Research Report

On
“ROLE OF PERFORMANCE APPRAISAL ON TATA
STEEL”

A research report submitted in the partial fulfillment for the degree

of

Master of Business Administration

(Session 2008-2010)

To
U P TECHNICAL UNIVERSITY, LUCKNOW

KALI CHARAN NIGAM INSTITUTE OF TECHNOLOGY,

BANDA

(Affiliated to U.P. Technical University, Lucknow & Approved by AICTE, New Delhi)

UNDER THE GUIDANCE OF: Submitted by:

Mr. Govind mishra Preeti dwivedi
(Faculty OF MBA Department) Roll NO. 0813970409

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 DECLARATION
I’m Preeti dwivedi, a student of Kali Charan Nigam Institute of technology, approved by
UPTU, Lucknow hereby declare that the project entitled “ROLE OF PERFORMANCE
APPRAISAL ON TATA STEEL ”, is the original work done by me and the information
provided in the study is authentic to the best of my knowledge. This study report has not been
submitted to any other institution or university for the award or any other degree.

This report is based on my personal opinion hence cannot be referred to legal purpose.

(Preeti Dwivedi)
Date: -

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 PREFACE

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 PREFACE

The history of performance appraisal is quite brief. Its roots in the early 20th century can be

traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same

may be said about almost everything in the field of modern human resources management. As a

distinct and formal management procedure used in the evaluation of work performance, appraisal

really dates from the time of the Second World War - not more than 60 years ago.

In many organizations - but not all - appraisal results are used, either directly or directly, to help

determine reward outcomes. That is, the appraisal results are used to identify the better

performing employees who should get the majority of available merit pay increases, bonuses and

promotions.

The purpose of this study has been to determine whether the performance appraisal was used for

employee development and whether the appraisal was emphasized as an important part of the

performance appraisal process in steel industry.Also whether the performance appraisal helps in

increasing industry’s profitability.

My study suggested that the performance appraisal has helped in increasing the profitability of

industry. Certain loop holes has been determined and suggestions were made.

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ACKNOWLEDGEMENT

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 ACKNOWLEDGEMENT

This project has been made possible through the direct and indirect co-operation of various

people for whom I wish to express my appreciation and gratitude. In the preparation of this

project report I have received help and encouragement from different sources.

I express my sincere thanks to Mr. Govind Mishra (Faculty of department), & other faculty

members of M.B.A. department including Dr. Purushottam Tripathi (Head of MBA deptt.

KCNIT, Banda), Mr. Rishi kanaujia, Dr. Sankalp Srivastava, Mr. Ravi Prasad, Mr. Abhishek

Srivastava, Mr. Jai Singh Yadav, Mr. Amit kumar Gupta, for the valuable suggestion and making

this project a real successful.

Last but not least, my sincere thanks to my parents and friends who directly or indirectly helped

me to bring this project into the final shape.

I once again thanks to all those who extended their support and co-operation in bringing out this

project work successfully.

Preeti Dwivedi
DATE:

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 OBJECTIVE OF

STUDY

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 OBJECTIVE OF THE STUDY

1. To examine why an appraisal system is important.

2. To study the effectiveness of the existing performance appraisal system in a Tata Steel.

3. On the basis of what company increase salary and provide training to its employees. And

what is basis of promotion in company.

4. To understand more and more about role of employee and become clear about his

functions.

5. To understand employee’s own strengths and weaknesses with respect to his role and

functions.

6. To analyze the role played by performance appraisal system in increasing the mutuality

between employee and his superiors.

7. What opportunities are provided by the performance appraisal system to the employees

for self reflection and individual goal setting.

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 TABLE OF CONTENT
TITLE PAGE NO.

Title page

Certificate of college

Declaration

Preface

Acknowledgement

Objective of the study

Introduction 10

Steel industry in India 28

Introduction of Tata Steel 30

Major players of steel in India 40

Trends in performance appraisal 48

Research Methodology 53

Findings and Analysis 56

Survey Findings 62

Conclusion 65

Implication of the Project 69

Suggestions and recommendations 70

Limitations 72

Bibliography 75

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 INTRODUCTION

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 INTRODUCTION

Almost every organization in one way or another goes through a periodic ritual, formally or

informally, known as performance appraisal. Performance appraisal has been called many things.

The formal performance appraisal has been called a tool of management, a control process, an

activity and a critical element in human resources allocation. Uses for performance appraisal

have included equal employment opportunity considerations, promotions, transfer and salary

increases. Primarily performance appraisal has been considered an overall system for controlling

an organization. Performance appraisal has also been called an audit function of an organization

regarding the performance of individuals, groups and entire divisions.

Performance appraisal may be defined as a structured formal interaction between a subordinate

and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in

which the work performance of the subordinate is examined and discussed, with a view to

identifying weaknesses and strengths as well as opportunities for improvement and skills

development. Almost every organization in one way or another goes through a periodic ritual,

formally or informally, known as performance appraisal. Performance appraisal has been called

many things. The formal performance appraisal has been called a tool of management, a control

process, an activity and a critical element in human resources allocation.

And since people differ in their abilities and aptitudes. These differences are natural to a great

extent and cannot be eliminated even by giving the same basic education and training to them.

There will be some differences in the quality and quantity of work done by different employees

even on the same job. Thus, there is a great need to have suitable performance appraisal system

to measure the relative merit of each employee.

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The basic purpose of performance appraisal is to facilitate orderly determination of an

employee’s worth to the organization of which he is a part. However, a fair determination of the

worth of an employee can take place only by appraising numerous factors some of which are

highly subjective, as for instant, attendance, while others are highly subjective, as for instant,

attitude and personality. The objective factor can be assessed accurately on the basis of records

maintained by the Human resource or personnel Department, but there is no device to measure

the subjective factor precisely. Notwithstanding this, appraisal of these factors must be done to

achieve the full appreciation of every employee merit.

Therefore, it can be said that, performance appraisal means systematic evaluation of the

personality and performance of each employee by his supervisor or some other person trained in

the techniques of merit rating. It employs various rating techniques for comparing individual

employees in a work group, in term of personal qualities or deficiencies and the requirements of

their respective jobs. To quote dale Yoder,” performance appraisal includes all formal

procedures used to evaluate personalities and contribution and potential of group members in a

working organization. It is a continuous process to secure information necessary for making

correct and objective decisions on employees.” The comparison of performance with job

requirements helps in finding out the merit of individual employees in a week group. Supervisor

or an independent appraiser may do rating.

Performance appraisal is a formal program in an organization, which is concerned with not only

the contribution of the members who form part of the organization, but aims at spotting the

potential also. The satisfactory performance is only a part of the system as a whole and the

management needs more information than mere performance ratings of the subordinates. There

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are no two opinions about the necessity of performance appraisal, which can meet requirements

of the management to achieve the organizational goals.

Performance appraisal is the systematic evaluation of the individual with respect to his

performance on the job and his potential for development. Performance appraisal is concerned

with determining the differences among the employees working in the organization. Generally,

the individual’s immediate superior in the organization and whose performance is reviewed in

turn by his superior does the evaluation. Thus, everyone in Performance appraisal employs rating

techniques for comparing individual employees in the work group, in terms of personal qualities

or deficiencies and the requirements of their respective jobs.

More abruptly it can be said that, Performance management can be defined as a strategic and

integrated approach to delivering sustained success to organizations by improving the

performance of the human capital and by developing the capabilities of teams and individuals

within that organization (Armstrong and Baron, 2000). The process of performance management

therefore focuses not only with ‘WHAT’ is produced but, also ‘HOW’ it is produced. It seeks to

ensure that what has been produced is in line with the organization’s needs and these products

have been produced in line with the organization’s way of doing things.

