PERFORMANCE APPRAISAL SYSTEM OF ASKARI BANK

CHAPTER NO.1

INTRODUCTION

INTRODUCTION TO THE TOPIC

The appraisal of employee performance is a key process for

an organization trying to increase or maintain its effectiveness

because the actions of employees affect the optimal use of the

organization's capital, technological, and marketing resources.

Despite the obvious importance of making accurate appraisals of an

employee's performance consist of a list of key traits or cost-related

variables. Both appraisal instruments are limited from the stand

point of counseling and developing an employee.

OBJECTIVES AND PURPOSE OF THE RESEARCH:

There are mainly two main objectives for performance

appraisal, in an organization i.e. evaluative objectives and

developmental objectives. As we know from our theoretical

knowledge that evaluative objectives are those which are mainly to

make compensation or staffing decisions. It also includes the

evaluation of the selection process on the other hand the

developmental objectives are mainly for the development of the

employees by providing them proper feed back and directing their

future performance and it also helps out to indicate the training and

developmental needs.

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In Askari Bank the main objective for performance appraisal is

to motivate the employees to increase their productivity and

earning their loyalty to the organization. They do not have proper

developmental objectives which could be proved beneficial in the

long run. But they believe in giving proper feed back to their

employees so that they should realize that what is expected of

them and what they have to achieve.

Through performance appraisal the organization also try to

develop a sound compensation system. And to carry out their

staffing decisions which would help them to tackle with many

problems.

THE BACKGROUND OF RESEARCH

THE PERFORMANCE APPRAISAL PROCESS

The process of performance appraisal is carried out in

different step. These steps are more or less the same in all

organizations. The following model gives an out look to the

performance appraisal process followed by Askari Bank.

Review Legal Requirements

Conduct Job analysis

Develop Appraisal Instrument

Select Observers

Train Observers

Measure Performance

Give Employee Results

Establish Performance Goal

Praise/Reward Performance

Reviewing Legal Requirements:

Before carrying out any performance appraisal system the

first step is to take into consideration that what are the legal

requirements. First the organization see that what performances

have to be appraised and upto what extent and it is after reviewing

the laws the organization is ready to conduct job analysis.

APPRAISAL METHODS AND INSTRUMENTS

The methods used for appraisal of the employees are

categorized into two broad categories. First is the "Comparative

methods" and second is the "Absolute standard methods".

The comparative method includes. Ranking, forced

distribution, paired distribution critical incident method and essay

approach. And the absolute standard method includes rating scales

which is further divided into graphic and non-graphic scales, MBO

(management by objective) and finally the combination methods.

Appraisal Methods Followed By Askari Bank

Askari Bank is our local bank which is trying to improve its

approval process and method used by them,. But at this point there

are very few methods used for the appraisal of the employees.

Basically they use critical incident method for the appraisal of

the middle level managers.

METHODS / TECHNIQUES OF PERFORMANCE EVALUATION

There are four methods of performance evaluation.

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1. Rating Scale

In this method you have to give the rate to individual

performance on the scale basis, this method is precise and simple

as compared to other methods.

2. Check List

The rater has to select only that statement which best

described the performance and individual. In order to measure the

performance, we can assign the weight to it will become weighted

check list, it will help to check the performance and this practical is

standard.

3. Forced Choice

It is a method of set choice. In this method you have to

develop a set of employees and give them the numbers on rater's

own observation.

4. Critical Incidence Technique

In this method the rater has keep in account positive and

negative behaviours in sequence, these are called incident critical

techniques. At the end of year in negative report in written on the

individual performance based on this report. This report help to

provide positive feedback to the employees.

Askari Bank has to adopt the rating scale method for given

the rate to their employees performance.

PROBLEMS IN PERFORMANCE APPRAISAL

AMBIVALENCE AND AVOIDANCE

Supervisors and subordinates are often ambivalent about

participating in the performance appraisal process. Superiors are

uncomfortable because their organizational role places them in the

position of being both judge and jury. They must make decisions

that affect people's careers and lives in significant ways.

