THESIS PERFORMANCE APPRAISAL SYSTEM FOR KEY PERSON IN FPT SOFTWARE

INTRODUCTION Rationale the research Nowadays, IT outsourcing service plays more and more important roles in global economy. Global IT outsourcing market is growing very fast in the recent years with growth rate about 50% and expected rate in next few years at 70%. In Vietnam, the economic booming and dramatic growth of international trade bring very high demands for IT outsourcing industry. This demand leads to open many IT outsourcing companies and increase competitiveness in this industry. Being in Vietnam for more than 13 years, FPT Software - the leading IT outsourcing company, has been attaining many excellent achievements and certificated partnerships with famous corporate in the world. Now FPT Software has 2600 staff, with branches in Japanese, Singapore, France, Malaysia, Australia and America. Revenue in 2008 is 42 millions USD contributed significantly from Japanese, Asia pacific and EU market. With characteristics of team-based structure, Fsoft has divided into development centers responsible for some accounts or some markets. Each center is composed of divisions of some accounts or one market. For specific project, Fsoft divides teams into small teams with 5-7 members. One small team has one leader. One big team has one manager So on average, those leaders and managers (hereinafter we called key person) in Fsoft make up 26 percents of total staff. They are core persons and are one of the most key success factors for the project as well as for development of Fsoft. According to HRM system in Fsoft, turnover rate for key person is extremely high, at 19%. It means that five key persons join into company; one key person is going out. The high turnover rate can cause some problems such as unstable structure, de-motivation for remaining staff, low productivity, costing in term of training and nurturing the potential key person. CHE – Performance appraisal system in Fsoft was built in 2000. After ten years, CHE and HRM are facing with following problems: Talent goes, bad fires and middle remains Middle remaining works with low productivity & de-motivated Projects maybe fails therefore company might be lost of customer, profit… -Company goes in not cost-effective way (training cost for project manager is very high) This situation requires Fsoft to review performance appraisal system for necessary adjustments to solve those problems. That is purpose to choose this topic for my thesis. Research objectives The study has three objectives: Review the fundamental background of performance management and performance appraisal system that are applicable the practical business. Evaluate current performance appraisal system based on theories and data from primary survey. Propose recommendations for Fsoft to build performance appraisal system for key person. Research questions This research will answer the following questions: 1.What are existing performance appraisal systems in Fsoft? 2.What are the competencies and feedback of key persons toward the existing system? 3.What is the most suitable performance appraisal system for key person? Research methodology Secondary data includes statistic information about key person as turnover rate, productivities, existing performance appraisal system and some papers of performance appraisal system. Primary data is the survey (both current employees and people left companies). This questionnaire of survey is designed based on research problem and theoretical basic. Scope of research The research only focuses on building separate performance appraisal system for key person in Fsoft from year 2000 (when CHE was built) up to now with assumptions: Clear job analysis and description, clear communicating job analysis and description, not relating to company strategies and very good company culture. Based on theoretical base of performance appraisal and with collected secondary survey and primary data, the study will propose performance appraisal system for key person and then identify some next moves in applying this rating system into Fsoft. The thesis content Introduction Chapter I: Literature review The first chapter illustrates the fundamental background of the study like key concepts, characteristics and basic elements of PAS. Chapter II: FPT Software at glance This chapter introduces Fsoft in some aspects such as history, strategy, structure and highlighted figure to help readers understand the overview context of the study. Chapter III: Current performance appraisal system in Fsoft The third chapter describes the existing rating system in Fsoft in all aspects mentioned in literature review chapter. Chapter IV: Research methodology The fourth chapter focuses on primary data to investigate feedback, expectation of key persons about the new performance appraisal system as well as their competencies toward new system. Chapter V: Findings and recommendations The last chapter encloses with findings of the study and recommendations for HR department and top management to build a separate performance appraisal system for key person. Conclusion

SOLVAY-BRUSSELS SCHOOL OF

Vietnam – Belgium Master Programmes MASTERS IN BUSINESS MANAGEMENT

TABLE OF CONTENT

EXECUTIVE SUMMARY1

INTRODUCTION 3

Rationale the research 3

Research objectives 4

Research questions4

Research methodology 4

Scope of research 4

The thesis content 4

I.1 Introduction to performance appraisal system 6

I.1.1 Meaning and definition 6

I.1.2 Characteristics of performance appraisal system 8

I.2 Objectives of performance appraisal 9 I.3 Performance appraisal process 10 I.4 Factors affecting on employee performance11 I.5 Key elements of performance appraisal system 12 I.5.1 Performance standard 12

I.5.2 Performance criteria 14

I.5.3 Methods for performance appraisal 14

I.5.4 Performance evaluator 18

I.5.5 Rating errors 21

I.5.6 Performance cycle 21

I.5.7 Performance interview 23

CHAPTER II: FSOFT AT GLANCE 24 II.1 Fsoft history 24 II.2 Organizational chart 25 II.3 Financial activities 26 II.4 People development 28 II.4.1 Largest pool of software engineers in Vietnam 28

II.4.2 Continuous development of human resource 28

II.5 HRM context in Fsoft29 II.5.1 Fsoft’s HR principle 29

II.5.2 HR practices 30

CHAPTER III: CURRENT PAS IN FSOFT 31 III.1 PAS purpose 31 III.2 Objects of PAS 31 III.3 Performance appraisal standard 31 III.4 Performance appraisal criteria 31 III.5 Performance evaluator 32 III.6 Performance appraisal method 32 III.7 Performance appraisal interview 32 III.8 Performance appraisal period 32 CHAPTER IV: RESEACH METHODOLOGY 33 IV.1 Introduction 33 IV.2 Questionnaire33 IV.3 Data analysis 35 CHAPTER V: FINDINGS AND RECOMMENDATIONS 51 V.1 Findings 51 V.1.1 Unsatisfactory level of current performance appraisal 51

V.1.2 Problems in performance appraisal system 51

V.1.3 A few objectives of current performance appraisal system 52

V.1.4 Evaluating few dimensions of employee performance 52

V.1.5 Only one PAS for everyone 53

V.1.6 No linkage between pay system and PAS 53

V.1.7 Lack of motivated key person 54

V.1.8 Skillful and qualified key person 54

V.2 Recommendation 54 V.2.1 Build separate performance appraisal system for key person 55

V.2.2 Improving training program 57

V.2.3 Improving incentive and reward system 57

V.2.4 Improving motivation 58

V.2.5 Enhancing ability 60

V.2.6 Reviewing and controlling rating system regularly 60

CONCLUSION 61 REFERRENCE i APPENDICES ii Part A: Survey questionnaire ii Part B: Research result vi 1 Respondent structure vi