Performance management can be achieved through many different ways. These include

performance appraisal system and coaching. Performance appraisal system can be described as a

fairly old system of measuring employees’ performance that has been in use in many

organizations. However, Performance appraisal has not brought in the amount of positive results

that was expected of it. Armstrong and Mulis (1994:86) quoted one manager describing

performance appraisal as “a dishonest annual ritual”. The question that arises then is: “If

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Managers (the custodians of the system) do not have confidence in their own system, what more

employees (who happen to be victims of the system)?”

The meaning of the word “appraisal” is “to fix a price or value for something”. This is used in

finance in terms such as project appraisal or financial appraisal where a value is attached to a

project. Similarly performance appraisal is a process in which one values the employee

contribution and worth to the organization.

Performance appraisal can be defined as a system of measuring employee’s performance

relative to the assigned or agreed objectives. The process starts with the supervisor

and or with the subordinate agreeing on specific objectives that need to be met on an

agreed time period. The objectives that are used in the Performance appraisal stem

from the main organizational objectives that are reduced to Departmental goals and

now to individual goals.

The performance appraisal system has to be transparent and the employee should be taken into

full confidence. In many cases employees themselves are given a chance to conduct a self-

appraisal. Performance appraisal is a case of joint problem solving by the organization and the

employee. However the organization must also take care of future potential and not get bogged

down by current performance.

Normally the immediate supervisor does the appraisal. Some organizations also have a peer

group performance appraisal where colleagues rate the performance.

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The HR person must also ensure that line managers are properly trained for carrying out the

appraisal including interviewing techniques and on how to give feedback. The managers must

also be trained to look at the cases objectively outside of their personal opinion of the candidate.

Therefore at end it would be right to say that, Performance appraisal is the process of obtaining,

analyzing and recording information about the relative worth of an employee. The focus of the

performance appraisal is measuring and improving the actual performance of the employee and

also the future potential of the employee. Its aim is to measure what an employee does.

According to Flippo, a prominent personality in the field of Human resources, "performance

appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the

matters pertaining to his present job and his potential for a better job." Performance appraisal is a

systematic way of reviewing and assessing the performance of an employee during a given

period of time and planning for his future.

It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to

analyze his achievements and evaluate his contribution towards the achievements of the overall

organizational goals.

Organizations exist to achieve goals. Goals are only met when individual employees efforts

matches with policy of the organization and thus bringing out success and effectiveness. The

assessment of how unsuccessful employees have been at meeting their individual goals therefore

becomes a critical part of HRM and here comes Performance Appraisal System.

Performance Appraisal is an important component of the information and control system. In

today’s flexible organizations, performance evaluations provide an effective way for managers to

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clarify performance goals and standards to enhance future individual performance. Thus, the

purpose of performance appraisal is to improve the organization’s performance through the

enhanced performance of individuals.

The performance appraisal system:

 Is an organizational necessity.

 Is based on well defined objective criteria.

 Is based on careful job analysis.

 Uses only job related criteria.

 Is supported by adequate studies.

 Is applied by trained qualified raters.

 Is applied objectively throughout the organization.

 Can be shown non discriminatory as defined by law.

By focusing the attention on performance, performance appraisal goes to the heart

of personnel management and reflects the management's interest in the progress of the

employees.

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 OBJECTIVE OF PERFORMANCE APPRAISAL

There are mainly two purposes for which performance appraisal is used by an organization:

(1) To improve the work performance of employees by helping them realize and use their full

potential in carrying out the firm’s missions; and

(2) To provide information to employees for use in making work related decisions,

More specifically, appraisals serve the following purposes.

a) Appraisals generate information to support administrative decisions. Promotions transfers

and reassignments, demotions and termination’s are action based at least in part on

performance.

b) Appraisals provide feedback to employees and thereby serve as vehicle for personal or

career development because feedback provides:

• Reassurance that they are contributing and doing the right thing

• Awareness of the impact on the desired results

• A measure of the adequacy of performance (quality, quantity, speed etc.)

• Recognition of the importance and value of their performance.

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 c) Once the development needs of employees are identified appraisals can help establish

objectives for training programmes. Thus evaluations provide a basis for changing

performance plans, including objectives and standards of behaviors as business plans and

conditions change.

d) As a result of proper specifications of performance levels, appraisals can help diagnose

organizational problems. They do so by identifying training needs and the knowledge,

abilities, and other characteristics to consider in hiring, and they also provide a basis for

distinguishing between, effective and ineffective performers.

e) Appraisals are used as criteria in test evaluations.The rationale for differential treatment of

employees needs to be consistent with company’s values, philosophy and strategy. It also

needs to be balanced with the desire for collaboration, rather than competition and conflict,

sought in TQM.

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 PERFORMANCE APPRAISAL - PROCESS MAP

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 METHODS OF PERFORMANCE APPRAISAL

Currently most of the companies are using one of the following Performance Appraisal Methods:

1). 360 Degree Appraisal Method

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2). Rating Scale Method

3). Management by Objective Method

Under the 360 Degree appraisal method the employee is rated from all angles i.e., by the

superiors, subordinates, peers, suppliers, distributors, customers and clients. Under the

Management by Objective method the employee goals are set mutually by the employee's and

the management. And the employees are rated based on the accomplishment of these goals.

Under the Rating Scale method each employee trait or characteristic is rated on a scale that

usually has several points ranging from "poor" to "excellent" (or some similar arrangement).The

traits assessed on these scales include employee attributes such as work quality, cooperation,

initiative, punctuality and technical competence, etc. The selected traits should be in some way

relevant to the appraisee's job.

360º APPRAISAL AND FEEDBACK

The 360 degree appraisal involves rating of an employee or manager by everyone above,

alongside and below him. Corporates are using this tool to find out truths about their managers.

Although deployed mostly as a fact-finding technique, 360 º appraisals are also used to design

promotion and reward system in the organization.

Concept of 360º Appraisal

According to Milliman and others, “360-degree appraisal is the process of systematically

gathering data on a person’s skills, abilities and behaviors from a variety of sources –the

manager, peers, subordinates and even customers and clients”. Thus, appraisal of an employee is

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done by his superior, his peers, his subordinates and clients or outsiders with whom he interacts

in the course of his job performance. In 360-degree appraisal, besides appraising the

performance of the assesses, his other attributes such as talents, behavior, values, and technical

capabilities are also appraised.

Besides the employee himself, superior, subordinates and peers play an important role in the

appraisal. Structured questionnaires are used to collect responses about the employee from his

superiors, peers and subordinates. Several parameters relating to performance and behavior are

used in the questionnaires. Each manager is assessed by a minimum of fifteen colleagues, at least

two of them being his bosses, four of them peer, and six of them subordinates. Even the

important customers or clients of the firm may also be requested to give their assessment of the

concerned employee. The responses are presented collectively to the assesses in the form of

charts and graphs. Comments and interpretations are presented later. Counseling sessions are

arranged with the employee to remove the weaknesses identified in the 360 degree assessment.

Merits of 360º Appraisal

The merits of 360º appraisal are as under:

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(i) The 360 degree appraisal leads to greater self-awareness of those appraised. It reveals

strengths and weaknesses in their working styles.

(ii) The gap between self assessment and the views of one’s colleagues of peer group in

reduced.

(iii) It facilitates empowerment of subordinates who get a say in the appraisal of their bosses.

(iv) Inflexible managers are forced to initiate self-change.

(v) Facts about organizational culture and ambience are brought to light by the multiple

appraisals.

Limitations of 360º Appraisal

The system of 360º appraisal suffers from the following limitations:

(i) The 360 degree appraisal system ignores performance in terms of goals.

(ii) The candidate being appraised may not accept negative feedback from the subordinates

and peers. He might feel humiliated.

(iii) Responses from colleagues often tend to be biased.

(iv) Linking rewards to findings under 360 degree appraisal can prove to be unfair.

(v) The subordinates and peers might not be fully competent in appraisal.

Guidelines for Better Use of 360º Appraisal

The use of multisource appraisal can be effective if the following guidelines are followed:

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 (i) Involve people. Ask them who should serve as raters, and give them an opportunity to

review and interpret the results. This will strengthen their commitment to both the overall

process and the specific decisions.