Furthermore most managers are not trained to handle the

interpersonally difficult situations that are likely to arise when

feedback is negative. This is particularly a problem because

managers would like to maintain good relations with their

subordinates in order to carry on with their jobs. All this leads to

uncertainty about their subjective judgments and anxiety about

meeting with subordinates to discuss performance. Yet supervisors

also know that both Askari Bank and the subordinate want such a

discussion to be held. Finally, supervisors often feel personally

bound to let people know where they stand. If they are not open

with their subordinates, the knowledge that they have been less

than truthful keeps them from building a relationship of mutual

trust. In short, supervisors are likely to be extremely ambivalent

about the performance appraisal process.

Subordinates are likely to be very ambivalent about receiving

negative feedback. They are likely to want to discuss negative

aspects of their performance so they can improve and develop, but

will not want to jeopardize promotions, pay, or their own self-image.

The ambivalence of superiors and subordinates has led to the

vanishing performance appraisal. In Askari Bank, supervisors report

that they hold periodic appraisal interviews and give honest

feedback, while their subordinates report they have not had a

performance appraisal for many years or that they heard nothing

negative. Probably the supervisors, fearful of the appraisal process,

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have expressed themselves in such a way that the subordinates do

not receive the unwelcome messages. The supervisor may carefully

package his negative feedback between heavy doses of positive

feedback (the sandwich approach) or may make only very general

statements, without referring to specific problems. That is,

supervisors provide negative feedback, but immediately

counterbalance it with positive statements when their own anxiety

or the defensiveness of the subordinate signals potential problems.

Because of their fear of learning things that will affect their

self-image, subordinates collude with the supervisor in avoiding

negative feedback. This sometimes results in long conversations

only marginally related to the purpose of the appraisal interview.

Sometimes avoidance is manifested in small talk or humor that

conveys an oblique message, or the use of phrases that do not have

clear meaning to either the supervisor or subordinate. Thus,

negative feedback is often not explored in depth and is not fully

understood and internalized by the subordinate.

As a result, no real appraisal occurs or, more likely, a shallow

appraisal just skims the surface. Both parties collude in meeting the

Askari Bank's requirement for appraisal but avoid the tough issues.

Is it surprising then that subordinates do not think they have been

given negative feedback, or had an appraisal at all?

CHAPTER NO.2

LITERATURE REVIEW

According to David Peele, the British have still another approach

to performance appraisal. Drawing on E.V. Corbett's work and his

own experience in both countries, he shows what the differences

are, and suggests that Americans use some elements of the British

system that would result in a less formalized system. The British

system appears to be halfway between the highly structured

American system and the very informal Scandinavian approach.

Although Peele does not directly question the need for an appraisal,

he does show that variations exist, and each seems to work equally

well. Or, perhaps it is more accurate to say that no clear evidence

exists that any system helps improve staff performance.

No matter what the goal(s) may be for the process, staff members

need a clear explanation of what those goals are and how to

accomplish them. Anyone with experience in examining a large

number of performance evaluation forms is struck by the fact that

the vast majority of the staff are rated "average" or above average-

a rather interesting phenomenon (where is the lower half of the

statistical curve?). Some academic libraries state in their personnel

policies that a person must be excellent to be hired and outstanding

to move up to the next rank; later advancements in rank require the

person to be rated as superior, exceptional, and distinguished. With

such a system, is it a wonder that few people ever get rated less

than excellent, or that people begin to doubt the value of such an

appraisal system as a true assessment of ability or a means of

promoting greater productivity? All too often, only the

administrative goal is achieved because the staff sees this as the

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sole purpose of the process and really have no training in using the

system to achieve the behavioral goals such as improvement of an

individual's performance or for growth and development.

In summary, a review of the literature and the informal data

collection indicates that a formal performance appraisal is

considered essential for good management in the United States-

essential because it provides a means of control over employee job

performance and, thus, over individual and organizational

productivity (behavior goals). It also carries with it what many

managers and supervisors believe to be a powerful sanction for

failing to achieve a satisfactory performance and level of

productivity (administrative goals). That sanction is the granting or

withholding of economic rewards, opportunities for advancement

and promotion, and in the case of totally unsatisfactory

performance, dismissal from the organization. What is assumed is

there is a direct relationship between conducting performance

appraisals and maintaining or improving 'an 'individual's

contribution to the organization (productivity). One does not find in

the literature any articles that supply evidence that the assumption

is valid. Nor does one find, other than indirectly, any questioning of

the need for such a system. Yet, as we have seen, at least one

working alternative exists to the highly structured American system

in Scandinavia and possibly a less structured approach in use in

Great Britain.