2 Satisfactory level of current performance appraisal system vi

3 Consensus level of current performance appraisal system vi

4 Knowledge vii

5 Number of years working experience vii

6 Project management level vii

7 Skills and competencies viii

8 Motivation viii Part C: Performance appraisal form ix

LIST OF TABLES

Table 1: Comparison between performance management and PA 8

Table 2: Fsoft's history 25

Table 3: Fairness statement 37

Table 4: Criteria statement 37

Table 5: Method statement 38

Table 6: Linkage statement 38

Table 7: Education level 39

Table 8: Professional training and certificates 39

Table 9: Level of foreign language proficiency 40

Table 10: Software development method 40

Table 11: Software development process 40

Table 12: Leadership skill 41

Table 13: Negotiation skill 41

Table 14: Communication skill 42

Table 15: Team building/development skill 42

Table 16: Client management skill 42

Table 17: Analysis and problem solving skill 43

Table 18: Conflict resolution skill 43

Table 19: Project scope management skill 44

Table 20: Project time management skill 44

Table 21: Project cost management skill 44

Table 22: Project quality management skill 45

Table 23: Project human resource management skill 45

Table 24: Project risk management skill 45

Table 25: Project procurement management skill 46

Table 26: Breadth (not depth) in specific application/industry knowledge skill 46

Table 27: Life cycle management skill 47

Table 28: Years of working experience 47

Table 29: Project management level 47

Table 30: Important level of responsibility motivation 48

Table 31: Important level of sense of accomplishment motivation 48

Table 32: Important level of opportunity to grow motivation 48

Table 33: Important level of incentive motivation 49

Table 34: Important level of promotion motivation 49

Table 35: Important level of power motivation 50

Table 36: Important level of praise motivation 50

Table 37: Important level of affiliation motivation 50

Table 38: Summary of level of importance of motivation 59

LIST OF FIGURES

Figure 1: Performance appraisal process 10

Figure 2: Maslow's Hierarchy of needs 12

Figure 3: Term used to define standards at one company 13

Figure 4: 360-degree feedback 18

Figure 5: Traditional review process by which supervisors conduct PA 19

Figure 6: Person being appraised in 360 degree feedback 21

Figure 7: Fsoft organizational chart 26

Figure 8: Market contribution to Fsoft revenue 27

Figure 9: Fsoft revenue (2005-2011) 27

Figure 10: Highlighted financial figure (2005-2008) 28

Figure 11: Fsoft human resource (2004-2009) 28

Figure 12: "Fsoft structure with Customer" HRM principle 29

Figure 13: Gender breakdown 35

Figure 14: Age breakdown 35

Figure 15: Working status breakdown 36

Figure 16: Satisfactory level of current PAS 36

Figure 17: Core competency areas 55

LIST OF ABBREVIATIONS

HR Human Resource

PMS Performance Management System

PAS Performance Appraisal System

SKA Skills, Knowledge and Abilities

MBO Management By Objectives

TQM Total Quality Management

ERP Enterprise Resource Planning

IT Information Technology

CMMI Capability Maturity Model Integration

GMAT Graduate Management Admission Test

TOEFL Test of English as Foreign Language

ISO International Organization for Standardization

BARS Behaviourally Anchored Rating Scales

TOEIC Test of English for International Communication

ICT Information Communication Technology

OSDC Offshore Software Development Center

EXECUTIVE SUMMARY

Performance appraisal may be understood as the assessment of an individual'sperformance in a systematic way It plays very important role in HR activities forany company in any industry The performance appraisal is important toemployees’ professional development, to meeting the company’s goals orobjectives and, ultimately, to contributing to the company’s bottom line Goodperformance appraisal system leads to motivate employees, increase productivity,stabilize organizational structure

In Fsoft, key person – project manager and leader accounts for 26% of total staff.They are the key success factors in the IT outsourcing projects as well as for thedevelopment of Fsoft Currently, turnover rate for key person is extremely high,

at 19% The high turnover rate can cause some problems such as unstablestructure, de-motivation for remaining staff, low productivity, costing in term oftraining and nurturing the potential key person

This paper is to aim to review current performance appraisal system – CHE andpropose new performance appraisal system for key person in FPT software Thetheoretical background of performance appraisal system and theory of (McCloy,

R A., Campbell, J B and Cudeck, R., 1994) that employee performance isaffected by knowledge, skills, abilities and motivations is used for this reviewingand making proposal At the first stage of this proposal, based on companyprofile, HR statistics, and personal experience, whole picture of currentperformance appraisal system is drawn

In the next step, based on factors affecting on performance, survey questionnaire

is created to investigate feedback of key person on CHE and those factors Withthe data collected from survey and the mapping with theoretical base, problemsand expectations of performance evaluation system from key person are made up.With this result, the thesis proposes new performance appraisal system for keyperson in FPT software and other recommended tactics to improve key personperformance

Keywords: performance appraisal, project manager, employee performance,

ability, skill, knowledge, motivation, FPT software

This dissertation was completed as a partial requirement for fulfillment of degree

at Vietnam – French Community of Belgium Master Programs

First, I would like express my sincere gratitude to MBA Vu Tuan Anh, myacademic supervisor for his guidance, advice and comments during the wholeprocess of thesis writing

Furthermore, I also thank the faculty members of Université Libre de Bruxellesand National Economics University, Deans, Professors, Executives and Teachersfor their supports They all gave me the honor of attaining such a great program

I also very appreciate management of Fsoft, especially for HR department fortheir enthusiastic and valuable support

Finally, I am grateful to all family members, and my MBM7 group mates who inmany ways contributed and supported me My heartfelt thank is especially for

my wife, Thao, for her encouragement and supports in not only this thesisprocess but also the last two year course

Rationale the research

Nowadays, IT outsourcing service plays more and more important roles in globaleconomy Global IT outsourcing market is growing very fast in the recent yearswith growth rate about 50% and expected rate in next few years at 70% InVietnam, the economic booming and dramatic growth of international trade bringvery high demands for IT outsourcing industry This demand leads to open many

IT outsourcing companies and increase competitiveness in this industry

Being in Vietnam for more than 13 years, FPT Software - the leading IToutsourcing company, has been attaining many excellent achievements andcertificated partnerships with famous corporate in the world Now FPT Softwarehas 2600 staff, with branches in Japanese, Singapore, France, Malaysia, Australiaand America Revenue in 2008 is 42 millions USD contributed significantly fromJapanese, Asia pacific and EU market

With characteristics of team-based structure, Fsoft has divided into developmentcenters responsible for some accounts or some markets Each center is composed

of divisions of some accounts or one market For specific project, Fsoft dividesteams into small teams with 5-7 members One small team has one leader Onebig team has one manager So on average, those leaders and managers(hereinafter we called key person) in Fsoft make up 26 percents of total staff.They are core persons and are one of the most key success factors for the project

as well as for development of Fsoft

According to HRM system in Fsoft, turnover rate for key person is extremelyhigh, at 19% It means that five key persons join into company; one key person isgoing out The high turnover rate can cause some problems such as unstablestructure, de-motivation for remaining staff, low productivity, costing in term oftraining and nurturing the potential key person

CHE – Performance appraisal system in Fsoft was built in 2000 After ten years,CHE and HRM are facing with following problems:

 Talent goes, bad fires and middle remains

 Middle remaining works with low productivity & de-motivated

 Projects maybe fails therefore company might be lost of customer,profit…

- Company goes in not cost-effective way (training cost for project manager

is very high)

This situation requires Fsoft to review performance appraisal system fornecessary adjustments to solve those problems That is purpose to choose thistopic for my thesis

Research objectives

The study has three objectives:

 Review the fundamental background of performance management andperformance appraisal system that are applicable the practical business

 Evaluate current performance appraisal system based on theories and datafrom primary survey

 Propose recommendations for Fsoft to build performance appraisal systemfor key person

Research questions

This research will answer the following questions:

1 What are existing performance appraisal systems in Fsoft?

2 What are the competencies and feedback of key persons toward the

Primary data is the survey (both current employees and people left companies).This questionnaire of survey is designed based on research problem andtheoretical basic

Scope of research

The research only focuses on building separate performance appraisal system forkey person in Fsoft from year 2000 (when CHE was built) up to now withassumptions: Clear job analysis and description, clear communicating jobanalysis and description, not relating to company strategies and very goodcompany culture

Based on theoretical base of performance appraisal and with collected secondarysurvey and primary data, the study will propose performance appraisal system forkey person and then identify some next moves in applying this rating system intoFsoft

The thesis content

Introduction

Chapter I: Literature review

The first chapter illustrates the fundamental background of the study like keyconcepts, characteristics and basic elements of PAS

Chapter II: FPT Software at glance

This chapter introduces Fsoft in some aspects such as history, strategy, structure and

highlighted figure to help readers understand the overview context of the study.

Chapter III: Current performance appraisal system in Fsoft

The third chapter describes the existing rating system in Fsoft in all aspectsmentioned in literature review chapter

Chapter IV: Research methodology

The fourth chapter focuses on primary data to investigate feedback, expectation

of key persons about the new performance appraisal system as well as theircompetencies toward new system

Chapter V: Findings and recommendations

The last chapter encloses with findings of the study and recommendations for HRdepartment and top management to build a separate performance appraisalsystem for key person

Conclusion

CHAPTER I: LITERATURE REVIEW

The first chapter illustrates the fundamental background of the study It will start

by introducing performance appraisal system with some key concepts such as performance, performance appraisal and differences between performance appraisal and performance management The chapter also introduces the characteristics of performance appraisal and its purposes The chapter ends with the key elements of performance appraisal system.

I.1 Introduction to performance appraisal system

I.1.1 Meaning and definition

Brumbach defines performance as embracing both behaviour and outcomes in amore comprehensive view:

“Performance means both behaviours and results Behaviours emanate from the performer and transform performance from abstraction to action Not just the instruments for results, behaviours are also outcomes in their own right the product of mental and physical effort applied to tasks and can be judged apart from results.” (Brumbach, 1988)

What is performance management?

Waldt defines performance management as the shared process: “In essence, performance management is a shared process between managers and the individuals and teams they manage It is based on the principle of management

by contract rather than command, although this does not exclude the need to incorporate high performance expectations in such contracts.” (Waldt, 2004)

A clear definition of performance managemnet is provided by MichealArmstrong:

“Performance management is a means of getting better results from the

organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, objectives and standards.” (Armstrong, 2000).

Performance management, then, is a systematic approach to the management ofpeople ensuring that:

- A shared vision of the organization and its objectives is communicatedclearly by top management

- Individual goals are agreed that take into account wider organizationalgoals

- Regular feedback and reviews of progress are held

- The review process identifies training, development and reward outcomes

- The system is driven by line management

- The effectiveness of the whole process is regularly evaluated

Therefore, performance management relies on the establishment of clear, realisticperformance goals between the line manager and employees The employeeobjectives may be expressed in terms of targets, standards of performance ortasks to be completed

What is performance appraisal?

In simple terms, performance appraisal may be understood as the assessment of

an individual's performance in a systematic way, the performance beingmeasured against such factors as job knowledge, quality and quantity of output,initiative, leadership abilities, supervision, dependability, co-operation, judgment,versatility, health, and the like Assessment should not be confined to pastperformance alone Potentials of the employee for future performance must also

be assessed (Aswathappa, 2007)

A formal definition of performance appraisal is:

“It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development.”

A more comprehensive definition is:

“Performance' appraisal is a formal structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee organization and society all benefit.” (Aswathappa, 2007)

Difference between performance appraisal and performance management

For many years, the focus for performance evaluation was the system builtaround performance appraisal Increasingly, though, the establishment of morecomprehensive systems of performance management is taking root inorganizations as a mean of measuring individual effectiveness Appraisal systems

form a part of this – often, still, a central part.

Table below outlines the difference between performance management andperformance appraisal:

Table 1: Comparison between performance management and PA

Performance management Performance appraisal

Performance should be managed throughout

the year, not just at the annual appraisal

Done once a year with six monthly/quarterly reviews (not always done)

Performance management looks forward Review past performance – makes targets for future (not always done)Done for good of department and individual Often done to appease human resource department – individual suffers if done by

untrained line managerDone in line with organization’s objectives

and strategy

Organization’s objective and strategy are not always taken into consideration

I.1.2 Characteristics of performance appraisal system

Performance appraisal cannot be implemented successfully unless it is accepted

by all concerned Some of the important considerations in designing aperformance appraisal system are:

 First, they are formal systems with a set of rules and guidelines that must befollowed in their operation For example, the time between appraisals willusually be laid down It might take place every six months, at yearly intervals,

or occasionally even less frequently The position of the person who is tocarry out the appraisal will also be specified Up until recently, this wasusually the appraisee’s immediate superior, but as we shall see later,increasingly others are being brought into the process What is to be appraised

is also determined in advance

 Another feature of many appraisal systems is the requirement to provide acomprehensive assessment of all relevant aspects of performance Theinformation collected is recorded in some form, either as a written report, or

in the form of ratings of individual aspects of performance

 The purposes of the appraisal system and consequently the outcomes to beexpected from it are usually made explicit to both the appraiser and theappraisee Thus, for example, if pay rises are to be based on appraisal data,then this should be known up front to all concerned Similarly, if one of thepurposes of an appraisal system is to establish training and developmentneeds, then the appraisee should be aware that this is the case

 The basis of the typical performance appraisal system is a review of pastperformance, usually covering the period since the previous appraisal Oftenthere will be a direct comparison with the results from the previous year’sappraisal

 In most cases, there will be feedback to the appraisee on how he or she has

been assessed This is most often done in the context of an appraisalinterview The interview will typically include a discussion not only of pastperformance, but also of what needs to be done to improve performance in thefuture.