(ii) Ensure that relevant data are being collected. Focus on behaviors and outcomes that

raters are capable of observing and are competent to evaluate.

(iii) Ensure that no single rater can dramatically affect the outcome. Use a large

enough sample or eliminate the highest and lowest scores to ensure that no one rater can

skew the data.

(iv)Train raters in what and how to observe. The better people understand what they look

for and how to record”critical incidents” (specific things the person said and did that can

be used as examples to support their ratings, and better the quality of the information that

will be collected.

(v) Ask raters to support their evaluations. Whenever possible, raters should discuss their

observations and evaluations with other raters. These discussions should trigger thoughts

and combat selective memory. Raters should also be required to provide a rationale for

their rating to other raters. This would prevent people from using the process to act on

personal grudges.

(vi)Move slowly and start small. Any organization considering using 360 º feedbacks in

the appraisal process should begin by using it for development purpose only and then

gradually to make it a part of appraisal system. Even then, the focus should be on the

goal-setting portion of the appraisal. People need to get comfortable with the idea of

multisource feedback as a development tool before they can accept it as part of the formal

performance management process.

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 A lot of organizations seem to be hurrying to integrate 360º feedback into the human

resource management system. Multisource feedback really does have the potential to

enhance human resource management system. However, 360º feedback won’t fix a

system that does not work.

(vii) Develop a culture that supports open feedback. Not surprisingly, 360º feedback

works best in companies where the environment is participatory rather than authoritarian,

where giving and receiving feedback are the norm and are seen as valuable sources of

information. If the current system (where only the supervisor does the appraisal) is not

working due to lack of straight talk and hesitancy to give direct feedback, it is essential to

introduce openness in the organization.

(viii) Clear and agreed on performance measures and behaviors. When 360º feedback is

used for development only, the organization may be able to settle the list of behaviors and

skills that have reasonable face validity and general support: “coaching” or “team

building”, for instance. However, when the feedback is being used to determine

performance ratings, the result and behavior for which people are held accountable must

be clear, unambiguous and specific.

(ix)The users must support the system and be willing to invest the time required to make

it work. The introduction of 360º feedback makes an already time-intensive appraisal

process even more demanding. It means more data to collect and more information to

process for the additional feedback.

(x) Sound feedback process. While the way the data are collected and presented are

always important, two aspects of sound 360º feedback procedure are particularly relevant

when the data are used for appraisal purpose: the validity and reliability of the practices

for which people will be measured and the confidentiality of the raters.

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Elements of 360º Appraisal Program

The elements of 360º appraisal program are as follows:

(i) Appraisal by Superior/ Boss. This is the most important element of the 360 degree

appraisal. Here the focus is to provide constructive feedback on employee’s performance

and his development needs. It is the responsibility of the superior to ensure that employee

sets goals not only in the area of business performance but also in the areas that are vital

to the organization. These are called corporate thrust areas and may include relationship

management, safety and quality development. If the working style of the employee is a

concern area and needs improvement for enhancing effectiveness then goal may be set

for “style of functioning” such as, from short-term to long-term orientation.

It is expected of the superior to put career aspirations of the employee in proper

perspective. Firstly, superior must communicate to the employee in a clear way what the

organization plans for the employee. Secondly, if the employee has unrealistic

aspirations, then also it is superior’s responsibility to share with the employee the realistic

picture given his/ her strengths, development areas, experience, qualifications, and the

organization’s ability to provide growth. This is how the superior’s appraisal has a very

significant role to play.

(ii) Appraisal by the Peer Group. The peers play an important role in the life of an

employee in the organization. The can also provide a deep insight into the personality

make up, attitude and style of working of the employee. For better results, it is essential

to select the right peers for the purpose of appraisal. They must include peers both from

within the department as well as from the other departments, which are directly

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 connected with the working of employee’s department. The concept of internal customers

comes handy here. Three to five internal customers should normally be chosen for peer

appraisal.

In order to achieve the purpose of 360º appraisal, the peer group appraisal must strive to

get the feedback on (a) employee’s working style, (b) sensitivity towards others, (c) spirit

of co-operation and collaboration, and (d) ability to work as a team member.

(iii) Appraisal by the Subordinates. Another distinctive feature of 360º appraisal is the

role of subordinates in appraisal. It signifies two things. Firstly, it is a clear expression

from the organization that it encourages openness and that feedback is a two-way

process. Secondly, it is a systemic recognition of the fact that an employee’s subordinates

do play a vital role in his appraisal. Thus, the purpose of subordinate’s appraisal is to get

first hand assessment of how the subordinates perceive their superior to be in terms of:

(a) delegation of authority, (b) guiding and training of subordinate, (c) motivation of

subordinates, (d) team building, etc.

Upward appraisal provides an opportunity to the subordinates to give feedback to their

superior on the kind of things they would like him/ her to continue doing (status quo),

things they would like him/ her to stop doing (areas for corrective action), things they

would like him/ her to start doing (areas for new initiatives).

(iv)Self Appraisal. Any program of 360º appraisal would not be complete without self

appraisal by the employee whose performance is being appraised. Self appraisal

facilitates the employee to identify his/ her strengths and weaknesses and provides an

opportunity to assess the performance. In a well established system, employees use the

self appraisal very effectively and organizations also find that employees often are their

own strongest critics and display very high degree of objectivity. Self appraisal also

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 provides an opportunity to the employee to express his career moves for the future.

However, this is only for gathering information and that under the given organizational

constraints, it may not be possible to provide the career progression desired by the

employee. Nevertheless, it is in the organization’s interest to at least know on a first hand

basis the aspirations of its employees.

STEEL INDUSTRY IN INDIA

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Steel has been the key material with which the world has reached to a developed position. All the

engineering machines, mechanical tools and most importantly building and construction

structures like bars, rods, channels, wires, angles etc are made of steel for its feature being hard

and adaptable. Earlier when the alloy of steel was not discovered, iron was used for the said

purposes but iron is usually prone to rust and is not so strong. Steel is a highly wanted alloy over

the world. All the countries need steel for the infrastructural development and overall growth.

Steel has a variety of grades i.e. above 2000 but is mainly categorized in divisions – steel flat and

steel long, depending on the shape of steel manufactured. Steel flat includes steel products in flat,

plate, sheet or strip shapes. The plate shaped steel products are usually 10 to 200 mm and thin

rolled strip products are of 1 to 10 mm in dimension. Steel flat is mostly used in construction,

shipbuilding, pipes and boiler applications. Steel long Category includes steel products in long,

bar or rod shape like reinforced rods made of sponge iron. The steel long products are required to

produce concrete, blocks, bars, tools, gears and engineering products. After independence,

successive governments placed great emphasis on the development of an Indian steel industry. In

Financial Year 1991, the six major plants, of which five were in the public sector, produced 10

million tons. The rest of India steel production, 4.7 million tons, came from 180 small plants,

almost all of which were in the private sector. India's Steel production more than doubled during

the 1980s but still did not meet the demand in the mid-1990s, the government was seeking

private-sector investment in new steel plants.

Production was projected to increase substantially as the result of plans to set up a 1 million ton

steel plant and three pig-iron plants totalling 600,000 tons capacity in West Bengal, with Chinese

technical assistance and financial investment. The commissioning of Tata Iron & Steel

Company's production unit at Jamshedpur, Bihar in 1911-12 heralded the beginning of modern

steel industry in India. At the time of Independence in 1947 India's steel production was only

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1.25 Mt of crude steel. Following independence and the commencement of five year plans, the

Government of India decided to set up four integrated steel plants at Rourkela, Durgapur, Bhilai

and Bokaro.

The Bokaro plant was commissioned in 1972. The most recent addition is a 3 Mt integrated steel

plant with modern technology at Visakhapatnam. Steel Authority of India (SAIL) accounts for

over 40% of India's crude steel production. SAIL comprises of nine plants, including five

integrated and four special steel plants. Of these one was nationalized and two were acquired;

several were set up in collaboration with foreign companies. SAIL also owns mines and

subsidiary companies.

