Performance Appraisal in Banking Sector by Ekta Bhatia

A
SYNOPSIS
ON
A COMPERATIVE STUDY ON PERFORMANCE
APPRAISAL OF EMPLOYEE SERVICE POLICY
OF BANKING SECTOR WITH SPECIAL
REFERENCE TO ICICI AND HDFC BANK
Submitted for the fulfillment for the award of
MASTER OF BUSINESS ADMINISTRATION
(SESSION: 2009-2010)
Submitted To:
Mr. Pankaj Upadhyay
Lecturer
Sikkim Manipal University
Under the Guidance of:

Mr. Pankaj Upadhyay
Lecturer
Sikkim Manipal University
Submitted By:
Ekta Bhatia
MBA IV Semester
Roll No. 510919106
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-4 th Sem.
Roll No.:
510919106
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
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
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
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

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
About the study
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
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.
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
10
efficiency and effectiveness to achieve the organizational and individual

goals.
This
study
provides
the
theoretical
knowledge
about
the
Performance Appraisals 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
11
Scope of the study

Following aspects are covered under this study:
A brief overview of the nature of the subject
An introduction to the HR as a managerial function in special

reference with Performance Appraisal
New
dimensions,
techniques,
approaches
and
thoughts
in
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
12
Practical challenges, opportunities in banking sector to implement

the effective performance management system
13
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, thats why the following research methods, techniques
and components are used to facilitate the study
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
14
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
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
15
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.
16
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.
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 ,
17
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.
18
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
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
19
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 borrowers financial health rather than
capability.
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
20
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
the
regulator
by
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.
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.
21
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.
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
22
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.
23
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
Union Bank of India
United Bank of India
24
Vijaya Bank
25
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
26
Tamil Nadu Mercantile Bank
Thane Janata Sahakari Bank
Bassein Catholic Bank
United Western Bank ( now IDBI Bank)
YES Bank
27
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

28
Shinhan Bank
Socit Gnrale
Sonali Bank
Standard Chartered Bank
State Bank of Mauritius
29
Banks with Representative Offices in India:

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
30
French Banks
Credit Industriel et Commercial
Natixis
German Banks
Bayerische Hypo und Vereinsbank
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
31
Portuguese Banks
Caixa Geral de Depositos
Russian Banks
Vnesheconombank
VTB India
Promsvyazbank
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
32
Rural Banks
Adhiyaman Grama Bank
Alaknanda Gramin Bank ( Now Uttranchal Gramin Bank)
Andhra Pragathi Grameena Bank
Avadh Gramin Bank
Aryavart Gramin Bank
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
33
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
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

34
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
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

35
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
36
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
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.
37
Human resource is an increasingly prominent field that is taking shape

throughout industries and workplaces world wide. Recognizing the fact
that people are a companys 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.
Now, properly managing a workforce is a lot more complicated than, say,
the maintenance of a companys 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.
Thats 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
38
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
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
39
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
making is not subject to the individual perceptions of the HR or the
General Manager, but it becomes the outcome of strategic consensus.
40
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 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
41
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.
42
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
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.
43
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
44
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 Appraisals 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.
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.
45
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.
46
THE PROCESS OF PERFORMANCE APPRAISAL
47
(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.
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.
48
(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.
(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.
49
(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.
50
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.
51
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
52
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
53
APPROACHES IN PERFORMANCE APPRAISAL

Intuitive
Self-appraisal
Group
Trait
Achievement of results
54
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
55
- Behaviorally anchored rating scales

- Assessment centers
PERFORMANCE APPRAISAL SYSTEMS
PROBLEMS
Measurement
Judgement
Policy
Organization
Deciding what to Appraising
Using the results Recognizing how
evaluate
of the appraisal
performance
managers work
and the
organization
culture
SYMPTOMS
Ambiguity in
Disagreement Top
Appraisal
56
roles and
responsibilities of
each job
Job
performance is
difficult to
quantify
No clear
on ratings
Official review
changes ratings
Appeals,
grievances,
accusations of
bias,
discrimination
statement of
management fails forms not

to reward
managers who
are excellent in
staff assessment
and development
Marginal
performers
receive
promotions or
overall objectives
salary increases
of units or the
completed
Managers com
plain about time
needed
System seen
as belonging to
the designers,
not the users
Personnel/HR
specialists take
organization
enforcer not
Appraisal
adviser role
contains only
system revised
numerical indices
frequently
POTENTIAL CURES
Job analysis
Observable,
Top
and credible job
behaviorally
management
description
based criteria
actually uses
Outcomes of
Performance
each job
documented over
identified
time
Overall goals
rater training
set for units and
and practice
the organization
Performance
Appraisal itself
Polices for
Implement
Performance
Appraisal using
the Performance
Management
(PM)
Performance
Appraisal
consistently
applied
57
Train managers Effective
performance-
to make
communication
contingent
documented
of performance
reward system
judgements
expectations
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
58
Dubai International Finance 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
59
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 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 transactionbanking 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
60
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.
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
61
Mr. K. Ramkumar, Executive Director

Mr. N. S. Kannan, Executive Director & CFO
Board Committees
Audit Committee
Board Governance &

Remuneration Committee
Mr. Sridar Iyengar
Mr. M. K. Sharma
Mr. K. V. Kamath
Mr. M. K. Sharma
Mr. Anupam Puri

Mr. P. M. Sinha
Customer Service
Committee
Credit Committee
Mr. K. V. Kamath
Mr. K. V. Kamath
Mr. M.K. Sharma
Mr. M .K. Sharma
Mr. P.M. Sinha
Mr. P. M. Sinha
Ms. Chanda Kochhar
Ms. Chanda Kochhar
Fraud Monitoring
Committee
Risk Committee
Mr. M. K. Sharma
Mr. K. V. Kamath
Mr. K. V. Kamath
Mr. Sridar Iyengar
Ms. Chanda Kochhar
Mr. V. Prem Watsa
Mr. Sandeep Bakhshi
Ms. Chanda Kochhar
62
Share Transfer &