Thus there is a need for extensive research in this area. This article

is filled with "it seems," "it appears," "perhaps," which reflects the

current lack of evidence about the following areas: (a) the

effectiveness of performance appraisal practices; (b) influence of

performance appraisal on work relationship (superior/subordinate

and peer); (c) relationship between performance appraisal and

productivity; and, (d) the cost benefit of conducting performance

appraisals. Each of the areas could be further subdivided into a

number of smaller more manageable research topics. We hope a

number of persons will begin to investigate these areas in general

and specifically in terms of libraries. As noted before, the Graduate

School of Librarianship and Information Management at the

University of Denver, and the Norwegian Library School hope to

secure funding to examine one very small portion of this highly

complex subject.

According to Helen Smeaton (1983) described in his article

“Library technicians in Australia: past, present and future”.

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CHAPTER NO.3

THEORETICAL FRAMEWORK

PERFORMANCE APPRAISAL & COMPENSATION

Often, "an excessively high turnover rate compared to the industry

standard is a symptom of problems within the organization"1.

Managers must realize that "high staff turnover can prove costly,

particularly to small businesses" (Oliver 1998). Strategies have to

be crafted that will minimize turnover and the costs associated with

it. Although strategies used to retain employees can be expensive,

turnover is a cyclical problem that usually becomes more expensive

in the long run (Brannick 1998). Costs that organizations face when

employees depart include recruitment costs associated with finding

replacements, selection costs associated with interviewing,

relocating and screening, training costs and separation costs such

as severance pay (Gomez-Mejia, Balkin, & Cardy 1998). Managers

can reward employees with tangible or intangible compensation

(Brannick 1998). Tangible compensation includes salary increases,

benefits, bonuses, potential for advancement and stock options

(Brannick 1998). The good news for managers is that there are also

inexpensive strategies that can be implemented to make and keep

employees happy with their jobs. Intangible compensation includes

respect, feedback, recognition, the opportunity to be heard and

encouragement (Armentrout 1998). All of these means of

compensation can be effective if managers take the time to get to

know their employees and what makes them happy. The human

1 Gomez-Mejia, Balkin & Cardy (1998)

resource function, compensation management is at the center of all

of these issues.

THE EFFECTS OF PERFORMANCE APPRAISAL

Employee turnover rate is defined as the measure of the rate at

which employees leave a firm2. Turnover has become a serious

dilemma facing organizations today (Davison 1997). Consistent

problems with turnover can lead to significant costs to organizations

(Auxillium 1998). The loss of productivity is detrimental as it often

takes 45 to 60 days to refill a position (Auxillium 1998). There are

costs associated with training new employees (Auxillium 1998).

Estimates from the U.S. Department of Labor indicate the significant

impact employee turnover has on the financial performance of an

organization. According to these estimates, "it costs a company

one-third of a new hire's annual salary to replace an employee"

(Brannick 1998). For an employee whose wage rate is only six

dollars per hour, it costs a company $3,600 when he or she departs

(Brannick 1998). The fast-food industry has done their own

calculations on the costs associated with turnover and has found

that it costs $500 to replace a crew person and $1,500 to replace a

manager (Brannick 1998). A fast-food operation with 500 total

employees and 100 percent turnover faces annual turnover costs of

$250,000 (Brannick 1998). Managers in the trucking industry

estimate the cost of replacing one driver to be between $3,000 and

$5,000 (Brannick 1998). These estimates are an indication of the

direct costs associated with employee turnover. Direct costs

encompass the time involved in the recruitment, selection and

training processes, and the costs associated with advertising 2 Gomez-Mejia, Luis, Balkin & Cardy (1998)

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expenses and manpower (Brannick 1998). When a manager has to

take time out of his or her schedule to select new employees this is

a direct cost of turnover (Brannick 1998). The manager would be

much better off using that time to carry out the basic

responsibilities of a manager (Brannick 1998).