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 INTRODUCTION
OF TATA STEEL

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 Introduction:

Tata Steel, formerly known as TISCO and Tata Iron and Steel Company Limited, is the world's

sixth largest steel company, with an annual crude steel capacity of 31 million tonnes. It is the

largest private sector steel company in India in terms of domestic production. Ranked 258th on

Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of

companies. Tata Steel is also India's second-largest and second-most profitable company in

private sector with consolidated revenues of Rs 1,32,110 crore and net profit of over Rs 12,350

crore during the year ended March 31, 2008. Backed by 100 glorious years of experience in steel

making, Tata Steel is among the top ten steel producers in the world with an existing annual

crude steel production capacity of 30 Million Tonnes Per Annum (MTPA). Established in 1907,

it is the first integrated steel plant in Asia and is now the world`s second most geographically

diversified steel producer and a Fortune 500 Company. Its main plant is located in Jamshedpur,

Jharkhand, with its recent acquisitions; the company has become a multinational with operations

in various countries. The Jamshedpur plant contains the DCS supplied by Honeywell. The

registered office of Tata Steel is in Mumbai. The company was also recognized as the world's

best steel producer by World Steel Dynamics in 2005. The company is listed on Bombay Stock

Exchange and National Stock Exchange of India, and employs about 82,700 people (as of 2007).

Tata Steel has a balanced global presence in over 50 developed European and fast growing Asian

markets, with manufacturing units in 26 countries. It was the vision of the founder; Jamsetji

Nusserwanji Tata., that on 27th February, 1908, the first stake was driven into the soil of Sakchi.

His vision helped Tata Steel overcome several periods of adversity and strive to improve against

32 | P a g e
all odds. Tata Steel`s Jamshedpur (India) Works has a crude steel production capacity of 6.8

MTPA which is slated to increase to 10 MTPA by 2010. The Company also has proposed three

Greenfield steel projects in the states of Jharkhand, Orissa and Chhattisgarh in India with

additional capacity of 23 MTPA and a Greenfield project in Vietnam.

The TATA Steel story is a classic example of synergy leveraged through the inorganic route. In

2005, Tata Steel acquired NatSteel Asia. This helped the company not only to establish a

beachhead in seven countries across the region, namely Singapore, Thailand, China, Malaysia,

Vietnam, the Philippines and Australia, but also provided it with a customer base for close to two

million tonnes of steel. As a brand, NatSteel's strong equity in the region was yet another

strategic gain for Tata Steel. The company's strong human resources and management

effectiveness is also an inheritance of immense value. Operationally, NatSteel's finishing

facilities across the region provided Tata Steel with the necessary support for upstream capacity

expansions in India, as well as access to knowledge and expertise in downstream processing of

bars and wire rods. The acquisition of Millennium Steel in 2005, Thailand's dominant steel

producer, still consolidated Tata Steel's gains from the NatSteel deal. Millennium's three

operating units gave the company a cumulative capacity to produce 1.2 million tonnes of steel

per annum through the electric arc furnace route along with a long products rolling capacity of

1.7 million tonnes a year. Geared towards the construction and automotive sector, Millennium

provided Tata Steel strategic space in the heart of the ASEAN region, enhancing its market

position in South East Asia. Apart from the existing backward integration with its own iron ore

mines and collieries, the company has enhanced its competitive advantage in raw materials

further, buying a five per cent interest in the Carborough Downs coal project located in

Queensland, Australia. Its backward and forward integration plans include the development of a

deep-sea port in Orissa. Through investments in Corus, Millennium Steel (renamed Tata Steel

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Thailand) and NatSteel Holdings, Singapore, Tata Steel has created a manufacturing and

marketing network in Europe, South East Asia and the pacific-rim countries. Corus, which

manufactured over 20 MTPA of steel in 2008, has operations in the UK, the Netherlands,

Germany, France, Norway and Belgium. Tata Steel Thailand is the largest producer of long steel

products in Thailand, with a manufacturing capacity of 1.7 MTPA. Tata Steel has proposed a 0.5

MTPA mini blast furnace project in Thailand. NatSteel Holdings produces about 2 MTPA of

steel products across its regional operations in seven countries. Tata Steel, through its joint

venture with Tata BlueScope Steel Limited, has also entered the steel building and construction

applications market. The iron ore mines and collieries in India give the Company a distinct

advantage in raw material sourcing. Tata Steel is also striving towards raw materials security

through joint ventures in Thailand, Australia, Mozambique, Ivory Coast (West Africa) and

Oman. Tata Steel has signed an agreement with Steel Authority of India Limited to establish a

50:50 joint venture company for coal mining in India. Also, Tata Steel has bought 19.9% stake in

New Millennium Capital Corporation, Canada for iron ore mining.

Exploration of opportunities in titanium dioxide business in Tamil Nadu, ferro-chrome plant in

South Africa and setting up of a deep-sea port in coastal Orissa are integral to the Growth and

Globalisation objective of Tata Steel.

. Tata Steel India is the first integrated steel company in the world, outside Japan, to be awarded

the Deming Application Prize 2008 for excellence in Total Quality Management. The Tata

Group made a huge acquisition in 2006 when it acquired the Dutch company Corus for more

than USD12 billion, making Tata-Corus one of the world's largest steelmakers.

34 | P a g e
Vision

We aspire to be the global steel industry benchmark

for
Value Creation and Corporate Citizenship

We make the difference through:

Our people, by fostering team work, nurturing talent, enhancing leadership capability and acting

with pace, pride and passion.

Our offer, by becoming the supplier of choice, delivering premium products and services, and

creating value for our customers.

Our innovative approach, by developing leading edge solutions in technology, processes and

products.

Our conduct, by providing a safe working place, respecting the environment, caring for our

communities and demonstrating high ethical standards.

35 | P a g e
Mission
Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to

strengthen India’s industrial base through the effective utilization of staff and materials. The

means envisaged to achieve this are high technology and productivity, consistent with modern

management practices.

Tata Steel recognizes that while honesty and integrity are the essential ingredients of a strong

and stable enterprise, profitability provides the main spark for economic activity.

Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere

free from fear, and thereby reaffirms its faith in democratic values.

36 | P a g e
 MANAGEMENT AND BOARD OF DIRECTORS

The operations and successes of the Tata Steel Group are taken care of by its capable
management and Board of Directors. At the helm of affairs are the Company’s Directors, whose
profiles offer a brief introduction and help get acquainted with them…

Board of Directors

expand all collapse all

Mr. Ratan Tata Chairman

Mr. Ratan N. Tata is presently Chairman of Tata Sons, the holding company of the Tata Group
and also Chairman of the major Tata companies including Tata Steel. It is under his leadership
that the Company has scaled new heights and established a presence as one of the leading steel
conglomerates in the world.

Mr. B. Muthuraman VIice Chairman

Mr. Muthuraman joined Tata Steel in 1966 as a Graduate Trainee. On completion of training, he
worked in the areas of Iron-making and Engineering Development for ten years and then moved
to the Marketing & Sales Division and spent nearly twenty years there, ultimately rising to the
position of Vice President.

37 | P a g e
Mr. H.M. Nerurkar Managing Director

Hemant M. Nerurkar has been Executive Director of India and South East Asia of Tata Steel
Limited since April 9, 2009 and Managing Director since October 10, 2009. Mr. Nerurkar also
serves as the Vice President of Kalinganagar Project, Orissa.

Mr. Nusli Neville Wadia Independent, Non - Executive Director

A textile magnate and an important person in the real-estate business, Mr. Nusli Neville Wadia
belongs to an illustrious family of Indian Parsi entrepreneurs. He happens to be the grandson of
Muhammad Ali Jinnah, founder of Pakistan.

Mr. S. M. Palia Independent, Non - Executive Director

Mr. S M Palia, a B.Com., LL.B., CAIIB and AIB ( London ) is a Development Banker by
profession. He was with IDBI from 1964 to 1989 during which period he held various
responsible positions including that of an Executive Director to the Company.

