Berger Paints Bangladesh Ltd.

Quality Policy

We at Berger Paints Bangladesh Limited are

Committed to achieving total

consumer satisfaction.

We commit to project ourselves as an ethical

and socially responsible company.

We commit to continue as the market leader

through consistent sales growth,

increasing productivity, and developing new

products befitting consumer needs.

We shall ensure continual improvement

in our operations through utilization of our

highly professional and dedicated team,

proper process management and

participation of our stakeholders

  

Berger Paints in the Economic Development of Bangladesh

Berger has been involved in paint business since 1950 in Bangladesh. This has been a footstep to bring more than 230 years of global paint industry experience into Bangladesh. Over the decades, Berger has evolved to becoming the leading paint Company in this country and has diversified into every sphere of the industry – from Decorative Paints to Industrial Coatings, from Marine Coatings to Powder Coatings, Home Décor, Color Consulting and many more.

In Berger, around 450 employees are working and leading their lives conveniently in comparison with other similar companies.  Berger is playing an important role in the Paint Sector of the country and flourishes the economy of Bangladesh in the following way:

 

1. Industrialization: Berger started its production immediate after independence that was the courageous footsteps of Industrialization in Bangladesh.
2. Employment: Total employees now at Berger around 500 (five hundred) and they are availing better and competitive Salary and Benefits compared to other similar companies of the country.
3. Quality of Production: Total products launched in Bangladesh by Berger Paints are the product of its own factories in Bangladesh. Now, more than 25 types of Paints and related items are produced in different categories at BPBL.
4. Saving Foreign Currency: Berger Paints Bangladesh Ltd. producing & selling goods to Bangladesh Market, so, the country is saving a huge amount of foreign currency because there is no need to purchase or import paint items.
5. TAX & VAT Paid:  Berger Paints Bangladesh Ltd. paid a huge amount of VAT & TAX to the Government fund every year.
6. Using native country’s product: Berger Paints Bangladesh Ltd. using a moderate amount of Raw materials produced in our country.
7. International Standard: Berger Paints Bangladesh Ltd. maintains and produces International Standard Paints.
8. 8.      Infrastructure Development:  Most of the paint is used in the construction work. People can use best quality paint with cheaper price.
9. Image Building: Berger Paints Bangladesh Ltd. as a multinational company is building images of the country.
10. Social Contribution: Berger Paints Bangladesh Ltd. is committed to itself as an ethical and socially responsible Company.

  Performance Analysis of Berger Paints Bd. Ltd.

   National Paint Market

Bangladesh paint market had been experienced a good growth of 8-10% per annum consistently in the late 90s mainly because of a boom in real estate development which now seems to have reached a saturation point.

A market growth trend analysis for Bangladesh during 2001 – 2006 is furnished below

Table 1: Market growth trend analysis

A good number of local paint manufacturing companies (40 organized and at least 50 more in the informal sector) has been operating in this small market.

The paint industry can be broadly categorized into four segments: Decorative, Industrial, Marine and Automotive paints. The category wise existing market condition is given in the following table:

 

 

Table 2: Category wise paint market size in 2006

Figure 1: Segments of Paint market

 

 

Supply Chain Management / Channel of Distribution

The distribution reach of the company is set basically on the three broad categories: Urban, Semi Urban and Rural. The standing of the major companies on the basis of the distribution reach is given below:

 

Table 3: Distribution Reach of BPBL & Competitors

 Strategies Pursued by the Company:

 

Corporate Strategy of Berger: Berger’s corporate strategy is to build larger market share through providing quality and speedy service. Its primary focus is to strengthen its current position by provided value added customer service. Berger is also aiming to expand its operation in foreign countries in the long run.

 

Berger Paints Bangladesh Limited is committed to achieving total consumer satisfaction. It commits to project itself as an ethical and socially responsible company. Berger commits to continue as the market leader through consistent sales growth, increasing productivity, and developing new products befitting consumer needs. Berger ensures continual improvement in our operations through utilization of our highly professional and dedicated team, proper process management and participation of our stakeholders.

 

Business Strategy: Berger’s strategy can be termed as the differentiation strategy, the unique attributes and characteristics of the product that provide superior value to its customers. The core competency of Berger is its Quality product, Corporate and Brand Image, Skilled technical human resources, Rapid product innovation through R & D.

 

Market Segmentation: ­For segmenting total paint market, Berger uses more than one basis. Initially, total business of the Company is segmented on the basis of customer types. Berger segments total market as Decorative, Industrial & Marine.

 

Product Differentiation: Berger is committed to offer quality products that satisfy consumers’ ultimate desires from paints with the help of state-of–art technology. Berger always believes in one step ahead in offering new product to create more value for customers’ money.

 

Premium Price: Generally Berger follows cost based pricing method. After calculation of the total manufacturing cost (Direct & Indirect RM cost, Direct & Indirect Labor cost and Manufacturing overhead cost) and adds 20% GP to get the price point of the product. But this is not the rule of thumb in pricing the Berger products. Competitor based pricing policy is also followed as well because of the increased competition in the paint market.

 

Promotion / Communication Mix: Advertising, Sales Promotion, Publicity, Public Relations.

 

Technological Innovation through Research and Development (R & D)

 

• Product development – New product development, Improvement of existing product
• Cost reduction strategies
• Substituting Raw materials with new source and new grade
•  Quality Improvement, Competitors’ Product Study
• Complain Handling with care
• Providing Customer Service- Providing Panel, Sample Delivery
• Train personnel of different Departments / Painters, Distributors, Dealers

 

Channel of Distribution

 

Effects of Strategy on Performance

Business Performance

Market Share Analysis: Market Share is one indicator of the success Berger has achieved through implementation of Differentiation strategy. At present Bangladesh paint industry has 6 companies who have significant market share. Berger Paints Bangladesh Ltd. is operating as the market leader and enjoying almost 52% of national paint market share.

 

 

Table 4: National Standing (Volume Share %)

****Source: Retail Store Audit by AC Nielsen

Figure 3: Market share of different companies

Positive Sales Growth: The business level strategies that are taken to increase sales and productivity at Berger Paints have so far being proved to be successful as the company is experiencing double digit sales growth for the last few years. The following data represents the scenario.

 

Table 5: Sales Trend Analysis

      Ratio Analysis: The strategic indicators of Berger Paints in 2006 are as follows:

1        Sales Growth – 35%

2        Gross operating profit – 444 Million

3        Net Profit after tax – 314 Million

4        EPS – 13.54

5        ROE – 64.02 %

6        Current Ratio – 1.91:1

 

Competitor Analysis: The competition in paint sector is very intense. Berger manufactures its products at its local factories and it competes with the present local manufacturers. The number of paint importers is not very high and the competition here is not very structured.

Berger can successfully supersede these local manufacturers/importers with its skilled and experienced Human Resources at all levels, Technical innovation through R & D, Corporate Image, latest Machineries and equipments, Quality Raw Materials, Supply chain management, strong Financial base etc. The experience of almost 55 years in the paint industry and the possession of the best brand image in paint industry will back Berger to be successful against the competitors. Some Competitors are one step ahead than Berger due to their use of the unethical and unfair means of avoiding tax and some times giving contaminated product.

