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MBA Human Resource Projects for
Students

S.No.
Project Name
Description
Add-on features
1
Human Resource Stress Survey for the
Employees in IT Sector.
A Project lessons on the stress
management and pattern among
employees of under 35 age for the IT
MNC Company. Work related stress,
Family or relationship issues, Health
reasons solution Yoga, Meditation ,
Workout , Walking, Jogging

Stress management Proejcts
Get the Project You're Looking For.
In Stress management
Resources for coping & stress
Free training & Projects on stress
for humanitarian workers & others
2
RECRUITMENT & SELECTION
PROCEDURE
Project describes the need for the legal
requirements, recruitment and selection
procedure. Review of the Job, design
selection process.
Projects for Freshers
1000s of Proejcts Listed
Submit Resume to Search & Apply
www.Proejctsjugaad.com
Immediate Interview, Instant Hiring
Post Your Resume Free!

3
PERFORMANCE APPRAISAL AT
NIIT TECHNOLOGIES Its a project
on performance management system at
NIIT Technologies, which include the
questionnaire to be filled from
employees and evaluate their appraisal
system.
Performance Appraisal Project
Online Employee Performance
Appraisals.
Performance Appraisal
Performance Appraisals on demand
or
on your intranet.
Performance Evaluation
Get Performance Evaluation
Learn for Performance Evaluation
4

360 DEGREE FEEDBACK
APPRAISAL PROCESS This Projects
includes Self Appraisal, Superior
Appraisal, Peer Group Appraisal,
Subordinate Appraisal, for all manager,
peers, subordinates and even for
customers and clients.
360 Degree Assessment
Understand your current reputation
Innovative 360 assessment
360º Assessment Project
India's preferred 360º assessment
Affordable, Reliable,
Comprehensive
5
TRAINING AND DEVELOPMENT
OF EMPLOYEES In this project
various method of online and offline
trainings for the employees which help
the development of them.

Employment Training Project
Free Job Skill Training For The
Underprivileged Via eLearning!
Training Assessment
New! Easily create online training
assessments with Projects Jugaad
6
FIVE DEADLY DISEASES This
Project Includes Bottom-line
management, Evaluation using
organized by-the-numbers performance
appraisals, Emphasis on short-term
gains, Lack of consistency of purpose,
Mobility of the work force
Project on 5 deadly
fast and reliable proejct for you
Low lin of Management
Everything you can do with the
lastest marketing project

7
EMPLOYEE TURNOVER AND
RETENTION This Project involves
taking measures to encourage
employees to remain in the organization
for the maximum period of time.
Best Turnover Project
Get Updates on retention project
8
INDUSTRIAL RELATIONS
This Project refers how to maintain
good relationship between management
and the workers. Good HR managed by
the means of conflict and cooperation.
TOP Industry Relation
Find out how to make good in the
company with Everyone
9

HRM POLICIES OF MOTOR BIKE
COMPANY HERO HONDA This
Project includes the HRM Policies of
India’s second largest Producer and
manufacturer of two-wheeler in the
world.
MSc in HRM (UK)
cipd accredited postgraduate degree
Full time / Part-time & Online
HR Project Reports
HR Research Papers, Projects
HR Thesis, Dissertation and more
10
HUMAN RESOURCE PROJECT
REPORT FORMAT &
GUIDELINES Title page / Cover
page, Training Certificate issued by
organization, Abstract,
Acknowledgement, Table of Contents,

List of Tables, List of Figures/ Flow-
charts, Chapters
What Is Human Resources
Projects
Search for What Is Human Resource
Project
Find What Is Human Resources
11
INDUCTION AND ORIENTATION
How to Design Induction Programs and
Execution, How to Design on the Job
Training Programs and Monitoring,
How to evaluate effectiveness of
Induction and on the Job Training
Programs, Probation Confirmation and
HR Role
Induction Programs
How to Execute the orientaiton.

12 TEAM MANAGEMENT
SKILLS Understanding What is a
Team, Understanding Team
Development Stages, What is your
Team Membership Orientation, How to
improve your effectiveness as Team
Member, What is Team Leadership,
Understanding my Orientation
Team Management Projects
Management Insights: Why Your
Team
Hates You And What To Do About
It
13 EMPLOYEES
REMUNERATION A very good
project on employees remuneration and
incentives, FRINGE BENEFITS &
SERVICES, OBSERVATIONS &
FINDINGS, CONCEPTS OF WAGES.

Benefits offers for Employee
how to give good services to all
your employees.
14 PROJECT TOPICS FOR
BUDDING HR PROFESSIONALS
Recruitment and Selection, Training
and Development, Performance
Management System (Performance
appraisal at different levels across the
org. hierarchy), Compensation
Management (Payroll & Salary
components), Labor Laws, Labor
Relations and Grievance Handling (For
manufacturing units & plants),
Competency Mapping, Role of HR in
TQM, Skills management, Talent
identification and Management,
Leadership Development, Management
Development, Job Enrichment, Utility
of HR in Change Management,
Organizational Behavior, Motivation

and Stress Management, Group
Dynamics, Employee Research, Team
building, HRM Policy, SWOT Analysis
of HRM in Indian/Global
Industry/Sectors
Top Projects in HR
Find Out the best projects in
HR from the Projectsjugaad.com
15 ROLES AND FUNCTIONS OF A
MANAGER This is a project on roles
and function of a manager. Includes a
few case studies, a comparative study,
interviews of managers from
RELIANCE COMMUNICATIONS,
SAHARA INDIA FINANCIAL CORP
and OMAN INTERNATIONAL
BANK.
Good Manager Skills
How to find out good idea's for the
Manager Post.

16 HUMAN RESOURCE
MOTIVATION This Project on
Background, Purpose, Limitation,
Realisation, Results for the motivation
of employees.
Positive Thinkers Project
Read inspiring stories of everyday
heroes making a difference!
What Is Motivation
Search for What Is Motivation
Find What Is Motivation
17
ATTRITION MANAGEMENT
Project on Attrition management in IT
industry including
surveys/questionnaires
For Complex IT-Systems
The best solution for Silent Failure
Learn NEC's unique software

Top B School in India to learn
Management
Flexible Curriculum & Corporate
Recognition Worldwide. Apply
Now!

A STUDY ON EMPLOYEE
MOTIVATION
Respected madam/sir,As a part of my
project I would like to gather
someinformation from you which will
help me in an in depth study of project.
I would beo b l i g e d i f y o u c o -
operate with me in filling the
questionnaire. Since
t h e questionnaire is being used for
academic purpose, the information
gathered will bestrictly confidential.

Shahid kv

Kindly fill the following:

(Please put a tick mark in the
appropriate box)

1. Are you satisfied with the
support from the HR
department?
Highly satisfied
Satisfied
Neutral
D i s s a t i s f i e
d
H i g h l y D i s s
a t i s f i e d
2. Management is really interested
in motivating the employees?
Strongly agree
Agree Neutral

D i s a g r e e
S t r o n g l y
d i s a g r e e
3. Which type of incentives
motivates you more?
Financial incentives
Non-financial incentives
Both
4. How far you are satisfied with
the incentives provided by the
organization?
Highly satisfied
Satisfied Neutral
d
H i g h l y
d
5.Please provide the following rates.
(5- Strongly agree, 4- Agree, 3-Neutral,
2-Disagree, 1-Strongly disagree)xi

N o
F a
c t
o r
s R
a t
e s
i.Reasonable periodical
increase in salary
ii.Job security exist in the
company
iii.Good relationship with co-
workers

iv.Effective performance
appraisal system
v . Eff ecti ve pro m otional
o p p ortunities in th e
o rg ani zation
vi.Good safety measures
adopted in the organization.
vii.Performance appraisal
activities are helpful to get
motivated
viii.Support from the co-worker is
helpful to get motivated
ix.Company recognize and
acknowledge your work
6. Rank the following factors which
motivates you the most?(Rank 1, 2, 3,
4….
respectively) N
o F a
c t o

r s R
a n k
i . S a l a r y
i n c r e a s e
i i . P r o m o t i o n
i i i . L e a v e
i v . M o t i v a t i o n a l
t a l k s
v . R e c o g n i t i o n
7. Do you think that the incentives and
other benefits will influence your
performance?
Influence
Does not influence
No opinion
8. Does the management involve you in
decision making which are connected
toyour department?Y e s
N o
O c c a s i
o n a l l y

9. What changes can be made to
improve the work place
environment?…………………………
…………………………………………
…………………….xii

Thank you for your kind co-operation

MARKETING LOGISTICS

WHAT IS LOGISTICS MANAGEMENT?