38 | P a g e
Mr. Suresh Krishna Independent, Non - Executive Director

Mr. Suresh Krishna received a Bachelor of Science degree from Madras Christian College in
1955 and an M.A. in literature from the University of Wisconsin in 1959. He did his post-
graduate work in literature at the University of Munich, Germany.

Mr. Ishaat Hussain Not Independent, Non - Executive Director

Mr. Ishaat Hussain graduated in economics from St Stephens College, New Delhi. He is a fellow
of the Institute of Chartered Accountants in England and Wales (FCA).

Dr. Jamshed J. Irani Not Independent, Non - Executive Director

Dr. Jamshed J. Irani is a renowned personality in the Iron and Steel Industry. He led Tata Steel's
pursuit of business excellence from 1988 through the decade into the nineties.

39 | P a g e
Mr. Subodh BhargavaIndependent, Non - Executive Director

Mr. Bhargava is a Mechanical Engineer from the University of Roorkee. He joined the Company
as a Director in 2006.

Mr. Jacobus Schraven Independent, Non - Executive Director

Jacobus Schraven (65) was appointed a non-executive director and Deputy Chairman of Corus in December 2004.

Mr. Andrew Robb Independent, Non - Executive Director

Mr. Andrew M. Robb is a Fellow of the Chartered Institute of Management Accountants and holds a Joint Diploma in
Management Accounting.

Mr. Kirby Adams Not Independent, Non - Executive Director

40 | P a g e
 MAJOR PLAYERS OF STEEL IN INDIA

PUBLIC SECTOR

1. STEEL AUTHORITY OF INDIA LIMITED (SAIL)

Steel Authority of India Limited (SAIL) is a company registered under the Indian Companies

Act, 1956 and is an enterprise of the Government of India. It has five integrated steel plants at

Bhilai (Chattisgarh), Rourkela (Orissa), Durgapur (West Bengal), Bokaro (Jharkhand) and

Burnpur (West Bengal). SAIL has three special and alloy steel plants viz. Alloy Steels Plant at

Durgapur (West Bengal), Salem Steel Plant at Salem (Tamilnadu) and Visvesvaraya Iron & Steel

Plant at Bhadravati (Karnataka). In addition, a Ferro Alloy producing plant Maharashtra

Elektrosmelt Ltd. At Chandrapur, is a subsidiary of SAIL. SAIL has Research & Development

Centre for Iron & Steel (RDCIS), Centre for Engineering & Technology (CET), SAIL Safety

Organisation (SSO) and Management Training Institute (MTI) all located at Ranchi; Central

Coal Supply Organisation (CCSO) at Dhanbad; Raw Materials Division (RMD), Environment

Management Division (EMD) and Growth Division (GD) at Kolkata. The Central Marketing

Organisation (CMO), with its head quarters at Kolkata, coordinates the country-wide marketing

and distribution network.

41 | P a g e
 2. RASHTRIYA ISPAT NIGAM LTD. (RINL)

RINL, the corporate entity of Visakhapatnmam Steel Plant (VSP) is the first shore based

integrated steel plant located at Visakhapatnam in Andhra Pradesh. The plant was commissioned

in August 1992 with a capacity to produce 3 million tonne per annum (mtpa) of liquid steel. The

plant has been built to match international standards in design

and engineering with state-of- the- art technology incorporating extensive energy saving and

pollution control measures. Right from the year of its integrated operation, VSP established its

presence both in the domestic and international markets with its superior quality of products. The

company has been awarded all the three Internationalstandards certificates, namely, ISO

9001:2000, ISO 14001: 1996 and OHSAS 18001: 1999. RINL was accorded the prestigious

‘Mini Ratna’ status by the Ministry of Steel, Govt. of India in the year 2006 and the company is

gearing up to complete the ambitious expansion works to increase the capacity to 6.3 mtpa by

2009. RINL has prepared a road map to expand the plant’s capacity up to 16 mtpa in phases.

3. HINDUSTAN STEELWORKS CONSTRUCTION LTD.(HSCL)

HSCL was incorporated in June 1964 with the primary objective of creating in the Public Sector

an organization capable of undertaking complete construction of modern integrated Steel Plants.

HSCL had done the construction work of Bokaro Steel Plant, Vizag Steel Plant and Salem Steel

Plant from the inception till commissioning and was associated with the expansion and

modernisation of Bhilai Steel Plant, Durgapur Steel Plant, IISCO (Burnpur) and also Bhadravati

Steel Plant. With the tapering of construction

activities in Steel Plants, the company intensified its activities in other sectors like Power, Coal,

Oil and Gas. Besides this, HSCL diversified in Infrastructure Sectors like Roads/Highways,

42 | P a g e
Bridges, Dams, Underground Communication and Transport system and Industrial and

Township Complexes involving high degree of planning, coordination

and modern sophisticated techniques. The company has developed its expertise in the areas of

Piling, Soil investigation, Massive foundation work, High rise structures, Structural fabrication

and Erection, Refractory, Technological structures and Pipelines, Equipment erection,

Instrumentation including testing and commissioning. The company has also specialised in

carrying out Capital repairs and Rebuilding work including hot repairs of Coke Ovens and Blast

Furnaces and other allied areas of Integrated Steel Plants.

4. MECON LTD.

MECON is one of the leading multi-disciplinary design, engineering, consultancy and

contracting organization in the field of iron & steel, chemicals, refineries and petrochemicals,

power, roads & highways, railways, water management, ports and harbours, gas & oil, pipelines,

non ferrous, mining, general engineering, environmental

engineering and other related/ diversified areas with extensive overseas experience. MECON, an

ISO: 9001- 2000 accredited company, registered with World Bank (WB), Asian Development

Bank (ADB), European Bank for Reconstruction and Development (EBRD), African

Development Bank (AFDB), and United Nations Industrial Development Organisation

(UNIDO), has wide exposure and infrastructure for carrying out engineering, consultancy and

project management services for mega projects encompassing architecture & town planning,

civil works, structural works, electric, air conditioning & refrigeration, instrumentation, utilities,

material handling & storage, computerization etc. MECON has collaboration agreements with

leading firms from the USA, Germany, France, Italy, Russia, etc. in various fields. The

43 | P a g e
authorized share capital of the company is Rs. 10,400 lakh (previous year Rs. 4,100 lakh) against

which the paid up capital is Rs. 10,313.84 lakh (previous year Rs. 4,013.84 lakh). All the shares

are held by the Government of India.

PRIVATE SECTOR
The private sector of the Steel Industry is currently playing an important and dominant role in

production and growth of steel industry in the country. Private sector steel playershave

contributed nearly 67% of total steel production of 38.08 million tonnes to the country during the

period April-December, 2007. The private sector units consist of bothmajor steel producers on

one hand and relatively smaller and medium units such as Sponge iron plants, Mini Blast

Furnace units, Electric Arc Furnaces, Induction Furnaces,Rerolling Mills, Cold-rolling Mills and

Coating units on the other. They not only play an important role in production of primary and

secondary steel, but also contribute substantial value addition in terms of quality, innovation and

cost effective.

44 | P a g e
 1. TATA STEEL LTD.

Tata Steel has an integrated steel plant, with an annual crude steel making capacity of 5 million

tonnes located at Jamshedpur, Jharkhand. Tata Steel has completed the first six months of fiscal

2007-08 with impressive increase in its hot metal production. The hot metal production at 2.76

million tonnes is 4.6%more compared to the corresponding period of the previous year. The

crude steel production during the period was 2.43 million tonnes which is marginally lower than

the production of 2.45 million tones last year. The saleable steel production was at a lower level

during the period April September, 2007 (2.34 million tonnes) compared to the corresponding

period of last year

(2.36 million tonnes). Tata Steel is continuing with its programme of expansion of steel making

capacity by 1.8 million tonnes to reach a rated capacity of 6.8 million tonnes. The Project is

reported to be moving ahead of schedule and is likely to be commissioned by May 2008 against

the original schedule of June 2008. The Company has planned to take the capacity to 10 million

tonnes by the fiscal year 2010. Tata Steel’s Greenfield projects in Orissa and Chattisgarh are

progressing on schedule with placement of equipment order for Kalinganagar Project in Orissa

and commencement of the land acquisition process. Jharkhand Project is awaiting announcement

of Relief & Rehabilitation policy of the State Government.

