performance appraisal in banking sector by ekta bhatia
TRANSCRIPT
A
RESEARCH REPORT
ON
“PERFORMANCE APPRAISAL” IN BANKING SECTOR
Submitted for the fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION (Sikkim Manipal University)
(SESSION: 2009-2010)
Submitted To: Under the Guidance of:Mr. Pankaj UpadhyayLecturerSikkim Manipal University
Mr. Pankaj UpadhyayLecturerSikkim Manipal University
Submitted By:Ekta Bhatia
MBA IV SemesterRoll No. 510919106
1
DECLARATION
I, Ekta Bhatia, hereby declare that the project titled
““PERFORMANCE APPRAISAL” IN BANKING SECTOR” is my own
work and efforts which is completed under the supervision of Mr.
Pankaj Upadhyay, senior lecturer of IIMT Management
College, Meerut
The Research report has been submitted to Sikkim Manipal
University, Centre 2017, New Delhi for the purpose of Research
Report under the compliance of fulfillment of Master of Business
Administration (M.B.A.).
Date: Ekta Bhatia
Place: MBA-4th Sem.
Roll No.: 510919106
2
List of contents
Preface
Acknowledgement
Objective Of The Study
About The Study
Scope Of The Study
Research Methodology
Introduction To Banking
Sector
HRM Approach
“Performance Appraisal”
– A Systematic Approach
ICICI Bank – Company Profile
Needs And Importance Of
“Performance Appraisal”
In Banking
3
“Performance Appraisal”
And Performance
Management In ICICI Bank
Banner Corporation Banks
On Halogen For Talent
And Learning And
Performance Management
(For Practical
Understanding)
Conclusion
Suggestion And
Recommendation
Bibliography
4
Preface
This study is done for fulfillment of the requirement of Sikkim Manipal
University to obtain the degree of Master of business management. In
this study, we strive to find out the implication of “Performance
Appraisal” in banking sector.
Banking sector is one of the emerging sectors of India; we strive to find
out what is the importance of HR in banking industry in specific with
“Performance Appraisal”.
In this report we discuss the banking industry, HR overview, need of
“Performance Appraisal” in banks, Indian banking scenario, techniques
and approaches of “Performance Appraisal” pertaining to the banking
industry. As we know that in present scenario of cut throat competition
in banking industry only the service is the factor that can make sense
in banking industry, we try to explore the importance of the
“Performance Appraisal” in banking to uplift the standard of
organization, individual and both as a mutual entity
5
Acknowledgement
I would like to thank Mr.Pankaj Upadhyay for his guidance & support
with his valuable inputs & knowledge.
I would like to thank my colleagues, friends, and family members for
their support, guidance and active contribution that helped me a lot to
collect secondary data and preparing this report
Once again thanks to all for providing me your direct and indirect
support for my research work and help in writing the report
EKTA BHATIA
0bjective of the Study
6
To understand the concept of HR in special reference of
“Performance Appraisal”
To understand the application of “Performance Appraisal” in
banking sector
To understand the practical aspect of “Performance Appraisal” in
banking scenario
To understand the modern trends emerging in “Performance
Appraisal”
To understand the management approach towards “Performance
Appraisal”
To understand the banking scenario of India
To gain the knowledge of the practical process of the
“Performance Appraisal”
To view the aspect of “Performance Appraisal” from managerial
perspective
To highlight the effectiveness of “Performance Appraisal” in
banking sector
To understand the need of “Performance Appraisal” for banking
industry
7
About the study
8
The study, ““Performance Appraisal” in Banking Sector”, highlights the
importance of “Performance Appraisal” in special reference of banking
industry. As we know the banking sector is one of the fastest growing
sectors of our country, the study highlights the perspective of HR in
banking sector.
In this study we strive to find out the need of “Performance Appraisal”
for banks, and try to understand how the “Performance Appraisal” is
done in banking sector. In this study we take the case of one of the
leading bank, ICICI bank, as our sample and try to find out their
techniques used for “Performance Appraisal”.
This study refers to the need of “Performance Appraisal” for banking
industry, importance and emerging trends in the field of “Performance
Appraisal”. For easy understanding of the study we have divided the
entire study in to several chapters that gives the specific nature of the
subject in question.
We have highlighted several trends of banking industry, growth and
prospect of banking in India, history of Indian banking, Role of RBI as
regulatory bank and the industrial importance bank as an institute to
march the nation in economic growth.
Further we highlighted the role of HR, its need and importance and
“Performance Appraisal” as its one of the major tools. It signifies the
role of HR in organizational perspective and highlight the rationale of
active HR polices in an organization , this reports takes the HR as
managerial function rather than the staff activities . In this report we
try to make the role and concept of HRM understood for our readers.
9
The study is manly conducted on the basis of secondary data rather
than the primary data. We managed to collect the secondary data from
ICICI bank and got the information about the HR policy and process of
the bank. In our study we highlighted the process of ICICI bank
“Performance Appraisal” mechanism and the manner in which
“Performance Appraisal” takes place in ICICI bank
In special cases like the practical example of ICICI bank ,the study
highlights:
a) techniques ,
b) approach,
c) forms,
d) managerial approach,
e) employees feedback,
f) process and other real aspect of the “Performance Appraisal”
that provides the realistic view of the “Performance Appraisal” process
that is carried out by the bank in actual work environment .
The study is conducted is a simple manner and most of the data is
collected through various sources. This study refers the “Performance
Appraisal” technique as an effective managerial tool to enhance the
efficiency and effectiveness to achieve the organizational and
individual goals. This study provides the theoretical knowledge about
the “Performance Appraisal”s on the issue like a)need , b)importance ,
c)features , d)techniques , e)approaches , f)model , g)trends and other
issues related to the banking industry . This study refers to the role of
“Performance Appraisal” in a wide and in a systematic manner that
takes place in a sequential way and covers almost all the aspect of the
appraisal from employees to organization under the universal
approach called “Performance Management”
10
Scope of the study
Following aspects are covered under this study:
A brief overview of the nature of the subject
11
An introduction to the HR as a managerial function in special
reference with ““Performance Appraisal””
New dimensions, techniques, approaches and thoughts in
““Performance Appraisal””.
Practical aspect of ““Performance Appraisal”” in ICICI bank
Modern techniques emerging in ““Performance Appraisal””.
Need and importance of “Performance Appraisal” in banking
industry
brief introduction of Indian banking industry
Introduction to ICICI bank
Role of “Performance Appraisal” as managerial decision in
banking sector in policy making and organizational success
Practical challenges, opportunities in banking sector to
implement the effective performance management system
12
Research Methodology
The study seems to be the observation and a description of the
project where we try to find out the hidden aspect or bring out the
concept for further explanation, but some scientific method and
techniques classified it as the research, that’s why the following
research methods, techniques and components are used to facilitate
the study
13
Research Design- Descriptive research design
Descriptive research design is a scientific method that is used in this
study which helps in observing and describing the behavior of a
subject without influencing it in any way to obtain a general overview
of the subject.
This design allows observation without affecting normal behavior. It is
also useful because it is not possible to test and measure the large
number of samples needed for more quantitative types of
experimentation
These types of experiments are often used by anthropologists,
psychologists and social scientists to observe natural behaviors
without affecting them in any way. It is also used by market
researchers to judge the habits of customers, or by companies wishing
to judge the morale of staff.
Though the results from a descriptive research can in no way be used
as a definitive answer or to disapprove a hypothesis but, if the
limitations are understood, they can still be a useful tool in many areas
of scientific and normal study research such as this project.
Type of data – secondary data
Secondary data was used for this study as the research design is
descriptive in nature so we tried to collect the data available through
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other sources on the subject. Some times, primary data is also
collected through observation method to facilitate the research work
Sources of data
The following sources are used for collecting the data for this study:
Books
internet
Journals
News papers
Personal sources
Sampling – judgmental sampling
Judgment sampling is a common no probability method. This
sampling is selected on the judgment. This is usually and extension of
convenience sampling. We have decided to draw the entire sample
from one "representative" bank even though the population includes
all banks. When using this method, we try to ensure that the chosen
sample is truly representative of the entire population.
15
Introduction to Banking Sector
Banking can be defined in various ways as the definition of the bank
varies from country to country and keeps on changing on the basis of
the activities carried out by the banks. In present dynamic business
scenario, banking can be defined as the activities carried out with the
bank on individual or corporate level. We can understand the concept
of the banking by looking into the activities of the bank.
