ASIAN JOURNAL OF MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research

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1 Online Open Access publishing platform for Management Research Research Article ISSN Analysis of the current state of performance management system (PMS) in consumer durable electronics industry and the rating about the effectiveness of the proposed PMS Professor and HOD- HR, Symbiosis Institute of Information Technology (SIIB), Pune ABSTRACT In today's competitive global business environment, it is important to have a an effective Performance Management System (PMS), which is objective, drives performance, where the performance evaluation factors are laid down and communicated in advance, where there are minimum chances of bias by the appraiser, to name a few among many characteristics for an effective PMS model. A study was conducted in Indian and Foreign companies of the consumer durable electronics industry. SPSS package was used for analysis of primary data. Results about the current state indicate that a lot needs to be done. Outcome of analysis of responses about the effectiveness of the proposed PMS are encouraging. Keywords: PMS, Bias, Objective, Primary data, Effectiveness. 1. Introduction Employee - assessment is one of the fundamental jobs of HRM, though not an easy one. In simple terms, performance appraisal may be understood as the assessment of an individual s performance in a systematic way, the performance being measured against such factors as job knowledge, quality & quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgement, versatility and the like. Assessment should not be confined to the past and present performance only. Potential of the employee for future performance must also be assessed. Consumer Durable Electronics Industry of India is more than Rs. 20,000 Crore Industry and hence a very important sector. It is playing a very crucial role in our nation s economy; and in the cultural and social changes, besides others. Hence, this industry was chosen for the research. The unique features of consumer durable electronics industry in India are: 1. It is a very very competitive industry. The competition is to such an extent that if the company doesn t perform well, survival could be difficult. 2. Every year, a couple of new players are entering and they are all global players. 3. Indian customer, seems to be both cost conscious and high quality conscious. Besides this, the technology is changing very fast. 736 Volume 2 Issue 1, 2012

2 Dick Grote writes in Best Practices in Performance Management, Performance Appraisal is the primary tool organizations are using to force culture change. Organizations vary widely in their concern for reliability, validity and fairness of performance ratings. Some organizations that are concerned with rating-accuracy, create formal mechanisms to create rating reliability; others virtually ignore the issue. Keeping all other factors equal, an organization can have an edge over others by managing its human resources in a better and effective manner. It is very much necessary to keep the employees motivated, conduct appropriate training and developmental programmes for them, reduce the level of resentment and grievances among employees, put appropriate persons at right positions. (Mlss.gov, 2011). Considering the above points, it is important to have a proper Performance Management System, which is objective; where employee gets informed well in advance about the factors/ criteria on which his performance will be evaluated; where there are minimum chances of Bias by the appraiser; employee gets objective, correct feedback of his performance on different evaluated factors. The PMS need to be very transparent and helpful, both to the employees & to the organization. 2. Objectives The research was undertaken with following objectives : 1. To know about the current state of the performance management system, that has been adopted by Indian organisations and Foreign organisations, in consumer durable electronics industry. 2. To get the feedback and opinion from the employees about the effectiveness of the proposed PMS, who are working in different companies of Consumer Durable Electronics industry. 3. Research methodology 3.1 Sources of data Primary Data Thrust was on collection of Primary Data. Questionnaire was prepared & discussed personally with the respondents to get their responses. Respondents were front /middle level executives, working in marketing /HR Deptt. of Consumer Durable Electronics Industry, both from Indian companies and Foreign companies Secondary Data Books, Magazines, Websites, journals etc. were consulted for related information. 3.2 Sampling procedure / Sample size Executives working with corporate sector were chosen as the respondents. They were categorised in 2 classes. 737