Shareholders'/ Investors'
Committee of Directors
Grievance Committee
Mr. M. K. Sharma
Ms. Chanda Kochhar
Mr. Sandeep Bakhshi
Mr. N. S. Kannan
Mr. Sonjoy Chatterjee

Mr. K. Ramkumar
Mr. N. S. Kannan
63
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
ICICI Bank Germany won the yearly banking test of the investor
magazine uro in the call moneycategory.
The ICICI Bank was awarded the runner's up position in Gartner
64
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.
65
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
potential
of
employees
and
earn
strategies
their
that realise the
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 developing their
human resources, Abu Dhabi recently hosted the Middle East Human
Resource Summit - the annual conference and exhibition for industry
66
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

Performance
Appraisal
is
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.
67
Validating and refining organizational action or banks action

Employee selection, training and just about any cultural or management
practicesuch as the introduction of a new pruning method or an
incentive pay programmay 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 Appraisals 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
68
(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 response from
the former boss was, "I feared you would stop working as hard."
69
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 workers positive behaviorsand do so in a sincere, nonmanipulative waywill 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.
70
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.
71
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 ,
72
most usually their line manager - to get together to engage in a dialogue

about the individuals 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 Appraisals 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 banks 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.
73
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
74
nurtured as the bank deals in service sector 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.
75
Reasons for Performance Appraisal in ICICI

76
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
77
A growing number of front running banks like ICICI, and others have
adopted a Performance Appraisal model in which best-to-worst 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 banks
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.
78
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
79
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 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
80
Performance Planning (includes employee goal setting / objective

setting)
Ongoing Performance Communication
Data Gathering, Observation and Documentation
Performance Appraisal Meetings
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
b)
How
well
c)
How
can
the
the
his
individual
individual
performance
is
has
be
expected
done
further
to
the
do?
task?
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
81
ICICI HR Philosophy on P.A
82
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 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 todays 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
83
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)
Forms Used By The Bank For P.A

1. General Performance Appraisal Form I
84
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
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.
85
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.
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
86
Performance
Appraisal
is
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.

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.
87
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.
88
(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 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.
89
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. 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
90
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 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
91
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.
(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
92
person-to-person scale which makes comparison of different ratings

difficult.
(d) Checklist Method: The assessor is furnished with a checklist of prescaled 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.
(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
93
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, goalsetting 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.
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
94
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
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."
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.
95
"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
employee
Software
makes
performance
and
powerful,
talent
simple-to-use
management
and
affordable
applications.
The
company offers a complete suite of web-based products that automate,

simplify and integrate employee Performance Appraisals, 360 degree
feedback, compensation management (pay for performance), succession
planning and learning management. Halogen's offering makes HR bestpractices 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 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
96
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 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
97
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:
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.
98
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 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
99
Suggestion and recommendation

Though it is the basic rule of the report writing that suggestion and
recommendation should not be given until its asked for but to keeping in
the mind the academic nature of the report we would like to recommend
the followings
o Management
and
employees
should
see
Performance
Appraisal as a positive tools to determine the organizational

efficiency and effectiveness
o Banks
should
use
well
communicative
method
of
Performance Appraisal to avoid any resistance from the

employees
100
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
Bibliography
1- Books and journals

2- Internal report of banks
3- Corporate bulletin and finance magazine
4- Internet and banks website
101
5- Personal sources
102

Performance Appraisal in Banking Sector by Ekta Bhatia

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Performance Appraisal in Banking Sector by Ekta Bhatia

Загружено:

Авторское право:

Доступные форматы

A

MASTER OF BUSINESS ADMINISTRATION

Under the Guidance of:

PERFORMANCE APPRAISAL IN BANKING SECTOR is my own

University, Centre 2017, New Delhi for the purpose of Research

Objective Of The Study

About The Study

Scope Of The Study

Needs And Importance Of

This study is done for fulfillment of the requirement of Sikkim Manipal

0bjective of the Study

To gain the knowledge of the practical process of the Performance

To understand the need of Performance Appraisal for banking

About the study

The study, Performance Appraisal in Banking Sector, highlights the

The study is conducted is a simple manner and most of the data is

efficiency and effectiveness to achieve the organizational and individual

Performance Appraisals on the issue like a)need , b)importance ,

Scope of the study

An introduction to the HR as a managerial function in special

Modern techniques emerging in Performance Appraisal.

Need and importance of Performance Appraisal in banking

Introduction to ICICI bank

Role of Performance Appraisal as managerial decision in banking

Practical challenges, opportunities in banking sector to implement

The study seems to be the observation and a description of the project

Research Design- Descriptive research design

psychologists and social scientists to observe natural behaviors without

Type of data secondary data

Sampling judgmental sampling

Introduction to Banking Sector

Banking can be defined in various ways as the definition of the bank

Services related to monetary transaction through current and

Assisting in trade through Letter of credit,

Home loan etc.

Banking sector In India

the fallout and nationalization of banks across developed economies,

proactive adjustment of monetary policy and so called close banking

comprehensive research and rational analysis on various segments, like

The forecast given in this report is not based on a complex economic

and supervisor of the financial system, Reserve

Bank of India (RBI).

Reserve bank of India

entirely owned by private shareholders in the beginning. The Government

The Bank was constituted for the need of following:

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

Indian Overseas Bank

Oriental Bank of Commerce

Punjab & Sind Bank

Punjab National Bank

Union Bank of India

United Bank of India

Private sector banks