16
A bank is a well regularized and licensed financial institute to assist the
individual and corporate customer in their financial needs. Normally
banks provide the following services to its retail (individual) and
corporate clients:
Transactional services,
Services related to monetary transaction through current and
saving account,
Investment services,
Fixed deposit ,
Letter of credit ,
Treasury services ,
Bill of exchange ,
Foreign exchange ,
Assisting in trade through Letter of credit,
Letter of guarantee,
Performance bond ,
Project financing ,
Personal loan ,
Credit card ,
Home loan etc.
17
Banking sector In India
Banking in India originated in the last decades of the 18th century.
The oldest bank in existence in India is the ‘State Bank of India’, a
government-owned bank that traces its origins back to June 1806 and
that is the largest commercial bank in the country. Central banking is
the responsibility of the Reserve Bank of India, which in 1935 formally
took over these responsibilities from the then Imperial Bank of India,
relegating it to commercial banking functions. After India's
independence in 1947, the Reserve Bank was nationalized and given
broader powers. In 1969 the government nationalized the 14 largest
commercial banks; the government nationalized the six next largest in
1980.
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public
sector banks (that is with the Government of India holding a stake), 31
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private banks (these do not have government stake; they may be
publicly listed and traded on stock exchanges) and 38 foreign banks.
They have a combined network of over 53,000 branches and 17,000
ATMs. According to a report by ICRA Limited, a rating agency, the
public sector banks hold over 75 percent of total assets of the banking
industry, with the private and foreign banks holding 18.2% and 6.5%
respectively.
The banking industry in India seems to be unaffected from the global
financial crises which started from U.S in the last quarter of 2008.
Despite the fallout and nationalization of banks across developed
economies, banks in India seems to be on the strong fundamental base
and seems to be well insulated from the financial turbulence emerging
from the western economies. The Indian banking industry is well
placed as compare to their banking industries western counterparts
which are depending upon government bailout and stimulus
packages.
The strong economic growth in the past, low defaulter ratio, absence of
complex financial products, regular intervention by central bank,
proactive adjustment of monetary policy and so called close banking
culture has favored the banking industry in India in recent global
financial turmoil.
Although there will be no impact on the Indian banking system similar
to that in west but the banks in India will adopt for more of defensive
approach in credit disbursal in coming period. In order to safe guard
their interest; banks will follow stringent norms for credit disbursal.
There will be more focus on analyzing borrower’s financial health
rather than capability.
19
The report “Indian Banking Sector Forecast to 2012” contains
comprehensive research and rational analysis on various segments,
like assets size, income level and number of cardholders, in the Indian
banking industry. It also analyzes the current performance and key
market trends, and helps clients to understand various products
available in the market and their future scope.
The forecast given in this report is not based on a complex economic
model but is intended as a rough guide to the direction in which the
market is likely to move. The future projection is done on the basis of
the current market scenario, past trends, and rules and regulations laid
by the regulator and supervisor of the financial system,
Reserve Bank of India (RBI).
The Economic Liberalization process has increasingly exposed the
Banking Sector to international competition. The role of Banking in the
process of financial intermediation has been undergoing a profound
transformation, owing to changes in the global financial system.
Consequently, the revolution in information technology has brought
about sea changes in the way banking transaction are carried out
Almost 80% of the businesses are still controlled by Public Sector
Banks (PSBs). PSBs are still dominating the commercial banking
system. Shares of the leading PSBs are already listed on the stock
exchanges.
The RBI has given licenses to new private sector banks as part of the
liberalization process. The RBI has also been granting licensees to
industrial houses. Many banks are successfully running in the retail and
consumer segments but are yet to deliver services to industrial
finance, retail trade, small business and agricultural finance.
20
The PSBs will play an important role in the industry due to its number
of branches and foreign banks facing the constraint of limited number
of branches. Hence, in order to achieve an efficient banking system,
the onus is on the Government to encourage the PSBs to be run on
professional lines.
To promote banking sector in India, Govt. has taken many steps and
formed several committee to review the banking needs and the
prospect the current scenario along with the safeguarding the interest
of the customers
Reserve bank of India
Economists and Planners consider monetary stability in an economy as
the most important function of a Central Bank. The Prime function of a
Central Bank is to ensure and secure monetary stability i.e. to ensure
that the growth rate of money supply is consistent with the growth rate
of output of goods and services. In an open economy framework
however the Central Banks is additionally entrusted with the
responsibility of managing the exchange rate. Since the inception of
the economic reforms when the Indian Economy embarked on a
programme of liberalization and exchange rate flexibility, the Reserve
Bank of India is managing its twin responsibilities of monetary stability
and exchange rate stability. The economy follows a managed float
system with RBI intervening in the event of violent fluctuations in
exchange rate. In an open economy framework with lesser restrictions
on capital flows, managing the monetary stability and exchange rate
stability pose a challenge for the Central Bank. Managing the twin
functions simultaneously is accompanied by trade-offs and conflicts.
21
The central bank of the country is the Reserve Bank of India (RBI). It
was established in April 1935 with a share capital of Rs. 5 crores on the
basis of the recommendations of the Hilton Young Commission. The
share capital was divided into shares of Rs. 100 each fully paid which
was entirely owned by private shareholders in the beginning. The
Government held shares of nominal value of Rs. 2, 20,000.
Reserve Bank of India was nationalized in the year 1949. The general
superintendence and direction of the Bank is entrusted to Central
Board of Directors of 20 members, the Governor and four Deputy
Governors, one Government official from the Ministry of Finance, ten
nominated Directors by the Government to give representation to
important elements in the economic life of the country, and four
nominated Directors by the Central Government to represent the four
local Boards with the headquarters at Mumbai, Kolkata, Chennai and
New Delhi. Local Boards consist of five members each Central
Government appointed for a term of four years to represent territorial
and economic interests and the interests of co-operative and
indigenous banks.
The Reserve Bank of India Act, 1934 was commenced on April 1, 1935.
The Act, 1934 (II of 1934) provides the statutory basis of the function
of the bank.
The Bank was constituted for the need of following:
To regulate the issue of banknotes
To maintain reserves with a view to securing monetary stability and
To operate the credit and currency system of the country to its
advantage.
22
Major Banks in India
Public sector banks
State Bank of India
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Travancore
Dena Bank
IDBI Bank
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Punjab National Bank
Syndicate Bank
UCO Bank
23
Union Bank of India
United Bank of India
Vijaya Bank
24
Private sector banks
Bank of Rajasthan
Bharat Overseas Bank
Catholic Syrian Bank
Centurion Bank of Punjab (Merged with HDFC bank)
City Union Bank
Development Credit Bank
Dhanalakshmi Bank
Federal Bank
HDFC Bank
ICICI Bank
IndusInd Bank
ING Vysya Bank
Jammu & Kashmir Bank
Karnataka Bank
Karur Vysya Bank
Kotak Mahindra Bank
Lakshmi Vilas Bank
Lord Krishna Bank ( now Centurion Bank of Punjab)
Nainital Bank
Nedungadi Bank (now Punjab National Bank)
Ratnakar Bank
Rupee Bank
Saraswat Bank
SBI Commercial and International Bank
South Indian Bank
25
Tamil Nadu Mercantile Bank
Thane Janata Sahakari Bank
Bassein Catholic Bank
United Western Bank ( now IDBI Bank)
YES Bank
26
Foreign Banks
ABN Amro bank
Abu Dhabi Commercial Bank Ltd
American Express Bank
Antwerp Diamond Bank
Arab Bangladesh Bank
Bank International Indonesia
Bank of America
Bank of Bahrain & Kuwait
Bank of Ceylon
Bank of Nova Scotia
Bank of Tokyo Mitsubishi UFJ
Barclays Bank
BNP Paribas
Calyon Bank
ChinaTrust Commercial Bank
Citibank
DBS Bank
Deutsche Bank
HSBC (Hongkong & Shanghai Banking Corporation)
JPMorgan Chase Bank
Krung Thai Bank
Mashreq Bank
Mizuho Corporate Bank
Oman International Bank
Shinhan Bank
Société Générale
Sonali Bank
27
Standard Chartered Bank
State Bank of Mauritius
Banks with Representative Offices in India :
28
American Banks
The Bank of New York
Wachovia Bank
Australian Banks
Commonwealth Bank
National Bank Australia
Westpac Banking Corporation
Austrian Banks
Raiffeisen Zentral Bank Osterreich
Belgian Banks
Fortis Bank
K.B.C. Bank N.V.
