used as a tool to make an organization, a learning organization, because if an organization learns faster, it grows faster, and is able to come up to expectations of the industry and also compete with its competitors. a) 74% of respondent are in favor of appraisals. b) 26% of respondent are in disfavor of appraisals Exhibit 2. If Yes then appraisal is? a) 38% says that appraisal is a means to improve performance. b) 26% says that appraisals is a means to know appraisals. c) 22% says that appraisal is a means to do training and development. d) 14% says that appraisal is an unofficial obligation. Exhibit 3. Do you feel that the attributes mentioned in your Performance Appraisal Form is being uniformly applied to all people? 21

4 a) 68% of respondents feels that the attributes mentioned in Performance Appraisal Form is being uniformly applied to all people. b) 32% of respondents feel that the attributes mentioned in Performance Appraisal Form is not being uniformly applied to all people. Exhibit 4. Frequent appraisal will result in a) 34% respondents are of view that Frequent appraisal will result improved performance. b) 31% respondents are of view that Frequent appraisal will result better control. c) 20% respondents are of view that Frequent appraisal will result better communications. d) 15% respondents are of view that Frequent appraisal will result more industrial problems Exhibit 5. Which method of appraisal you like the best of your company? a) 40% of respondents like the 360 degree appraisal method. b) 25% of respondents are in favor of self appraisal. c) 24% of respondents are in favor of rating method. d) 11% of respondents are in favor of Management by objective REFERENCE Arora, A. and S. Athreye (2002): The software industry and India s economic development. Information Economics and Policy, Vol. 14(2) Arora, A., Arunachalam, V. S., Asundi, J. and Fernandes, R. (2000): The Indian Software Services Industry. Research Policy. Ashwathapa,K. Human Resource & Personnel Management, Tata McGraw-Hill Publishing company, New Delhi, 1997 Cole,G.A., Personnel Management-Theory and Practices, D.D. Publications, Craig Robert L. and Bittei Lester,Training and Development Handbook, McGraw- HillsBook Co.,

5 Dev, Sudipta, What employees want, June28,2004. Dwivedi,R.S., Managing Human Resource,Galgotia Publishing House, 2005 Flippo,E.B. Principle of personnel Management, New York McGraw-Hills,1997 Gaurav Sankalp, Human Resource Management, Sahitya Bhavan Publication, Agra 2009 Ghemawat, P. and M. Patibandala (2000): India s exports since reforms: three analytic industry studies. In Sachs J.D, A. Varshney & N.Bajpai (eds): India in the era of economic reforms. Oxford University Press. Harvard Business School (1999): The Indian software industry at the Millenium. Case number N Monga, M.L., Management Of Performance Appraisal: Text and Cases, Biombay, Himalaya publishing house,1983 Parthasarathy, Balaji (2000): Globalization and Agglomeration in Newly Industrializing Countries: The State and the Information Technology Industry in Bangalore, India, Doctoral dissertation, University of California at Berkeley. Saiyadian, M.S., Human Resource Management, Tata McGraw-Hill Publishing Company, New Delhi

Comparative study on effectiveness of performance appraisal techniques in Public Sector and Private Sector in India

SHIV SHAKTI International Journal in Multidisciplinary and Academic Research (SSIJMAR) Vol. 1, No. 3, September-October (ISSN 2278 5973) Comparative study on effectiveness of performance appraisal techniques