Logistics is concerned with getting product and services where they are needed,
when they are also desired. Logistics is a activity that never stop.

Logistics involves two major operations:

¨ MATERIAL MANAGEMENT.

¨PHYSICAL DISTRIBUTION MANAGEMENT.

SUPPLY CHAIN MANAGEMENT?

Supply Chain Management [SCM] refers to the physical network that begins with
supplier and end with customers. Internally SCM involves seamless integration of
logistics with the other functional area and externally, works to achieve
integration with other trading partners and service company.

SCM entails:

®Management of flow of goods from the supplier to the final user.

®System wide coordination of product and information flows. Development of
relations and integration of all activities that provide customer value.

Inventory Management?

The main function of inventory management is to minimize inventory cost,
subject to demand and services constraint .It deal with guiding a firm with respect
to

«Row materials and finished goods stocking policies.

«Short-term sales forecasting.

«Number size and location of stocking points.

«Just in time, pull push strategies.

Logistics in India

Studies revel that in India total logistics cost constitute nearly 10% of national
GNP out of which 40% is due to transportation alone.

The RITES report on commodity flow for total transport system study of the
planning commission, government of India, states that import elements of total
logistics cost in India are produced inventory at source.

INVENTORY MANAGEMENT

Types of inventory: -

TRANSITION INVENTORY: -

This is inventory currently undergoing transformation and function as a
vehicle for profit generation.. It can be either in form of working progress or in
the form of finished goods. The finished goods transition inventory can either be
undergoing quality checker could be in the process of being transported from the
point of consumption.

BUFFER INVENTORY: -

This is the inventory which is waiting to enter a production activitie

MAINTENANCE INVENTORY: -

These are inventories, which are not involved directly in the conversion process
but are necessary to manage an organization property, plant and equipment.

FUNCTIONS OF INVENTORY:

§ Inventory allows managers to decouple operation.

§ Inventory protects one part of an operation system from disruptions in
other parts of system.

§ Inventory can provide an edge against inflation.

§ Inventory allows firms to meet expected demand.

COSTS OF INVENTORY.

A company might carry inventory so as to:

§Reduces cost of purchasing by increased order lots

And decreasing number of orders.

§ AVOID STOCK OUTS

§ Allow variability in supply time.

§ Provide for storage space for WIP

There are four main categories of cost associated with inventory.

Procurement costs

Out of stock

Costs ¬ Inventory costs ® over costs

¯

Inventory carrying costs

OUT OF STOCK COST: -

The costs incurred when a customer places, as order and order cannot be filled
from the inventory to which it is normally assigned.

They are further divided into two categories:

§Lost sales costs.

§Back order costs.

LOST SALES COSTS: -

These costs occur when the customer, faced with out of stock situation, chooses to
withdraw his order for the product. The cost id the profit that would have been
made if the sale gad occurred and cost of negative affects that the stock out may
have on future sales.

BACK ORDER COST: -

Back order costs that customer will wait for his order to be filled so that the sales is
not lost but only delayed. These create clerical and sales cost for order processing
additional, transport etc. That has to be occurred to fulfill these back orders out of
course of normal distribution channel.

CONCLUSION: -

Inventory control, production control and warehouse management are the
underlying methodologies that affect the industrial success of distribution
organizations.

Inventory management is the practice of planning directing and controlling of
inventory so that it contributes to the business profitability. Inventory
management can help business be more profitable by lowering their costs of
goods sold by increasing sales. Inventory managers have to provide for stocks,

when needed, utilize available storage space efficiencies so that stocks do not
exceed the storage space available. All of this is called inventory control.

MARKETING LOGISTICS

WHAT IS LOGISTICS MANAGEMENT?

Logistics is concerned with getting product and services where they are needed,
when they are also desired. Logistics is a activity that never stop.

Logistics involves two major operations:

¨ MATERIAL MANAGEMENT.

¨PHYSICAL DISTRIBUTION MANAGEMENT.

SUPPLY CHAIN MANAGEMENT?

Supply Chain Management [SCM] refers to the physical network that begins with
supplier and end with customers. Internally SCM involves seamless integration of
logistics with the other functional area and externally, works to achieve
integration with other trading partners and service company.

SCM entails:

®Management of flow of goods from the supplier to the final user.

®System wide coordination of product and information flows. Development of
relations and integration of all activities that provide customer value.

Inventory Management?

The main function of inventory management is to minimize inventory cost,
subject to demand and services constraint .It deal with guiding a firm with respect
to

«Row materials and finished goods stocking policies.

«Short-term sales forecasting.

«Number size and location of stocking points.

«Just in time, pull push strategies.

Logistics in India

Studies revel that in India total logistics cost constitute nearly 10% of national
GNP out of which 40% is due to transportation alone.

The RITES report on commodity flow for total transport system study of the
planning commission, government of India, states that import elements of total
logistics cost in India are produced inventory at source.

INVENTORY MANAGEMENT

Types of inventory: -

TRANSITION INVENTORY: -

This is inventory currently undergoing transformation and function as a
vehicle for profit generation.. It can be either in form of working progress or in
the form of finished goods. The finished goods transition inventory can either be
undergoing quality checker could be in the process of being transported from the
point of consumption.

BUFFER INVENTORY: -

This is the inventory which is waiting to enter a production activitie

MAINTENANCE INVENTORY: -

These are inventories, which are not involved directly in the conversion process
but are necessary to manage an organization property, plant and equipment.

FUNCTIONS OF INVENTORY:

§ Inventory allows managers to decouple operation.

§ Inventory protects one part of an operation system from disruptions in
other parts of system.

§ Inventory can provide an edge against inflation.

§ Inventory allows firms to meet expected demand.

COSTS OF INVENTORY.

A company might carry inventory so as to:

§Reduces cost of purchasing by increased order lots

And decreasing number of orders.

§ AVOID STOCK OUTS

§ Allow variability in supply time.

§ Provide for storage space for WIP

There are four main categories of cost associated with inventory.

Procurement costs

Out of stock

Costs ¬ Inventory costs ® over costs

¯

Inventory carrying costs

OUT OF STOCK COST: -

The costs incurred when a customer places, as order and order cannot be filled
from the inventory to which it is normally assigned.

They are further divided into two categories:

§Lost sales costs.

§Back order costs.

LOST SALES COSTS: -

These costs occur when the customer, faced with out of stock situation, chooses to
withdraw his order for the product. The cost id the profit that would have been
made if the sale gad occurred and cost of negative affects that the stock out may
have on future sales.

BACK ORDER COST: -

Back order costs that customer will wait for his order to be filled so that the sales is
not lost but only delayed. These create clerical and sales cost for order processing
additional, transport etc. That has to be occurred to fulfill these back orders out of
course of normal distribution channel.

CONCLUSION: -

Inventory control, production control and warehouse management are the
underlying methodologies that affect the industrial success of distribution
organizations.

Inventory management is the practice of planning directing and controlling of
inventory so that it contributes to the business profitability. Inventory
management can help business be more profitable by lowering their costs of
goods sold by increasing sales. Inventory managers have to provide for stocks,
when needed, utilize available storage space efficiencies so that stocks do not
exceed the storage space available. All of this is called inventory control.

Project Report - Working Capital Management

WORKING CAPITAL - Meaning of Working Capital

Capital required for a business can be classified under two main categories via,

1) Fixed Capital

2) Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- to-
day operations. Long terms funds are required to create production facilities through purchase of
fixed assets such as p&m, land, building, furniture, etc. Investments in these assets represent that
part of firm’s capital which is blocked on permanent or fixed basis and is called fixed capital. Funds
are also needed for short-term purposes for the purchase of raw material, payment of wages and
other day – today expenses etc.

These funds are known as working capital. In simple words, working capital refers to that
part of the firm’s capital which is required for financing short- term or current assets such as cash,
marketable securities, debtors & inventories. Funds, thus, invested in current assts keep revolving
fast and are being constantly converted in to cash and this cash flows out again in exchange for
other current assets. Hence, it is also known as revolving or circulating capital or short term capital.

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital

2. Net working capital

The gross working capital is the capital invested in the total current assets of the enterprises
current assets are those

Assets which can convert in to cash within a short period normally one accounting year.

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank

2) Bills receivables

3) Sundry debtors

4) Short term loans and advances.