Canadian Banks
Royal bank of Canada
UAE Banks
Emirates Bank International
French Banks
Credit Industriel et Commercial
Natixis
German Banks
Bayerische Hypo und Vereinsbank
29
Commerzbank
Dresdner Bank
DZ Bank AG Deutsche Zentral – Genossenschafts Bank
HSH Nordbank
Landesbank Baden – Wurttemberg
Irish Banks
DEPFA Bank
Italian Banks
Banc Intesa Banca Commerciale Italiana
Banca di Roma
Banca Populare Di Verona E Novara
Banca Popolare di Vicenza
BPU Banca –Banche Popolari Unite
Monte Dei Paschi Di Sienna
Sanpaolo IMI Bank
Uni Credito Italiano
Nepalese Banks
Everest Bank
Portuguese Banks
Caixa Geral de Depositos
Russian Banks
Vnesheconombank
VTB India
Promsvyazbank
30
South African Banks
First Rand Bank
South Korean Banks
Wori Bank
Spanish Banks
Banco de Sabadell
Banco Bilbao Vizcaya Argentaria
SriLankan Banks
Hatton National Bank
Swiss Banks
UBS
Zurcher Kantonalbank
Rural Banks
Adhiyaman Grama Bank
Alaknanda Gramin Bank ( Now Uttranchal Gramin Bank)
Andhra Pragathi Grameena Bank
Avadh Gramin Bank
Aryavart Gramin Bank
31
Balasore Gramya Bank
Ballia Kshetriya Gramin Bank
Banaskantha Mehsana Gramin Bank
Bangiya Grameen Vikash Bank
Bareilly Kshetriya Gramin Bank
Baroda Uttar Pradesh Gramin Bank
Bijapur Grameena Bank
Bilaspur-Raipur Kshetriya Gramin Bank
Bolangir Anchalik Gramya Bank
Bundelkhand Kshetriya Gramin Bank
Bundi Chittorgarh Kshetriya Gramin Bank
Cauvery Grameena Bank
Chaitanya Godavari Grameena Bank
Chambal Kshetriya Gramin Bank
Champaran Kshetriya Gramin Bank
Chhatrasal Gramin Bank
Chhindwara Seoni Kshetriya Gramin Bank
Chitradurga Gramin Bank
Cuttack Gramya Bank
Damoh Panna Sagar Kshetriya Gramin Bank
Devipatan Kshetriya Gramin Bank
Dhenkanal Gramya Bank
Dungarpur Banswara Kshetriya Gramin Bank
Ellaquai Dehati Bank
Farrukhabad Gramin Bank
Gaur Gramin Bank
Gurgaon Gramin Bank
Hadoti Kshetriya Gramin Bank
Himachal Gramin Bank
Hissar-Sirsa Kshetriya Gramin Bank
Indore Ujjain Kshetriya Gramin Bank
32
Jaipur Nagaur Aanchalik Gramin Bank
Jamnagar Rajkot Gramin Bank
Jamuna Gramin Bank
Jhabua-Dhar Kshetriya Gramin Bank
Jharkhand Gramin Bank
Kakathiya Grameena Bank
Kalpatharu Grameena Bank
Kamraz Rural Bank
Kanpur Kshetriya Gramin Bank
Kapurthala Ferozpur Kshetriya Gramin Bank
Kashi Gomti Samyut Gramin Bank
Kisan Gramin Bank,Budaun
Kolar Gramin Bank
Krishna Grameena Bank
Kshetriya Gramin Bank,Hoshangabad
Kutch Grameen Bank
Malaprabha Grameena Bank
Mandla Balaghat Kshetriya Gramin Bank
Manjira Grameena Bank
Marwar Ganganagar Bikaner Gramin Bank (Previously : Marwar
Gramin Bank)
Mewar Aanchalik Gramin Bank
Nagarjuna Grameena Bank
Netravati Grameena Bank
Nimar Kshetriya Gramin Bank
North Malabar Gramin Bank
Panchmahal Vadodara Gramin Bank
Pandyan Grama Bank
Pinakini Grameena Bank (merged to form Andhra Pragathi
Grameena Bank)
Pragjyotish Gaonlia Bank
33
Prathama Bank
Raigarh Kshetriya Gramin Bank
Rani Lakshmi Bai Kshetriya Gramin Bank
Ratlam Mandsaur Kshetriya Gramin Bank
Rayalaseema Grameena Bank (merged to form Andhra Pragathi
Grameena Bank)
Rewa-Sidhi Gramin Bank
Sahyadri Gramin Bank
Samyut Kshetriya Gramin Bank
Sangameshwara Grameena Bank
Shahjahanpur Kshetriya Gramin Bank
Shreyas Gramin Bank (Aligarh,Etah,Agra,Mathura,Firozabad)
Shivpuri Guna Kshetriya Gramin Bank
South Malabar Gramin Bank
Sree Anantha Grameena Bank (merged to form Andhra Pragathi
Grameena Bank)
Sri Saraswati Grameena Bank
Sri Visakha Grameena Bank
Surat Bharuch Gramin Bank
Thar Aanchalik Gramin Bank
Tripura Gramin Bank
Tungabhadra Gramin Bank
Vidur Gramin Bank
MCB
Madhya Bharat Gramin Bank
34
Human Resources Management Approach
(H.R M Approach)
“Human resource management's objective is to maximize the return
on investment from the organization's human capital and minimize
financial risk. It is the responsibility of human resource managers in a
corporate context to conduct these activities in an effective, legal, fair,
and consistent manner”
35
The Human Resources (HR) function provides significant support and
advice to line management. The attraction, preservation and
development of high caliber people are a source of competitive
advantage for our business, and are the responsibility of HR.
H.R can be well understood as a model of personnel management that
focuses on the individual rather than taking a collective approach.
Responsibility for human resource management is often devolved to
line management. It is characterized by an emphasis on strategic
integration, employee commitment, workforce flexibility, and quality of
goods and services.
Human resource is an increasingly prominent field that is taking shape
throughout industries and workplaces world wide. Recognizing the fact
that people are a company’s greatest asset, business leaders across
the globe are coming to rely more and more upon an effective
management policy that applies specifically to the area of human
resources.
With a rapid increase – a boom, in fact – of professionals, generalists
and specialists in the area of human relations, there has also been a
major rise in the amount of knowledge and innovation pertaining to the
most efficient and productive methods of streamlining workforce
management policy. When applied, there are already a great number
of proven techniques which result in the actual increases of profit
margins.
But what, exactly, is the definition of human resources? Essentially, HR
applies to the workforce managed by any employer. A business of any
size needs employees in order for it to run. As an important – the most
important – asset for any business leader, employees need to be
properly managed in order for optimal efficacy to be achieved.
36
Now, properly managing a workforce is a lot more complicated than,
say, the maintenance of a company’s material capital such as
machinery, computer systems, etc. Indeed, the mechanistic approach
to employee relations has often failed. Fortunately, this failure has
prompted close study into how to effectively see that human capital is
treated right and is able to reach its full potential.
That’s why the application of human resources management focuses
largely on a more sensitive and human analysis to determine what
really works with employees. One of the major aspects of HR
maintenance involves employee recruitment, training and
development as a function of human capital management.
Making sure that employees’ abilities are correctly and optimally
nurtured is essential to seeing a worthwhile return on investment come
from their contribution to the company, once their training period is
over. Along with employee training, human resources departments
also delve into the area of applicant tracking. How to find the best
talent available on the global labor market place is often a problem
that the human resources department will strive to tackle.
In addition, human resources departments take care of a variety of
concerns such as labor relations – the crucial and highly sensitive
negotiations between employees and management – the production of
job descriptions, the monitoring of interplay between workers in order
to design a more efficient employee management system, the
compilation of benefits packages as well as a variety of other vital
functions that relate directly to the employee workforce
37
Organizational Psychology holds that successful organizations do not
owe their success solely to market realities and sustainable
competitive advantages. Actually, there is a lot more. Successful
companies are those that consider their human capital as their most
important asset. Facts and figures are the quantitative elements of
successful management, yet the qualitative, i.e. the cognitive aspects,
are those that actually make or break an organization.
Human Resources Management (HRM) is the strategic management of
the employees, who individually and collectively contribute to the
achievement of the strategic objectives of the organization. Assuming
that the employees of an organization are individuals with own mental
maps and perceptions, own goals and own personalities and as such
they cannot be perceived as a whole, HRM holds that the organization
should be able to employ both individual and group psychology in
order to commit employees to the achievement of organizational
goals.
Aiming to enable the organization to achieve its strategic goals by
attracting, retaining and developing employees, HRM functions as the
link between the organization and the employees. A company should
first become aware of the needs of its employees, and at a later stage,
understand and evaluate these needs in order to make its employees
perceive their job as a part of their personal life, and not as a routine
obligation. To that end, HRM is very crucial for the whole function of an
organization because it assists the organization to create loyal
employees, who are ready to offer their best.
The HRM activities in modern organizations are typically performed in
communication with the General Management in an effort to provide a
variety of views when a decision must be taken. In that way, decision
38
making is not subject to the individual perceptions of the HR or the
General Manager, but it becomes the outcome of strategic consensus.
The main goals / responsibilities of HRM are:
• To retain low employee turnover rate by inspiring people to work for
the company
• To attract new employees
• To contribute to employee development
To achieve these goals, Human Resources Management trains and
motivates the employees by communicating ethical policies and
socially responsible behavior to them. In doing so, it plays a significant
role in clarifying the organization's problems and providing solutions,
while making employees working more efficiently.
On the other hand, challenges do not cease for the HRM. Modern
organizations can survive in the dynamic, competitive environment of
today only if they capitalize on the full potential of each employee.
Unfortunately, many companies have not understood the importance
of the human capital in successful operations. The recruitment and
39
selection of the best employees is a very difficult obligation. Even
companies that are voted in the top-ten places to work at, often
endure long periods of hard work to realize that human element is all
an organization should care about.
New challenges arise even now for the organization, and it is certain
that new challenges will never cease to emerge. Therefore, the use of
proper Human Resources techniques is a really powerful way for
organizations to overcome these challenges, and to improve not only
their quantitative goals but also their organizational culture, and their
qualitative, cognitive aspects.
40
Current trends in HR
Human resource management is a process of bringing people and
organizations together so that the goals of each other are met. The
role of HR manager is shifting from that of a protector and screener to
the role of a planner and change agent. Personnel directors are the
new corporate heroes. The name of the game today in business is
personnel. Nowadays it is not possible to show a good financial or
operating report unless your personnel relations are in order.
Over the years, highly skilled and knowledge based jobs are increasing
while low skilled jobs are decreasing. This calls for future skill mapping
through proper HRM initiatives.
Indian organizations are also witnessing a change in systems,
management cultures and philosophy due to the global alignment of
Indian organizations. There is a need for multi skill development. Role
of HRM is becoming all the more important.
41
Functions of H. R
1. Recruitment & Selection
2. Training and Development (People & Organization)
3. Performance Evaluation and Management
4. Promotions
5. Redundancy
6. Industrial and Employee Relations
7. Record keeping of all personal data.
8. Compensation, pensions, bonuses etc in liaison with Payroll
9. Confidential advice to internal 'customers' in relation to problems
at work
10. Career development
42
“Performance Appraisal” – A Systematic
Approach
“Performance Appraisal”, also known as employee appraisal, is a
method by which the job performance of an employee is evaluated
(generally in terms of quality, quantity, cost and time).
“Performance Appraisal” is a part of career development.
“Performance Appraisal”s are regular reviews of employee
performance within organizations.
Generally, the aims of a “Performance Appraisal” are to:
1. Give feedback on performance to employees.
2. Identify employee training needs.
3. Document criteria used to allocate organizational rewards.
4. Form a basis for personnel decisions: salary increases, promotions,
disciplinary actions, etc.
43
5. Provide the opportunity for organizational diagnosis and
development.
6. Facilitate communication between employee and administration
7. Validate selection techniques and human resource policies to meet
federal Equal Employment Opportunity requirements.
“Performance Appraisal” is a management tool which is helpful in
motivating and effectively utilizing human resources. Assessment of
human potential is difficult, no matter how well designed and
appropriates the performance planning and appraisal system is, the
“Performance Appraisal” system should:
be correlated with the organizational mission, philosophies and value
system;
cover assessment of performance as well as potential for
development;
take care of organizational as well as individual needs; and
help in creating a clean environment by
- Linking rewards with achievements,
- generating information for the growth of the employee as well as of
the organization,
- suggesting appropriate person-task matching and career plans.
Feedback is an important component of “Performance Appraisal”.
While positive feedback is easily accepted, negative feedback often
meets with resistance unless it is objective, based on a credible source
and given in a skilful manner.
44
THE PROCESS OF PERFORMANCE APPRAISAL
45
(a) “Performance Appraisal” System: The Process
“Performance Appraisal” involves an evaluation of actual against
desired performance. It also helps in reviewing various factors which
influence performance. Managers should plan performance
development strategies in a structured manner for each employee. In
doing so, they should keep the goals of the organization in mind and
aim at optimal utilization of all available resources, including financial.
“Performance Appraisal” is a multistage process in which
communication plays an important role.
Craig, Beatty and Baird (1986) suggested an eight-stage “Performance
Appraisal” process:
(i) Establishing Standards and Measures
The first step is to identify and establish measures which would
differentiate between successful and unsuccessful performances.
These measures should be under the control of the employees being
appraised. The methods for assessing performance should be decided
next. Basically, management wants to:
know the behavior and personal characteristics of each employee;
and
assess their performance and achievement in the job.
46
There are various methods available for assessing results, behavior
and personal characteristics of an employee. These methods can be
used according to the particular circumstances and requirements.
(ii) Communicating Job Expectations
The second step in the appraisal process is communicating to
employees the measures and standards which will be used in the
appraisal process. Such communication should clarify expectations and
create a feeling of involvement.
(iii) Planning
In this stage, the manager plans for the realization of performance
expectations, arranging for the resources to be available which are
required for attaining the goals set. This is an enabling role.
(iv) Monitoring Performance
“Performance Appraisal” is a continuous process, involving ongoing
feedback. Even though performance is appraised annually, it has to be
managed 'each day, all year long.' Monitoring is a key part of the
“Performance Appraisal” process. It should involve providing
assistance as necessary and removing obstacles rather than
interfering. The best way to effectively monitor is to walk around, thus
creating continuous contacts, providing first-hand information, and
identifying problems, which can then be solved promptly.
47
(v) Appraising
This stage involves documenting performance through observing,
recalling, evaluating, written communication, judgment and analysis of
data. This is like putting together an appraisal record.
(vi) Feedback
After the formal appraisal stage, a feedback session is desirable. This
session should involve verbal communication, listening, problem
solving, negotiating, compromising, conflict resolution and reaching
consensus.
(vii) Decision Making
On the basis of appraisal and feedback results, various decisions can
be made about giving rewards (e.g., promotion, incentives, etc.) and
punishments (e.g., demotion). The outcome of an appraisal system
should also be used for career development.
(viii) Development of performance
The last stage of “Performance Appraisal” is 'development of
performance,' or professional development, by providing opportunities
for upgrading skills and professional interactions. This can be done by
supporting participation in professional conferences or by providing
opportunities for further study. Such opportunities can also act as
incentives or rewards to employees.
48
The ESSENTIALS of an effective performance system are as follows:
Documentation – means continuous noting and documenting the performance. It also helps the evaluators to give a proof and the basis of their ratings.
Standards / Goals – the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable.
Practical and simple format - The appraisal format should be
simple, clear, fair and objective. Long and complicated formats are
time consuming, difficult to understand, and do not elicit much useful
information.
49
WHAT SHOULD A PERFORMANCE SYSTEM BE?
Correlated with the organization's philosophies and mission
Cover assessment of performance as well as potential for
development
Look after the needs of both the individual and the organization
Help create a clean environment
Rewards linked to achievements
Generate information for personnel development and career
planning
suggesting appropriate person-task matching
50
HOW CAN THE “PERFORMANCE APPRAISAL” SYSTEM HELP?
Promote better understanding of an employee's role and clarity
about his or her functions
Give a better understanding of personal strengths and
weaknesses in relation to expected roles and functions
Identify development needs of an employee
Establish common ground between the employee and the
supervisor
Increase communication
Provide an employee with the opportunity for self-reflection and
individual goal setting
Help an employee internalize the culture, norms and values of
the organization. This helps develop an identity with and
commitment to the organization and prepares an employee for
higher-level positions in the hierarchy
Assist in a variety of personnel decisions
51
APPROACHES IN “PERFORMANCE APPRAISAL”
Intuitive
Self-appraisal
Group
Trait
Achievement of results
52
TECHNIQUES OF “PERFORMANCE APPRAISAL”
Easy appraisal method
Graphic rating scales
Field review method
Forced choice rating method
Critical incident appraisal method
Management by objectives
Work standard approach
Ranking methods
methods
Alteration ranking
- Paired comparison
- Person-to-person rating
- Checklist
53
- Behaviorally anchored rating scales
- Assessment centers
“PERFORMANCE APPRAISAL” SYSTEMS
PROBLEMS
Measurement Judgement Policy Organization
Deciding what to
evaluate
Appraising
performance
Using the results
of the appraisal
Recognizing how
managers work
and the
organization
culture
SYMPTOMS
54
Ambiguity in
roles and
responsibilities of
each job
Job
performance is
difficult to
quantify
No clear
statement of
overall objectives
of units or the
organization
Appraisal
contains only
numerical indices
Disagreement
on ratings
Official review
changes ratings
Appeals,
grievances,
accusations of
bias,
discrimination
Top
management
fails to reward
managers who
are excellent in
staff assessment
and development
Marginal
performers
receive
promotions or
salary increases
Appraisal forms
not completed
Managers com
plain about time
needed
System seen as
belonging to the
designers, not
the users
Personnel/HR
specialists take
enforcer not
adviser role
system revised
frequently
POTENTIAL CURES
Job analysis and
credible job
description
Outcomes of
each job
identified
Overall goals
set for units and
the organization
Observable,
behaviorally
based criteria
Performance
documented
over time
rater training
and practice
Top
management
actually uses
“Performance
Appraisal” itself
Polices for
“Performance
Appraisal”
consistently
applied
Implement
“Performance
Appraisal” using
the Performance
Management
(PM)
55
Train managers
to make
documented
judgements
Effective
communication
of performance
expectations
performance-
contingent
reward system
operates
ICICI BANK – company profile
Overview
ICICI Bank is India's second-largest bank with total assets of Rs.
3,744.10 billion (US$ 77 billion) at December 31, 2008 and profit after
tax Rs. 30.14 billion for the nine months ended December 31, 2008.
The Bank has a network of 1,438 branches and about 4,644 ATMs in
India and presence in 18 countries. ICICI Bank offers a wide range of
banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset
management. The Bank currently has subsidiaries in the United
Kingdom, Russia and Canada, branches in United States, Singapore,
Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance
56
Centre and representative offices in United Arab Emirates, China,
South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK
subsidiary has established branches in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock
Exchange and the National Stock Exchange of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York Stock
Exchange (NYSE).
History
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian
financial institution, and was its wholly-owned subsidiary. ICICI's
shareholding in ICICI Bank was reduced to 46% through a public
offering of shares in India in fiscal 1998, an equity offering in the form
of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of
Bank of Madura Limited in an all-stock amalgamation in fiscal 2001,
and secondary market sales by ICICI to institutional investors in fiscal
2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the
World Bank, the Government of India and representatives of Indian
industry. The principal objective was to create a development financial
institution for providing medium-term and long-term project financing
to Indian businesses. In the 1990s, ICICI transformed its business from
a development financial institution offering only project finance to a
diversified financial services group offering a wide variety of products
and services, both directly and through a number of subsidiaries and
affiliates like ICICI Bank. In 1999, ICICI become the first Indian
57
company and the first bank or financial institution from non-Japan Asia
to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking
industry, and the move towards universal banking, the managements
of ICICI and ICICI Bank formed the view that the merger of ICICI with
ICICI Bank would be the optimal strategic alternative for both entities,
and would create the optimal legal structure for the ICICI group's
universal banking strategy. The merger would enhance value for
ICICI shareholders through the merged entity's access to low-cost
deposits, greater opportunities for earning fee-based income and the
ability to participate in the payments system and provide transaction-
banking services. The merger would enhance value for ICICI Bank
shareholders through a large capital base and scale of operations,
seamless access to ICICI's strong corporate relationships built up over
five decades, entry into new business segments, higher market share
in various business segments, particularly fee-based services, and
access to the vast talent pool of ICICI and its subsidiaries. In October
2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries,
ICICI Personal Financial Services Limited and ICICI Capital Services
Limited, with ICICI Bank. The merger was approved by shareholders of
ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at
Ahmedabad in March 2002, and by the High Court of Judicature at
Mumbai and the Reserve Bank of India in April 2002. Consequent to
the merger, the ICICI group's financing and banking operations, both
wholesale and retail, have been integrated in a single entity.
58
Board Members
Mr. K. V. Kamath, Chairman
Mr. Sridar Iyengar
Mr. Lakshmi N. Mittal
Mr. Narendra Murkumbi
Dr. Anup K. Pujari
Mr. Anupam Puri
Mr. M.S. Ramachandran
Mr. M.K. Sharma
Mr. P.M. Sinha
Prof. Marti G. Subrahmanyam
Mr. T.S. Vijayan
Mr. V. Prem Watsa
Ms. Chanda Kochhar, Managing Director & CEO
Mr. Sandeep Bakhshi, Executive Director
Mr. Sonjoy Chatterjee, Executive Director
59
Mr. K. Ramkumar, Executive Director
Mr. N. S. Kannan, Executive Director & CFO
Board Committees
Audit Committee Board Governance &
Remuneration Committee
Mr. Sridar Iyengar
Mr. Narendra Murkumbi
Mr. M. K. Sharma
Mr. M. K. Sharma
Mr. K. V. Kamath
Mr. Anupam Puri
Mr. P. M. Sinha
Prof. Marti G. Subrahmanyam
Customer Service
Committee Credit Committee
Mr. K. V. Kamath
Mr. Narendra Murkumbi
Mr. M.K. Sharma
Mr. P.M. Sinha
Ms. Chanda Kochhar
Mr. K. V. Kamath
Mr. Narendra Murkumbi
Mr. M .K. Sharma
Mr. P. M. Sinha
Ms. Chanda Kochhar
Fraud Monitoring
CommitteeRisk Committee
Mr. M. K. Sharma
Mr. K. V. Kamath
Mr. Narendra Murkumbi
Ms. Chanda Kochhar
Mr. K. V. Kamath
Mr. Sridar Iyengar
Prof. Marti G. Subrahmanyam
Mr. V. Prem Watsa
60
Mr. Sandeep Bakhshi Ms. Chanda Kochhar
Share Transfer &
Shareholders'/ Investors'
Grievance Committee
Committee of Directors
Mr. M. K. Sharma
Mr. Narendra Murkumbi
Mr. N. S. Kannan
Ms. Chanda Kochhar
Mr. Sandeep Bakhshi
Mr. Sonjoy Chatterjee
Mr. K. Ramkumar
Mr. N. S. Kannan
61
Extra Mile for ICICI bank
ICICI Bank 2009
ICICI Bank bags the “Best bank in SME financing (Private Sector)” at
the Dun & Bradstreet Banking awards 2009.
ICICI Bank NRI services win the “Excellence in Business Model
Innovation Award” in the eighth Asian Banker Excellence in Retail
Financial Services Awards Programme.
ICICI Bank's Rural Micro Banking and Agri-Business Group win WOW
Event & Experiential Marketing Award in two categories - “Rural
Marketing programme of the year” and “Small Budget On Ground
Promotion of the Year”. These awards were given for Cattle Loan
'Kamdhenu Campaign' and 'Talkies on the move campaign'
respectively.
ICICI Bank's Germany Branch has been certified by “Stiftung
Warrentest”. ICICI Bank is ranked 2nd amongst 57 savings products
across 19 banks
62
ICICI Bank Germany won the yearly banking test of the investor
magazine €uro in the “call money”category.
The ICICI Bank was awarded the runner's up position in Gartner
Business Intelligence and Excellence Award for Asia Pacific for its
Business Intelligence functions.
ICICI Bank's Organizational Excellence Group was recently awarded
ISO 9001:2008 certification by TUV Nord. The scope of certification
comprised processes around consulting and capability building on
methods of quality & improvements.
ICICI Bank has been awarded the following titles under The Asset
Triple A Country Awards for 2009:
• Best Transaction Bank in India
• Best Trade Finance Bank in India
• Best Cash Management Bank in India
• Best Domestic Custodian in India
ICICI Bank has bagged the Best Cash Management Bank in India
award for the second year in a row. The other awards have been
bagged for the third year in a row.
ICICI Bank Canada received the prestigious Canadian Helen Keller
Award at the Canadian Helen Keller Centre's Fifth Annual Luncheon
in Toronto. The award was given to ICICI Bank its long-standing
support to this unique training centre for people who are deaf-blind.
63
Needs and Importance For “Performance
Appraisal” in Banking
The butt of many a corporate joke, these hard working professionals
are often relegated to small back offices where their activities, viewed
as little more than administrative functions, are carried out without
much recognition. But in an increasingly aggressive corporate world,
where every competitive edge counts, leading organisations would do
well to recognise the human potential that can be unleashed by
adopting effective human resource management strategies that realise
the potential of employees and earn their respect and loyalty.
Dealing with the mundane personal matters of corporate life has
traditionally been seen as the sole purpose of the HR department.
From hiring workers and providing transportation and meals services,
to processing housing, medical and insurance benefits, the functions of
HR professionals have been recognised as essential, but have not
always inspired respect for those involved in executing them.
Essentially, people remain the strongest and most competitive
assets of a business.
This should, and is, changing. In a region where business growth is
rapid, and organisations are competing to secure talent from the same
pool, investing in and revering effective HR departments to find, train
and help retain this talent is increasingly important. Testament to the
fact many banks in the region are now recognising the value of
64
developing their human resources, Abu Dhabi recently hosted the
Middle East Human Resource Summit - the annual conference and
exhibition for industry professionals. But can everyone be persuaded to
take real action in developing their HR departments
Banking industry is facing a cut throat completion in present banking
scenario where the motivation of the employee can be a competitive
advantage to retain its customer.
“Performance Appraisal” In Banking
Sector
65
“Performance Appraisal” is a vehicle to (1) validate and refine
organizational actions (e.g. selection, training); and (2) provide
feedback to employees with an eye on improving future performance.
Validating and refining organizational action or banks action
Employee selection, training and just about any cultural or
management practice—such as the introduction of a new pruning
method or an incentive pay program—may be evaluated in part by
obtaining worker performance data.
The evaluation may provide ideas for refining established practices or
instituting new ones. For instance, appraisal data may show that a
farm supervisor has had a number of interpersonal conflicts with other
managers and employees. Some options include
(1) Paying more attention to interpersonal skills when
selecting new supervisors,
(2) Encouraging present supervisors to attend communication
or conflict management
Classes at the local community college, or
(3) Providing the supervisor one-on-one counseling.
Data from “Performance Appraisal”s can also help farmers
(1) Plan for long-term staffing and worker development,
(2) give pay raises or other rewards,
(3) Set up an employee counseling session, or
66
(4) Institute discipline or discharge procedures.
For validation purposes, it is easier to evaluate performance data when
large numbers of workers are involved such as in banks. Useful
performance data may still be collected when employees are
evaluated singly, but it may take years to obtain significant data
trends.
Employee need for feedback
Although employees vary in their desire for improvement, generally
workers want to know how well they are performing. A successful
farmer recalled with sadness how as a youth he had worked very hard,
along with his immigrant family, for a farmer who never seemed to
notice the effort. Years later he met the former employer and asked
why he had never made any positive comments about their work. The
67
response from the former boss was, "I feared you would stop working
as hard."
People need positive feedback and validation on a regular basis. Once
an employee has been selected, few management actions can have as
positive an effect on worker performance as encouraging affirmation.
These are, in effect, good-will deposits, without which withdrawals
cannot be made. This does not mean you should gloss over areas
needing improvement. When presented in a constructive fashion,
workers will often be grateful for information on how to improve
shortcomings. Such constructive feedback, however, "can happen only
within the context of listening to and caring about the person." In
general, supervisors who tend to look for worker’s positive behaviors—
and do so in a sincere, non-manipulative way—will have less difficulty
giving constructive feedback or suggestions. Furthermore, in the
negotiated approach, the burden for performance analysis does not fall
on the supervisor alone, but requires introspection on the part of the
individual being evaluated.
Feedback may be qualitative or quantitative. Qualitative comments are
descriptive, such as telling the shop mechanic you appreciate the
timeliness and quality of her repairs. In contrast, quantitative feedback
is based on numerical figures, such as the percentage of plant grafts
that have taken. Some researchers feel feedback is particularly useful
when workers have an achievement objective
By focusing the attention on performance, performance appraisal goes
to the heart of personnel management and reflects the
management's interest in the progress of the employees.
68
Objectives Of Performance appraisal:
To review the performance of the employees over a given period of time.
To judge the gap between the actual and the desired performance.
To help the management in exercising organizational control. Helps to strengthen the relationship and communication between
superior – subordinates and management – employees. To diagnose the strengths and weaknesses of the individuals so
as to identify the training and development needs of the future. To provide feedback to the employees regarding their past
performance.
69
Provide information to assist in the other personal decisions in the organization.
Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.
To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.
To reduce the grievances of the employees.
Followings should kept in the mind for effective “Performance
Appraisal” in a bank
Select what performance data to collect
Determine who conducts the appraisal
Decide on a rating philosophy
Overcome rating deficiencies
Create a rating instrument
Deliver useful information to employees
The “Performance Appraisal” or review is essentially an opportunity for
the individual and those concerned with their performance in the
bank , most usually their line manager - to get together to engage in a
70
dialogue about the individual’s performance, development and the
support required from the manager. It should not be a top down
process or an opportunity for one person to ask questions and the
other to reply. It should be a free flowing conversation in which a range
of views are exchanged.
“Performance Appraisal”s usually review past behavior and so provide
an opportunity to reflect on past performance of the bank employees.
But to be successful they should also be used as a basis for making
development and improvement plans and reaching agreement about
what should be done in the future to enhance the bank’s effect and
effectiveness.
The “Performance Appraisal” is often the central pillar of performance
management in the bank to keep the motivation of the employees
high.
71
“Performance Appraisal” And
Performance Management In ICICI Bank
The facilitation of high achievement by employees. Performance
management involves enabling people to perform their work to
the best of their ability, meeting and perhaps exceeding targets
and standards. Performance management can be coordinated by
an interrelated framework between manager and employee. Key
areas of the framework to be agreed are objectives, human
resource management, standards and performance indicators,
and means of reward. For successful performance management
in ICICI , a culture of collective and individual responsibility for
the continuing improvement of business processes needs to be
established, and individual skills and contributions need to be
encouraged and nurtured as the bank deals in service sector
72
where the employees are the main factor of making the
difference . One tool for monitoring performance management is
“Performance Appraisal” that the banks use for rewarding its
employees. For the bank, performance management is usually
known as company performance and is monitored through
business appraisal.
73
Reasons for “Performance Appraisal” in ICICI
74
Increase motivation to perform effectively
Increase staff self-esteem
Gain new insight into staff and supervisors
Better clarify and define job functions and responsibilities
Develop valuable communication among appraisal participants
Encourage increased self-understanding among staff as well as
insight into the kind of development activities that are of value
Distribute rewards on a fair and credible basis
Clarify organizational goals so they can be more readily accepted
Improve institutional/departmental manpower planning, test
validation, and development of training programs
Modern Trends In Banks for P.A
A growing number of front running banks like ICICI, and others have
adopted a “Performance Appraisal” model in which best-to-worst
75
ranking methods are used to identify poor performers. The identified
poor performers are then given a time period during which they have
to show an improvement in their performance.
In cases where the employee fails to improve his performance he is
asked to leave the organization gracefully and a severance package is
offered to him. If the employee refuses to leave then his service is
terminated and no compensation is offered. This system is called “rank
and yank strategy”. Advocates of this system feel that it continually
motivates employees to better their performance since nobody would
like to be included in the poor performance band. But the flip side of
this strategy is that employees become too competitive and team
spirit is not nurtured.
Effective banks are not build merely on investment and returns but
more on the quality of the workforce, its commitment to the
organizational goals and investments made to attract train and retain
superior human capital. An integrated Performance Management
system is essential to get the best out of its people. Employee
performance is linked to the bank’s performance. This helps in
achieving the organizational goal and creates a performance culture in
the bank. Invention, creativity, diversity of perspectives is fostered.
Employees act as one bank one brand.
76
ICICI BANK PEFORMENCE APPRAISAL ENVIRONMENT
The bank is using the Management by Objectives (MBO) method. In
this method the subordinate in consultation with the supervisor chalks
out short term objectives followed by specific actions that he has to
carry out. The goals are finally set and are action oriented. The goals
set are specific, measurable, achievable, review able and time bound
77
and most importantly they use to be aligned with the goal of the
organization. At the end of a specified time period, the activities are
jointly reviewed by both the subordinate and his supervisor. Depending
on the performance of the subordinate, the goals are modified or
redesigned for the next period of time.
The MBO is thus a performance oriented system. A well thought out
MBO system provides multiple benefits. It establishes a link between
the performance of the individual and the bank
It is easy to implement because those who carry out the plan also
participates in setting it up. Each employee becomes aware of the task
he has to perform in the bank. This leads to better utilization of
capacity and talent. It promotes better communication and information
sharing. It provides guidelines for self evaluation as well as evaluation
by the superior against set tasks and goals. It facilitates guidance and
counseling.
The Effective Components of ICICI P .A System
Performance Planning (includes employee goal setting / objective
setting)
Ongoing Performance Communication
Data Gathering, Observation and Documentation
“Performance Appraisal” Meetings
78
Performance Diagnosis and Coaching
An effective “Performance Appraisal” system in ICICI bank emphasizes
individual objectives, Bank objectives and also mutual objectives. From
the viewpoint of individual objective the “Performance Appraisal” talks
about
a) What task the individual is expected to do?
b) How well the individual has done the task?
c) How can his performance be further improved?
d) His reward for doing well.
From the bank view point a “Performance Appraisal” should generate
manpower information, improve efficiency and effectiveness serve as a
mechanism of control and provide a rational compensation structure.
In short the appraisal system establishes and upholds the principle of
accountability in the absence of which bank failure is the only possible
outcome.
Finally, talking about mutual goals, the emphasis is on growth and
development, harmony, effectiveness and profitability of the bank
79
ICICI HR Philosophy on P.A
“Performance Appraisal” is one such method that allows for the
optimisation of employees. In a broad sense , it is a formal structure
that allows for the continued measuring and evaluation of individual
behavior and performance, whilst influencing an employees job related
attributes through such factors as increased job satisfaction and
recognition (with the use of promotional aids such as better
equipment, duties, and salaries). The purpose of any such system, is
not only to measure the performance of human resources but also to
find areas of skill deficit for further development (through employee
80
feedback), identify excess potential that could be better utilized, and
communicate objectives more accurately to workers . By doing so,
businesses move one step closer to the achievement of their set goals
and objectives. Included here is also one other factor that is not a
direct objective of appraisals, but becomes a valuable asset within
itself. This simply is the provision for maintaining records of workers
that are legally viable, that can protect the business when dealing in
cases of dismissals and demotions. This is especially important in
today’s society because of the "increasing legislation and regulation
dealing with victimization and discrimination" making bank liable for all
their actions.
The annual “Performance Appraisal” is usually done in two steps. First,
the employees and their manager complete the “Performance
Appraisal” form - doing a self assessment. Often the bank also uses a
60 degree feedback process, asking for input from peers. Secondly, the
bank employees and manager participate in a formal “Performance
Appraisal” interview. The appraisal form, used in the first step, consists
of performance standards and criteria that are used to judge evaluate
your performance. The items comprising your job description are
usually the performance standards that are used in employees annual
appraisal .The performance standards are derived from a job analysis,
which is a detailed list of all of the skills involved in performing a task.
For example, what are the skills necessary to perform a complete
blood count? The criteria are used to determine the level of
performance, which can be excellent, average, or poor (or alternatively
meets, exceeds or does not meet standards). Once appraisal is
complete, score is averaged and merit raise (if applicable)
81
Forms Used By The Bank For P.A
1. General “Performance Appraisal” Form I
Six-page form includes evaluation sections for three categories: a) objectives from last review period; b) current job duties (which are customizable), and c) organization core values (e.g., maturity, vision).
2. General “Performance Appraisal” Form II
Four-page form has three sections: a) overall performance, b) communication skills, and c) people/self development skills.
3. General “Performance Appraisal” Form III
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Two-page "short form" has numerical rankings for two sections: a) general work attributes and b) managerial attributes. Includes a weighted average calculation.
4. 360-Degree “Performance Appraisal” Form I
Two-page form for peers, outside suppliers and customers to fill out. Also can be used for "upwards" feedback about managers.
5. 360-Degree “Performance Appraisal” Form II
Two-page form for peers and outsiders - all open-ended questions, without numerical rankings.
6. Manager “Performance Appraisal” Form
Six-page form with all sections related to managerial skills. Also includes a section for listing future objectives.
7. Administrative/Technical “Performance Appraisal” Form
Four-page form perfect for administrative, technical and customer service workers.
8. Sales “Performance Appraisal” Form
Five-page form focused on sales personnel. Includes four sections: a) actual vs. plan performance, b) lead generation, c) selling skills and d) account maintenance.
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9. Project Evaluation Review Form
Four-page form geared towards specific projects, and an individuals' role on a given project.
10. Employee Self-Assessment Form
Two-page open-ended form for an employee to fill-out before his or her own review. Sections include: a) success in meeting goals from last review, b) accomplishments and c) areas for improvement.
Approaches And Techniques In “Performance Appraisal” Used
By The Bank
“Performance Appraisal” is a multistage process involving several
activities, which can be administered using a variety of approaches.
Some of these approaches are being used by the banks for
“Performance Appraisal”
Intuitive Approach: In this approach, a supervisor or manager
judges the employee based on their perception of the employee's
behavior.
Self-Appraisal Approach: Employees evaluate their own
performance using a common format.
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Group Approach: The employee is evaluated by a group of persons.
Trait Approach: This is the conventional approach. The manager or
supervisor evaluates the employee on the basis of observable
dimensions of personality, such as integrity, honesty, dependability,
punctuality, etc.
Appraisal Based On Achieved Results: In this type of approach,
appraisal is based on concrete, measurable, work achievements
judged against fixed targets or goals set mutually by the subject and
the assessor.
Behavioral Method: This method focuses on observed behavior and
observable critical incidents.
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Appraisal techniques
There are several techniques of “Performance Appraisal”, each with
some strong points as well as limitations. Oberg (1972) has
summarized some of the commonly used “Performance Appraisal”
techniques.
(i) Essay Appraisal Method:
The assessor writes a brief essay providing an assessment of the
strengths, weaknesses and potential of the subject. In order to do so
objectively, it is necessary that the assessor knows the subject well
and should have interacted with them. Since the length and contents
of the essay vary between assessors, essay ratings are difficult to
compare.
(ii) Graphic Rating Scale
A graphic scale 'assesses a person on the quality of his or her work
(average; above average; outstanding; or unsatisfactory).' Assessment
could also be trait centered and cover observable traits, such as
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reliability, adaptability, communication skills, etc. Although graphic
scales seem simplistic in construction, they have application in a wide
variety of job responsibilities and are more consistent and reliable in
comparison with essay appraisal. The utility of this technique can be
enhanced by using it in conjunction with the essay appraisal technique.
(iii) Field Review Method
Since individual assessors differ in their standards, they inadvertently
introduce bias in their ratings. To overcome this assessor-related bias,
essay and graphic rating techniques can be combined in a systematic
review process. In the field review method, 'a member of the HRM staff
meets a small group of assessors from the supervisory units to discuss
each rating, systematically identifying areas of inter-assessor
disagreement.' It can then be a mechanism to help each assessor to
perceive the standards uniformly and thus match the other assessors.
Although field review assessment is considered valid and reliable, it is
very time consuming.
(iv) Forced-Choice Rating Method
Unlike the field review method, the forced-choice rating method does
not involve discussion with supervisors. Although this technique has
several variations, the most common method is to force the assessor
to choose the best and worst fit statements from a group of
statements. These statements are weighted or scored in advance to
assess the employee. The scores or weights assigned to the individual
statements are not revealed to the assessor so that she or he cannot
favor any individual. In this way, the assessor bias is largely eliminated
and comparable standards of performance evolved for an objective.
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However, this technique is of little value wherever “Performance
Appraisal” interviews are conducted.
(v) Critical Incident Appraisal Method
In this method, a supervisor describes critical incidents, giving details
of both positive and negative behavior of the employee. These are
then discussed with the employee. The discussion focuses on actual
behavior rather than on traits. While this technique is well suited for
performance review interviews, it has the drawback that the supervisor
has to note down the critical incidents as and when they occur. That
may be impractical, and may delay feedback to employees. It makes
little sense to wait six months or a year to discuss a misdeed, a
mistake or good display of initiative.
(vi) Management By Objectives
The employees are asked to set or help set their own performance
goals. This avoids the feeling among employees that they are being
judged by unfairly high standards. This method is currently widely
used, but not always in its true spirit. Even though the employees are
consulted, in many cases management ends up by imposing its
standards and objectives. In some cases employees may not like 'self-
direction or authority.' To avoid such problems, the work standard
approach is used.
(vii) Work Standard Approach
In this technique, management establishes the goals openly and sets
targets against realistic output standards. These standards are
incorporated into the organizational “Performance Appraisal” system.
Thus each employee has a clear understanding of their duties and
knows well what is expected of them. “Performance Appraisal” and
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interview comments are related to these duties. This makes the
appraisal process objective and more accurate. However, it is difficult
to compare individual ratings because standards for work may differ
from job to job and from employee to employee. This limitation can be
overcome by some form of ranking using pooled judgment.
(viii) Ranking Methods:
Some of the important forms of ranking for “Performance Appraisal”
are given below, based on Oberg, 1972; and Monga, 1983:
(a) Alteration Ranking Method
The Individual With The Best performance is chosen as the ideal
employee. Other employees are then ranked against this employee in
descending order of comparative performance on a scale of best to
worst performance. The alteration ranking method usually involves
rating by more than one assessor. The ranks assigned by each
assessor are then averaged and a relative ranking of each member in
the group is determined. While this is a simple method, it is impractical
for large groups. In addition, there may be wide variations in ability
between ranks for different positions.
