Project on Performance Appraisal of PEL and PARCO

We are very much gratified to Almighty Allah who enabled us to

complete this term report successfully.

We are extremely obliged to respected “Mr. SHAUKAT MALIK”

who provided us such a good opportunity to learn and analyze the

Performance Appraisal System of the organizations practically,

functions and concepts which are being practiced in PARCO and

PAKARAB FERTILIZERS .

We are very much thankful to our respected course instructor Mr.

SHAUKAT MALIK whose encouragement and motivating behavior

and guidance helped us a lot in completing our report successfully.

We have special regards and pay very much thanks to all persons in

PARCO and PAKARAB FERTILIZERS with whom we worked

during our survey, they have cooperated us excellently and equipped us with valuable information.

Special thanks to;

Mr.Waseem Anwar

Management Executive-111

Personnel Department , PARCO

Mr. Farooq Malik

Deputty Manager Personnel Department

PAKARAB FERTILIZERS

Authors:

Shams Iqbal

Javed Iqbal

Business environments are becoming more and more complex with the passage of time. To understand and deal with such riddle phenomena, one needs a lot of energy and knowledge. So business education has become an evolving science which helps to solve the business problems.

Academic education provides a general knowledge about business decision and policies.

This Term Report provides the opportunity of peeping into real professional life of the business people. It enables us to evaluate and understand the practical application of the terms & techniques that we have studied during our course of Human Resource Management regarding the topic of Performance Appraisal.

We were assigned to complete our term report, at PARCO and PAKARAB FERTRILIZERS. In this Report, We have tried our level best to explain each and every aspect of the selected topic of performance appraisal comprehensively from the two selected organizations’ point of view.

Executive Summary

The goal of the Department of Business Administration is to develop and provide professionally trained managers by offering broad knowledge in a number of business areas and thus preparing the student for versatile and successful management careers. The preparation of term reports helps the students to gain some understanding of how the organization formulate strategies to achieve their stated goals and at the same time enables the students to face challenges in their professional life by sharpening their skills of decision making, leadership, communication and team work.

This report is an effort to study one of the main functions of HR department, which is ‘performance appraisal’ on practical grounds, by studying two selected organizations, which are PARCO and PAKARAB FERTILIZERS.

To make our analysis sound, first we collected the material about performance appraisal that what is performance appraisal, why we do it, who does it, what are different approaches and methods for employee appraisal, and what are problems in appraising using books and articles. Then we designed a questionnaire for the survey purpose in the guidance of our respected course instructor Mr. Shaukat Malik. We visited regional offices of the two organizations PARCO and PAKARAB .We met with Human Resource Managers of both the organizations and other officials to get the relevant information about our topic. From the filled questionnaires and discussions with the employees, we analyzed the performance appraisal system of both the organizations. Finally we compared the performance appraisal systems of both the organizations on the basis of their analysis. We

have also attached two articles regarding our topic with the report. Also overview of each article is given in the report and we also related our comparison with the articles material. At the end of this report, we have given some recommendations.

Introduction

Human resource is a greatest asset of any organization. Each organization either a manufacturing or service oriented does its best for the proper arrangement of its employees. These are the employees who are the distinction between organizations.

People are needed to manage people. There must be in charge to direct and guide people in the organizations. So human resource management is the art of managing people in the organization. For this purpose almost every organization has separate department which is called human resource department or personnel department.

Article # 1

1. To define the meaning and concept of the 360 degree performance appraisal process.

2. To communicate or inform the participants about the weaknesses of the conventional system and how 360 degree system overcome these weak areas.

A latest “performance management tool” is a 360 degree appraisal system. This process enables the individuals performance to be evaluated from an all around perspective and thereby provide more accurate information on an individual’s performance over a stated time period. The concept of 360 degrees comes from the number of degrees in a circle. Every point at the edge of the circle provides a direction or a dimension to its centre. So providing an employee with 360 degree feedback means that feedback comes from all directions like

Here we see that what factors we should keep in mind while appraising under 360 rule.

A modern questionnaire is designed on the basis of various job dimensions. These job dimensions could vary from employee to employee. These forms are given to all the points on the edge of the circle keeping employee as a centre of that circle.

The process of 360 degree performance appraisal or assessment can help your employees see themselves in an entirely new light. It can assist them in gaining consensus about what they are doing right and what they still need to improve.

Article # 2

Ø Techniques to identify the “results” and “performance standards” for this kind of work.

Here we assume that each measure is a yardstick. The employee should know what point on the yardstick represents meeting expectations.

Our Survey About Topic

Our survey topic is performance appraisal. First we designed a questionnaire of size 26 for survey purpose which were filled by randomly selected employees of both the organizations for getting feedback related to their own appraisal and overall organization.

Appraisal system. Fortunately, we got a good response from HR managers and employees of the organization in conducting this survey. The copies of the filled questionnaire of HR managers of the organization are attached at the end of this report. On the basis of information collected from questionnaires, the analysis is made by the comparison of information collected from both organizations. After analyzing these information and research articles we acknowledged some findings and recommendations for smooth run of performance appraisal systems in the organization.