Constraints to Effective Performance

• Insignificant presence in the international satellite channels
• Perceived as premium priced company at semi-urban and rural market
• Higher dependence on large dealers
• Consumers’ knowledge gap about paints and painting system
• Fierce competition in the Bangladesh market
• Credit-driven market
• Strong command of few dealers in the market through sub-dealer network
• Unethical and corrupt practices by the local companies
  • Low priced imported products are entering due to trade liberalization; specially from China and South East Asia

Area of Operation

Berger Paints operates in three broad segments of the paint industry.

Decorative Paint

• The objective is to beautify the surfaces with protection from corrosion and erosion
• This business category mainly targets household segment
• Products are being offered to the consumers through a dealer network
• Products fulfill the aesthetic value of the consumers
• Major revenue earning business area of BPBL

 

Industrial

• Tailor made products to cater to the specific needs of customers
  • Products give protection to the surfaces in extreme situations like severe hazardous environment, high temperature, movement of heavy materials and machinery etc.
  • Direct marketing approach is being used to promote the Industrial Coatings
    • Main customer groups: Garments Factories, Chemical Plants, Fertilizer Manufacturing Plants, Consumer Durable Manufacturing Plants etc.

 

Marine

• Products are being offered mainly through Direct marketing approach.
• Dock Yards, Bangladesh Navy, Passenger Ships are the main user groups.
• Market is mostly concentrated in Dhaka and Chittagong.

Manpower Structure

It is consisted of more than 300 employees of whom about 160 are general workers and the rest are White Collar employees. These employees are working in different factories and depots of the company.

The positional hierarchy of the company is as follows:

 

• Managing Director
• Director
• General Manager (Executive -I)
• Executive -II
• Senior Manager
• Manager-I
• Manager-II
• Assistant Manager/ Management Trainee
• Officer (I, II, IIIA, IIIB, IV)

Major Departments of the Company

Major functions, responsibilities & other necessary aspects of the major departments of the company are described below:

Marketing Department: Until 1990, business practice of the Berger Paints Bangladesh Ltd. Was very much conservative in terms of market presence. In 1993, marketing department started. Thereafter Berger has been growing very rapidly in terms of market share and sales growth. In 1994, just after the year of launching marketing department, sales growth was 34%. Berger is enjoying 48% share of the total paint market and established itself as the champion of the market through its commitment, offering the most quality paint and providing the maximum value for customers’ money, to the customers.

Total business of the Berger Paints Bangladesh Ltd. is categorized into three major heads. These are:

• Decorative
• Industrial
• Marine

Although three categories comprise the total business of Berger, contribution of the Decorative sector is 85% (app.) of the total turnover. Because of its contribution, Decorative is considered the main business of the organization and is getting more priority.

Three categories of paints are promoted to the market under three brand names. Decorative is offered to the market under the brand name of “Robbialac” and Industrial & Marine are of “Jensolin” & “Seaborne” respectively. Marketing department handles mainly decorative paints.

The major activities of marketing department are as follow:

• Estimation of sales growth
• Preparing Marketing Mix
• Promotion/Communication Mix

 

Sales Department: This department is broadly categorized into two parts: Decorative and Industrial & Marine. These are respectively discussed in brief below

 

Decorative Sales Department: This department is headed by Director Operations who is assisted by GSM (Decorative). 7 strategic depots manage sales activities all over the country. Activities of all seven strategic depots are monitored and controlled by the Sales (Decorative) Office situated in Corporate Office.

 

Major Functions of Decorative Sales Department:

• To prepare National Sales Budget detailing sales value, volume & growth and translates it into monthly and half-yearly budget.
• To express the national sales budget in terms of Sales Area, Zone, Product & Shades of Color.
• To develop sales strategies to achieve sales budget.
  • To respond to complains of customers efficiently and take necessary action(s) for arriving a favorable solution to the problem.
  • To maintain relationship with existing dealers of the Co. and develop new dealers.
    • To suggest marketing department to introduce incentive programs to enhance sales volume.
    • To scan current market condition including competitors’ current and probable future action pattern, customers’ preference, dealers’ business situation and etc.
    • To monitor sales position of the company. and initiate necessary actions if any deviation exists.
    • To arrange sales review meeting timely basis.
    • To ensure smooth distribution of paints
    • To train the sales personnel to handle customers efficiently.

 

Sales (Industrial and Marine): This department is headed by Director Operations who is assisted by the Manager – Industrial & Marine for all the activities & performances of the department. These business groups contribute 15% (app.) of the total turnover of the BPBL. All paints of these groups are offered to the customers under two categories: premium products are under two different Brand names that is, Jensolin and Seaborne for Industrial and Marine paints respectively and the other category is Economy products. Economy products are represented by another two different Brand names Berger Industrial and Berger Marine.

 

Special Features of the Business Groups in BPBL

• All customers are institutional
• Direct marketing (Personal Selling) is the only mean to promote the brand.
• More resistance power than decorative products.
  • These two categories include high performance coating paints and other protective coatings.
  • Lower discount rate than decorative paints. 2% discount on MRP for Industrial paints and 3% for Marine paints are offered, whereas discount rate is 5% for decorative paints.
  • Number of customer is limited. But consumption per customer is much higher in this area than decorative area.
  • Incentives are rarely offered to the customers. Sometimes, volume incentives are offered to the regular customers during the buying of bulk quantities.
  • Institutional customers, if they buy decorative paints, buy decorative paints through Industrial and Marine sales personnel.

 

Industrial Sector: Only in Dhaka and Chittagong sales area, individual sales personnel promote the paints to the current and potential customers directly. In other areas, sales people of Decorative communicate with prospects and collect order & place it to the concerned department of industrial paints. Sales people engaged in Dhaka and Ctg. with Industrial Paint perform the duties as same as the sales people of decorative. Some dealers in Dhaka and Ctg. are involved with the trade of industrial paints with smaller quantities.

 

Types of Customers:

Industrial Customers are of two types:

• OEM customers: This is the Original Equipment Manufacturer who uses the paint as the raw material and eventually buys frequently.
• Protective Coating (PC): This group is the infrequent buyers of the industrial brands. Most of their consumption is for the maintenance purpose.

 

Marine Sector: Like Industrial Paints, individual sales personnel are engaged in Dhaka and Ctg. to communicate with the customers. All products are promoted in the market under “Seaborne” and “Berger Marine” brand name. Most of the transactions (large volume) take place through personal selling although 12 dealers in Dhaka & 6/7 dealers in Ctg. offer Marine Paints to the customers.

 

Finance Department: Director – Finance who is assisted by Financial Controller (FC), Accounts Manager and Cost Accountant Manager, heads finance department. Three sections – finance, personal accounts and costing, perform all activities of the department.

 

Activities of Finance Section: 

Financial Controller is responsible for all the activities of this section. This section handles absolute debtors (customer related) related all activities.

 

Bill Payment System: Bills are considered as external & internal. Payment of internal bill is made as early as possible. But external bills are paid twice, 10th and 25th day of the month, in a month. All bills are approved by DFM provided that there is no provision for VAT and amount of bill is not more than Tk. 5000. If the amount of bill is more than Tk. 5000 to Tk. 10,000, then, GM decides on the bill. There after, only authorized person to approve the billing amount is MD.