(b) Paired Comparison: The paired comparison method systematizes
ranking and enables better comparison among individuals to be rated.
Every individual in the group is compared with all others in the group.
The evaluations received by each person in the group are counted and
turned into percentage scores. The scores provide a fair idea as to how
each individual in the group is judged by the assessor.
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(c) Person-to-Person Rating: In the person-to-person rating scales,
the names of the actual individuals known to all the assessors are used
as a series of standards. These standards may be defined as lowest,
low, middle, high and highest performers. Individual employees in the
group are then compared with the individuals used as the standards,
and rated for a standard where they match the best. The advantage of
this rating scale is that the standards are concrete and are in terms of
real individuals. The disadvantage is that the standards set by different
assessors may not be consistent. Each assessor constructs their own
person-to-person scale which makes comparison of different ratings
difficult.
(d) Checklist Method: The assessor is furnished with a checklist of
pre-scaled descriptions of behavior, which are then used to evaluate
the personnel being rated (Monga, 1983). The scale values of the
behavior items are unknown to the assessor, who has to check as
many items as she or he believes describe the worker being assessed.
A final rating is obtained by averaging the scale values of the items
that have been marked.
(e) Behaviorally Anchored Rating Scales (BARS): This is a
relatively new technique. It consists of sets of behavioral statements
describing good or bad performance with respect to important
qualities. These qualities may refer to inter-personal relationships,
planning and organizing abilities, adaptability and reliability. These
statements are developed from critical incidents collected both from
the assessor and the subject.
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(f) Assessment centers: This technique is used to predict future
performance of employees were they to be promoted. The individual
whose potential is to be assessed has to work on individual as well as
group assignments similar to those they would be required to handle
were they promoted. The judgment of observers is pooled and paired
comparison or alteration ranking is sometimes used to arrive at a final
assessment. The final assessment helps in making an order-of-merit
ranking for each employee. It also involves subjective judgment by
observers.
A “Performance Appraisal” system could be designed based on
intuition, self-analysis, personality traits, behavioral methods and
result-based techniques. Different approaches and techniques could be
blended, depending on the goals of “Performance Appraisal” in the
organization and the type of review. For example, management by
objectives, goal-setting and work standard methods are effective for
objective coaching, counseling and motivational purposes. Critical
incident appraisal is best suited when supervisor's personal
assessment and criticism are essential. A carefully developed and
validated forced-choice rating can provide valuable analysis of the
individual when considering possible promotion to supervisory
positions. Combined graphic and essay form is simple, effective in
identifying training and development needs, and facilitates other
management decisions.
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Banner Corporation Banks on Halogen for
Talent and Learning and performance
Management (For Practical
Understanding)
Northwest U.S. based Banner Corporation has selected Halogen
Software for a Web-based talent management system to streamline
the employee “Performance Appraisal” process and tightly integrate
learning into its talent management process. Banner Corporation,
which operates commercial banks in Washington, Oregon and Idaho, is
focused on creating a tightly integrated talent management program,
to ensure its 1,200 employees are executing on the bank's strategic
vision and delivering outstanding customer service. Halogen was
selected following a review of more than 20 talent and learning
management vendors.
"Our number one priority was to improve our learning management
processes, and we quickly realized that for this to work, it was critical
that we establish a tight link between employee performance, talent
management and learning functions," explained Mimi Ellis, SVP Talent
Management, Banner Corporation. "We really did our homework and
selected Halogen based on the fact that it would meet all of our
current and future talent management needs."
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The new Web-based system will enable Banner Corporation to
automate the employee appraisal process driving consistency across
the organization. Learning functions, such as compliance training, will
be tied into the appraisal process, and information from appraisals will
be used for succession planning purposes, thereby creating a complete
talent management strategy across all its locations in the Northwest.
Banner Corporation is starting with a deployment of Halogen
eAppraisal Financial Services and Multi-Rater for employee
performance management and plans to build on the implementation
with fully integrated Halogen eSuccession and eLMS modules.
"The Halogen system is straightforward and easy to use, and everyone
we've worked with at the company has been wonderful," added Ellis.
"We are looking forward to continuing to work with Halogen and
reaping the benefits of our new approach to talent management."
Banner Corporation joins financial services institutions across North
America relying on Halogen, including AGF, International Finance
Corporation, People's Bank and United Bank and Trust.
About Halogen Software
A recognized industry leader with over 1000 customers worldwide,
Halogen Software makes powerful, simple-to-use and affordable
employee performance and talent management applications. The
company offers a complete suite of web-based products that
automate, simplify and integrate employee “Performance Appraisal”s,
360 degree feedback, compensation management (pay for
performance), succession planning and learning management.
Halogen's offering makes HR best-practices accessible to companies of
all sizes and its healthcare, financial services and professional services
specific suites meet the unique needs of these industries. Halogen is
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consistently recognized by the industry and its customers for its
exceptional implementation and support services, and has won
multiple awards for its corporate leadership and product innovation,
including HR Technology Product of the Year. For more information,
visit www.halogensoftware.com .
About Banner Corporation
Banner Corporation is the parent company of Banner Bank, a
commercial bank that operates a total of 86 branch offices and 12 loan
offices in 29 counties in Washington, Oregon and Idaho. It is also the
parent of Islanders Bank which operates three branch offices in
Washington's San Juan Islands. Banner serves the Pacific Northwest
region with a full range of deposit services and business, commercial
real estate, construction, residential, agricultural and consumer loans.
Conclusion
To summarize our discussion we can say that the “Performance
Appraisal” is an integral part of performance management and has
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become the important component of the HRM. Performance
management includes activities to ensure that goals are consistently
being met in an effective and efficient manner. Performance
management can focus on performance of the organization, banks, a
department, processes to build a product or service, employees, etc
Performance management reminds us that being busy is not the same
as producing results. It reminds us that training, strong commitment
and lots of hard works alone are not results. The major contribution of
performance management is its focus on achieving results -- useful
products and services for customers inside and outside the bank and
organization. Performance management redirects our efforts away
from busyness toward effectiveness.
Recently, organizations have been faced with challenges like never
before. Increasing competition from businesses across the world has
meant that all businesses must be much more careful about the
choice of strategies to remain competitive. Everyone (and everything)
in the organization must be doing what they're supposed to be doing
to ensure strategies are implemented effectively.
This situation has put more focus on effectiveness, that systems and
processes in the organization be applied in the right way to the right
things: to achieve results. All of the results across the organization
must continue to be aligned to achieve the overall results desired by
the organization for it to survive and thrive. Only then it be said that
the organization and its various parts are really performing.
We can say that
Performance management should be:
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Strategic - it is about broader issues and longer-term
goals
Integrated - it should link various aspects of the
business, people management, and individuals and
teams.
A well designed “Performance Appraisal” system helps an
organization, bank
know and understand what is expected of them
have the skills and ability to deliver on these
expectations
are supported by the organization to develop the capacity
to meet these expectations are given feedback on their
performance
have the opportunity to discuss and contribute to
individual and team aims and objectives.
On going banking scenario has changed the scope of the
performance management system as the competition is extensive
and to retain the employees has become the challenging task for the
management. With the help of “Performance Appraisal” the bank
can recognize its true personnel inventory and formulate the
strategy for man power planning and career development.
“Performance Appraisal” directly affects the other sub system of
HRM such as manpower planning, selection, career development,
potential development, recruitment, compensation etc.
To wind up our discussion we can say that “Performance Appraisal”
is an integrated and widen approach to guide the employees in the
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right direction to achieve organizational as well as individual
objectives mainly in banking sector because of the dominancy of
personal skill and service level to interact with the customers
Suggestion and recommendation
Though it is the basic rule of the report writing that suggestion and
recommendation should not be given until it’s asked for but to keeping
in the mind the academic nature of the report we would like to
recommend the followings
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o Management and employees should see “Performance
Appraisal” as a positive tools to determine the
organizational efficiency and effectiveness
o Banks should use a well communicative method of
“Performance Appraisal” to avoid any resistance from the
employees
o The outcome of the “Performance Appraisal” should be
shared with the concerned employees and corrective
action should be taken in the light of the outcome
o “Performance Appraisal” should be treated as an integral
part of the organizational development not just the
formality
o If the external agency is hired for “Performance
Appraisal” , it will be appreciated to remove the possibility
of biasness
o “Performance Appraisal” should be done on both basis
qualitative an quantitative
o There should be a cost and benefit study of “Performance
Appraisal” process
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Bibliography
1- Books and journals
2- Internal report of banks
3- Corporate bulletin and finance magazine
4- Internet and bank’s website
5- Personal sources
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