Indirect costs also become a factor for organizations experiencing

turnover (Brannick 1998). Current employees may see an increase

in their workloads while positions are unfilled and productivity may

diminish due to low employee morale (Brannick 1998). Indirect

costs seep down through an organization and only compound the

problem as other workers may resign due to perceived unfairness

related to increased workloads (Brannick 1998).

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3 Andrew P. Newcomb Human Resources Management, (April 11, 1999)

CHAPTER NO.4

RESEARCH DESIGN

Universe:

For conducting my research on performance appraisal I have

selected a bank i.e. Askari Bank. So all the employees of the bank

are the universe for my study.

Sample:

To make the study simple I have selected the performance

appraisal procedure of the middle level managers of Askari Bank so

this is my sample for conducting this research.

SOURCES OF INFORMATION:

For analysing and carrying out our research the sources

through which we can get our relative information are:

1. Immediate supervisors (Officers)

2. Superiors (CEO, Chief Manager etc.)

3. Middle level managers (Deputy Managers and Managers)

4. Appraisal policies followed by the bank.

5. Relevant literature/books from the library.

6. Other staff of the bank.

SIGNIFICANCE OF THE STUDY

The significance of this study is that it provides a practical

base for what we have learned in a class-room.

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Secondly, it provides us an opportunity to learn by getting

more understanding of the subject through this research

assignment.

Through this research we will find out the existing strengths

and weaknesses in the performance appraisal system in the

selected organization. And it will help to find out the basic reasons

behind. Moreover we will be able to give few suggestions to make

the system of performance appraisal sound and effective.

STATEMENT OF THE PROBLEM

The basic approach of this study is to analyze the

performance appraisal system which is carried out for the middle

level managers in "Askari Bank". Here I am trying to find out that

what are the actual strengths and weaknesses in the system and

that how this system could be improved so that the employees not

only get maximum motivation but the overall productivity of the

institution also increase.

CHAPTER NO.5

RESEARCH METHODOLOGY

HYPOTHESIS

H1: Hygiene and motivator theory is significantly related to

employees performance appraisal rate.

Ho: Hygiene and motivator theory is not significantly related to

employees performance appraisal rate.

SCOPE OF THE STUDY

Askari Bank was studied as an example for banking industry

on the basis of convenience in collection of data.

DATA COLLECTION:

Source

Data was collected from Askari Bank.

Methods:

I was conduct personal interviews, meetings with employees.

Sample Profile

A sample of 30 individuals was studied as follows:

* 30 employees currently working were studied for measuring

the level of satisfaction in hygiene and motivation theory.

Equipments & Tools Needed

Following was used for this research:

Computer,

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Stationary,

Conveyance.

Time Schedule

Time was spent for this project as follows:

Data collection 3 weeks

Data analyzing & organizing 2 weeks

Data filtering 1 week

1st Draft 2 weeks

2nd Draft 1 week

Final report 1 week

Total Time 10 weeks

Cost Estimation: Cost of this project was:

Computer Rs.5000/=

Stationary Rs.200/=

Conveyance Rs.250/=

Other Expenses Rs.300/=

Total Cost Rs.5750/=

CHAPTER NO.6

DATA ANALYSIS OF SURVEY QUESTIONNAIRE

QUESTION NO.1

Your Department is?

Features No. of Response

Cash Department 12

Advances Department 6

Remittance Department 4

General Banking Department 3

Credit Department 5

Total Respondents 30

QUESTION NO.2

Askari Bank Policy Regarding Employees (H.R)

Features No. of Response

Very good 0

Good 9

Normal 15

Bad 4

Very Bad 2

Total Respondents 30

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IFINDINGS AND INTERPRETATION OF DATA

* There is no significant relationship between hygiene score of

currently working employees and the hygiene score of

employees left during last 5 years.

* Motivation score of currently & emply left have a significant

relation.

r = 0.455

The motivation score of the two groups is positively but

weakly related (45%).