5) Inventories of stock as:

a. Raw material

b. Work in process

c. Stores and spares

d. Finished goods

6. Temporary investment of surplus funds.

7. Prepaid expenses

8. Accrued incomes.

9. Marketable securities.

In a narrow sense, the term working capital refers to the net working. Net working capital
is the excess of current assets over current liability, or, say:

NET WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES.

Net working capital can be positive or negative. When the current assets exceeds the
current liabilities are more than the current assets. Current liabilities are those liabilities,
which are intended to be paid in the ordinary course of business within a short period of
normally one accounting year out of the current assts or the income business.

CONSTITUENTS OF CURRENT LIABILITIES

1. Accrued or outstanding expenses.

2. Short term loans, advances and deposits.

3. Dividends payable.

4. Bank overdraft.

5. Provision for taxation , if it does not amt. to app. Of profit.

6. Bills payable.

7. Sundry creditors.

The gross working capital concept is financial or going concern concept whereas net working capital
is an accounting concept of working capital. Both the concepts have their own merits.

The gross concept is sometimes preferred to the concept of working capital for the following
reasons:

1. It enables the enterprise to provide correct amount of working capital at
correct time.

2. Every management is more interested in total current assets with which
it has to operate then the source from where it is made available.

3. It take into consideration of the fact every increase in the funds of the
enterprise would increase its working capital.

4. This concept is also useful in determining the rate of return on
investments in working capital. The net working capital concept,
however, is also important for following reasons:

It is qualitative concept, which indicates the firm’s ability to meet to its operating
expenses and short-term liabilities.

IT indicates the margin of protection available to the short term creditors.

It is an indicator of the financial soundness of enterprises.

It suggests the need of financing a part of working capital requirement out of the
permanent sources of funds.

CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways:

o On the basis of concept.

o On the basis of time.

On the basis of concept working capital can be classified as gross working capital and net
working capital. On the basis of time, working capital may be classified as:

 Permanent or fixed working capital.

 Temporary or variable working capital

PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to ensure effective
utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to
maintain a minimum level of raw material, work- in-process, finished goods and cash balance. This
minimum level of current assts is called permanent or fixed working capital as this part of working is
permanently blocked in current assets. As the business grow the requirements of working capital
also increases due to increase in current assets.

TEMPORARY OR VARIABLE WORKING CAPITAL

Temporary or variable working capital is the amount of working capital which is required to meet
the seasonal demands and some special exigencies. Variable working capital can further be classified
as seasonal working capital and special working capital. The capital required to meet the seasonal
need of the enterprise is called seasonal working capital. Special working capital is that part of
working capital which is required to meet special exigencies such as launching of extensive
marketing for conducting research, etc.

Temporary working capital differs from permanent working capital in the sense that is required for
short periods and cannot be permanently employed gainfully in the business.

IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL

 SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the
solvency of the business by providing uninterrupted of production.

 Goodwill: Sufficient amount of working capital enables a firm to make prompt payments
and makes and maintain the goodwill.

 Easy loans: Adequate working capital leads to high solvency and credit standing can
arrange loans from banks and other on easy and favorable terms.

 Cash Discounts: Adequate working capital also enables a concern to avail cash
discounts on the purchases and hence reduces cost.

 Regular Supply of Raw Material: Sufficient working capital ensures regular
supply of raw material and continuous production.

 Regular Payment Of Salaries, Wages And Other Day TO Day

Commitments: It leads to the satisfaction of the employees and raises the morale of its
employees, increases their efficiency, reduces wastage and costs and enhances production
and profits.

 Exploitation Of Favorable Market Conditions: If a firm is having adequate
working capital then it can exploit the favorable market conditions such as purchasing its
requirements in bulk when the prices are lower and holdings its inventories for higher
prices.

 Ability To Face Crises: A concern can face the situation during the depression.

 Quick And Regular Return On Investments: Sufficient working capital enables
a concern to pay quick and regular of dividends to its investors and gains confidence of the
investors and can raise more funds in future.

 High Morale: Adequate working capital brings an environment of securities, confidence,
high morale which results in overall efficiency in a business.

EXCESS OR INADEQUATE WORKING CAPITAL

Every business concern should have adequate amount of working capital to run its business
operations. It should have neither redundant or excess working capital nor inadequate nor
shortages of working capital. Both excess as well as short working capital positions are bad for
any business. However, it is the inadequate working capital which is more dangerous from the
point of view of the firm.

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL

1. Excessive working capital means ideal funds which earn no profit for
the firm and business cannot earn the required rate of return on its
investments.

2. Redundant working capital leads to unnecessary purchasing and
accumulation of inventories.

3. Excessive working capital implies excessive debtors and defective
credit policy which causes higher incidence of bad debts.

4. It may reduce the overall efficiency of the business.

5. If a firm is having excessive working capital then the relations with
banks and other financial institution may not be maintained.

6. Due to lower rate of return n investments, the values of shares may
also fall.

7. The redundant working capital gives rise to speculative transactions

DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business needs some amounts of working capital. The need for working capital arises due to
the time gap between production and realization of cash from sales. There is an operating cycle

involved in sales and realization of cash. There are time gaps in purchase of raw material and
production; production and sales; and realization of cash.

Thus working capital is needed for the following purposes:

For the purpose of raw material, components and spares.

To pay wages and salaries

To incur day-to-day expenses and overload costs such as office expenses.

To meet the selling costs as packing, advertising, etc.

To provide credit facilities to the customer.

To maintain the inventories of the raw material, work-in-progress, stores and spares and
finished stock.

For studying the need of working capital in a business, one has to study the business under
varying circumstances such as a new concern requires a lot of funds to meet its initial
requirements such as promotion and formation etc. These expenses are called preliminary
expenses and are capitalized. The amount needed for working capital depends upon the size of
the company and ambitions of its promoters. Greater the size of the business unit, generally
larger will be the requirements of the working capital.

The requirement of the working capital goes on increasing with the growth and expensing of the
business till it gains maturity. At maturity the amount of working capital required is called
normal working capital.

There are others factors also influence the need of working capital in a business.

FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS

1. NATURE OF BUSINESS: The requirements of working is very

limited in public utility undertakings such as electricity, water supply and railways
because they offer cash sale only and supply services not products, and no funds are tied
up in inventories and receivables. On the other hand the trading and financial firms

requires less investment in fixed assets but have to invest large amt. of working capital
along with fixed investments.

2. SIZE OF THE BUSINESS: Greater the size of the business, greater

is the requirement of working capital.

3. PRODUCTION POLICY: If the policy is to keep production steady by

accumulating inventories it will require higher working capital.

4. LENTH OF PRDUCTION CYCLE: The longer the

manufacturing time the raw material and other supplies have to be carried for a longer
in the process with progressive increment of labor and service costs before the final
product is obtained. So working capital is directly proportional to the length of the
manufacturing process.

5. SEASONALS VARIATIONS: Generally, during the busy season, a

firm requires larger working capital than in slack season.

6. WORKING CAPITAL CYCLE: The speed with which the

working cycle completes one cycle determines the requirements of working capital.
Longer the cycle larger is the requirement of working capital.

DEBTORS

CASH FINISHED GOODS

RAW MATERIAL WORK IN PROGRESS

7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the
question of working capital and the velocity or speed with which the sales are affected.
A firm having a high rate of stock turnover wuill needs lower amt. of working capital as
compared to a firm having a low rate of turnover.

8. CREDIT POLICY: A concern that purchases its requirements on credit and sales its
product / services on cash requires lesser amt. of working capital and vice-versa.

9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is
need for larger amt. of working capital due to rise in sales, rise in prices, optimistic
expansion of business, etc. On the contrary in time of depression, the business
contracts, sales decline, difficulties are faced in collection from debtor and the firm may
have a large amt. of working capital.

10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require
large amt. of working capital.

11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more
earning capacity than other due to quality of their products, monopoly conditions, etc.
Such firms may generate cash profits from operations and contribute to their working
capital. The dividend policy also affects the requirement of working capital. A firm
maintaining a steady high rate of cash dividend irrespective of its profits needs working
capital than the firm that retains larger part of its profits and does not pay so high rate
of cash dividend.

12. PRICE LEVEL CHANGES: Changes in the price level also affect the working
capital requirements. Generally rise in prices leads to increase in working capital.

Others FACTORS: These are:

 Operating efficiency.

 Management ability.

 Irregularities of supply.

 Import policy.

 Asset structure.

 Importance of labor.

 Banking facilities, etc.

MANAGEMENT OF WORKING CAPITAL

Management of working capital is concerned with the problem that arises in attempting to
manage the current assets, current liabilities. The basic goal of working capital management
is to manage the current assets and current liabilities of a firm in such a way that a
satisfactory level of working capital is maintained, i.e. it is neither adequate nor excessive as
both the situations are bad for any firm. There should be no shortage of funds and also no
working capital should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a
great on its probability, liquidity and structural health of the organization. So working capital
management is three dimensional in nature as

1. It concerned with the formulation of policies with regard to
profitability, liquidity and risk.

2. It is concerned with the decision about the composition and level of
current assets.

3. It is concerned with the decision about the composition and level of
current liabilities.

WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business. Adequate amount
of working capital is very much essential for the smooth running of the business. And the

most important part is the efficient management of working capital in right time. The
liquidity position of the firm is totally effected by the management of working capital. So, a
study of changes in the uses and sources of working capital is necessary to evaluate the
efficiency with which the working capital is employed in a business. This involves the need of
working capital analysis.

The analysis of working capital can be conducted through a number of devices, such as:

1. Ratio analysis.

2. Fund flow analysis.

3. Budgeting.

1. RATIO ANALYSIS

A ratio is a simple arithmetical expression one number to another. The technique of ratio
analysis can be employed for measuring short-term liquidity or working capital position of a
firm. The following ratios can be calculated for these purposes:

1. Current ratio.

2. Quick ratio

3. Absolute liquid ratio

4. Inventory turnover.

5. Receivables turnover.

6. Payable turnover ratio.

7. Working capital turnover ratio.

8. Working capital leverage

9. Ratio of current liabilities to tangible net worth.

2. FUND FLOW ANALYSIS

Fund flow analysis is a technical device designated to the study the source from which
additional funds were derived and the use to which these sources were put. The fund flow
analysis consists of:

a. Preparing schedule of changes of working capital

b. Statement of sources and application of funds.

It is an effective management tool to study the changes in financial position (working
capital) business enterprise between beginning and ending of the financial dates.

3. WORKING CAPITAL BUDGET

A budget is a financial and / or quantitative expression of business plans and polices to be
pursued in the future period time. Working capital budget as a part of the total budge ting
process of a business is prepared estimating future long term and short term working capital
needs and sources to finance them, and then comparing the budgeted figures with actual
performance for calculating the variances, if any, so that corrective actions may be taken in
future. He objective working capital budget is to ensure availability of funds as and needed,
and to ensure effective utilization of these resources. The successful implementation of
working capital budget involves the preparing of separate budget for each element of
working capital, such as, cash, inventories and receivables etc.

ANALYSIS OF SHORT – TERM FINANCIAL POSITION OR TEST OF

LIQUIDITY

The short –term creditors of a company such as suppliers of goods of credit and
commercial banks short-term loans are primarily interested to know the ability of a firm to
meet its obligations in time. The short term obligations of a firm can be met in time only
when it is having sufficient liquid assets. So to with the confidence of investors, creditors,
the smooth functioning of the firm and the efficient use of fixed assets the liquid position
of the firm must be strong. But a very high degree of liquidity of the firm being tied – up in
current assets. Therefore, it is important proper balance in regard to the liquidity of the
firm. Two types of ratios can be calculated for measuring short-term financial position or
short-term solvency position of the firm.

1. Liquidity ratios.

2. Current assets movements ‘ratios.

A) LIQUIDITY RATIOS

Liquidity refers to the ability of a firm to meet its current obligations as and when these
become due. The short-term obligations are met by realizing amounts from current,
floating or circulating assts. The current assets should either be liquid or near about
liquidity. These should be convertible in cash for paying obligations of short-term nature.
The sufficiency or insufficiency of current assets should be assessed by comparing them
with short-term liabilities. If current assets can pay off the current liabilities then the
liquidity position is satisfactory. On the other hand, if the current liabilities cannot be met
out of the current assets then the liquidity position is bad. To measure the liquidity of a
firm, the following ratios can be calculated:

1. CURRENT RATIO

2. QUICK RATIO

3. ABSOLUTE LIQUID RATIO

1. CURRENT RATIO

Current Ratio, also known as working capital ratio is a measure of general liquidity and its
most widely used to make the analysis of short-term financial position or liquidity of a
firm. It is defined as the relation between current assets and current liabilities. Thus,

CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITES

The two components of this ratio are:

1) CURRENT ASSETS

2) CURRENT LIABILITES

Current assets include cash, marketable securities, bill receivables, sundry debtors,
inventories and work-in-progresses. Current liabilities include outstanding expenses, bill
payable, dividend payable etc.

A relatively high current ratio is an indication that the firm is liquid and has the ability to
pay its current obligations in time. On the hand a low current ratio represents that the
liquidity position of the firm is not good and the firm shall not be able to pay its current
liabilities in time. A ratio equal or near to the rule of thumb of 2:1 i.e. current assets
double the current liabilities is considered to be satisfactory.

CALCULATION OF CURRENT RATIO

(Rupees in crore)

e.g.

Year 2006 2007 2008
Current Assets 81.29 83.12 13,6.57
Current Liabilities 27.42 20.58 33.48
Current Ratio 2.96:1 4.03:1 4.08:1

Interpretation:-

As we know that ideal current ratio for any firm is 2:1. If we see the current ratio of the
company for last three years it has increased from 2006 to 2008. The current ratio of
company is more than the ideal ratio. This depicts that company’s liquidity position is
sound. Its current assets are more than its current liabilities.

2. QUICK RATIO

Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be
defined as the relationship between quick/liquid assets and current or liquid liabilities. An
asset is said to be liquid if it can be converted into cash with a short period without loss of
value. It measures the firms’ capacity to pay off current obligations immediately.

QUICK RATIO = QUICK ASSETS

CURRENT LIABILITES

Where Quick Assets are:

1) Marketable Securities

2) Cash in hand and Cash at bank.

3) Debtors.

A high ratio is an indication that the firm is liquid and has the ability to meet its current
liabilities in time and on the other hand a low quick ratio represents that the firms’
liquidity position is not good.

As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if
quick assets are equal to the current liabilities then the concern may be able to meet its

short-term obligations. However, a firm having high quick ratio may not have a satisfactory
liquidity position if it has slow paying debtors. On the other hand, a firm having a low
liquidity position if it has fast moving inventories.

CALCULATION OF QUICK RATIO

e.g. (Rupees in Crore)

Year 2006 2007 2008
Quick Assets 44.14 47.43 61.55
Quick Ratio 1.6 : 1 2.3 : 1 1.8 : 1

Interpretation :

A quick ratio is an indication that the firm is liquid and has the ability to meet its
current liabilities in time. The ideal quick ratio is 1:1. Company’s quick ratio is more than
ideal ratio. This shows company has no liquidity problem.

3. ABSOLUTE LIQUID RATIO

Although receivables, debtors and bills receivable are generally more liquid than
inventories, yet there may be doubts regarding their realization into cash immediately or
in time. So absolute liquid ratio should be calculated together with current ratio and acid
test ratio so as to exclude even receivables from the current assets and find out the
absolute liquid assets. Absolute Liquid Assets includes :

ABSOLUTE LIQUID RATIO = ABSOLUTE LIQUID ASSETS

CURRENT LIABILITES

ABSOLUTE LIQUID ASSETS = CASH & BANK BALANCES.

e.g. (Rupees in Crore)

Year 2006 2007 2008

Absolute Liquid Assets 4.69 1.79 5.06
Absolute Liquid Ratio .17 : 1 .09 : 1 .15 : 1

Interpretation :

These ratio shows that company carries a small amount of cash. But there is nothing to
be worried about the lack of cash because company has reserve, borrowing power & long
term investment. In India, firms have credit limits sanctioned from banks and can easily
draw cash.

B) CURRENT ASSETS MOVEMENT RATIOS

Funds are invested in various assets in business to make sales and earn profits. The
efficiency with which assets are managed directly affects the volume of sales. The better
the management of assets, large is the amount of sales and profits. Current assets
movement ratios measure the efficiency with which a firm manages its resources. These
ratios are called turnover ratios because they indicate the speed with which assets are
converted or turned over into sales. Depending upon the purpose, a number of turnover
ratios can be calculated. These are :

1. Inventory Turnover Ratio

2. Debtors Turnover Ratio

3. Creditors Turnover Ratio

4. Working Capital Turnover Ratio

The current ratio and quick ratio give misleading results if current assets include high
amount of debtors due to slow credit collections and moreover if the assets include high
amount of slow moving inventories. As both the ratios ignore the movement of current
assets, it is important to calculate the turnover ratio.

1. INVENTORY TURNOVER OR STOCK TURNOVER RATIO :

Every firm has to maintain a certain amount of inventory of finished goods so as to
meet the requirements of the business. But the level of inventory should neither be
too high nor too low. Because it is harmful to hold more inventory as some amount
of capital is blocked in it and some cost is involved in it. It will therefore be advisable
to dispose the inventory as soon as possible.

INVENTORY TURNOVER RATIO = COST OF GOOD SOLD

AVERAGE INVENTORY

Inventory turnover ratio measures the speed with which the stock is converted into
sales. Usually a high inventory ratio indicates an efficient management of inventory
because more frequently the stocks are sold ; the lesser amount of money is
required to finance the inventory. Where as low inventory turnover ratio indicates
the inefficient management of inventory. A low inventory turnover implies over
investment in inventories, dull business, poor quality of goods, stock accumulations
and slow moving goods and low profits as compared to total investment.

AVERAGE STOCK = OPENING STOCK + CLOSING STOCK

2

(Rupees in Crore)

Year 2006 2007 2008
Cost of Goods sold 110.6 103.2 96.8
Average Stock 73.59 36.42 55.35
Inventory Turnover Ratio 1.5 times 2.8 times 1.75 times

Interpretation :

These ratio shows how rapidly the inventory is turning into receivable through sales. In
2007 the company has high inventory turnover ratio but in 2008 it has reduced to 1.75
times. This shows that the company’s inventory management technique is less efficient as
compare to last year.

2. INVENTORY CONVERSION PERIOD:

INVENTORY CONVERSION PERIOD = 365 (net working days)

INVENTORY TURNOVER RATIO

e.g.

Year 2006 2007 2008
Days 365 365 365
Inventory Turnover Ratio 1.5 2.8 1.8
Inventory Conversion Period 243 days 130 days 202 days

Interpretation :

Inventory conversion period shows that how many days inventories takes to convert
from raw material to finished goods. In the company inventory conversion period is
decreasing. This shows the efficiency of management to convert the inventory into cash.

3. DEBTORS TURNOVER RATIO :

A concern may sell its goods on cash as well as on credit to increase its sales and a
liberal credit policy may result in tying up substantial funds of a firm in the form of trade
debtors. Trade debtors are expected to be converted into cash within a short period and
are included in current assets. So liquidity position of a concern also depends upon the
quality of trade debtors. Two types of ratio can be calculated to evaluate the quality of
debtors.

a) Debtors Turnover Ratio

b) Average Collection Period

DEBTORS TURNOVER RATIO = TOTAL SALES (CREDIT)

AVERAGE DEBTORS

Debtor’s velocity indicates the number of times the debtors are turned over during a
year. Generally higher the value of debtor’s turnover ratio the more efficient is the
management of debtors/sales or more liquid are the debtors. Whereas a low debtors
turnover ratio indicates poor management of debtors/sales and less liquid debtors. This

ratio should be compared with ratios of other firms doing the same business and a trend
may be found to make a better interpretation of the ratio.

AVERAGE DEBTORS= OPENING DEBTOR+CLOSING DEBTOR

2

e.g.

Year 2006 2007 2008
Sales 166.0 151.5 169.5
Average Debtors 17.33 18.19 22.50
Debtor Turnover Ratio 9.6 times 8.3 times 7.5 times

Interpretation :

This ratio indicates the speed with which debtors are being converted or turnover into
sales. The higher the values or turnover into sales. The higher the values of debtors
turnover, the more efficient is the management of credit. But in the company the debtor
turnover ratio is decreasing year to year. This shows that company is not utilizing its
debtors efficiency. Now their credit policy become liberal as compare to previous year.

4. AVERAGE COLLECTION PERIOD :

Average Collection Period = No. of Working Days

Debtors Turnover Ratio

The average collection period ratio represents the average number of days for which
a firm has to wait before its receivables are converted into cash. It measures the quality of
debtors. Generally, shorter the average collection period the better is the quality of
debtors as a short collection period implies quick payment by debtors and vice-versa.

Average Collection Period = 365 (Net Working Days)

Debtors Turnover Ratio

Year 2006 2007 2008
Days 365 365 365
Debtor Turnover Ratio 9.6 8.3 7.5
Average Collection Period 38 days 44 days 49 days

Interpretation :

The average collection period measures the quality of debtors and it helps in
analyzing the efficiency of collection efforts. It also helps to analysis the credit policy
adopted by company. In the firm average collection period increasing year to year. It
shows that the firm has Liberal Credit policy. These changes in policy are due to
competitor’s credit policy.

5. WORKING CAPITAL TURNOVER RATIO :

Working capital turnover ratio indicates the velocity of utilization of net working
capital. This ratio indicates the number of times the working capital is turned over
in the course of the year. This ratio measures the efficiency with which the
working capital is used by the firm. A higher ratio indicates efficient utilization of
working capital and a low ratio indicates otherwise. But a very high working capital
turnover is not a good situation for any firm.

Working Capital Turnover Ratio = Cost of Sales

Net Working Capital

Working Capital Turnover = Sales

Networking Capital

e.g.

Year 2006 2007 2008

Sales 166.0 151.5 169.5
Networking Capital 53.87 62.52 103.09
Working Capital Turnover 3.08 2.4 1.64

Interpretation :

This ratio indicates low much net working capital requires for sales. In 2008,
the reciprocal of this ratio (1/1.64 = .609) shows that for sales of Rs. 1 the company
requires 60 paisa as working capital. Thus this ratio is helpful to forecast the working
capital requirement on the basis of sale.

INVENTORIES

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008
Inventories 37.15 35.69 75.01

Interpretation :

Inventories is a major part of current assets. If any company wants to manage its
working capital efficiency, it has to manage its inventories efficiently. The graph shows
that inventory in 2005-2006 is 45%, in 2006-2007 is 43% and in 2007-2008 is 54% of their
current assets. The company should try to reduce the inventory upto 10% or 20% of
current assets.

CASH BNAK BALANCE :

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008
Cash Bank Balance 4.69 1.79 5.05

Interpretation :

Cash is basic input or component of working capital. Cash is needed to keep the
business running on a continuous basis. So the organization should have sufficient cash to
meet various requirements. The above graph is indicate that in 2006 the cash is 4.69

crores but in 2007 it has decrease to 1.79. The result of that it disturb the firms
manufacturing operations. In 2008, it is increased upto approx. 5.1% cash balance. So in
2008, the company has no problem for meeting its requirement as compare to 2007.

DEBTORS :

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008
Debtors 17.33 19.05 25.94

Interpretation :

Debtors constitute a substantial portion of total current assets. In India it constitute
one third of current assets. The above graph is depict that there is increase in debtors. It
represents an extension of credit to customers. The reason for increasing credit is
competition and company liberal credit policy.

CURRENT ASSETS :

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008
Current Assets 81.29 83.15 136.57

Interpretation :

This graph shows that there is 64% increase in current assets in 2008. This increase is
arise because there is approx. 50% increase in inventories. Increase in current assets
shows the liquidity soundness of company.

CURRENT LIABILITY :

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008
Current Liability 27.42 20.58 33.48

Interpretation :

Current liabilities shows company short term debts pay to outsiders. In 2008 the
current liabilities of the company increased. But still increase in current assets are more
than its current liabilities.

NET WOKRING CAPITAL :

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008
Net Working Capital 53.87 62.53 103.09

Interpretation :

Working capital is required to finance day to day operations of a firm. There should be
an optimum level of working capital. It should not be too less or not too excess. In the
company there is increase in working capital. The increase in working capital arises
because the company has expanded its business.

RESEARCH METHODOLOGY

The methodology, I have adopted for my study is the various tools, which basically analyze critically
financial position of to the organization:

I. COMMON-SIZE P/L A/C
II. COMMON-SIZE BALANCE SHEET

III. COMPARTIVE P/L A/C

IV. COMPARTIVE BALANCE SHEET

V. TREND ANALYSIS

VI. RATIO ANALYSIS

The above parameters are used for critical analysis of financial position. With the evaluation
of each component, the financial position from different angles is tried to be presented in well
and systematic manner. By critical analysis with the help of different tools, it becomes clear
how the financial manager handles the finance matters in profitable manner in the critical
challenging atmosphere, the recommendation are made which would suggest the organization
in formulation of a healthy and strong position financially with proper management system.

I sincerely hope, through the evaluation of various percentage, ratios and comparative
analysis, the organization would be able to conquer its in efficiencies and makes the
desired changes.

ANALYSIS OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS:

Financial statement is a collection of data organized according to logical and consistent
accounting procedure to convey an under-standing of some financial aspects of a business
firm. It may show position at a moment in time, as in the case of balance sheet or may reveal
a series of activities over a given period of time, as in the case of an income statement. Thus,
the term ‘financial statements’ generally refers to the two statements

(1) The position statement or Balance sheet.

(2) The income statement or the profit and loss Account.

OBJECTIVES OF FINANCIAL STATEMENTS:

According to accounting Principal Board of America (APB) states

The following objectives of financial statements: -

1. To provide reliable financial information about economic resources and obligation of a
business firm.

2. To provide other needed information about charges in such economic resources and
obligation.

3. To provide reliable information about change in net resources (recourses less obligations)
missing out of business activities.

4. To provide financial information that assets in estimating the learning potential of the
business.

LIMITATIONS OF FINANCIAL STATEMENTS:

Though financial statements are relevant and useful for a concern, still they do not present a
final picture a final picture of a concern. The utility of these statements is dependent upon a
number of factors. The analysis and interpretation of these statements must be done carefully
otherwise misleading conclusion may be drawn.

Financial statements suffer from the following limitations: -

1. Financial statements do not given a final picture of the concern. The data given in these
statements is only approximate. The actual value can only be determined when the business is
sold or liquidated.

2. Financial statements have been prepared for different accounting periods, generally one
year, during the life of a concern. The costs and incomes are apportioned to different periods
with a view to determine profits etc. The allocation of expenses and income depends upon the
personal judgment of the accountant. The existence of contingent assets and liabilities also
make the statements imprecise. So financial statement are at the most interim reports rather
than the final picture of the firm.

3. The financial statements are expressed in monetary value, so they appear to give final and
accurate position. The value of fixed assets in the balance sheet neither represent the value for
which fixed assets can be sold nor the amount which will be required to replace these assets.
The balance sheet is prepared on the presumption of a going concern. The concern is
expected to continue in future. So fixed assets are shown at cost less accumulated
deprecation. Moreover, there are certain assets in the balance sheet which will realize nothing
at the time of liquidation but they are shown in the balance sheets.

4. The financial statements are prepared on the basis of historical costs Or original costs. The
value of assets decreases with the passage of time current price changes are not taken into
account. The statement are not prepared with the keeping in view the economic conditions.
the balance sheet loses the significance of being an index of current economics realities.
Similarly, the profitability shown by the income statements may be represent the earning
capacity of the concern.

5. There are certain factors which have a bearing on the financial position and operating
result of the business but they do not become a part of these statements because they cannot
be measured in monetary terms. The basic limitation of the traditional financial statements
comprising the balance sheet, profit & loss A/c is that they do not give all the information
regarding the financial operation of the firm. Nevertheless, they provide some extremely
useful information to the extent the balance sheet mirrors the financial position on a particular
data in lines of the structure of assets, liabilities etc. and the profit & loss A/c shows the result
of operation during a certain period in terms revenue obtained and cost incurred during the
year. Thus, the financial position and operation of the firm.

FINANCIAL STATEMENT ANALYSIS

It is the process of identifying the financial strength and weakness of a firm from the
available accounting data and financial statements. The analysis is done

CALCULATIONS OF RATIOS

Ratios are relationship expressed in mathematical terms between figures, which are connected with
each other in some manner.

CLASSIFICATION OF RATIOS
Ratios can be classified in to different categories depending upon the basis of classification

The traditional classification has been on the basis of the financial statement to which the
determination of ratios belongs.

These are:-

Profit & Loss account ratios

Balance Sheet ratios

Composite ratios

PERFORMANCE APPRAISAL SYSTEM AT BSNL

INTRODUCTION TO THE TOPIC

Human Resource (or personnel) management, in the sense of getting things done through people, is

an essential part of every manager’s responsibility, but many organizations find it advantageous to

establish a specialist division to provide an expert service dedicated to ensuring that the human

resource function is performed efficiently.

“People are our most valuable asset” is a cliché, which no member of any senior management team

would disagree with. Yet, the reality for many organizations are that their people remain under

valued, under trained and under utilized.

Performance Appraisal is the process of assessing the performance and progress of an employee

or a group of employees on a given job and his / their potential for future development. It

consists of all formal procedures used in the working organizations to evaluate personalities,

contributions and potentials of employees.

PREFACE

Managing human resources in today’s dynamic environment is becoming more and more
complex as well as important. Recognition of people as a valuable resource in the
organization has led to increases trends in employee maintenance, job security, etc

My research project deals with “Performance Appraisal as carried out at Bhart Sanchar Nigam Ltd.

(BSNL)”. In this report, I have studied Evaluated the performance appraisal process as it is carried

out in the company.

The first section of my report deals with a detailed company profile. It includes the company’s

history: its activities and operations, organizational structure, etc. this section attempts to give

detailed information about the company and the nature of it’s functioning.

The second section deals with performance appraisal. In this section, I have given a brief conceptual

explanation to performance appraisal. It contains the definition, process and significance of

performance appraisal.

In the third section of my report, I have conducted a research study to evaluate the process of

performance appraisal at Bharat Sanchar Nigam Ltd.; this section also contains my findings,

conclusions, suggestions and feedback.

The forth and final section of this report consists of extra information that I related to the main

contents of the report. These annexure include some graphs and diagrams relating to the company,

graphs relating to the research study and important documents upon which the project is based.

RATIONALE OF THE STUDY

Performance Appraisal is the important aspect in the organization to evaluate the employees

performance. It helps in understanding the employees work culture, involvement, and satisfaction. It

helps the organization in deciding employees promotion, transfer, incentives, pay increase.

INTRODUCTION TO HUMAN RESOURCE MANAGEMENT







The market place for talented, skilled people is competitive and expensive. Taking on new staff can

be disruptive to existing employees. Also, it takes time to develop ‘cultural awareness’, product /

process / organization knowledge and experience for new staff members.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT

Following are the various functions of Human Resource Management that are essential for the

effective functioning of the organization:

1. Recruitment

2. Selection

3. Induction

4. Performance Appraisal

5. Training & Development

Recruitment

The process of recruitment begins after manpower requirements are determined in terms of

quality through job analysis and quantity through forecasting and planning.

Selection

The selection is the process of ascertaining whether or not candidates possess the requisite

qualifications, training and experience required.

Induction

a) Induction is the technique by which a new employee is rehabilitated into the changed

surroundings and introduced to the practices, policies and purposes of the organization.

WHAT IS “PERFORMANCE APPRAISAL”?

Performance Appraisal is defined as the process of assessing the performance and progress of an

employee or a group of employees on a given job and his / their potential for future

development. It consists of all formal procedures used in working organizations and potential of

employees. According to Flippo, “Performance Appraisal is the systematic, periodic and an

important rating of an employee’s excellence in matters pertaining to his present job and his

potential for a better job.”

CHARACTERISTICS

1. Performance Appraisal is a process.

2. It is the systematic examination of the strengths and weakness of an employee in terms of

his job.

3. It is scientific and objective study. Formal procedures are used in the study.

4. It is an ongoing and continuous process wherein the evaluations are arranged periodically

according to a definite plan.

5. The main purpose of Performance Appraisal is to secure information necessary for making

objective and correct decision an employee.

PROCESS

The process of performance appraisal:

1. Establishing performance standards

2. Communicating the Standards

3. Measuring Performance

4. Comparing the actual with the standards

5. Discussing the appraisal

6.Taking Corrective Action

LIMITATIONS

1. Errors in Rating

2. Lack of reliability

3. Negative approach

4. Multiple objectives

5. Lack of knowledge

METHODS OF PERFORMANCE APPRAISAL

The foregoing list of major program pitfalls represents a formidable challenge, even
considering the available battery of appraisal techniques. But attempting to avoid these

pitfalls by doing away with appraisals themselves is like trying to solve the problems of life
by committing suicide. The more logical task is to identify those appraisal practices that are
(a) most likely to achieve a particular objective and (b) least vulnerable to the obstacles
already discussed.

Before relating the specific techniques to the goals of performance appraisal stated at the
outset of the article, I shall briefly review each, taking them more or less in an order of
increasing complexity.

The best-known techniques will be treated most briefly.

ESSAY APPRAISAL

In its simplest form, this technique asks the rater to write a paragraph or more covering an
individual's strengths, weaknesses, potential, and so on. In most selection situations,
particularly those involving professional, sales, or managerial positions, essay appraisals
from former employers, teachers, or associates carry significant weight.

.

GRAPHIC RATING SCALE

This technique may not yield the depth of an essay appraisal, but it is more consistent and
reliable. Typically, a graphic scale assesses a person on the quality and quantity of his work
(is he outstanding, above average, average, or unsatisfactory?) and on a variety of other
factors that vary with the job but usually include personal traits like reliability and
cooperation. It may also include specific performance items like oral and written
communication.

FIELD REVIEW

The field review is one of several techniques for doing this. A member of the personnel or
central administrative staff meets with small groups of raters from each supervisory unit and
goes over each employee's rating with them to (a) identify areas of inter-rater disagreement,
(b) help the group arrive at a consensus, and (c) determine that each rater conceives the
standards similarly. .

FORCED-CHOICE RATING

Like the field review, this technique was developed to reduce bias and establish objective
standards of comparison between individuals, but it does not involve the intervention of a
third party.

MANAGEMENT BY OBJECTIVES

To avoid, or to deal with, the feeling that they are being judged by unfairly high standards,
employees in some organizations are being asked to set - or help set - their own performance
goals. Within the past five or six years, MBO has become something of a fad and is so
familiar to most managers that I will not dwell on it here.

RANKING METHODS

For comparative purposes, particularly when it is necessary to compare people who work for
different supervisors, individual statements, ratings, or appraisal forms are not particularly
useful. Instead, it is necessary to recognize that comparisons involve an overall subjective
judgment to which a host of additional facts and impressions must somehow be added. There
is no single form or way to do this.

The best approach appears to be a ranking technique involving pooled judgment.

The two most effective methods are alternation ranking and paired comparison ranking.

1. “Alternation ranking”:

Ranking of employees from best to worst on a trait or traits is another method for evaluating
employees. Since it is usually easier to distinguish between the worst and the best employees
than to rank them, an alternation ranking method is most popular. Here subordinates to be
rated are listed and the names of those not well enough to rank are crossed. Then on a form as
shown below, the employee who is highest on the characteristic being measured and the one
who is the lowest are indicated. Then chose the next highest and the next lowest, alternating
between highest and lowest until all the employees to be rated have been ranked.

2. “Paired-comparison ranking”:

This technique is probably just as accurate as alternation ranking and might be more so. But
with large numbers of employees it becomes extremely time consuming and cumbersome.

Both ranking techniques, particularly when combined with multiple rankings (i.e., when two
or more people are asked to make independent rankings of the same work group and their
lists are averaged), are among the best available for generating valid order-of-merit rankings
for salary administration purposes.

ASSESSMENT CENTERS

So far, we have been talking about assessing past performance. What about the assessment of
future performance or potential? In any placement decision and even more so in promotion
decisions, some prediction of future performance is necessary. How can this kind of
prediction be made most validly and most fairly?

360 DEGREE FEEDBACK

Many firms have expanded the idea of upward feedback into what the call 360-degree feedback. The

feedback is generally used for training and development, rather than for pay increases.

Most 360 Degree Feedback system contains several common features. Appropriate parties – peers,

supervisors, subordinates and customers, for instance – complete survey, questionnaires on an

individual. 360 degree feedback is also known as the multi-rater feedback, whereby ratings are not

given just by the next manager up in the organizational hierarchy, but also by peers and

subordinates. Appropriates customer ratings are also included, along with the element of self

appraisal. Once gathered in, the assessment from the various quarters are compared with one

another and the results communicated to the manager concerned.

Another technique that is useful for coaching purposes is, of course, MBO. Like the critical
incident method, it focuses on actual behavior and actual results, which can be discussed
objectively and constructively, with little or no need for a supervisor to "play God."

Advantages

Instead of assuming traits, the MBO method concentrates on actual outcomes. If the employee

meets or exceeds the set objectives, then he or she has demonstrated an acceptable level of job

performance. Employees are judged according to real outcomes, and not on their potential for

success, or on someone's subjective opinion of their abilities.

The guiding principle of the MBO approach is that direct results can be observed easily. The MBO

method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements

that go to make up employee performance.

MBO advocates claim that the performance of employees cannot be broken up into so many

constituent parts, but to put all the parts together and the performance may be directly observed

and measured.

Disadvantages

This approach can lead to unrealistic expectations about what can and cannot be reasonably

accomplished. Supervisors and subordinates must have very good "reality checking" skills to use

MBO appraisal methods. They will need these skills during the initial stage of objective setting, and

for the purposes of self-auditing and self-monitoring.

Variable objectives may cause employee confusion. It is also possible that fluid objectives may be

distorted to disguise or justify failures in performance.

Benefits of Performance Appraisals

Measures an employee’s performance.
Helps in clarifying, defining, redefining priorities and objectives.
Motivates the employee through achievement and feedback.
Facilitates assessment and agreement of training needs.
Helps in identification of personal strengths and weaknesses.
Plays an important role in Personal career and succession planning.
Clarifies team roles and facilitates team building.
Plays major role in organizational training needs assessment and analysis.
Improves understanding and relationship between the employee and the reporting manager
and also helps in resolving confusions and misunderstandings.
Plays an important tool for communicating the organization’s philosophies, values, aims,
strategies, priorities, etc among its employees.
Helps in counseling and feedback.

Rating Errors in Performance Appraisals

Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as 'rating

errors'. These errors can seriously affect assessment results. Some of the most common rating errors

are: -

Leniency or severity: - Leniency or severity on the part of the rater makes the assessment subjective.

Subjective assessment defeats the very purpose of performance appraisal. Ratings are lenient for the

following reasons:

a) The rater may feel that anyone under his or her jurisdiction who is rated unfavorably

will reflect poorly on his or her own worthiness.

b) He/She may feel that a derogatory rating will be revealed to the rate to detriment

the relations between the rater and the ratee.

c) He/She may rate leniently in order to win promotions for the subordinates and

therefore, indirectly increase his/her hold over him.

Central tendency: - This occurs when employees are incorrectly rated near the average or middle of

the scale. The attitude of the rater is to play safe. This safe playing attitude stems from certain

doubts and anxieties, which the raters have been assessing the rates.

Halo error: - A halo error takes place when one aspect of an individual's performance influences the

evaluation of the entire performance of the individual. The halo error occurs when an employee who

works late constantly might be rated high on productivity and quality of output as well ax on

motivation. Similarly, an attractive or popular personality might be given a high overall rating. Rating

employees separately on each of the performance measures and encouraging raters to guard

against the halo effect are the two ways to reduce the halo effect.

Rater effect: -This includes favoritism, stereotyping, and hostility. Extensively high or low score are

given only to certain individuals or groups based on the rater's attitude towards them and not on

actual outcomes or behaviors; sex, age, race and friendship biases are examples of this type of error.

Primacy and Regency effects: - The rater's rating is heavily influenced either by behavior exhibited

by the ratee during his early stage of the review period (primacy) or by the outcomes, or behavior

exhibited by the ratee near the end of the review period (regency). For example, if a salesperson

captures an important contract/sale just before the completion of the appraisal, the timing of the

incident may inflate his or her standing, even though the overall performance of the sales person

may not have been encouraging. One way of guarding against such an error is to ask the rater to

consider the composite performance of the rate and not to be influenced by one incident or an

achievement.

Performance dimension order: - Two or more dimensions on a performance instrument follow each

other and both describe or rotate to a similar quality. The rater rates the first dimensions accurately

and then rates the second dimension to the first because of the proximity. If the dimensions had

been arranged in a significantly different order, the ratings might have been different.

Spillover effect: - This refers lo allowing past performance appraisal rating lo unjustifiably influence

current ratings. Past ratings, good or bad, result in similar rating for current period although the

demonstrated behavior docs not deserve the rating, good or bad.