I.2 Objectives of performance appraisal

Data relating to performance assessment of employees are recorded, stored, andused for several purposes There are two important objectives: developmentaluses and administrative uses/decisions

Development uses

Performance appraisal can be a primary source of information and feedback foremployees, which is the key to their future development When supervisorsidentify the weaknesses, potentials, and training needs of employees throughperformance appraisal feedback, they can inform employees about their progress,discuss what skills they need to develop, and work out development plans

The manager’s role in such a situation is like that of a coach The coach’s job is

to reward good performance with recognition, explain what improvement isnecessary, and show employees how to improve After all, people do not alwaysknow where they could improve, and managers really cannot expectimprovement if they are unwilling to explain where and how improvement canoccur

The purpose of developmental feedback is to change or reinforce individualbehavior, rather than to compare individuals - as in the case of administrativeuses of performance appraisal Positive reinforcement for the behaviors theorganization wants is an important part of development

The use of teams provides a different set of circumstances for developmentalappraisal The manager may not see all of the employee’s work, but teammembers do Teams can provide developmental feedback However, it is still anopen question whether teams can handle administrative appraisal When teamsare allowed to design appraisal systems, they prefer to “get rid of judgment,” andthey apparently have a very hard time dealing with differential rewards Perhaps,then, group appraisal is best used for developmental purposes

on how well they perform their jobs The manager’s role historically has been as

an evaluator of a subordinate’s performance, which then leads to managersmaking compensation recommendations or decisions for employees If any part

of the process fails, the most productive employees do not receive the largerrewards, resulting in perceived inequity in compensation

I.3 Performance appraisal process

Figure 1: Performance appraisal process

Objectives of appraisal

The first step is to identify objectives for performance appraisal system Theobjectives might be the ones in the section I.2

Establish job expectation

The second step in the appraisal process is to establish job expectations Thisincludes informing the employee what is expected of him or her on the job.Normally, a discussion is held with his or her superior to review the major dutiescontained in the job place of formal performance evaluation

Design an appraisal performance

Designing an appraisal programme poses several questions that need to answers:

1 Formals versus informal appraisal

2 Whose performance is to be assessed?

3 Who are the raters?

4 What problems are encountered?

5 How to solve the problems?

6 What should be evaluated?

7 When to evaluate?

8 What methods of appraisal are to be used?

Performance interview

Performance interview is another step in the appraisal process that will describemore details in the section I.4.7

Use appraisal data for appropriate purposes

The final step in the evaluation process is the use of evaluation data The data andinformation generated through performance evaluation must be used by the HRdepartment

In one way or another, data and information outputs of a performance appraisalsystem can be useful in the following areas of HRM:

 Remuneration administration

 Validation of selection programmes

 Employee training and development programmes

 Promotion, transfer and lay-off decisions

 Grievance and discipline programmes

 HR planning

I.4 Factors affecting on employee performance

Studies (McCloy, R A., Campbell, J B and Cudeck, R., 1994) show that

employee performance depends on the following general factors:

Employee performance = f (K, S, A, M) where:

* K = Knowledge of facts, rules, principles, and procedures

* S = Skills to handle tasks

* A = Abilities to perform tasks

* M = Motivation to perform

Employee performance depends upon some blend of knowledge, skill, ability,and motivation People with in-depth knowledge (K) need to be hired It is alsonecessary to concentrate on building skills (S) and abilities (A), and to find ways

to motivate (M) employees to perform in ways that contribute to higherindividual and organizational performance For an organization to succeed, itneeds employees who perform well This involves not only good compensationstrategy and practice, but other well-developed human resource policies as well Motivation is the activation or energization of goal-oriented behavior Motivation

is said to be intrinsic or extrinsic Intrinsic motivation comes from rewardsinherent to a task or activity itself - the enjoyment of a puzzle or the love of

playing Social and educational psychologists have studied this form ofmotivation since the early 1970s Research has found that it is usually associatedwith high educational achievement and enjoyment by students Extrinsicmotivation comes from outside of the performer Money is the most obviousexample, but coercion and threat of punishment are also common extrinsicmotivations.

The basis of Maslow's theory of motivation (Maslow, 1954) is that human beingsare motivated by unsatisfied needs, and that certain lower needs need to besatisfied before higher needs can be addressed Per the teachings of AbrahamMaslow, there are general needs (physiological, safety, love, and esteem) whichhave to be fulfilled before a person is able to act unselfishly These needs weredubbed "deficiency needs." While a person is motivated to fulfill these basaldesires, they continue to move toward growth, and eventually self-actualization.The satisfaction of these needs is quite healthy While preventing theirgratification makes us ill or act evilly

Figure 2: Maslow's Hierarchy of needs

As a result, for adequate workplace motivation, it is important that leaderunderstands which needs are active for individual employee motivation In thisregard, Abraham Maslow's model indicates that basic, low-level needs such asphysiological requirements and safety must be satisfied before higher-level needssuch as self-fulfillment are pursued As depicted in this hierarchical diagram,sometimes called 'Maslow's Needs Pyramid' or 'Maslow's Needs Triangle', when

a need is satisfied it no longer motivates and the next higher need takes its place

I.5 Key elements of performance appraisal system

I.5.1 Performance standard

To know that an employee produces 10 "photons" per day does not provide a

complete basis for judging employee performance as satisfactory or not Maybe

15 photons are considered a sufficient day's work Performance standards definethe expected levels of performance, and are "benchmarks,” or goals,” or “targets"

- depending on the approach taken In a sense, performance standards definewhat satisfactory job performance is It is important to establish standards beforethe work is performed, so that all involved will understand the level ofaccomplishment expected When standards and goals are set, organization has tocommunicate the standards and goals in detail to all employees Because when heemployee understands the goals and standards, it is easier to point out why theyearned a certain score in a given criteria

The extent to which standards have been met often is expressed in eithernumerical or verbal ratings, for example, "outstanding" or "unsatisfactory" Itmay sometimes be difficult for two or more people to reach agreement on exactlywhat the level of performance has been relative to the standard Figure 2 showterms used in evaluating employee performance on standards at one company.Notice that each level is defined in terms of performance standards, rather thannumbers, in order to minimize different interpretations of the standards Salesquotas and production output standards are familiar numerical performancestandards A non-numerical standard of performance is that a sales man mustcommunicate well with his customers

Figure 3: Term used to define standards at one company

Someone external to the job, such as a supervisor or a quality control inspector,often sets standards but employees can write them effectively as well.Experienced employees usually know what constitutes satisfactory performance

of tasks in their job descriptions, and so do their supervisors Therefore, theseindividuals often can collaborate effectively on setting standards

I.5.2 Performance criteria

It is not difficult for all employees to agree that performance appraisal isnecessary in human resource management The question is about what exactlyare measured or assessed There are various criteria including SKAs, personaltraits, work behaviours and results (Milkovich & Boudreau, 1991) SKAsnormally come with the employees upon their employment Professional likedoctors, lawyers or accountants must have obtained their professionalqualifications before working in such professions

Traits

Traits are basically referred to the desirable characteristics like loyalty, initiative,and intelligence, trustworthy, kind, cheerful, brave or friendly Thesecharacteristics fit all jobs They are not related to organizational goals

Competencies

In the recent years, there has been a growth of using competency-based appraisal.Competency, as defined by (Boyatzis, 1982) is “an underlying characteristic of aperson,” which could be “a motive, trait, skill, aspect of one’s self-image orsocial role, or a body of knowledge which he or she uses.” Others describe whatconstitutes competence: “an observable skill or ability to complete a managerialtask successfully” (Jacobs, 1989) while (Woodruffe, 1990) writes about

“behavioural dimensions that affect job performance”

Behaviours and results

Behaviours and results are the bases for the two most objective appraisals:behaviourally-anchored rating scales (BARS) and management by objectives(MBO) Behaviours are the activities and tasks that individuals are engagedduring the course of duty while results are the outcome of these activities.Behaviours and result are observable and are more objective

I.5.3 Methods for performance appraisal

Traditional methods of performance appraisal

Essay appraisal method

This traditional form of appraisal, also known as “Free Form method” involves adescription of the performance of an employee by his superior The description is

an evaluation of the performance of any individual based on the facts and oftenincludes examples and evidences to support the information A major drawback

of the method is the inseparability of the bias of the evaluator

Straight ranking method

This is one of the oldest and simplest techniques of performance appraisal In this

method, the appraiser ranks the employees from the best to the poorest based ontheir overall performance It is quite useful for a comparative evaluation

Paired comparison

A better technique of comparison than the straight ranking method, this methodcompares each employee with all others in the group, one at a time After all thecomparisons based on the overall comparisons, the employees are given the finalrankings

Critical incident methods

In this method of performance appraisal, the evaluator rates the employee based

on critical events and how the employee behaved during those incidents Itincludes both negative and positive points The drawback of this method is thatthe supervisor has to note down the critical incidents and the employee behaviour

as and when they occur

Field review

In this method, a senior member of the HR department or a training officerdiscusses and interviews the supervisors to evaluate and rate their respectivesubordinates A major drawback of this method is that it is a very timeconsuming method But this method helps to reduce the superiors’ personal bias

Checklist method

The rater is given a checklist of the descriptions of the behaviour of the

employees on job The checklist contains a list of statements based on which the rater describes the on the job performance of the employees

Graphic rating scale

In this method, an employee’s quality and quantity of work is assessed in agraphic scale indicating different degrees of a particular trait The factors takeninto consideration include both the personal characteristics and characteristicsrelated to the on-the-job performance of the employees For example, a trait likeJob Knowledge may be judged on the range of average, above average,outstanding or unsatisfactory

Forced distribution

To eliminate the element of bias from the rater’s ratings, the evaluator is asked todistribute the employees in some fixed categories of ratings like on a normaldistribution curve The rater chooses the appropriate fit for the categories on hisown discretion

Modern methods for performance appraisal

Assessment centers

An assessment centre typically involves the use of methods like social/informalevents, tests and exercises, assignments being given to a group of employees toassess their competencies to take higher responsibilities in the future Generally,employees are given an assignment similar to the job they would be expected toperform if promoted The trained evaluators observe and evaluate employees asthey perform the assigned jobs and are evaluated on job related characteristics.The major competencies that are judged in assessment centers are interpersonalskills, intellectual capability, planning and organizing capabilities, motivation,career orientation etc assessment centers are also an effective way to determinethe training and development needs of the targeted employees.

Behaviorally anchored rating scales

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique thatcombines the graphic rating scale and critical incidents method It consists ofpredetermined critical areas of job performance or sets of behavioral statementsdescribing important job performance qualities as good or bad (for example, thequalities like inter-personal relationships, adaptability and reliability, jobknowledge etc) These statements are developed from critical incidents

In this method, an employee’s actual job behaviour is judged against the desiredbehaviour by recording and comparing the behaviour with BARS Developingand practicing BARS requires expert knowledge

Human resource accounting method

Human resources are valuable assets for every organization Human resourceaccounting method tries to find the relative worth of these assets in the terms ofmoney In this method, the performance appraisal of the employees is judged interms of cost and contribution of the employees The cost of employees includeall the expenses incurred on them like their compensation, recruitment andselection costs, induction and training costs etc whereas their contributionincludes the total value added (in monetary terms) The difference between thecost and the contribution will be the performance of the employees Ideally, thecontribution of the employees should be greater than the cost incurred on them

Management by objectives

MBO represents a modern method of evaluating the performance of personnel.Thoughtful managers have become increasingly aware that the traditionalperformance evaluation systems are characterized by somewhat antagonisticjudgments on the part of the rater There is a growing feeling nowadays that it isbetter to make the superior work with subordinates in fixing goals This wouldinevitably enable subordinates to exercise self-control over their performancebehaviors The concept of management by objectives is actually the outcome of

the pioneering works of Drucker (1954), McGregor (1957), and Odiorne (1965)

in management science Management by objectives can be described as “a

process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individuals’ major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contributions of each of its members” MBO thus represents more than an evaluation programme and

process Practicing management scientists and pedagogues view it as aphilosophy of managerial practice; it is a method by which managers andsubordinates plan, organize, control, communicate and debate

Total quality management

With the advent of TQM (Total Quality Management) and the extensive use ofteams, traditional performance appraisal systems have come under somecriticism For example, rather than motivating employees, conflict may becreated when appraisals are tied to merit pay and when that merit pay is based

on a forced ranking

W Edwards Deming, the founder of total quality management (Deming, 2009)has long been associated with the view that performance appraisals ought to beeliminated Many TQM proponents claim that performance appraisals areharmful

To enhance workplace efficacy, subordinates should:

 Know what is expected of them

 Have an opportunity to perform

 Know how well they are doing

 Receive assistance as needed

 Be rewarded (or penalized) based on results

360-degree feedback

360-degree feedback, also known as 'multi-rater feedback', is the mostcomprehensive appraisal where the feedback about the employees’ performancecomes from all the sources that come in contact with the employee on his job

360 degree respondents for an employee can be his/her peers, managers (i.e.superior), subordinates, team members, customers, suppliers/ vendors - anyonewho comes into contact with the employee and can provide valuable insights andinformation or feedback regarding the “on-the-job” performance of theemployee

360-degree appraisal has four integral components:

 Self appraisal

Subordinates appraisal gives a chance to judge the employee on the parameterslike communication and motivating abilities, superior’s ability to delegate thework, leadership qualities etc Also known as internal customers, the correctfeedback given by peers can help to find employees’ abilities to work in a team,co-operation and sensitivity towards others.

