Reference no: EM132884416

Unique Funds Ltd. is a reputed finance company having 10 branches in different parts of the country. Its staff includes 290 operative employees and 70 executives. The company has a performance rating plan under which the staff members are rated at the end of each financial year by a committee of 2 executives by means of graphic scale. The qualities considered are: responsibilities, initiatives, dependability, leadership potential, cooperative attitude and community service. After the performance is evaluated, the ratings are discussed with the concerned employees by the immediate boss and are used to counsel them and arrange further training for them. The ratings are also used for granting or withholding of increments and promoting the meritorious staff.

Recently, two employees working at the Head Office have been denied annual increments due to comparatively low ratings. They have made a representation to the CEO expressing their dissatisfaction with the appraisal system and insisting that community service is not a part of their job and it shouldn't influence their ratings. The employees seem to organize a union and demand that annual increments should be granted automatically.

The CEO feels that performance appraisal is a dangerous source of friction and so it should be discontinued altogether.

Question 1. If you were the HR Manager, how would diffuse the problem?

Question 2. How far do you agree with the CEO's view that performance appraisal should be discontinued?

Question 3. On what lines would you recommend modifications in the performance appraisal system of the company?