 

Private Accounts Section: An Accounts Manager who deals with Salary Payment, Group Insurance, Foreign Affairs and issues related with corporate heads this section.

 

Costing Section: A Cost Accountant Manager who is assisted by four Officers heads this section. Main function of this section is to find out per liter Production Cost of a paint category. This section finds out Gross Profit (GP=MRP– Dealers’ Commission – Total Production Cost) of a specific category of paints and shows more than one price points by considering different GM percentage on total production cost of that paint. In addition, this section calculates the total costing and GP of PTC (Pre Treatment Chemical) and other finished goods imported from abroad. Moreover, this section performs inventory valuation activities including factories and depots. Costing section prepares profitability analysis report for most of the paints. If profitability of any paint is not satisfactory they inform relevant authority.

 

Other Sections in Finance Department: VAT and Audit activities are also included in Finance Department. Activities of these two sections are briefly described below:

Audit: An internal auditor performs audit-related activities in Berger. The person who is responsible for auditing, reports to Director- Finance directly. External auditors are also employed for time-to-time basis. Internal auditor audits sales depots twice in a year, generally in June & November. And yearly audit of total organization takes place once in a year.

 

VAT: This section assesses VAT amount that has to be deposited to Govt. exchequer on the bill payable to the external parties. Moreover, some external parties deposit VAT amount in favor of Berger Paints and that amount need to be adjusted with financial activities of Berger. An Assistant Manager, reporting directly to the Director-Finance. and an Officer manage the activities of the section.

 

Planning and Materials Department: Main responsibility of this department is to collect raw materials at right time from right vendors at right price and at right quantity. Moreover, this department also purchases required machinery and other stationery necessary for the organization.

Functions of P & M Department:

• To find out material and machinery sources: This department continuously scans the Internet, Literatures and other related publications to identify new sources from where raw materials & machinery can be collected.
• To communicate with the sources: They communicate with the sources and collect information regarding price, quality, terms and conditions of payment & other relevant matters about raw materials and machinery.
• To buy raw materials, machinery & other necessary items from internal (domestic) and external sources.
• To develop new vendors: When raw materials source is very much limited, sometimes buyers have to accept unfavorable terms and conditions because of not having sufficient bargaining power. To gain adequate bargaining power this department tries to develop new vendors in areas where they are in disadvantageous position.
• To reduce the cost of raw materials: If access power to different vendors is high, this department collects raw materials from the substitute vendors to get some types of advantages (such as lower price) provided that this source meets all other criteria.
• To find out substitute raw materials.
• To send the sample to R&D for assuring the quality of the raw materials.
• To provide support to the Marketing Department in developing container.
  • To provide new ideas regarding raw materials, packaging, machinery and help to reduce cost.
  • To support R&D to make new formulations.
  • To suggest maintenance department for doing their jobs efficiently.
  • To buy gift items for marketing department.
  • To buy shade cards for Marketing Department from India & Singapore.
  • To collect color bank materials from Italy.
  • To buy raw materials for Jenson & Nicholson.

 

Research and Development Department: R & D is playing very vital role in the operations of Berger Paints Bangladesh Ltd. Their continuous dedicated efforts help the organization to offer different types of products ranging from economy paint such as JSE & JSD to premium brand of paint such as Weather Coat (WC) & LSE to solve different motives of different users.

 

Major functions of R&D are described below:

• Product development: Two type of product development activities are performed by R&D. Product development activities of R&D are depicted below:
• New product development
• Improvement of existing product
• Cost reduction exercise
• Substituting Raw materials with new source and new grade
• Complains Handling (Site visit, Sample testing
• Providing Customer Service (Providing Panel, Sample Delivery
• To Train the personnel of different departments

 

Production Department

 

The Production Process:

The production process consists of the following departments:

 

Raw Materials Department: There are various raw materials that are required for producing different paints. These raw materials are gathered both from local and international sources. At the beginning of the year, the total projected raw materials requirement is submitted to the department and the department sources out the raw materials and ensures the availability of the materials at the right time. They are also responsible for storing and dispatching of the raw materials.

 

Water-based Plant: All types of Water-based products are produced in this plant. The major products produced here are SPD, PSD, APE, LSE, Weather Coat, Tartaruga, Water Sealer and Roofing Compound. There are 5 types of machine here – TSD1, TSD2, Master Mixture, HSD4 and HSD7.

 

Solvent-based Plant: All the solvent-based paints are produced here. The major products are RSE, PSE, Wood Keeper, Hammer Finish, Epoxy paints, Plastron Sealer, Stoving Paint, Various Primers and all other solvent-based paints.

 

Durocem Plant: As Durocem is a different type of product (offered in powdered shape), a separate plant has been established for the production of Durocem. As Durocem is basically cement paint, the main raw material used for producing Durocem is White Cement. The

Table 5: Sales Trend Analysis

      Ratio Analysis: The strategic indicators of Berger Paints in 2006 are as follows:

1        Sales Growth – 35%

2        Gross operating profit – 444 Million

3        Net Profit after tax – 314 Million

4        EPS – 13.54

5        ROE – 64.02 %

6        Current Ratio – 1.91:1

 

Competitor Analysis: The competition in paint sector is very intense. Berger manufactures its products at its local factories and it competes with the present local manufacturers. The number of paint importers is not very high and the competition here is not very structured.

Berger can successfully supersede these local manufacturers/importers with its skilled and experienced Human Resources at all levels, Technical innovation through R & D, Corporate Image, latest Machineries and equipments, Quality Raw Materials, Supply chain management, strong Financial base etc. The experience of almost 55 years in the paint industry and the possession of the best brand image in paint industry will back Berger to be successful against the competitors. Some Competitors are one step ahead than Berger due to their use of the unethical and unfair means of avoiding tax and some times giving contaminated product.

Constraints to Effective Performance

• Insignificant presence in the international satellite channels
• Perceived as premium priced company at semi-urban and rural market
• Higher dependence on large dealers
• Consumers’ knowledge gap about paints and painting system
• Fierce competition in the Bangladesh market
• Credit-driven market
• Strong command of few dealers in the market through sub-dealer network
• Unethical and corrupt practices by the local companies
  • Low priced imported products are entering due to trade liberalization; specially from China and South East Asia

 Area of Operation

Berger Paints operates in three broad segments of the paint industry.

Decorative Paint

• The objective is to beautify the surfaces with protection from corrosion and erosion
• This business category mainly targets household segment
• Products are being offered to the consumers through a dealer network
• Products fulfill the aesthetic value of the consumers
• Major revenue earning business area of BPBL

 

Industrial

• Tailor made products to cater to the specific needs of customers
  • Products give protection to the surfaces in extreme situations like severe hazardous environment, high temperature, movement of heavy materials and machinery etc.
  • Direct marketing approach is being used to promote the Industrial Coatings
    • Main customer groups: Garments Factories, Chemical Plants, Fertilizer Manufacturing Plants, Consumer Durable Manufacturing Plants etc.