* Motivation score of currently working employees is

significantly related to hygiene score of working employees.

r = 0.577

Motivation level & hygiene score are related with each and

show a correlation of 58%.

APPRAISAL SYSTEM EVALUATION (STRENGTH AND

WEAKNESSES)

The appraisal system of any organization should be evaluated

to remove its weaknesses and to make improvements.

Some of the weaknesses and strengths of the Performance

Appraisal (PA) system of Askari Bank is given as follows:

STRENGTHS

* Their PA system is very systematic as they carryout

evaluations on annual basis.

* Their PA system ensures their employee of getting rewards of

their better performances.

* The basic aim of their PA system is the motivation of the

employees which encourage them a lot.

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* Through their performance appraisal system they encourage

their employees to do handwork with honesty by creating a

favourable environment for them.

WEAKNESSES

* Their appraisal system is annual so if any extraordinary goal is

achieved in any point of time during the year is mostly not

rewarded separately due to which employees are

discouraged.

* The major weakness of their PA system is the supervisory

bias. As most of the employees get the rewards and

appraisals though they have not done any notable work / task

just because they are liked by the supervisor.

* Their appraisal system is going through the process of

evaluation so it is changing all the time which arises a

confusion among the employees that how their performance

will be ultimately evaluated.

* They do not follow any goal setting process on the individual

level which makes the employee feel standing in the middle of

nowhere. It is difficult for him to prove his worthiness.

* Right now The Bank is not following proper developmental

objectives due to which it is difficult to predict about the goal

of future performances and the need for improving them.

* They do not give frequent appraisals because of which

employees feel disheart on their achievements and their

morale decreases.

* Feeling of inequity may arise among the employees due to

biase prevailing which will decrease their productivity.

* Proper feedback is not given to the employees due to which

they are unable to findout what performance is expected of

them and their goals remain vague.

* Negative marking is also carried out which creates fear

among employees and it reduces their productivity.

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REFERENCES

* Kaldenberg DO, Regrut BA. (1999). Do satisfied patients

depend on satisfied employees? Or do satisfied employees

depend on satisfied patients? The Satisfaction Report

newsletter. Volume 3. South Bend, Ind: Press, Ganey

Associates Inc.

* Andrew P. Newcomb. (1999). Human Resources Management:

April 11, 1999

* Arendt, Laurie (1998). Designing the extras [50 paragraphs].

* Armentrout, Bryan (1995). The five best gifts to give your

employees. HR Focus, p.3.

* Auxillium (1998). Controlling employee turnover [5

paragraphs].

* Brannick, Joan (1998). Decreasing the staggering costs of

turnover in your organization [14 paragraphs]

* Condodina, Jen, Ermel, Lauren (1997). Compensating

packages changing shape. HRFocus, p.S-1.

* Davis, Barbara (1997). Strategies for managing retention.

HRFocus, p.S-3.

* Gomez-Mejia, Luis, Balkin, David, Cardy, Robert (1998).

Managing Human Resources, New Jersey: Prentice Hall.

* Oliver, Judith (1998). High staff turnover- find out why your

staff are leaving. Management Today, p.84.

* Shaw, Jason, Delery, John, Jenkins, Douglas, Gupta, Nina

(1998). An organization-level analysis of voluntary and

involuntary turnover. Academy of Management Journal, 41,

p.511.

* Campbell and Lee (1988). “Managerial discretion in the

use of self-ratings in an appraisal system: the

antecedents and consequences”.

* Inderrieden, Edward J.; Allen, Robert E.; Keaveny, Timothy J.

(2004). Publication: Journal of Managerial Issues:

Publication Date: 22-DEC-04.

* Gary P. Latham, Kenneth N. Wexley. (2002). “Increasing

productivity through performance appraisal”.

* Helen Smeaton (1983). “Library technicians in Australia: past,

present and future”.

* David W. Belcher (1998). “Compensation”.

* Thomas J. Atchison (1991). Administration, Second Edition.

* Uma Sekaran (1988). Research Methods for Business.

* Koontz (1987). Management

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