45 | P a g e
 2. ESSAR STEEL LTD. (ESL)

Essar Steel Holdings Ltd. (ESHL) is a global producer of steel with a footprint covering India,

Canada, USA, the Middle East and Asia. It is a fully integrated flat carbon steel manufacturer—

from iron ore to ready-to-market products. ESHL has a current global capacity of 8 million

tonnes per annum (MTPA). With its aggressive expansion plans in India and other parts of Asia

and North America, its capacity is likely to go up to 25 MTPA by 2012. Its products find wide

acceptance in highly discerning consumer sectors, such as automotive, white goods,

construction, engineering and shipbuilding. Essar Steel Ltd., the Indian Company of Essar Steel

Holdings Limited, is the largest steel producer in

western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to increase this

to 8.5 MTPA. The Indian operations also include an 8 MTPA beneficiation plant at Bailadilla,

Chattisgarh which has world’s largest slurry pipeline of 267 km to transport beneficiated Iron

Slurry to the pellet plant, and an 8 MTPA pellet complex at Visakhapatnam. The Essar Steel

Complex at Hazira in Gujarat, India, houses the world’s largest gas-based single location sponge

iron plant, with a capacity of 4.6 MTPA. The complex also houses the steel plant and the 1.4

MTPA cold rolling complex. The steel complex has a complete infrastructure setup, including a

captive port, lime plant and oxygen plant. Essar Steel produces highly customized valueadded

products catering to a variety of product segments and is India’s largest exporter of flat products,

selling close to half of its production to the highly demanding US and European markets, and to

the growing markets of South East Asia and the Middle East. The company’s products conform

to quality specifications of international quality certification agencies, like ABS, API, TUV

Rhine Land and Lloyd’s Register. Essar Steel is the first Indian steel company

46 | P a g e
to receive an ISO 9001 and ISO 14001 certification for environment management practices.

Essar Steel utilizes Hot Briquetted Iron-Direct Reduced Iron (HBIDRI) technology supplied by

Midrex Technology, USA along with four 150 tonnes DC electric arc furnaces imported from

Clecim, France. The Hazira unit of Essar Steel is equipped with 5.5 million tonnes per annum

(MTPA) hot briquetted iron plant, 4.6 MTPA electric are furnace, 4.6 MTPA continuous caster,

3.6 MTPA hot strip mill and 1.4 MTPA Cold Rolling Mill. During the year 2007-08, Essar was

awarded costs ISO/TS 16949 and OHSAS 18000 certification.

3. JINDAL STEEL & POWER LTD. (JSPL)

Jindal Steel & Power Limited is one of the fast growing major steel units in the country. The

Raigarh plant of JSPL has a present capacity of 1.37 million tonne per annum (MTPA) sponge

iron plant, 2.40 MTPA Steel Melting Shop (SMS), 1.0 MTPA plant Mill, 2.30 sinter plant, 0.8

MTPA coke oven and a 330 Mega Watt captive power plant. During the year 2006-07, the

company produced 1.19 million tonnes of sponge iron, 0.8million tonnes of various steel

products, 0.57 million tones of hot metal and 0.21 million tonnes of rolled products. The

performance of JSPL during April-October 2007-08 was 0.68 million tonnes of sponge iron, 0.72

million tonnes of steel products (slabs/blooms/billets/rounds), 0.68 million tones of hot metal,

0.27 million tonnes of rolled products and 0.11 million tonnes of plates.

47 | P a g e
 MARKET SHARE OF LEADING PLAYERS IN IRON AND
STEEL INDUSTRY

COMPANY PRODUCTION OF STEEL MARKET SHARE

(IN MILLION TONNES) (IN PERCENTAGE
TERMS)

SAIL 13.5 32 %

TISCO (Tata Steel) 5.2 11 %

RNIL 3.5 8%

ESSAR, ISPAT, JSWL 8.4 19 %

OTHERS 14.5 30 %

TOTAL 45.1 100 %

Therefore, it can rightly be concluded that the liberalization of industrial policy and other

initiatives taken by the Government have given a definite impetus for entry, participation and

growth of both private and public sector in the steel industry.

48 | P a g e
 TRENDS IN PERFORMANCE APPRAISAL SYSTEM

Performance appraisal in its traditional from known as ACR-Annual Confidential Report is often

misused than used. Performance appraisal has now been recognized as a HRD function. In the

last decade many organizations have reviewed and changed their managerial appraisal systems.

1) There is a trend away from the composite appraisals with multiple objectives (e.g.

performance planning, development rewards and promotions)to separate systems for

different systems for different clusters of objectives.

2) There is a move away from isolated appraisal system to the business linked one .

3) There is shift away from closed confidential type to open dialogue and discussions based

system.

4) There is a movement quantitative (pseudo objective) to qualitative (interactive,

improvement and process oriented) system.

5) There is a movement away from boss assessed feedback to 360-degrees feedback involving

customers, peers, team members, subordinates etc. in addition to supervisors.

6) There is also a trend away from elaborate systems to simple ones.

7) There is a shift from standard systems to flexible and group specific ones.

8) There is a movement from result oriented systems to process oriented system.

9) There is a movement from the assessment of individual performance to the development of

team performance.

10) There is also a movement from complacency to experimentation through continuous research

change.

49 | P a g e
Performance appraisal refers to the assessment of an employee’s actual performance, behavior

on jobs, and his or her potential for future performance. Appraisal has several objectives but the

main purposes are to assess training needs, to effect promotions, and to give pay increases.

Appraisal of performance proceeds in a set pattern. The steps involved are –defining appraisal

objectives, establishing job expectations, designing the appraisal programme, conducting

performance interview, and using appraisal data for different HR activities.

Two important contemporary techniques of performance appraisal include 360º appraisal and

goal setting approach to appraisal also known as ‘Managing by Objectives’.

However, performance appraisal system also serves to be the backbone of any industry in the

corporate world and since the project report focuses on the role played by performance appraisal

in industrial establishment so review of research is done by also analyzing following secondary

data.

The data source: Secondary Data.

The research approach: Survey Method.

The research instrument: Journals , Books , Newspaper Articles.

50 | P a g e
 JOURNAL ARTICLES

1. Title :- “A New Framework for Selection of the Best Performance Appraisal Method”

Author :- Mostafa Jafari , Atieh Bourouni , Roozbeh Hesam Amiri.

Abstract :- Performance appraisal is one of the most important processes in human resource

management, because it has a great effect on both the financial and program components of any

organization. There is a variety of methods for the appraisal of employees' performance.

Obviously, no method can claim that it has an integrated approach in performance appraisal.

Therefore, human resource managers should select an appraisal method which is most efficient

in their organizations. In this paper, we propose a framework for the selection of appraisal

methods and compare some performance appraisal methods in order to facilitate the selection

process for organizations. The value of this framework is that, with use of it, organisations can

evaluate their performance appraisal method with respect to the key features of it before

implementing any method as well as expending extra costs. This framework is theoretical in

nature, and is build based on a review of related literature.

2. Title:-“Function of performance appraisal in career development”

Authors :- Baldwin, Jennifer

Abstract :- The design of a performance appraisal system may be considered an unusual

topic in the field of career development. However, it is considered most relevant in the current

employment climate for graduates given the repeated emphasis on career development at various

stages of the employment process. There has been a growing emphasis since the mid-1970s on

employees' needs rather than just organizational needs, and a recognition of the strategic value of

employees being developed to their best potential. Organizations have become increasingly

aware that the effective development of their employees' skills and knowledge has benefits for

51 | P a g e
the whole organization. Career development (or employee or professional development) is a

thread that runs through each stage of this discussion of the design of a performance appraisal

system. This issue of career development may also be observed in promotional brochures and

information sessions given by recruiters of graduates of tertiary institutions. Much is made of

training and development opportunities as organizations seek to attract the brightest and best

graduates to their graduate management trainee programs. Performance appraisal can be a crucial

factor in the setting of career goals and the perception of job satisfaction leading to increased

motivation and productivity.

3 Title:-“ Innovative human resource management and corporate performance

in the context of economic liberalization in India”

Authors :- Ashok Som

Abstract :- The Indian economy was forced to adopt a structural adjustment programme at

the beginning of 1991. The structural adjustment programme or liberalization initiated the

process of the opening up of an otherwise closed economy of India. Liberalization created a

hypercompetitive environment and to respond to this turbulence, Indian organizations adopted

innovative changes in their HRM practices. Current research shows that HRM practices are

important for enhanced corporate performance but little has been reported on the effect of HRM

practices and corporate performance in the context of economic liberalization of India. This

study tries to understand the role of innovative HRM practices and specifically questions how

HRM practices, such as the role of HR department, recruitment, retraining and redeployment,

performance appraisal and compensation, enhance corporate performance during the change

process. A multiple-respondent survey of 69 Indian organizations was undertaken to study the

impact of innovative HRM practices on firm performance. The survey found that the innovative

52 | P a g e
recruitment and compensation practices have a positive significant relationship with firm

performance. It was observed that recruitment, the role of the HR department and compensation

practices seem to be significantly changing within the Indian firms in the context of India’s

economic liberalization. The synergy between innovative HRM practices was not significant in

enhancing corporate performance during the liberalization process.

4 Title:-“ The Effects of Human Resource Management Practices on

Productivity: A Study of Steel Finishing Lines”

Authors :- Casey Ichniowisky , Kathryn Shaw and Giovanna Prenushi

Abstract :- This study investigate the productivity effects of innovative employment

practices using data from a sample of 36 homogeneous steel production lines owned by 17

companies. The productivity regressions demonstrate that lines using a set of innovative work

practices, which include incentive pay, teams, jlexible job

assignments, employment security, and training, achieve substantially higher levels

of productivity than do lines with the more traditional approach, which includes

narrow job de$nitions, strict work rules, and hourly pay with close supervision. Our results are

consistent with recent theoretical models which stress the importance of complementarities

among work practices.

53 | P a g e
 RESEARCH
METHODOLOGY

54 | P a g e
 RESEARCH METHODOLOGY

The formidable problem that follows the task of defining the research problem is the preparation

the design of the research project, popularly known as the “research design”. Decisions regarding

what, where, when, how much, by what means concerning an inquiry or a research study

constitute a research design. “A research design is the arrangement of conditions for collection

and analysis data in a manner that aims to combine relevance to the research purpose with

economy in procedure.” In fact, the research design is the conceptual structure within which

research is conducted; it constitutes the blueprint for the collection, measurement and analysis of

data. As such the design includes outline of what the researcher will do from writing the

hypothesis and its operational implications the final analysis of data.

Therefore, this study outline following designing decisions:-

(i) What is the study about?

The study comprises critical analysis of various functions, methods and scope of performance

appraisal in different companies prevailing in steel industry.

(ii) Why is the study being made?

The main purpose of study is to help in understanding various functions, role and importance of

performance appraisal system and identify the developmental needs of employees in steel

industry. It also focus on the impact of performance appraisal system on industrial relations and

help in finding out various tools for bridging the communication gap between employees and

supervisors.

55 | P a g e
(iii) What type of data is required?

Data comprising the impact of performance appraisal system on steel industry is required for the

study. Therefore, journal articles and news article from leading business magazines and news

papers did the needful.

(iv) Where can the required data be found?

Since data is secondary therefore most of the review was done with help of internet, journals,

newspaper articles and various books .

(v) What periods of time will the study include?

This study is the result of 2 – 3 months of research.

(vi) What techniques of data collection will be used?

To accomplish the objectives of the study secondary data is used.

(vii) How will the data be analyzed?

Data is analyzed on the basis of journal, newspaper articles and the core knowledge gained on

performance appraisal system from few books and steel industry. A complete review has been

done on role of performance appraisal system on steel industry and its impact in gaining

competitive advantages. Therefore, for this purpose role of performance appraisal has been

studied in few companies prevailing in the steel industry.

(vii) In what style will the report be prepared?

Report is distributed in Chapters completing all the requirements of the research.

56 | P a g e
 FINDINGS AND

ANALYSIS

57 | P a g e
 FINDINGS AND ANALYSIS

The main objective of this study is to analyse the role of performance appraisal and system

implementation in TATA Steel. Since the research is empirical in nature that’s why following

aspects of various organization structure and design of the company have been covered.

ORGANIZATION STRUCTURE AND DESIGN

TATA STEEL

TATA STEEL is a young, dynamic organization and is going strong on the stock market.

1- The company is well aware of the dynamic environment of software, it is operating and

in order to keep it with the pace of the environment it believes in constant up gradation of

courses. Organization structure and design of the company is such that it supports this

change.

2- Tata steel has a matrix kind of a structure wherein it takes the form of combination of

structures. Matrix structures are adopted became there is more than one factor around

which the structure can be built.

3- This matrix structure at tata steel ltd. improves the quality of decision-making where

interest conflicts arise and direct contacts replaces bureaucracy

4- . This increases the motivation of the managers and development of wider involvement in

strategies. Although at times the company faces high risk of dilution of priorities became

e people do not know who is responsible for what.

58 | P a g e
 5- An organization is a network of authority, responsibility and relationships. Different

organization structure consists of different type of relationships.

Performance Appraisal at Tata Steel

While on the job, performance reviews of every employee are done every quarter. The reviews

are done with a view to helping the individual excel at his/her workplace. In case there are any

training requirements, these are noted and acted upon in the coming quarter. Also, the goals and

objectives for the employee are re-visited for

The performance appraisal mechanism is carried out at Tata steel for promotional purposes.

These are done so as to motivate the employee and improve his performance level. The method

is as follows:

a) Establishment of performance standards with the employees

b) The goals are set mutually as per measurable standards.

c) The actual performance is hence measured.

d) After measuring of the actual performance, the same is compared with the standards set

e) The appraisal is then discussed with the employees.

f) And finally, if need arises corrective action is initiated. For this purpose the corrective

action is actually identified through brainstorming exercises initiated by the departmental

heads at all the Tata Steel. It is then measured as a tool to evaluate the past performances

of the employees.

Some of the methods used at Tata Steel are:

59 | P a g e
 1. Key Performance Index

2. 360 Degree Feedback

3. Paired Comparisons

4. Behaviorally Anchored Rating Scale

1. KPI-Key Performance Index

It is based on the performance level of the employee generally classified on the basis of:

• Targets achieved

• Ratings through students’ feedback forms

• Punctuality and regularity

• Day to day performance

This is given after every module at the centers.

Thus we can observe that the appraisal system is not a biased one but based on performance and

productivity basis. All the respective heads of the employee together with the senior persons at

the center brainstorm and then give the promotion.

2. 360 Degree Feedback

This feedback system involves the participation of:

• Coworkers – 40%

60 | P a g e
 • Subordinates - 20%

• Superior - 40%

Thus the feedback given by these members at Tata Steel is considered under a holistic view and

then the employee is given a performance appraisal. This evaluation method involves 40%

feedback from the coworkers which says that the employee should not only maintain good

rapport with the senior or junior but majorly with the coworkers also.

3. Paired Comparisons

The evaluator compares all possible pairs of subordinates on their overall ability to do the job.

Due to the subjectivity of evaluating overall performance some managers me e a number of

different job related dimensions when comparing.

4. Behaviorally Anchored Rating Scale (BARS)

It is a sophisticated method of evaluating the employee based on the employee behavior. It is a

numerical scale that is anchored by the seniors of the organization at various centers. This is

highly confidential and the information is sent in sealed envelopes and opened only at the time of

the final evaluation. There is no further discussion regarding this scaling, thus it is not given

enough weightage.

Key Observations at TATA STEEL

In the present performance appraisal system of TATA STEEL we found the following

loop holes: If the appraisee has good terms with the reviewing officer and does not have a

61 | P a g e
smooth relationship with the reporting officer, in such case the reporting officer is sometimes

forced by the reviewing officer to give better score to the appraisee.

62 | P a g e
 FINDINGS

SURVEY FINDINGS

63 | P a g e
In this section, basic data of Tata Steel is presented on various attributes of performance

appraisal.

Frequency and frequency percent scores was computed for the company and thus it enlighten the

following points:-

 Promotions were and known to most of the top and senior management while middle and

lower management were a bit not clear about it. This could be attributed to the fact that

senior and top management were more involved in decision making and policy

formulation than are the middle and lower management.

 At the lower levels of the organization, performance can be quantified, and the managers

are made accountable at the higher echelons the tasks are too complex and therefore

cannot be assessed on the basis of quantified performance

 Most of the managers feel that the mechanism for potential appraisal is not adequate.

 The company believed that self appraisal is the best for managers and above.

 To improve interpersonal communication and behavior assessment by peers and

subordinates is essential.

 The performance of the employees is not regularly monitor and the required feedback is

provided to the subordinates from time to time. The appraisals are conducted at fixed

intervals. The company believes in using appraisal for rewarding and increments.

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  It would not be wrong to say that interpersonal relations and personal biases (i.e. liking

and disliking) influence the appraisals in the company

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 CONCLUSION

CONCLUSIONS

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 1. Company proves that a major amount of work towards developing an effective and

efficient performance appraisal system has not been accomplished to the fullest.

2. It seems company is genuinely interested in improving the efficiency and utility of

performance appraisal system to succeed in today’s dynamic environment;

3. Systems of innovative HRM practices have large effects on production workers'

performance, while changes in individual employment practices have little or no effect.

Outward Orientation Performance Appraisal System

The appraisal system should be more sensitive and responsive to current competitive
environment. This is possible through making the company :

• Quality conscious in products and services to match international standards.

• Customer oriented (internally as well as externally)

• Cost effective

• Technology oriented

• Focused towards collaboration and teamwork

• People oriented

• Focused towards performance standards

• Focused towards values and culture that would help unbottle hidden talent.

In achieving the above, the PA system have a catalytic role to play.

PERIODIC PERFORMANCE REVIEW AND PLANNING:

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There should be some aspect in the PA forms, which deals with the effect of Internal Influences,
organizational influences and external influences on performance of employee to make the PA
system more sensitive to changes.

 Increase awareness of company goals in order to integrate company and individual

expectations.

 Conducting training workshops for appraisers to remove biases and errors in appraisal.

 Increasing transparency and open communication and minimizing confidentiality in

performance review discussions.

The work done towards modifying and developing performance appraisal systems, time to time
should be continued.

Integrating TQM into Performance Appraisal

• Individual rewards should be declined with the PA system. The focus should shift to team
rewards. To recognize individual excellence, the team rewards. To recognize individual
excellence, the team should recommend rewards to tone up motivation levels in the entire
team.

• Continuous feedback and transparency in every system

• Focus on customer delight, both internal and external

Linkage with Rewards

Good performers should be recognized and rewarded, whereas weak performers need to be
encouraged to become better performers. PA systems when liked with individual rewards and
promotions create more problems than they help in motivating people. They encourage fewer
employees and discourage more. They do not develop the team spirit but rather enhance
interpersonal comparisons and power politics. The focus should be shifted from rewarding the
performance of few to development of performance of many.

However there is also a need for recognition and rewarding good work. Alternative systems of
rewarding with multiple reward/recognition mechanism are needed. But these systems should be
separated from other systems (like career planning).

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Role of HRD

• HRD should develop relevant competencies and work through empowering the line
managers.

• Development of subordinates and teams should be key function of line managers.

• HRD should facilitate the development of behavioral, managerial and technical (multi
functional) competencies in line managers.

“Role analysis” should find a place in the company. “Role directories should be published with
key functions for each role.

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 IMPLICATION OF THE PROJECT

In a simple way performance appraisal is meant to be an exercise to value an estimate what a

person has done and how has he done. The nature of Performance appraisal and its effectiveness

depends a great deal on how human resources in the industry are viewed and treated. People are

to be treated as resources of the industry. Unlike the other resources, the human resources have

the capability of expanding to unlimited extents with proper investment in human capabilities.

Therefore, an organization interested in developing the capabilities of its employees, should

understand the nature and capabilities required to perform different functions as well as the

dynamics underlying the development of these capabilities in an organizational content.

These capabilities can be considered to fall under four categories. They are:-

(i) Technical capabilities

(ii) Managerial capabilities

(iii) Behavioral (human) capabilities

(iv) Conceptual capabilities

The extents to which the various capabilities are required for the performance of the job differ

from level to level in the organizational hierarchy.

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 SUSSESTIONS
AND
RECOMMENDATIONS

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 RECOMMENDATIONS

1. The economic indicators are all favorable for Growth, temporally slump is ephemeral.

2. Company exudes optimism, thus, more stress relieving packages should be offered to the

mentally stressed staff.

3. Investment in infrastructure is crucial to step up demand for steel , therefore, in this

respect the HR Dept should attempt to obtain the maximum agreement of Managers in

respect of needs and objectives and purpose of the systems.

4. New technologies to use indigenous natural resources would have to be developed

thorough expert person performing their roles efficiently in personnel management.

5. Company should try to avoid employee resistance, which is associated with change

worlds true change follows instance. This for all kinds of systems be it Performance

Appraisal.

6. Overtime should be taken care of at time of performance appraisal, which would motivate

the employees to perform better for longer hours.

7. Performance appraisal should be after at proper span of time.

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 LIMITATIONS

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 LIMITATIONS

The project report carries with it few limitations, on which the accuracy of the text written will

depend. This study is cross-sectional and data were collected over two time periods but are still

perceptive. Cross-sectional data might create problems with respect to causality.

 The first and foremost limitation is regarding the sources of information. The information

contained has been obtained from sources believed to be reliable and in good faith, but

which may not be verified independently.

 Using several statistical tools derives the estimates. Hence the findings obviously carry

all the limitations of the statistical tools used.

 Same sets of data from different sources are different. Since not all the data are available

from a single source, an attempt has been made to standardize the data wherever required,

which is essential to maintain uniformity through out the project.

 The data set is restricted to observations on one very specific type of manufacturing

production process. This narrow focus eliminates many sources of heterogeneity that

confound productivity comparisons in more aggregate data and in more heterogeneous

samples.

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Finally, this study did not find evidence of the configuration argument and did not test the

contingency argument, but could find evidence in the universalistic or the best practice

perspective. One way of explaining this might be that due to the turbulent and hyper-competitive

environment, firms are primarily supportive of innovative, adaptive nature of high-involvement

work systems. In other words, there may be some restriction in range with regard to

organizational environments that somehow undercut this study’s ability to provide a full test of

the contingency perspective.

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 BIBLIOGRAPHY

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BOOK

1. Kothari,C.R.,Methods and Techniques,New Delhi,New Age International Pvt, Ltd., 2005

WEBSITES

1. www.google.com

2. www.wikipedia.org

3. www.sailindia.co.in

4. www.performance-appraisal.com/intro.html

5. www.tata.com

JOURNALS

1. A New Framework for Selection of the Best Performance Appraisal Method

2. Function of performance appraisal in career development

3. Innovative human resource management and corporate performance in the context of

economic liberalization in India.

4. The Effects of Human Resource Management Practices on Productivity: A Study of Steel

Finishing Lines

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