Marine

• Products are being offered mainly through Direct marketing approach.
• Dock Yards, Bangladesh Navy, Passenger Ships are the main user groups.
• Market is mostly concentrated in Dhaka and Chittagong.

   Manpower Structure

It is consisted of more than 300 employees of whom about 160 are general workers and the rest are White Collar employees. These employees are working in different factories and depots of the company.

The positional hierarchy of the company is as follows:

• Managing Director
• Director
• General Manager (Executive -I)
• Executive -II
• Senior Manager
• Manager-I
• Manager-II
• Assistant Manager/ Management Trainee
• Officer (I, II, IIIA, IIIB, IV)

 

Major Departments of the Company

 

Major functions, responsibilities & other necessary aspects of the major departments of the company are described below:

Marketing Department: Until 1990, business practice of the Berger Paints Bangladesh Ltd. Was very much conservative in terms of market presence. In 1993, marketing department started. Thereafter Berger has been growing very rapidly in terms of market share and sales growth. In 1994, just after the year of launching marketing department, sales growth was 34%. Berger is enjoying 48% share of the total paint market and established itself as the champion of the market through its commitment, offering the most quality paint and providing the maximum value for customers’ money, to the customers.

Total business of the Berger Paints Bangladesh Ltd. is categorized into three major heads. These are:

• Decorative
• Industrial
• Marine

 

Although three categories comprise the total business of Berger, contribution of the Decorative sector is 85% (app.) of the total turnover. Because of its contribution, Decorative is considered the main business of the organization and is getting more priority.

 

Three categories of paints are promoted to the market under three brand names. Decorative is offered to the market under the brand name of “Robbialac” and Industrial & Marine are of “Jensolin” & “Seaborne” respectively. Marketing department handles mainly decorative paints.

The major activities of marketing department are as follow:

• Estimation of sales growth
• Preparing Marketing Mix
• Promotion/Communication Mix

 

Sales Department: This department is broadly categorized into two parts: Decorative and Industrial & Marine. These are respectively discussed in brief below

 

Decorative Sales Department: This department is headed by Director Operations who is assisted by GSM (Decorative). 7 strategic depots manage sales activities all over the country. Activities of all seven strategic depots are monitored and controlled by the Sales (Decorative) Office situated in Corporate Office.

 

Major Functions of Decorative Sales Department:

• To prepare National Sales Budget detailing sales value, volume & growth and translates it into monthly and half-yearly budget.
• To express the national sales budget in terms of Sales Area, Zone, Product & Shades of Color.
• To develop sales strategies to achieve sales budget.
  • To respond to complains of customers efficiently and take necessary action(s) for arriving a favorable solution to the problem.
  • To maintain relationship with existing dealers of the Co. and develop new dealers.
    • To suggest marketing department to introduce incentive programs to enhance sales volume.
    • To scan current market condition including competitors’ current and probable future action pattern, customers’ preference, dealers’ business situation and etc.
    • To monitor sales position of the company. and initiate necessary actions if any deviation exists.
    • To arrange sales review meeting timely basis.
    • To ensure smooth distribution of paints
    • To train the sales personnel to handle customers efficiently.

 

Sales (Industrial and Marine): This department is headed by Director Operations who is assisted by the Manager – Industrial & Marine for all the activities & performances of the department. These business groups contribute 15% (app.) of the total turnover of the BPBL. All paints of these groups are offered to the customers under two categories: premium products are under two different Brand names that is, Jensolin and Seaborne for Industrial and Marine paints respectively and the other category is Economy products. Economy products are represented by another two different Brand names Berger Industrial and Berger Marine.

 

Special Features of the Business Groups in BPBL

• All customers are institutional
• Direct marketing (Personal Selling) is the only mean to promote the brand.
• More resistance power than decorative products.
  • These two categories include high performance coating paints and other protective coatings.
  • Lower discount rate than decorative paints. 2% discount on MRP for Industrial paints and 3% for Marine paints are offered, whereas discount rate is 5% for decorative paints.
  • Number of customer is limited. But consumption per customer is much higher in this area than decorative area.
  • Incentives are rarely offered to the customers. Sometimes, volume incentives are offered to the regular customers during the buying of bulk quantities.
  • Institutional customers, if they buy decorative paints, buy decorative paints through Industrial and Marine sales personnel.

 

Industrial Sector: Only in Dhaka and Chittagong sales area, individual sales personnel promote the paints to the current and potential customers directly. In other areas, sales people of Decorative communicate with prospects and collect order & place it to the concerned department of industrial paints. Sales people engaged in Dhaka and Ctg. with Industrial Paint perform the duties as same as the sales people of decorative. Some dealers in Dhaka and Ctg. are involved with the trade of industrial paints with smaller quantities.

 

Types of Customers:

Industrial Customers are of two types:

• OEM customers: This is the Original Equipment Manufacturer who uses the paint as the raw material and eventually buys frequently.
• Protective Coating (PC): This group is the infrequent buyers of the industrial brands. Most of their consumption is for the maintenance purpose.

 

Marine Sector: Like Industrial Paints, individual sales personnel are engaged in Dhaka and Ctg. to communicate with the customers. All products are promoted in the market under “Seaborne” and “Berger Marine” brand name. Most of the transactions (large volume) take place through personal selling although 12 dealers in Dhaka & 6/7 dealers in Ctg. offer Marine Paints to the customers.

 

Finance Department: Director – Finance who is assisted by Financial Controller (FC), Accounts Manager and Cost Accountant Manager, heads finance department. Three sections – finance, personal accounts and costing, perform all activities of the department.

 

Activities of Finance Section: 

Financial Controller is responsible for all the activities of this section. This section handles absolute debtors (customer related) related all activities.

 

Bill Payment System: Bills are considered as external & internal. Payment of internal bill is made as early as possible. But external bills are paid twice, 10th and 25th day of the month, in a month. All bills are approved by DFM provided that there is no provision for VAT and amount of bill is not more than Tk. 5000. If the amount of bill is more than Tk. 5000 to Tk. 10,000, then, GM decides on the bill. There after, only authorized person to approve the billing amount is MD.

 

Private Accounts Section: An Accounts Manager who deals with Salary Payment, Group Insurance, Foreign Affairs and issues related with corporate heads this section.

 

Costing Section: A Cost Accountant Manager who is assisted by four Officers heads this section. Main function of this section is to find out per liter Production Cost of a paint category. This section finds out Gross Profit (GP=MRP– Dealers’ Commission – Total Production Cost) of a specific category of paints and shows more than one price points by considering different GM percentage on total production cost of that paint. In addition, this section calculates the total costing and GP of PTC (Pre Treatment Chemical) and other finished goods imported from abroad. Moreover, this section performs inventory valuation activities including factories and depots. Costing section prepares profitability analysis report for most of the paints. If profitability of any paint is not satisfactory they inform relevant authority.

 

Other Sections in Finance Department: VAT and Audit activities are also included in Finance Department. Activities of these two sections are briefly described below:

Audit: An internal auditor performs audit-related activities in Berger. The person who is responsible for auditing, reports to Director- Finance directly. External auditors are also employed for time-to-time basis. Internal auditor audits sales depots twice in a year, generally in June & November. And yearly audit of total organization takes place once in a year.