Figure 4: 360-degree feedback

Self assessment is an indispensable part of 360 degree appraisals and therefore

360 degree Performance appraisal have high employee involvement and alsohave the strongest impact on behavior and performance It provides a "360-degree review" of the employees’ performance and is considered one of the mostcredible performance appraisal methods

360-degree appraisal is also a powerful developmental tool because whenconducted at regular intervals (say yearly) it helps to keep a track of the changesothers’ perceptions about the employees A 360-degree appraisal is generallyfound more suitable for the managers as it helps to assess their leadership andmanaging styles This technique is being effectively used across the globe forperformance appraisals

I.5.4 Performance evaluator

 Supervisory rating of subordinates

Traditional rating of employees by supervisors is based on the assumptionthat the immediate supervisor is the person most qualified to evaluate theemployee’s performance realistically, objectively, and fairly Toward thisend, some supervisors keep performance logs noting what their employeeshave done These logs provide specific examples to use when doing ratings.They also serve to jog their memory, because supervisors cannot be expected

to remember every detail of performance over a six-month or one-year period.The manager’s boss to make sure that a proper job of appraisal has been donetypically reviews a supervisor’s appraisal Figure 4 shows the traditionalreview process by which supervisors conduct performance appraisals onemployees

Figure 5: Traditional review process by which supervisors conduct PA

 Employees rating of managers

The concept of having supervisors and managers rated by employees or groupmembers is being used in a number of organizations today A prime example

of this type of rating takes place in colleges and universities, where studentsevaluate the performance of professors in the classroom Industry also usesemployee ratings for management development purposes

 Team/Peer ratings

The use of peer groups as raters is another type of appraisal with potentialboth to help and to hurt For example, if a group of salespersons meets as acommittee to talk about one another’s ratings, then they may share ideas thatcould be used to improve the performance of lower-rated individuals.Alternatively, the criticisms could lead to future work relationships beingaffected negatively Peer ratings are especially useful when supervisors do nothave the opportunity to observe each employee’s performance, but other work

group members do.

 Self-ratings

Self-appraisal works in certain situations Essentially, it is a self-developmenttool that forces employees to think about their strengths and weaknesses andset goals for improvement If an employee is working in isolation orpossesses a unique skill, the employee may be the only one qualified to ratehis or her own behavior However, employees may not rate themselves assupervisors would rate them; they may use quite different standards Peopletend to be more lenient when rating themselves, whereas other research doesnot Despite the difficulty in evaluating self-ratings, employee self-ratings can

be a valuable and credible source of performance information

 Outside raters

Outsiders (customers or clients) also may do rating Outside experts may becalled in to review the work of a college president, for example; or a panel ofdivision managers might evaluate a person’s potential for advancement in anorganization Outsiders may furnish managers with professional assistance inmaking appraisals, but there are obvious disadvantages The outsider may notknow all the important contingencies within the organization In addition,outsider appraisals are time consuming and expensive

 Multisource ratings

As noted in the chapter opening discussion, multisource—or 360°—rating isgrowing in popularity Figure 5 shows graphically some of the parties whomay be involved in 360° rating Multisource feedback recognizes that themanager is no longer the sole source of performance appraisal information.Instead, feedback from various colleagues and constituencies is obtained andgiven to the manager, thus allowing the manager to help shape the feedbackfrom all sources The manager remains a focal point both to receive thefeedback initially and to engage in appropriate follow-up, even in a 360°system Thus, the manager’s perception of an employee’s performance is still

an important part of the process

Participants have seen multisource feedback as useful, but follow-up on thedevelopment activities identified because of the feedback has been found to

be the most critical factor in the future development of a manager’s skills.Appraisees are generally supportive of subordinate appraisal when theyreceive feedback from both their managers and their subordinates However,supervisors’ enthusiasm for subordinates’ ratings dims considerably whensuch ratings are used to help determine pay

Figure 6: Person being appraised in 360 degree feedback

I.5.5 Rating errors

Whilst completing the appraisal form, the appraiser is advised to exercisecaution, as there may be several pitfalls that may skew the assessment:

I.5.6 Performance cycle

When assessing individual’s performance, a period has to be set so that the

appraisees may receive feedback on their performance for improvement At thesame time, the appraisal period between the performance appraisal reports has to

be long enough for accomplishment of the job responsibilities Length of theappraisal period depends on the demand of the job In practice, it is generallyconvenient to appraise employees annually Newly recruited staff or contract-term staff will be appraised more frequently as they need prompt feedback

Even though when an organization has decided to appraise employee’sperformance annually, there is still a question of when to conduct There are twocommon choices between the anniversary-date and focal point approach(Mohrman, 1989) There two methods are actually alternatives to supplementeach other’s disadvantages

Anniversary-date approach

In the anniversary-date approach, performance appraisals are conducted on theanniversary of each employee's date of employment This approach helps tospread the workload of appraising officers who can then go into details of theirassessment Quality of the appraisals should therefore be better It is alsoconvenient to provide reference for assessing annual increment

However, it fails to provide information on the assessment especially whenmaking decisions like promotion or reward Up-to-date information may not beavailable when in need In addition, this approach lacks comparability It isdifficult to compare performance between employees for judgmental purposes

It is also difficult for the appraising officers to compare performance of theappraisees who were being assessed at different times of the year Throughoutthe year, environmental or organizational conditions may have changed, affectingthe appraising standards From another angle, it is equally difficult to monitorappraising officers' assessment It is not easy to observe whether certainappraising officers had been too lenient or too strict Questions of fairness andequity arise Implementation of an assessment panel for moderating andbalancing the ratings is almost impossible under this approach

Focal-point approach

Under focal-point approach, performance appraisals on all employees areconducted at the same time Assessment among employees becomes comparable.Timely and up-to-date information becomes available Appraising officers cancompare performance of their appraisees and may even rank them Appraisingofficers' assessment standards or style can be better monitored enabling bettercontrol on fairness and equity One of the disadvantages of this approach is thepossible lack of supervisory attention to details because the appraising officers'workload is piled up They may have less time to consider seriously and tocomplete the appraisal reports Prompt reference for annual increment may not beavailable

I.5.7 Performance interview

The appraisal interview presents both an opportunity and a danger It is anemotional experience for the manager and the employee, because the managermust communicate both praise and constructive criticism A major concern formanagers is how to emphasize the positive aspects of the employee’sperformance while still discussing ways to make needed improvements If theinterview is handled poorly, the employee may feel resentment, and conflict mayresult, which could be reflected in future work

Specifically, performance interview has three goals:

 To change behaviour of employees whose performance does not meetorganizational requirements or their own personal goals

 To maintain the behaviour of employees who perform in an acceptablemanner and

 To recognize superior performance behaviours so that they will becontinued

Raters offer feedback to the ratees through several methods-tell and sell, tell and

listen, problem solving and mixed In tell and sell, also called directive interview,

the interviewer let assesses know how well they are doing and sells them on the

merits of setting specific goals for improvement, if needed The “tell and listen”

interview provides the subordinates with chances to participate and establish adialogue with their superiors Its purpose is to communicate the rater'sperceptions about the ratee's strength and weaknesses and let the subordinates

respond to these perceptions In the problem solving or participative interview,

an active and open dialogue is established between the superior and thesubordinate Not only are perceptions shared, but also solutions to problems are

presented, discussed, and sought Mixed interview is a combination of tell and

sell and problem solving interviews

Whatever are the approaches followed, the emphasis in the interview should be

on counseling and development and not on criticism, witch-hunting and passing Because of the significance of appraisal interview, every effort must bemade to make it effective

buck-CHAPTER II: FSOFT AT GLANCE

The second chapter introduces Fsoft in some aspects such as Fsoft’s history, organizational structure, experiences and expertise, financial activities, and development activities to its staff This chapter will help reader to have an understanding overview of Fsoft and have the context to continue read the current performance appraisal system in Fsoft in the chapter III.

II.1 Fsoft history

Fsoft is the leading provider of software outsourcing services in Vietnam With alargest pool of young and highly capable human resources in the area, Fsoft hasdelivered high quality services, such as software development and maintenance,ERP implementation, quality assurance testing, migration, embedded systems,and many others Fsoft also prides on its extensive experience in various domainsincluding banking & finance, telecoms, manufacturing, insurance, governmentand public, retail, infrastructure, and IT services and utilities

Started in 1988 as a division of FPT Corporation, the biggest ICT Company inVietnam, Fsoft has developed rapidly and become a company of internationalstature We have presence in 3 biggest cities of Vietnam (Ha Noi, Da Nang, HoChi Minh City) and in all major IT markets including Japan (Tokyo, Osaka),South East Asia (Singapore, Malaysia, Thailand, the Philippines), Europe(France), United States and Australia Fsoft plans to open representative offices

in regions and countries where we have already established presence

In order to provide our customers with ever increasing quality services, wehave continued to improve through technological advancements, talentcultivation and infrastructure upgrades We consistently pledge to providesoftware services of the highest quality for overseas markets

Vision

“In our enduring endeavor to become a world-class player in the software

industry, we at Fsoft relentlessly strive to expand our knowledge, provide customers with products meeting international standards, and offer dedicated software services, so as to contribute, as best we can, to the making of a new,

prosperous Vietnam.”

Growing history

Table 2: Fsoft's history

1988 - Started as a software division of FPT Corporation

1999 - Launched software outsourcing business

2000

- Established first Offshore Software Development Center (OSDC)with Harvey Nash UK

- Cooperated with NTT-IT, our first Japanese customer

2001 - Selected by IBM to be independent software service supplier

2002 - Partnered with IBM Japan

2003 - Officially registered as Fsoft company

- Partnered with IBM US, Hitachi Software, Nissen, TIS

2004

- Became Fsoft Joint Stock Company

- Opened Ho Chi Minh City Branch

- Opened Tokyo office

- Partnered with IBM France, Mizuho Trust Systems, Hitachi Ltd

2005

- Opened Da nang Branch

- Partnered with Toshiba Joho, Hitachi Joho

- Established Fsoft Japan Ltd

2006

- Became a Gold Certificated Partner of Microsoft

- Become a Core Partner of HitachiSoft

- Partnered with NTT Data, HP Japan, Panasonic, JIP, Argo 21 (Canon

IT Solutions), IBM Singapore, IBM Benelux

2007

- Established Fsoft Asia Pacific Pte Ltd in Singapore

- Partnered with Neopost, the number two largest mail processingcorporation in the world

- Achieved Microsoft Business Solutions Competency - MS

- Successfully completed the largest software project in South EastAsia

2008

- Established Fsoft Europe Ltd in France

- Established Fsoft Malaysia Sdn Bhd in Kuala Lumpur, Malaysia

- Established FPT USA Corp in San Mateo, US

- Established FPT Australasia Pty Ltd in New South Wales, Australia

2009

- FPT Japan became “PARTNER OF THE YEAR” of JapanInformation Processing Service Co.,Ltd (JIP), the leading stock andfinance software company in Japan

- Awarded the Best Software Company, Company with the BestManagement Procedures, and the Highest Revenue Company byMinistry of Communications and Information - 2008

- Established Fsoft Enterprise Solution Company Limited

II.2 Organizational chart

Fsoft is organized as in the below figure with five level of management:

Company – Branch – Operation Group/Strategic Unit – Division – Project Team

 On the top is board of directors; below are companies The highest executive officer these companies are General Director

 Branches are child companies The head of branches are Directors.

 Groups or Units are business/operating centers Head of groups are Group Directors

 Divisions are operating department in each groups Head of division are Division Head

 Project teams are lowest level of management including all members in the development team The project team leader/manager is responsible for taking lead of project team

Figure 7: Fsoft organizational chart

II.3 Financial activities

With worldwide expanding strategy, at present, Fsoft has five major markets Thebiggest and the most profitable market is Japanese market accounting for 61percents of sales revenue The second biggest market are in Asia Pacific focusing

on Singapore, Malaysia and Philippine, accounting for 13 percents EU and USmarket are equal with 10 percents of sales volume focusing on United State,France and England Domestic market with Unilever and Vinamilk customer isaccounting for 6 percents

Figure 8: Market contribution to Fsoft revenue

With the average growing rate of 41 percents, revenue in 2005 was just 9.2million USD and in 2009, sales volume reaches 47 million USD as estimated.Fsoft is considered as outsourcing service company with a growing rate of theworld’s fastest

Figure 9: Fsoft revenue (2005-2011)

Here are financial figures during 2005-2008:

Figure 10: Highlighted financial figure (2005-2008)

II.4 People development

Our staffs are at the core of the development and execution of our organizationalstrategy Understanding that leadership, cohesion, innovation and loyalty play acrucial role in our company's success, we have invested heavily in our people andhave acquired a large pool of young, talented, IT professionals who have theability and desire to conquer new technologies fast and deliver them to ourclients successfully

II.4.1 Largest pool of software engineers in Vietnam

Fsoft currently has the largest pool of software engineers in Vietnam Thenumber of employees speaks well about its fast development and attractiveness

In 2004, Fsoft has all 510 staff and increases to 2,800 staff in 2008

Figure 11: Fsoft human resource (2004-2009)

II.4.2 Continuous development of human resource

Our staff mainly come from top IT universities in Vietnam and overseas, fromspecialized IT educational institutions such as FPT Aptech (FPT is a MasterFranchise of Aptech India, a world famous IT educational institution in India)and through head-hunter channels

After the completion of internship or orientation training program (for newcomers), there is a wide range of tailored training and examination preparatorycourses in the company for staff to attain professional qualifications, enhancetechnical and management skills for relevant positions In addition to in-housetraining, we encourage lifelong learning and offer tuition fee subsides to thosewho attend recognized classes or certification examinations at academicinstitutions

II.5 HRM context in Fsoft

II.5.1 Fsoft’s HR principle

With HC centric principle, Fsoft should not be very high tower of structure Itshould build large and spread out like Great Wall Below figure is the model ofFsoft structure

Figure 12: "Fsoft structure with Customer" HRM principle

Regarding to this model, OGs are building blocks, DBs are foundations, HOs arecohesive material, and OBs are tops of watchtower to pull “Fsoft wall” reach outeverywhere In Fsoft, team is set up whenever there is an opportunity and theleader of the team will be the one catching up it The leader of team presenteverywhere – He is the person orienting and motivating other people

The model minimizes the distance between any employees in Fsoft with itscustomer It makes customer closed to company and make employeesunderstand, serve customer much better When employees understand and servetheir customer better, they will grow more rapidly and in the right way

The model helps OGs work independently and when needed, they can merge intobig team or army to take bigger opportunities When OGs are too big, it will bedivided into small OGs OGs here are companies with director legally If Fsoft issmall market, OGs are entities (companies) cooperating and competing inspecific framework to grow So there are the economical relationships amongstOGs, OGs with BOs and due to this, it reduces significantly command and

Delivery

Manage

Offshore care, support

control in management style.