ROLES IN THE PERFORMANCE APPRAISAL PROCESS

a) Reporting Manager

Ø Provide feedback to the reviewer / HOD on the employees’ behavioral traits

indicated in the PMS Policy Manual

Ø Ensures that employee is aware of the normalization / performance appraisal

process

Ø Address employee concerns / queries on performance rating, in consultation

with the reviewer

b) Reviewer (Reporting Manager’s Reporting Manager)

Ø Discuss with the reporting managers on the behavioral traits of all the

employees for whom he / she is the reviewer

Ø Where required, independently assess employees for the said behavioral traits;

such assessments might require collecting data directly from other relevant

employees

c) HOD (In some cases, a reviewer may not be a HOD)

Ø Presents the proposed Performance Rating for every employee of his / her

function to the Normalization committee.

Ø HOD also plays the role of a normalization committee member

Ø Owns the performance rating of every employee in the department

d) HR Head

Ø Secretary to the normalization committee

Ø Assists HOD’s / Reporting Managers in communicating the performance rating of

all the employees

e) Normalization Committee

Ø Decides on the final bell curve for each function in the respective Business Unit /

Circle

Ø Reviews the performance ratings proposed by the HOD’s, specifically on the

upward / downward shift in ratings, to ensure an unbiased relative ranking of

employees on overall performance, and thus finalize the performance rating of

each employee

KEY CONCEPTS IN PMS
In order to understand the Performance Management System at BHARTI, some concepts need to be explained which play a very

important role in using the PMS successfully. They are:

Ø KRA’S (KEY RESULT AREAS): The performance of an employee is largely dependent on the KRA score achieved by the employee

during that particular year. Thus, it is necessary to answer a few basic questions i.e.

o What are the guidelines for setting the KRA’s for an employee?

o How does an employee write down his KRA’s for a particular financial year?

o KRA’s: The Four Perspectives.

o How is the KRA score calculated for an employee on the basis of the targets sets and targets achieved?

Ø BEHAVIORAL TRAITS: Some of the qualitative aspects of an employees’ performance combined with the general behavioral

traits displayed by the employee during a year constitutes his behavior traits. An employee is assigned the rating on the basis of

the intensity of the behavior displayed by him. They play a very important role in the deciding the final performance rating for

an employee as is even capable of shifting the rating one level upwards/downwards.

Ø BHARTI 2010 LEADERSHIP COMPETENCY FRAMEWORK: This competency framework is a simple and structured way to describe

the elements of behaviors required to perform a role effectively. This framework also tries to assess the performance of an

employee objectively.

Ø THE PERFORMANCE RATING PROCESS: The rating process tries to explain the four different types of rating that an employee

can achieve i.e. EC, SC, C and PC. It also explains the criteria, which is considered for awarding any of these ratings to the

employee.

Ø PROMOTION AND RATING DISRTRIBUTION GUIDELINES: The promotion and normal distribution guidelines provide the

framework within which the performance appraisal process has to work. It is very important that the HR department pays due

attention to these guidelines while preparing the bell curves for various functions and the consolidated bell curve for all the

functions. These guidelines also help in deciding upon the promotion cases in a year.

PERFORMANCE RATING PROCESS

EXCEPTIONAL CONTRIBUTOR (EC) SIGNIFICANT CONTRIBUTOR (SC)

· Performs consistently and substantially above · Performs above expectations in all areas
expectations in all areas
· Achieves final score between 100-114%
· Achieves a final score greater than or equal to
115% Versatile in his/ her area of operation

· Consistently delivers on stretch targets Develops creative solutions and require

· Is proactive little / minimal supervision

· Spots and anticipates problems, implements Sets examples for others
solutions Take ownership of own development
· Sees and exploits opportunities
Coaches others
· Delivers ahead of time
Demonstrates business initiative
· Sees the wider picture-impacts across business
Is self motivated
· Focuses on what’s good for the business
Supportive team player
· Seen as role model by others
Leads own team very effectively
· Recognized as exceptional by other functions
Demonstrate functional initiative
as well

· Motivates others to solve problems ·

· Develops others

· Provides open and honest feedback

· Able to establish and lead cross-functional
teams

LITERATURE REVIEW AND CONCEPT FORMULATION








Following are the various functions of Human Resource Management that are essential for the

effective functioning of the organization:

1. Recruitment

2. Selection

3. Induction

4. Performance Appraisal

5. Training & Development

OBJECTIVES OF THE STUDY

To carry out the study of BSNL, we framed the following objectives

1. Identification of the technique of performance appraisal followed in BSNL.

2. Employee attitude towards the present appraisal system.

3. Review of the current appraisal system in order to

1. Enhance productivity

2. Attain global standards

4. To provide suggestions & recommendations from the study conducted.

RESEARCH METHODOLOGY

RESEARCH DESIGN:

Research Design refers to "framework or plan for a study that guides the collection and analysis of

data". A typical research design of a company basically tries to resolve the following issues:

a) Determining Data Collection Design

b) Determining Data Methods

c) Determining Data Sources

d) Determining Primary Data Collection Methods

e) Developing Questionnaires

f) Determining Sampling Plan

(1) Explorative Research Design:

Explorative studies are undertaken with a view to know more about the problem. These studies help

in a proper definition of the problem, and development of specific hypothesis is to be tested later by

more conclusive research designs. Its basic purpose is to identify factors underlying a problem and to

determine which one of them need to be further researched by using rigorous conclusive research

designs.

(2) Conclusive Research Design:

Conclusive Research Studies are more formal in nature and are conducted with a view to eliciting

more precise information for purpose of making marketing decisions.

These studies can be either:

a) Descriptive or

b) Experimental

Thus, it was mix of both the tools of Research Design that is, Explorative as well as Conclusive.

SAMPLING PLAN:

Sample Size = 50 Employees

Sample Area = Sahara Airlines Ltd, Delhi,

Dr Gopaldas Building.

Duration = Two (2) Months.

DATA COLLECTION:

Data Sources:

(i) Secondary Data through Internet

(ii) Primary Data through Questionnaire

(iii) Contact Method

(iv) Personal Interaction

DATA PRESENTATION AND ANALYSIS:

1. Bar graphs

2. Pie Diagrams

3. Doughnuts

FINDINGS AND ANALYSIS

Employees Opinion as to the Purpose of Performance Appraisal

Performance standards / yardsticks

Options Response

Yes 84

No 16

Awareness of technique of Performance Appraisal being followed at BSNL among Employees

Options Response

Yes 72

No 28

Number of Employees being appraised during their service period

Options Response

Yes 68

No 32

Employees’ opinion as to the present appraisal system

Options Responses (in %)

Fully Satisfied 2

Satisfied 24

Can’t Say 44

Dissatisfied 30

Employee perception as to the frequency of appraisal

Options Response (in %)

Once During The 2
Service Period

Continuous 92

Never 0

Can’t Say 6
If continuous appraisal – what should be the gap between two appraisal period

Options Response (in %)

Quarterly 20

Half Yearly 44

Yearly 36

How Performance Appraisal affects the productivity of the employees

Motivated Indifferent Demotivated

+ Feedback
38 12 -

- Feedback
12 10 28

Neutral 24 21 5

Who should do the appraisal?

Options Response ( in % )

Superior 24

Peer 0

Subordinate 0

Self Appraisal 8

Consultant 4

All of the above 48

Superior + Peer 16

.Does appraisal help in polishing skills and performance area?


Yes 74

No 10

Somewhat 16

If the process of appraisal does not lead to the improvement of the skills and proficiency of

the employees, the very purpose of appraisal becomes illogical. In the survey conducted it

was observed that nearly 74 % of the respondents agree that Performance Appraisal does

leads to polishing the skills of the employees. Nearly 10 % of the respondents view that it

does not serve this purpose and around 16 % were not able to respond as to whether it

serve any such purposes or not.

Does personal bias creeps-in while appraising an employee


Yes 82

No 18

In the process of appraising, both the parties are human being, that is, the one who is being

apprised and the other who is appraising. Thus, there bound to be subjectivity involved, be it

an objective way of appraising.

Thus, when asked from among the sample size of 50 respondents, as huge as 82 %

respondended that personal bias do creep in while appraising an individual. Hence, it is

inevitable to say that personal likings do not come in the process of appraisal. It is the extent

to which the appraiser manages it so that it does not become very partial and bias.

If given a chance, would employees like to review the current appraisal technique?


Yes 72

No 4

Can’t Say 24

Appropriate method of conducting the performance appraisal

12%
0%
20%
58%
4%
6%
Rating Scale
Paired Comparison
Critical Incident
MBO
Assessment Centre
360 Degree


Ranking Method 12

Paired Comparison 0

Critical Incidents 20

MBO 58

Assessment Centre 4

360 degree 6

Does performance appraisal leads to identification of hidden potential


Yes 96

Hr

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