 

VAT: This section assesses VAT amount that has to be deposited to Govt. exchequer on the bill payable to the external parties. Moreover, some external parties deposit VAT amount in favor of Berger Paints and that amount need to be adjusted with financial activities of Berger. An Assistant Manager, reporting directly to the Director-Finance. and an Officer manage the activities of the section.

 

Planning and Materials Department: Main responsibility of this department is to collect raw materials at right time from right vendors at right price and at right quantity. Moreover, this department also purchases required machinery and other stationery necessary for the organization.

 

Functions of P & M Department:

• To find out material and machinery sources: This department continuously scans the Internet, Literatures and other related publications to identify new sources from where raw materials & machinery can be collected.
• To communicate with the sources: They communicate with the sources and collect information regarding price, quality, terms and conditions of payment & other relevant matters about raw materials and machinery.
• To buy raw materials, machinery & other necessary items from internal (domestic) and external sources.
• To develop new vendors: When raw materials source is very much limited, sometimes buyers have to accept unfavorable terms and conditions because of not having sufficient bargaining power. To gain adequate bargaining power this department tries to develop new vendors in areas where they are in disadvantageous position.
• To reduce the cost of raw materials: If access power to different vendors is high, this department collects raw materials from the substitute vendors to get some types of advantages (such as lower price) provided that this source meets all other criteria.
• To find out substitute raw materials.
• To send the sample to R&D for assuring the quality of the raw materials.
• To provide support to the Marketing Department in developing container.
  • To provide new ideas regarding raw materials, packaging, machinery and help to reduce cost.
  • To support R&D to make new formulations.
  • To suggest maintenance department for doing their jobs efficiently.
  • To buy gift items for marketing department.
  • To buy shade cards for Marketing Department from India & Singapore.
  • To collect color bank materials from Italy.
  • To buy raw materials for Jenson & Nicholson.

 

Research and Development Department: R & D is playing very vital role in the operations of Berger Paints Bangladesh Ltd. Their continuous dedicated efforts help the organization to offer different types of products ranging from economy paint such as JSE & JSD to premium brand of paint such as Weather Coat (WC) & LSE to solve different motives of different users

 

Major functions of R&D are described below:

• Product development: Two type of product development activities are performed by R&D. Product development activities of R&D are depicted below:
• New product development
• Improvement of existing product
• Cost reduction exercise
• Substituting Raw materials with new source and new grade
• Complains Handling (Site visit, Sample testing
• Providing Customer Service (Providing Panel, Sample Delivery
• To Train the personnel of different departments

 

Production Department

 

The Production Process:

The production process consists of the following departments:

Raw Materials Department: There are various raw materials that are required for producing different paints. These raw materials are gathered both from local and international sources. At the beginning of the year, the total projected raw materials requirement is submitted to the department and the department sources out the raw materials and ensures the availability of the materials at the right time. They are also responsible for storing and dispatching of the raw materials.

 

Water-based Plant: All types of Water-based products are produced in this plant. The major products produced here are SPD, PSD, APE, LSE, Weather Coat, Tartaruga, Water Sealer and Roofing Compound. There are 5 types of machine here – TSD1, TSD2, Master Mixture, HSD4 and HSD7.

 

Solvent-based Plant: All the solvent-based paints are produced here. The major products are RSE, PSE, Wood Keeper, Hammer Finish, Epoxy paints, Plastron Sealer, Stoving Paint, Various Primers and all other solvent-based paints.

 

Durocem Plant: As Durocem is a different type of product (offered in powdered shape), a separate plant has been established for the production of Durocem. As Durocem is basically cement paint, the main raw material used for producing Durocem is White Cement. The

machines that are used for the production process are basically Ball Mills. There are three Ball Mills in the plant – One with ½ M. Ton capacity and Two with 1 M. Ton capacity.

 

Resin Plant: Resin works as the binder for the solvent-based paints. Resins are of various types and different types of resins are required for different type of paints. Most of these resins are produced in this resin plant. But the resin for the Epoxy paints is imported from foreign countries. In this resin plant twelve types of resins are produced.

 

Distribution: Distribution is the way of dispatching the produced items as per the requirement of different depots. First, the distribution department hands over the container wise requirements of various products to the plants. Then the distribution department plans the truck loading for different depots. In this purpose they give the first priority to the Project Requirements, second priority to the critical requirements of the depots and third priority to other requirements that are not termed as critical by the depots. During this process, the Dhaka depot is given the most priority, as there lies a huge volume of business.

 

Administration: Administration handles the labors of the factory. The Administration department looks after the welfare of the labors as well as officers of the factory.

 

Role of R&D in Production:  R&D is not directly related with the production process. Its main duty is to check the new options of raw materials, search for better ways of production, developing the guideline for production of paints and developing new products. But, sometimes R&D gets involved in the production process as per requirement and solves the problem if any.

 

FG Planning Department (Distribution): The organization’s business philosophy has turned into “Marketing Concept” from the previous “Sales Concept”. For every year a target of sales is established by considering current market size, market growth rate, consumers’ preference trends, govt.’s plan to develop infrastructure, foreign aid available for Socio-economic development of the country, trade policy of the govt. and some other issues related with the business of the organization. Then, total yearly target is broken down into monthly target.

 

Decorative paints are basically sold through Company’s registered Dealers, whereas Industrial & Marine paints are basically sold through personal selling.

 

Figure 4: Distribution Flow (Currently)

Major functions:

• To monitor current stock position in the depots
• To place indent to the factory
• To know the last month’s sales and sales month to date
• To place additional/minus indent if necessary
• To inform the expected delivery date of paints from factory.
  • To assist production department in developing production plan so that utilization of the resources – men, machines, materials & etc- can be optimized.

 CHAPTER- 3: PROJECT PART

 

  Introduction

As the researcher has been employed as a Management Trainee in the Human Resource Department of Berger Paints Bangladesh Ltd, it was possible for her to observe the Activities & Policies of the concern department. From this experience and observation, various aspects of this department are discussed here which consists of the Project part of this report. And among all these aspects, the Performance Appraisal process has been chosen as the key discussion point.

    Evaluation of HR Policies

After collecting, exploring and evaluating all the available Information, some of the major findings and analysis are presented here:

 

   HR Position at Berger- At a glance

 

Berger Paints Bangladesh Limited is not a very large organization in terms of employees. At present (for the year 2007) the Board of Directors has approved 341 permanent employees out of which 183 are Management members and the rest 158 are workers. Besides this, there are few contractual and casual employees.

 

Table 6: Headcount of Human Resources (Location-Wise) as of May 2007

 

* 08 (eight) persons are working on Contract basis.

** 15 (fifteen) persons are working as “Casual Worker”.

* 08 positions are currently Vacant.

 

  Recruitment & Selection Policies

Two of the most important functions of any organization are the recruitment and selection of employees. The health and well being of an organization depend in large part on a steady flow of new people. Employees must be hired to fill newly created positions and to replace

people who have left. Acquiring new employees can be a costly and difficult undertaking. It involves the following four steps:

1. Planning the need for employees
2. Getting appropriate people to apply for positions (recruitment)
3. Deciding whom to hire (selection)
4. Getting the selected people to take the jobs.