II.5.2 HR practices

Recruitment

While recruiting new employees, Fsoft took adequate care to identify the rightcandidates On the qualities that Fsoft looked for in a candidate, Bui Hong Lien,CEO of Fsoft said, "We focus on recruiting candidates who display a high degree

of 'learnability.' By learnability, we mean the ability to derive generic knowledgefrom specific experiences and apply the same in new situations

We also place significant importance on professional competence and academicexcellence Other qualities we look for are analytical ability, teamwork andleadership potential, communication and innovation skills, along with a practicaland structured approach to problem solving."

Training

Training at Fsoft was an ongoing process When new recruits from collegesjoined Fsoft, they were trained through fresher training courses (orientationtraining) They were trained then on new processes and technologies As theyreached the higher levels, they were trained on project management and laterwere sent for management development programs, followed by leadershipdevelopment programs

CHAPTER III: CURRENT PAS IN FSOFT

The third chapter introduces current performance appraisal system in Fsoft including purpose, evaluator, standard, criteria and so on Reading this chapter, reader will have whole picture of present performance appraisal system and might identify differences between theoretical base and reality.

III.1 PAS purpose

In Fsoft, performance appraisal is a process designed to evaluate, manage andultimately improve employee performance Following are the main objectives:

 To increase salaries, positions and remuneration for employees

 To ensure that the Fsoft has an explicit system for setting objectives

and standards with all its employees and for monitoring and evaluating

their performance

 To ensure that the Fsoft has a fair and objective system for the

evaluation of performance

III.2 Objects of PAS

Any employee who joins Fsoft on or before 31 June for the first checkpoint or 31Dec for the second checkpoint is eligible for performance appraisal Allemployees (staff, project manager, department manager, director…) use the sameelements of performance appraisal system such as performance standard,performance criteria, method to appraisal, and period of reviewing and so on

III.3 Performance appraisal standard

The checkpoint rating scale is defined as below:

 Excellent: Performance always exceeded expectations by major excellentachievements and highly took initiative at work

 Very good: Performance consistently exceeded beyond expectations bysome special accomplishments benefiting the Unit

 Satisfactory: Performance consistently met expectations effectively andproperly and demonstrated professional proficiency

 Bad: Performance did not meet all expectations and needed improvement

 Very Bad: Performance always did not meet expectations

Employee will be evaluated by a rating of excellent, very good, satisfactory, badand very bad with the weight accordingly

III.4 Performance appraisal criteria

The evaluation criteria in CHE include:

 Work results (Weighted = 80%): Completion rate of each task in previousregistered CHE (Every single task should contain the following parts:description, result, quality)

 Skills (Weighted = 20%):

o Professional skill: Skills are required to perform the tasks This sectiondoes not mention examples of professional skills or list all skills thatemployee rate

o Technology skill: Skills apply new technologies to work This sectionalso does not mention examples of Technology skills or list all skillsthat employee rate

III.5 Performance evaluator

PA is a common practice in the life of any organization Although there is nowritten policy as to the system of performance evaluation, according to theresponse obtained through the questionnaire and the interview fromconcerned personnel in Fsoft employees are evaluated based on the jobanalysis and job description described to them An employee is evaluated andappraised by the following participant

Employee him or her self

CHE is made by requesting the employee to explain the major activities and taskshe/she has performed during the appraisal period In this regard, employees are alsogiven the opportunity to describe about if there is any impediment faced indischarging their responsibility There is a space prepared to list out theimpediments clearly in the first page of the performance appraisal format.Employees are free to describe any opinion regarding their needs, requirement,problems and any technical aid or material required to perform their task properly

The senior management (the Unit Head)

He is the final person in the evaluation ladder that will approve or disprove bysigning the performance evaluation format and kept it as a complete document

 Employee writes employee checkpoint form as self-review and then submits

 Upon examining the employee's self-statement, the Unit Head is required toaccept or approve the review

III.6 Performance appraisal method

Fsoft uses graphic rating scale as method to evaluate its staff Staff evaluates hisquantity and quality of work and some skills in a graphic scale For example,staff can be evaluated as Excellent, Very good, Satisfactory, Bad and Very bad

III.7 Performance appraisal interview

In the interview, appraisee has to explain why they evaluate at the specific leveland tell managers some expectations/comment that do not mention in CHE.Before interviewing, manager has their own evaluation of their staff andnormally they will not change their rating For some exceptional cases, afterdiscussion with manager in the interview, the result of CHE is determined

III.8 Performance appraisal period

There are two checkpoints reviewing employee performance in Fsoft from 27May to 20 June for the first evaluation and from 17 November to 13 Decemberfor the second evaluation each year

CHAPTER IV: RESEACH METHODOLOGY

The fourth chapter will go through profile of respondents, describe questionnaire for survey and analyze data collected

IV.1 Introduction

Respondents for this survey are key persons only Sampling is 150 divided intotwo categories: key persons are working at Fsoft and key persons did not work atFsoft anymore The survey was carried out in December 2009 and 150questionnaires were sent key persons After three weeks, 108 responses werereceived, corresponding to response rate of 72% All the responses are treatedequally

IV.2 Questionnaire

As mentioned in the theoretical base, employee performance = f (Skills,Knowledge, Ability, Motivation) Therefore, questionnaire of the survey have toask employees about those factors affecting on their performances Thequestionnaire is composed of six sections as following:

- Section 1: Respondent’s profile

This information of respondents is their name, email, age, gender, andstaying in Fsoft or not (question 1 to question 5)

- Section 2: Feedback on the current performance appraisal system

o Question 6: Satisfactory level of current performance appraisalsystem

This question is to know the completely satisfactory level ofcurrent performance appraisal system from key person

o Question 7: Problem of current system

This question asks respondents for choosing consensus level aboutstatements relating to fairness, criteria, method, and linkage to paysystem, and separate system of current performance appraisalsystem Objective of this question is to know the problems ofpresent performance appraisal system It will be helpful to propose

a new performance appraisal system in the next chapter

- Section 3: Knowledge

o Question 8: Educational level

This question is to know distribution of educational qualificationamongst key persons It assumes that the higher level of education,the more employee perform their job

o Question 9: Professional certificate and training

This question is to know which certificate and training program keypersons have It also assumes that each time employee awards new