We made our recommendations keeping in view the Pakistani culture and environment. The analysis table of both organizations comprises of major points of the questionnaire.

Parco Introduction

Parco is the biggest oil refinery in Asia. Parco stands for Pakarab Refinery Limited. Parco is incorporated in MAY 1974 as a public limited company. Pakarab refinery limited (Parco) is a joint venture of Government of Pakistan (GOP) & Abu Dhabi.

Its authorised capital is Rs.5 billion and paid up capital of Rs.2.16 billion of which 60% is held by GOP and 40% by ABU DHABI PETROLEUM INVESMENT COMPANY (ADPI) .In the last 25 years the company has expanded a phenomenal 24 times and has achieved an equity base of Rs. 13 billion and an asset base exceeding Rs.68 billion or just over US$ 10 billion in current dollar terms.

Human Resource Departmnt Introduction In Parco

Parco has its HR department in head quarter Karachi , but its subunit is working at the site with the name of Personnel Department. All the policies regarding Human Resource are developed in Karachi and further they are communicated to the Personnel Department at the site. Personnel Department implement these policies to the human resource at there.

Among these policies , one main policy is n the area of Performance Appraisal which is the main function of Human Resource Department. At Parco Qasba Gujrat ,Mahmood kot ,Personnel Department does the performance appraisal of employees and sends its evaluation with its suggestions to HR department , Karachi.

In HR department , the development programs are made on the basis of performance appraisal’s evaluation and personnel department’s suggestions.

Analysis of Parco

Categories of employees Senior executive , line managers, mangers, Engineer and technical staff, operating staff, Sales force

Purpose of performance appraisal promotion, guide to job changes, salary decision, employee development, supervisory understanding.

Performance appraisal approach comparison against standards, direct performance measure

Methods of appraisal rating scale(personal trait and behavior scale, job dimension rating scale)

Problems organizational influence, personal biasness, difficult to set qualitative standard

Reason for inaccurate evaluation subjective standard, rate error, negative communication

Description of Performance Apparisal System In PARCO on the basis of analysis

As the manufacturing organization, PARCO has various categories of employees including senior executives, line managers, managers, engineer and technical staff, operating staff and sales force, so it is comprised of various nature of jobs, making it complex to conduct a smooth performance appraisal system.

To deal with human resource of the organization, the main HR department is located in Karachi but its personnel department is working at the site located in Qasba Gujrat, Mahmood kot, Distt. Muzaffargarh

The main HR Department in Karachi formulates the actual appraisal policy and communicate to the personnel department at the site, then personnel department conducts performance appraisal of employees accordingly.

For employees on probation , their performance report is done after six months. For permanent employees, their appraisal is conducted after every one year. The organization financial year is July to June.

The personnel department conducts the performance appraisal of employees for their Promotion, their Job Changes, Development, and Salary Decisions. Personnel department normally uses different types of approaches for different types of employees depending upon their job nature. Mostly, they use Comparison Against Standards or Direct Performance Measurement approach. In this organization, both formal and informal systems are comprised for performance evaluation which are usually handled by immediate supervisor.

The formal system’s procedure is described below, while the informal system includes the activities like Club Sitting, Parties, Attitude during informal activities, Seminars, Games etc.

The appraisal method, used by the personnel department, is Rating Scale, in which they use Job Dimension Rating Scale and Personal Traits & Behavior Rating Scale. The reason for using these methods is that it covers the job activities to be done as well as the attitude & behavior required by that job. Five degrees of scale are used such as Very Good, Good, Fair, Satisfactory, Poor.

Parco has job security to its employees. Company also checks the references of the employees from their previous jobs. Promotion is given on experience and good work. In performance appraisal, the following characteristics are measured:

Procedure

Personnel department sends the appraisal form to immediate supervisors. Supervisors fill the forms and send back to the Personnel Department. On the basis of supervisor’s evaluation, the instructions from the personnel departments are communicated to supervisors to deal with the particular employees. But the employees appraisal results are not communicated to the employees formally but with the passage of time ,as needed, they are informally communicated by immediate supervisors.

After conducting appraisal, the personnel department communicates its evaluation with recommendations regarding appraisal policy. Then HR department makes decisions on the basis of Personnel department’s evaluation.

Although Personnel Department tries to communicate a fair and smooth appraisal system but due to some reasons, the inaccuracy in performance measurement occurs. The reasons for this include:

There are also some problems, which the personnel department has to face in the accurate evaluation of the measured performance. The problems include:

But the personnel department believes that its performance appraisal system is still working fine.

PAKARAB INTRODUCTION

Islamic republic of Pakistan and the state of Abu Dhabi , the two Muslim brother countries , agreed to establish a joint venture for contributing to Pakistan’s economy. It was June 12 , 1962 when a company named National Gas Fertilizers was established by Pakistan Industrial Development Corporation (PIDC) in Multan with ammonia and nitric acid plants of 200 & 100 m tons per day respectively. PAKARAB FERTILIZERS Limited was established as protocol concluded and signed on the November 15 , 1972 by the federal government to further strengthen and develop internal ties between Islamic Republic Of Pakistan and the state of Abu Dhabi to cooperate in the Fields of Petroleum industries and Natural Resources for the Mutual benefits.

Hr Introduction In Pakarab

In PAKARAB FERTILIZERS , the Human Resource department is established since its own establishment. The Human Resource department is working under the supervision of senior manager. HR department is playing a vital role in the success of PAKARAB. In PAKARAB , the following criteria of grading is used generally and on that basis predefined fringe benefits and salary decisions have been defined for each grade.

In PAKARAB , The Human Resource department is divided into two major departments :

The IR department is currently headed by a senior manager Mr. Khalid Bashir assisted by a deputy manager , Mr. Farooq Malik .PERFORMANCE APPRAISAL is one of the main function of The Human Resource department .P&A department do appraisal of supervisors and executives. IR department do appraisal of workers staff. In The Human Resource department, the promotions and salary decisions are made on the basis of performance appraisal’s evaluation.

Analysis of Pakarab

Existence of Hr department yes (personal administration for executive and supervisor, industry relation department for workers)

Purpose of performance appraisal promotion, salary decision, employee development

Performance appraisal approach comparison against standards, interpersonal comparison

Methods of appraisal rating scale (job dimension rating scale, forced distribution)

Problems organizational influence, personal biasness, difficult to set qualitative standard

Description Of Performance Appraisal System In Pakarab

Pakarab Fertilizer is a manufacturing organization having various types of job nature like executives , managers , engineer and technical staff , operating staff ,and sales force. Because of various job categories , HR Department of Pakarab Fertilizers is subdivided into two units. One unit called Personnel & Administration manage the executives and supervisory staff. Second unit named as Industry Relations Department for managing working staff. This subdivision of HR Department makes it easy to conduct an effective and efficient Performance Appraisal System.

The policies about Performance Appraisal in both the departments are made separately. The policy issues are concerned with the purpose of Performance Appraisal which could vary in both subunits of HR department.

The common purposes of both the units of HR Department are promotion, supervisory understanding , salary decisions , and employee development. Performance Appraisal of executives and supervisors is made according to calendar year

and of workers is according to financial year (July to June).The criteria for promotion of an employee is good appraisal and seniority. Section Head writes the performance appraisal of the employees and it is countersigned by the divisional head. The rule exists is to write the Performance Appraisal in front of the individual with the proper justification but it is not actually in practice.

For appraising the performance of employees , different approaches are being in practice. In Pakarab Fertilizers, the most commonly used are Comparison Against Standards and Interpersonal Comparison . By adopting these approaches and to get the required results, different methods are used. In HR Department of Pakarab Fertilizers , the Performance Appraisal methods are Job Dimension Rating Scale and Force Distribution depending on the situation. Force Distribution method is used when to avoid from clustering of employees at one end of the scale.

Both the subunits of HR Department of Pakarab Fertilizers follow strict rules and regulations of the performance appraisal policy to conduct a fair appraisal system. The end results of this performance appraisal system are kept secret by the concerned subunit and this evaluation is used for employee development programs.

HR Department of Pakarab Fertilizers is facing different problems both in the measurement of the performance and in the evaluation accuracy. Some of the major problems in the performance measurement are the following:

Rating Error

Instead of all the problems , the current performance appraisal system is working well according to the HR Department of the organization.

Comparison Of Performance Appraisal System

PARCO AND PAKARAB have the various similarities and dissimilarities in their performance appraisal systems. These similarities and dissimilarities are the followings:

2.The organogram of both the organizations is same because of having same nature of job Description.

4.To handle these complex human resource both have their HR departments which conducts the formal appraising system.

1.The main difference in their performance appraisal systems is feedback of results to supervisors and employees. Parco communicates the results of employees to immediate supervisors but in PAKARAB FERTILIZERS this is not done usually.

2.Thier are no formal training programs in PAKARAB as a result of performance appraisal but PARCO has.

Findings & Recommendations:

In the light of the articles and our study in the organizations, we become able to suggest some recommendations which are as follows:

1.They should convert the qualitative work into measurable quantitative factors so

2. They should apply MBO technique to check performance of those employees who are having work assignments which can be quantified accurately.

3.They should apply 360 degree appraisal system so that appraisal biasness can be reduced to the minimum level and to improve measurement accuracy.

For the application of 360 degree appraisal system, it requires cultural change in whole organization.360 degree appraisal system should be used where investigation is required.

effectively because this approach involves getting feedback about an employee from a wide variety of sources in addition to his or her manger.

4.For evaluation accuracy, skilled personnel should be appointed, for the evaluation of measured performance, who have greater knowledge of descriptions of those jobs.

5. Post appraisal interviews should be conducted to give opportunity to employees for their justification and to create motivation in them.