Recruitment and Selection process begin in Berger only after the HR Planning has been made. These plans include both a consideration of the organization’s needs for people and the supply of possible people to hire.

At BPBL, in order to initiate the procedure of Hiring, there are 3 requirements, which must be met:

1. Employee Requisition by the Authority or Concern Department: Whenever there is a vacant position in a department or unit, the departmental head raises an employee requisition to the Human Resources Division.
2. Standard of the Quality of the Personnel (Job Description & Job Specification): The second step is to generate a Man Profile based on the Job Profile provided by the relevant department. It includes the type of the job, the involved functions, and most importantly the required qualifications (both educational & professional) to perform the job.
3. A Planned Recruitment Program: When the above mentioned steps are completed the HR department takes initiative to arrange for the proper recruitment procedure.

 

Recruiting Applicants:

To be able to hire good people, an organization must have a large number of job applicants because there are many available people who are easily attracted. For jobs in which there is an undersupply of people, an organization must expend considerable effort to attract the right people to fill its job vacancies. Several methods can be used to recruit applicants for a vacant position. For Recruitment and Selection both sources are examined:

1. Internal Source: This includes current employees (promote able/ transferable), Employee Referral etc.
2. External Source: This comprises of the whole labor market outside the organization.

After selecting the source, HRD decides on the appropriate media like, Newspaper, Internet, Notice Board, Agents for publishing the advertisement for Recruitment. In Berger Paints Bd. Ltd. recently almost all the career opportunities are exposed through web site/ internet. Very few ads are published in the leading newspapers. And some specific job opportunities (mostly contractual) are circulated in related educational / professional institutes.

Selection Process:

1. Screening: Initial Screening of resumes is conducted to match the requirements of the job with the applicant profiles. Sometimes there are preliminary interviews according to the nature of job.
2. Employment Interview: In most of the cases Written Tests are carried out for entry-level jobs.
3. Applicant Appraisal Form: A prescribed Application Form has to be filled in before the Interview.
4. VIVA: A Viva is conducted after passing the Written Test, if any. 1 / 2 Interviewers from the related departments along with HR personnel usually conduct the interview session.
5. Conditional Job Offer: Depending on the performance of the final interview, few applicants are offered the respective job.
6. Physical Examination: If the individual(s) accept(s) the offer, they are sent for a medical examination. This is mandatory for all.
7. Appointment: If they are found medically fit and eligible, Appointment /Employment Letter are handed over.

 

1. Induction/ Orientation: The Induction to the new employee takes place after joining.  The duration of orientation program can be for minimum 1 (one) day to maximum 30 (thirty) days depending on the nature of Job.

This is the actual end of the Selection process.

 

 Promotion Policies

Human Resources Department (HRD) of Berger Paints Bangladesh Ltd. always cares about the motivational tool-Promotion for its personnel. Promotion Policies of the Company are as follows:

1. In every year, after conducting the Annual Performance Appraisal (PPAD-Performance Planning Appraisal & Development), HRD get recommendations for Promotion from the various Departmental Head’s.
2.  Bases on the selected criteria for the respective personnel, HRD proposes to the Top Management for approval for Promotion, if any.
3. Berger Paints Bangladesh Ltd. believes in “Ability and Seniority” both for giving Promotion to the employees.

 Transfer Policies

The company may transfer any employee to other Department or to other Offices, Factories or Depots located in different places in the country at its full discretion according to the situational demand of the Company.

The Company has 2 Factories, 2 Sales Offices, and 7 Depots in different parts of the country including its Head Office at Dhaka. Transfer is a normal practice in the Company and most of them are found horizontal Transfer.

 

Training Policies

The Human Resources Training section begin its function of providing whatever Training and Orientation the employees might need in order to make certain that they are well equipped to perform their duties as per desired level of the Company

After conducting Training Needs Assessment (TNA) or getting the summary of needs from Annual Appraisal (PPAD), HRD arrange Training for the respective employees. Training may be different types according to the needs:

1. On-the-Job
2. Off-the-Job

It may be Tailor made Training or Local or International Training according to the needs and demand of the situation. Berger Paints Bangladesh Ltd. believes in investment of people.

In the Table below shown the Training Program arranged for the employees in the preceding 3 years as follows:

 

Table 7: Statement of Training Given to the Employees

 

  Job Evaluation and Analysis

The Company conducts Job Evaluation & Job Analysis Program as a means of controlling Wage & Salaries, Equity of Pay, Hiring Decisions, and Appraisal Functions; to have better Knowledge and control of the employees and to ensure competitiveness in Wage & Salaries.

For Appraising and Grading the Job, Berger Paints Bangladesh Ltd. practices the following procedures:

1. Wage & Salary Survey with the similar companies.
2. Made a Guideline or Plan of Salary Range.
3. Analysis, Evaluation, Weighing & Scoring of the information.
   1. Observe Survey Result, Company Chart, Questionnaire (if used), Compiled Job Descriptions (to account for each job being performed in the company), and chosen Wage & Salary Plan- the Company determine the value or weight on each Job Descriptions.
   2. When Jobs are Evaluated, Written, Scored & Approved, they must then be maintained on a periodic basis.

 

Merit Rating/ Performance Appraisal

Berger has a Systematic, and Periodic Appraisal Process to assess its employee’s performance. As this is the focus of the recent study, it will be covered in details later on.

 

Pay Scales

Berger Paints Bangladesh Ltd. is a Private Limited Company. As there is no Government prescribed Pay Scale for the Private Company, Berger has its own Pay Scale.

There are 16 Grades found on that Pay Scales from Worker to The Managing Director. But according to the Management of Berger Paints Bangladesh Ltd. it is completely restricted and prohibited to express their Pay Scale to others in any form. So, it is not possible to attach the Pay Scale of Berger Paints Bangladesh Ltd. with this report.

But the Management informed that their Pay Scale is Competitive, Consistent and Commensurate with other similar companies of the country.

   Disciplinary Program

The objective of the Disciplinary Program is to make conscious and to motivate the employee to the extent possible to improve performance and not to indulge in any activity detrimental to the Company.

Whenever Disciplinary action is required, it is important that the penalty fit the offence (after assuring that there was in fact an offence) and that the Labour Code be followed with regard to all Disciplinary actions.