3 Category one: Appraisers or Raters, 42 Executives of well known Cos. Questionnaire form B was administered to them. Category two: Appraisees or Ratees, 126 Executives of well known Cos. Questionnaire form A was administered to them. Totally 168 respondents from 23 companies (16 Indian Companies and 7 foreign companies) have responded. 3.3 Data collection procedure Personal Visits were made by me to different organisations & employees. Performance Management System was discussed with the respondents, questionnaires were administered, questions were explained and the responses were received on the questionnaire. 4. Research Analysis and Discussion 4 (A): Analysis to know the Current State of performance management system from the raters and ratees working in foreign companies and Indian companies in the consumer durable electronics industry. 4 (A-1): Analysis of responses received from ratees about current state of performance appraisal in their companies Question 1 to ratees: Does Interpersonal relation with the boss influence the appraisal outcome? the response of the ratee to this question. 4.8% of ratees from foreign companies responded that interpersonal relations with the boss influence the appraisal outcome moderately to highly. Whereas 48.4 % of ratees from indian companies responded that interpersonal relations with the boss influence the appraisal outcome moderately to highly. Chi Square test was conducted which is shown in table 1 Table 1: Chi-square test Chi-Square Tests (Table 1) Value df Asymp. Sig. (2- sided) Pearson Chi-Square a Likelihood Ratio N of Valid Cases 126 a. 1 cells (12.5%) have expected count less than 5. The minimum expected count is

4 P-value is 0.000, so null hypothesis is rejected. the ratee to this question is Highly Significant. Question 2 to ratees: After appraisal, do you get feedback? the response of the ratee to this question. 78.6% of ratees from foreign companies and 75.5% of ratees from indian companies responded Yes to this question. Table 2: Chi Square test was conducted Value df Asymp. Sig. (2-sided) Pearson Chi-Square.113 a Likelihood Ratio N of Valid Cases 126 P-value is 0.737, so null hypothesis is accepted. the ratee to this question is not significant. Question 3 to the ratees: How much are you satisfied with your co's appraisal process? Give your rating. the response of the ratee to this question. 78.5% of ratees from foreign companies and 32.7% of ratees from indian companies responded 'very good to excellent' to this question. Chi Square test was conducted (table 3): Table 3: Chi-Square tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square a Likelihood Ratio N of Valid Cases 126 a. 2 cells (20.0%) have expected count less than 5. The minimum expected count is P value is 0.000, so null hypothesis is rejected. 739

5 the ratee to this question is Highly Significant. Question 4 to the ratees: Do you know what are the criteria used to appraise your performance? the response of the ratee to this question. 82.1% of ratees from foreign companies and 36.7% of ratees from indian companies responded 'Yes' to this question. Chi Square test was conducted (table 4): Table 4: Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square a Likelihood Ratio N of Valid Cases 126 a. 1 cells (16.7%) have expected count less than 5. The minimum expected count is P value is 0.000, so null hypothesis is rejected. the ratee to this question is Highly Significant. 4 (A-2) Analysis of responses received from raters about current state of performance appraisal in their companies: Question 1 to the raters: Are the criteria for performance appraisal documented? the response of the rater to this question. 100% of raters from foreign companies and 30% of raters from indian companies responded 'Yes' to this question. Table 5: Chi Square test was conducted Value df Asymp. Sig. (2-sided) Pearson Chi-Square a Likelihood Ratio N of Valid Cases

6 P value is 0.000, so null hypothesis is rejected. the rater to this question is Highly Significant. Question 2 to the raters: Does Interpersonal relation with the ratees influence the appraisal outcome? the response of the rater to this question. 33.3% of raters from foreign companies and 0% of raters from Indian companies responded Not at all to this question. That means, the raters from both Indian and foreign companies are agreeing that interpersonal relationship (positive or negative) influences the outcome of appraisal. This influence is very high in case of Indian companies. Chi-Square Tests (Table 6) Table 6: Chi Square test was conducted Value df Asymp. Sig. (2-sided) Pearson Chi-Square a Likelihood Ratio N of Valid Cases 42 a. 3 cells (50.0%) have expected count less than 5. The minimum expected count is P value is 0.000, so null hypothesis is rejected. the rater to this question is highly significant. Question 3 to the raters: Do your employees get self appraised? the response of the rater to this question. 100% of raters from foreign companies and 40% of raters from Indian companies responded in Yes to this question. Chi Square test was conducted (table 7): Table 7: Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square a Likelihood Ratio N of Valid Cases

