Performance Appraisal System in Dabur India Limited

Dabur began its streamlining efforts in April 1997, when consultants McKinsey & Co. were hired. Their three-fold recommendations were:

• to focus on a few business areas;
• to improvise the supply chain and procurement processes and
• to restructure the appraisal and compensation systems (HR Restructuring n.d).

Performance appraisals at Dabur were made further objective by incorporating many measurable criteria. New concepts were introduced as yardsticks for performance appraisals. Some of these new yardsticks are customer satisfaction, increased sales and reduced costs, cycle-time efficiency, return on investment and shareholder value (Gibson, Harvey & Harris 2007).

A few key performance areas (KPAs) for each employee were identified by HR managers to enhance employee satisfaction levels. Now, for performance appraisal and compensation planning, KRAs became the base. A Balanced Scorecard based performance management (Dabur India Ltd n.d) is followed by Dabur, which ensures balanced performance by managers across manifold dimension including financial targets, customer relationship management, internal business processes and research and development. The variable pay plan of the company has modified key performance indicators (KPIs) using the Balanced Scorecard, of. (Kaplan and Nortan 2001, Malmi 2001).

How well the employees achieve a specific set of objectives that have been determined to be significant in the successful completion of their job, determines the basis of their evaluation. This approach is referred to as Management by objectives (Greenwood 1981, Lepak et. al 2006), which consists of setting goals, action planning, self- control, and periodic reviews (Nayab 2009). In goal setting, the organization’s overall objectives are used as guidelines from which departmental and individual objectives are set. In action planning, the means are determined for achieving the ends established in goal setting i.e., pragmatic plans are developed to attain the objectives.

There are three outcomes possible as far as Dabur Company is concerned:

• Outstanding - If the employee performs well, as to collect 3 consecutive outstanding performances into his/her credit, he / she gets promoted.
• Good - If he/she is graded“good”, they are sent to training programme to improve his/her skill to perform better.
• Below average -If the employee gains three below average to his/her credit, then he/she is terminated from work.

Although, the review of performance appraisal system in Dabur reveals that it does have an effective appraisal system, nevertheless, the following recommendations have been made:

Basis the performance, job rotation and training programme may be included in the remedial measures taken (Craig, Beatty, Baird 1986).

Both from the individual and organizational point of view, the frequency of feedback needs to be increased, to keep the employee motivated towards attaining organizational goals.

Training the appraiser for better comprehension of the system and counselling him/her to be honest, just and unbiased in the appraisal process.

Providing the employee with suitable remark or justification for being given a particular grade.

Better clarity of job descriptions need to be provided to the employees.

Making the performance appraisal on quarterly basis instead of the present system of annual basis to make it more effective.

More apparent and transparent Performance Appraisal system (Carrie, Barton and James 2014).

Detailed performance feedback sessions to provide the employee with details such as problem behaviour, consequences of the problem behaviour and proposed changes.

Implementing Open appraisal system, wherein the employees come together to set the targets, recognize the mutual potential and the support to be provided by the appraiser to the employee towards achieving these mutually accepted goals to promote outcome oriented performance.

Conclusion

Performance Appraisals is the systematic appraisal of employee’s and is a developmental tool employed for holistic development of the employee and the organization as well. The process of performance appraisal in Dabur India Ltd is done on an annual basis. Reports say that employees are moderately satisfied with the system followed. Though feedback is a critical step in performance appraisal, Dabur focus less on providing feedback to employees as to what are their incompetence’s, what are the proposed remedial measures and so on.