The following Data shows Disciplinary Actions taken during the last 5 years:

 

Table 8: Disciplinary Actions Taken in Last 5 Years

   Health & Safety

Berger Paints Bangladesh Ltd. taking the following measures for maintaining Health & Safety at the work place:

• Smoking Free Environment
• Medical Allowance
• Lunch at Canteen
• Canteen Facilities
• Mineral Water
• Proper Ventilation
• Adequate Lighting
• Neat and Clean Environment

Activities for Ensuring Safety & Security:

1. Creating Awareness regarding Accident from Fire
2. Creating Awareness for any injuries those may cause from Unsafe Act & Unsafe Conditions
3. Mandatory Physical Examination before joining
4. Employ Security Guard for ensuring safety & security
5. Security Watch
6. Adequate Exit Doors
7. Fire Extinguisher
8. Sand / Water Tub
9. Safe Guards for Machines
10. Safety Belts

  Benefits & Rewards Packages

Berger Paints Bangladesh Ltd. gives the following Benefits and Reward Package for its employees:

1. Provident Fund (10% + 10 %)
2. Gratuity
3. Festival Bonus (2 Bonuses)
4. Profit Participation Scheme
5. Leave Fair Assistance
6. House Loans
7. Group Insurance
8. Conveyance
9. Entertainment Allowance
10. Product Discount
11. Medical Allowance
12. Laundry Allowance

xiii.Uniform Cost

1. Car Facilities
2. Driver’s Allowance
3. Lunch Allowance
4. Canteen Facilities
5. Service Awards

xix.Certificate of Appreciation

1. Travel Allowance

xxi.Dearness Allowance

1. Company Picnic

Trade Unionism

Berger Paints Bangladesh Ltd. has only 1 (one) Registered Trade Union named “ BERGER PAINTS SRAMIK UNION”, Registration No. 275, Established in 1972, situated in Kalurghat, Chittagong. It is also the legal Collective Bargaining Agent (C.B.A.) for the employees in the company.

The Elections for “Office Bearers” of the Trade Union held on regularly. Total number of Office Bearers is 8 (eight). 1 (one) Labour Welfare Officer (LWO) is working closely with the Trade Union or C.B.A regarding Employer-Employee related matter.

It is a matter of proud that there was no Strike Called by the Trade Union or major conflict happened / dispute arisen between The Management and The Trade Union or C.B.A during this long period since 1972 and there was no need to appointment of Conciliator or to go to the Court for any of the matter or issues for final settlement / judgment. In minor cases, both the Management and the C.B.A are conscious to handle and settle such type of dispute quickly and fairly by a sitting as per the provisions of Law and in voluntarily.

As per mutual understanding, The C.B.A submits the “Charter of Demands” after every 2 years and “The Representatives of the Employers” sit with them for negotiating a contract for mutual benefits.

It is found that, The Company bears a good Labour Management Relations (LMR).

 

Introduction

Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.

Any organization requires consistent levels of high performance from its employees in order to survive in a highly competitive environment. Many firms use some form of results oriented planning & control systems. Managements by objectives (MBO) is a cyclical process that often consists of four steps as a way to attain desired performance:

• Setting Objectives
• Action planning
• Periodic Reviews
• Annual Evaluation

Performance appraisal plays a key role in a reward system. It is the process of evaluating the performance of employees, sharing that information with them, and searching for ways to improving their performance. It is also a formal opportunity to express appreciation for employee contributions. Appraisal systems are therefore necessary for proper management and for employee development.

The hallmarks of modern appraisal philosophy are as follows:

1. Performance orientation: It is not enough for employees to put forth effort; that effort must result in the attainment of desired outcomes (products & services).
2. Focus on goals or objectives: Employees need to have a clear idea of what they are supposed to be doing and the priorities among their tasks.
3. Mutual goal setting between supervisor & employee: This is the belief that people will work harder for goals or objectives that they have participated in setting. Among their desires are to perform a worthwhile task, share in a group effort, share in setting their objectives, share in the rewards of their efforts and continue personal efforts and continue personal growth. The Theory Y assumption is that people want to satisfy some of their needs through work and that they will do so if management will provide them with a supportive environment.
4. Extensive feedback systems: Employees can fine-tune their performance better if they know how they are doing in the eyes of the organization.

 Approaches to Performance Appraisal

There have been two prevalent approaches to performance appraisal. The first approach has been the traditional approach.  This approach has also been known as the organizational or overall approach. The traditional approach has been primarily concerned with the overall organization and has been involved with past performance.

The second approach to performance appraisal has been the developmental approach. This approach viewed the employees as individuals and has been forward looking through the use of goal setting.

Purposes of Traditional Performance Appraisals

Performance appraisal for evaluation using the traditional approach has served the following purposes:

1. Promotion, separation, and transfer decisions
   1. Feedback to the employee regarding how the organization viewed the employee’s performance
   2. Evaluations of relative contributions made by individuals and entire departments in achieving higher level organization goals
   3. Criteria for evaluating the effectiveness of selection and placement decisions, including the relevance of the information used in the decisions within the organization
   4. Reward decisions, including merit increases, promotions, and other rewards
   5. Ascertaining and diagnosing training and development decisions
   6. Criteria for evaluating the success of training and development decisions
      1. Information upon which work scheduling plans, budgeting, and human resources planning can be use

Two serious flaws in the traditional approach to performance appraisal exist. These are:

• Organizational performance appraisal is typically primarily concerned with the past rather than being forward looking through the use of setting objectives or goals.
• Performance appraisal is usually tied to the employees’ salary review. Dealing with salary generally overwhelmed and blocked creative, meaningful, or comprehensive consideration of performance goals.

Purposes of Developmental Performance Appraisals

The development approach contained all of the traditional overall organizational performance appraisal purposes and the following additional purposes:

1. Provided employees the opportunity to formally indicate the direction and level of the employee’s ambition
2. Show organizational interest in employee development, which was cited to help the enterprise retain ambitious, capable employees instead of losing the employees to competitors
3. Provided a structure for communications between employees and management to help clarify expectations of the employee by management and the employee
4. Provide satisfaction and encouragement to the employee who has been trying to perform well

 Expectations of a Manager in doing a Performance Appraisal

The following is typically expected from company managers when doing performance appraisals:

1. Translate organizational goals into individual job objective.
2. Communicate management’s expectations regarding employee performance.
3. Provide feedback to the employee about job performance in light of management’s objectives.
4. Coach the employee on how to achieve job objectives/requirements.
5. Diagnose the employee’s strengths and weaknesses.
6. Determine what kind of development activities might help the employee better utilize his or her skills improve performance on the current job.

 The Performance Appraisal Process

The performance appraisal process typically consists of four inter-related steps as follows:

1. Establish a common understanding between the manager (appraiser) and employee (appraisee) regarding work expectations; mainly, the work to be accomplished and how that work is to be evaluated.
2. Ongoing assessment of performance and the progress against work expectation. Provisions should be made for the regular feedback of information to clarify and modify the goals and expectations, to correct unacceptable performance before it was too late, and to reward superior performance with proper praise and recognition.
3. Formal documentation of performance through the completion of a performance and development appraisal form appropriate to the job family.
4. The formal performance and development appraisal discussion, based on the completed appraisal form and ending in the construction of a Development Plan.

 

Appraisal Method

Terms used to describe the various type of rating systems as well as a definition for performance appraisal is as follows:

Behavioral Anchored Rating Scales –

The term used to describe a performance rating that focused on specific behaviors or sets as indicators of effective or ineffective performance, rather than on broadly stated adjectives such as “average, above average, or below average”. Other variations were:

• Behavioral observation scales
• Behavioral expectations scales
• Numerically anchored rating scales

Checklists –

The term used to define a set of adjectives or descriptive statements. If the rater believed the employee possessed a trait listed, the rater checked the item; if not, the rater left the item blank. Rating score from the checklist equaled the number of checks.