7 P value is 0.000, so null hypothesis is rejected. the rater to this question is Highly Significant. 4 (B): Analysis to know the opinion or rating about the effectiveness of the proposed PMS (performance management system) from the raters and ratees working in foreign companies and Indian companies in the consumer durable electronics industry. 4 (B-1): Analysis of responses received from ratees about the proposed model of performance management system: Respondents were asked to rate the effectiveness of proposed PMS on 1 to 5 point scale (5 for highest level of effectiveness). T- Test was conducted on the responses to the questions, received from 126 respondents. Hypothesis: There is no significant difference between the mean value of the rating and the test value. Test value was set as high as 4, out of max 5, because we wanted to test the effectiveness of proposed model of PMS on different important parameters, comparing it with a higher level of test value for rating. Analysis is given below in table 2 Table 2(a): T-Test proposed PMS for transparency proposed PMS to reduce bias. proposed PMS for correct & objective appraisal proposed PMS for reducing resntment about appraisal proposed PMS for giving correct feedback proposed PMS for having scope to cover all relevant criteria for appraisal One-Sample Statistics N Mean Std. Deviation Std. Error Mean

8 proposed PMS for having scope to communicate in Advance about the criteria of appraisal proposed PMS for being useful, both to the co. & to the employee Table 2(b): T-Test continued One-Sample Test proposed PMS for transparency proposed PMS to reduce bias. proposed PMS for correct & objective appraisal proposed PMS for reducing resntment about appraisal proposed PMS for giving correct feedback proposed PMS for having scope to cover all relevant criteria for appraisal proposed PMS for having scope to communicate in Advance about the criteria of appraisal proposed PMS for being useful, both to the co. & to the employee Sig. (2- t df tailed) Test Value = 4 95% Confidence Mean Differe nce Interval of the Difference Lower Upper All responses from the ratees were subjected to t-test. P-value was found to be

9 That means, the difference between the mean value of rating and the test value which was set as high as 4 (out of max 5) for the effectiveness of the proposed PMS is highly significant. 4 (B-2): Analysis of responses received from raters about the proposed model of performance management system Respondents were asked to rate the effectiveness of proposed PMS on 1 to 5 point scale (5 for highest level of effectiveness). Hypothesis: There is no significant difference between the mean value of the rating and the test value. Test value was set as high as 4, out of max 5, because we wanted to test the effectiveness of the proposed model of PMS on different important parameters, comparing it with a higher level of test value for rating. T- Test was conducted on the responses to the questions, received from 42 respondents. Analysis is given below in table 4 Table 3(a): T-Test proposed PMS for transparency proposed PMS to reduce bias. proposed PMS for correct & objective appraisal proposed PMS for reducing resntment about appraisal proposed PMS for giving correct feedback proposed PMS for having scope to cover all relevant criteria for appraisal proposed PMS for having scope to communicate in Advance about the criteria of appraisal One-Sample Statistics N Mean Std. Deviation Std. Error Mean

10 proposed PMS for transparency proposed PMS to reduce bias. proposed PMS for correct & objective appraisal proposed PMS for reducing resntment about appraisal proposed PMS for giving correct feedback proposed PMS for having scope to cover all relevant criteria for appraisal proposed PMS for having scope to communicate in Advance about the criteria of appraisal proposed PMS for being useful, both to the co. & to the employee One-Sample Statistics N Mean Std. Deviation Std. Error Mean Table 3(b): One sample test proposed PMS for transparency proposed PMS to reduce bias. One-Sample Test Test Value = 4 95% Confidence Mean Sig. (2- Differenc Interval of the Difference t df tailed) e Lower Upper

11 proposed PMS for correct & objective appraisal proposed PMS for reducing resentment about appraisal proposed PMS for giving correct feedback proposed PMS for having scope to cover all relevant criteria for appraisal proposed PMS for having scope to communicate in Advance about the criteria of appraisal proposed PMS for being useful, both to the co. & to the employee All responses from the raters were subjected to t-test. Null hypothesis is rejected on 4 questions regarding effectiveness of proposed PMS for 'correct & objective appraisal', 'scope to cover all relevant criteria for appraisal', 'scope to communicate in advance about the criteria of appraisal' and 'for being useful both to the co. & to the employee'. That means, the difference between the mean value of rating and the test value which was set as high as 4 (out of max 5) for the effectiveness of the proposed PMS is highly significant. Null hypothesis is accepted on 4 questions regarding effectiveness of proposed PMS for 'transparency', 'to reduce bias', 'for reducing resentment about appraisal' and 'for giving correct feedback'. That means, the difference between the mean value of rating and the test value which was set as high as 4 (out of max 5) for the effectiveness of the proposed PMS is Not significantly high. 5. Limitations 1. Because of time constraint, the research was conducted only in one type of industry (consumer durable electronics industry). More industries can be included for the research. 746

12 2. Sample size could have been higher but it could not be afforded because of manpower constraint and time constraint. 5.1 Conclusions and Recommendations As given in the analysis of A-1 & A-2, there is scope for lot of improvements in the current practices related to performance management system prevalent in the companies (specially Indian companies). Practices and state of the PMS in the foreign companies are better compared to Indian companies. As given in the analysis of B-1 & B-2, the rating by the employees (raters & ratees of both foreign & Indian companies) regarding the possible effectiveness of the proposed performance management system, is quite high. So, going by the positive feedback about the proposed performance management system, it is recommended to be implemented in few companies under different industries as pilot testing. On getting desirable results, the proposed model can be implemented in other companies as a generalised model. 6. References 1. De Cenzo David A. & Robbins Stephen P., (2000), Personnel/ Human Resource Management, PHI Learning. 2. Ashwathappa K., (2000), Human Resource & Personnel Management, Tata Mc Graw- Hill Publication Co. Ltd.,. 3. Boydell Tom & Leary Malcolm, Identifying Training Needs, Institute of Personnel and Development, (1996). 4. Foster Bill & Seeker Karen R., (1998), Coaching for Peak Employee Performance, Wheeler Publishing. 5. FICCI Consumer Durable Goods Survey (October 2005) ficci/surveys/consumer- durable.pdf 6. Harrison Rosemary, Employee Development, Orient Longman Ltd., (1998). 7. Herman Roger E., Keeping Good People, Mc Graw Hill Inc Jain Arun Kumar, Corporate Excellence, All India Management Association, Excel Books, (1998). 10. Lidstone John, (1992), Motivating your Sales People, Mc Graw Hill Book co., 11. Magor Robert E., (1999), HRD Training & Development, Vol.2, Jaico Publishing, 12. Memoria C.B., (2000), Personnel Management, Himalaya Publishing, New Delhi, 13. Monappa Arun & Saiyadain Mirza S., (1998), Personnel Management, Tata Mc Graw-Hill Publishing Co. 747

13 14. Monappa Arun, (1998), Managing Human Resources, Mc Millan India Ltd.,. 15. Pareek Udai, Training Instruments for Human resource Development, Tata Mc Graw- Hill Publishing Co. Ltd. 16. Pareek Udai & Sisodia V., (1999), HRD in the New Millenium, Tata Mc Graw-Hill Publishing Co. Ltd.,. 17. Potts Michael, (1998), Training & Development Training & Development, Kpan Page Ltd.,. 18. Rao T.V., (1999), Appraising & Developing Managerial Performance, Excel Books 19. Rao T.V., (2005), Rao Raju, The Power of 360 Degree Feedback - Maximizing Managerial and Leadership Effectiveness, Response Books 20. Rao, VSP, (2000), Human Resource Management, Excel Books, New Delhi. 21. Robert L. Cardy, (2004), Performance Management Concepts, Skills and Exercises; PHI New Delhi. 22. Thorn Jeremy, (1997), Managing Change, University Press. 23. Weihrich Heinz & Koontz Harold, (1993), Management A Global Perspective, Mc Graw Hill Inc., 24. White Mel & Southon Paul, (1997), Effective Supervision in the Office, University Press. 748