Critical Incident Technique –

The term used to describe a method of performance appraisal that made lists of statements of very effective and very ineffective behavior for employees. The lists have been combined into categories, which vary with the job. Once the categories had been developed and statements of effective and ineffective behavior had been provided, the evaluator prepared a log for each employee. During the evaluation period, the evaluator recorded examples of critical behaviors in each of the categories, and the log has been use to evaluate the employee at the end of the evaluation period.

Forced Choice Method –

This appraisal method has been developed to prevent evaluators from rating employees to high. Using this method, the evaluator has to select from a set of descriptive statements, statements that apply to the employee. The statements have been weighted and summed to at, effectiveness index.

Forced Distribution –

The term used to describe an appraisal system similar to grading on a curve. The evaluator had been asked to rate employees in some fixed distribution of categories. One way to do this has been to type the name of each employee on a card and ask the evaluators to sort the cards into piles corresponding to rating.

Graphic Rating Scale –

The term used to define the oldest and most widely used performance appraisal method. The evaluators are given a graph and asked to rate the employees on each of the characteristics. The number of characteristics can vary from one to one hundred. The rating can be a matrix of boxes for the evaluator to check off or a bar graph where the evaluator checked off a location relative to the evaluators rating.

Management by Objectives (MBO) –

The management by objectives performance appraisal method has the supervisor and employee get together to set objectives in quantifiable terms. The appraisal method has worked to eliminate communication problems by the establishment of regular meetings, emphasizing results, and by being an ongoing process where new objectives have been established and old objectives had been modified as necessary in light of changed conditions.

Paired Comparison. –

The term used to describe an appraisal method for ranking employees. First, the names of the employees to be evaluated have been placed on separate sheets in a pre-determined order, so that each person has been compared with all other employees to be evaluated. The evaluator then checks the person he or she felt had been the better of the two on the criterion for each comparison. Typically the criterion has been the employees over all ability to do the present job. The number of times a person has been preferred is tallied, and the tally developed is an index of the number of preferences compared to the number being evaluated.

Ranking. –

The term ranking has been used to describe an alternative method of performance appraisal where the supervisor has been asked to order his or her employees in terms of performance from highest to lowest.

Weighted Checklist. –

The term used to describe a performance appraisal method where supervisors or personnel specialists familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behavior on jobs.

  Who Should Do Appraising

Input into the appraisal of worker performance may come from many sources including the employee, co-workers, supervisors, subordinates, or even persons outside the organization. Ratings from multiple sources usually yield more reliable performance appraisals.

• Self-Ratings: Usually the employee has a good understanding of his daily performance and how it can be improved. Employees can be the most important persons in the evaluation process, as we saw in the negotiated performance appraisal approach. Nevertheless, employees have a vested interest in making positive comments about their own performance, and no matter how motivated they are, can usually benefit from outside evaluation.
• Peer Appraisals: At times co-workers have a better grasp for a colleague’s performance than the supervisor, but co-worker evaluations have a tendency to be lenient. Sometimes co-workers hope management will read between the lines and praise irrelevant or insignificant factors. Peer review is usually anonymous and several peers are involved in the evaluation. This anonymity, while often needed, can also lend itself to abuses.
• The Immediate Supervisor: Performance appraisal data obtained from the immediate supervisor is the most common rating source. Supervisors are often in the best position to give workers an honest evaluation. The danger in supervisory evaluations is the substantial amount of power and influence wielded, often by the hand of a single rater.
• Appraisal By Subordinates: Formal evaluation by subordinates is unusual, although from time to time subordinates may be asked for input into the evaluation of their supervisor. When subordinates have an input into their supervisor’s evaluation, supervisors have been known to improve their interpersonal relations and reduce management by intimidation. Issues of anonymity and adequate sampling of subordinates may be important in traditional appraisals.
• Outsiders: Evaluations by outside clientele may be useful in instances when there is much personal contact with outsiders or when the person being evaluated knows more about aspects of the job than the farmer or supervisor.
• 360-Degree Feedback: 360 degree appraisals are a powerful developmental method and quite different to traditional manager-subordinate appraisals. As such a 360-degree process does not replace the traditional one-to-one process – it augments it, and can be used as a stand-alone development method. 360-degree appraisals involve the appraisee receiving feedback from people (named or anonymous) whose views are considered helpful and relevant. The feedback is typically provided on a form showing job skills/abilities/attitudinal/behavioral criteria and some sort of scoring or value judgment system. The appraisees should also assess themselves using the same feedback instrument or form. 360-degree respondents can be the appraisee’s peers, up-line managers/execs, subordinate staff, team members, other staff, customers, and suppliers – anyone who comes into contact with the appraisee and has opinions/views/reactions of and to the appraisee.

 Appraisal Interview

Appraisal interview is an interview, in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. Four things are needed to conduct appraising interviews:

(i)                 Be direct and specific,

(ii)               Don’t get personal,

(iii)             Encourage the person to talk and

(iv)             Don’t tiptoe around.

 

The prevailing Controversy regarding Performance Appraisal

Few issues in management stir up more controversy than performance appraisal.
There are many reputable sources – researchers, management commentators, psychometricians who have expressed doubts about the validity and reliability of the performance appraisal process. At the other extreme, there are many strong advocates of performance appraisal. Some view it as potentially “… the most crucial aspect of organizational life”.

Between these two extremes lie various schools of belief. While all endorse the use of performance appraisal, there are many different opinions on how and when to apply it.

Appraisers often know their appraisees well, and are typically in a direct subordinate-supervisor relationship. They work together on a daily basis and may, at times, mix socially. Suggesting that a subordinate needs to brush up on certain work skills is one thing; giving an appraisal result that has the direct effect of negating a promotion is another. The result can be resentment and serious morale damage, leading to workplace disruption, soured relationships and productivity declines.

On the other hand, there is a strong rival argument, which claims that performance appraisal must unequivocally be linked to reward outcomes. The advocates of this approach say that organizations must have a process by which rewards may be openly and fairly distributed to those most deserving on the basis of merit, effort and results.

There is a critical need for remunerative justice in organizations. Performance appraisal is the only process available to help achieve fair, decent and consistent reward outcomes.

 

Findings

Existing Performance Appraisal System in BPBL:

Berger has a Systematic, and Periodic Appraisal Process to assess its employee’s performance. BPBL conduct Performance Appraisal / Merit Rating on yearly basis to determine and take actions accordingly on Increment, Promotion, Transfer, Training, Separation, Job Rotation etc.

Performance Appraisal is done by the Human Resource Department (HRD). There are 3 types of Performance Appraisal for 3 different categories:

1. Performance Appraisal for Senior Managers and above
2. Performance Appraisal for Officers to Managers
3. Workers & Staffs Performance Appraisal

Appraisal Form is given to the Supervisors for appraising their subordinates. Appraisal Forms for Workers and Staffs and the Management members are attached in the Appendix, which are Self-Explanatory.

After collecting the Performance Appraisal Form from the Departmental Heads’, HRD forward it to the Top Management for Approval of the same.

The Multiple Regression Model:

The statistical tool with the help of which we are in a position to estimate (or predict) the unknown values of one variable from known values of two or more variable sis called Multiple Regression.

The general form of the linear multiple regression function for n independent variables is: