127505250 43924014 performance appraisal in banking sector by ekta bhatia

8/9/2019 127505250 43924014 Performance Appraisal in Banking Sector by Ekta Bhatia

1/102

A RESEARCH REPORT ONPERFORMANCE APPRAISAL IN BANKING SECTORSubmitted for the fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION(Sikkim Manipal University)

(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. 5109191061


2/102

DECLARATIONI, Ekta Bhatia, hereby declare that the project titled

PERFORMANCE APPRAISAL IN BANKING SECTOR is my own work and efforts which is completd 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: Place: Roll No.:

Ekta Bhatia MBA-4th Sem. 510919106

2


3/102

List of contentsPreface Acknowledgement Objective Of The Study About The Study Scope Of The Study Research Methodology Introduction To Banking

Sector HRM Approach Performance Appraisal

A Systematic Approach ICICI Bank Company Profile Needs And Importance Of

Performance Appraisal In Banking

3


4/102

Performance Appraisal

And Performance Management In ICICI Bank Banner Corporation Banks

On Halogen For Talent And Learning And Performance Management (For Practical Understanding) Conclusion Suggestion And

Recommendation Bibliography

4


5/102

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. Bankingsector 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. Inthis 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 factorthat can make sense in banking industry, we try to explore the importance of thePerformance Appraisal in banking to uplift the standard of organization, individual and both as a mutual entity

5


6/102

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 alot to collect secondary data and preparing this report Once again thanks to allfor providing me your direct and indirect support for my research work and helpin writing the report

EKTA BHATIA

0bjective of the Study

6


7/102

To understand the concept of HR in special reference of Performance Appraisal To nderstand the application of Performance Appraisal in banking sector To understandthe 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 o gain the knowledge of the practical process of the

Performance Appraisal To view the aspect of Performance Appraisal from managerialrspective To highlight the effectiveness of Performance Appraisal in banking sector To understand the need of Performance Appraisal for banking industry

7


8/102

About the study8


9/102

The study, Performance Appraisal in Banking Sector, highlights the importance of Pormance 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 outthe need of Performance Appraisal for banks, and try to understand how the Performance Appraisal is done in banking sector. In this study we take the case of one of the leading bank, ICICI bank, as our sample and try to find out their techniques used for Performance Appraisal. This study refers to the need of Performance Appraisal for banking industry, importance and emerging trends in the field of Performance Appraisal. For easy understanding of the study we have divided the entire study in to several chapters that gives the specific nature of the subject in question. We have highlighted several trends of banking industry, growth and prospect of banking in India, history of Indian banking, Role of RBI as regulatory bank and the industrial importance bank as an institute to march the nation in economic growth. Further we highlighted the role of HR, its need and importance and Performance Appraisal as its one of the major tools. It signifies the role of HR in organizational perspective and highlight the rationale of active HR polices inan organization , this reports takes the HR as

9


10/102

managerial function rather than the staff activities . In this report we try tomake the role and concept of HRM understood for our readers. The study is manlyconducted 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 ofICICI bank Performance Appraisal mechanism and the manner in which Performance Appraisal takes place in ICICI bank In special cases like the practical example of ICICI bank ,the study highlights: a) techniques , b) approach, c) forms, d) managerial approach, e) employees feedback, f) process and other real aspect of the Performance Appraisal that provides the realistic view of the Performance Appraisal process that is carried out by the bank in actual work environment .

The study is conducted is a simple manner and most of the data is collected through various sources. This study refers the Performance Appraisal technique as an effective managerial tool to enhance the efficiency and effectiveness to achievethe 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

10


11/102

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

Scope of the study11


12/102

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 thougin

Performance Appraisal. Practical aspect of Performance Appraisal in ICICI banchniques emerging in Performance Appraisal. Need and importance of Performance Asal in banking industry brief introduction of Indian banking industry Introduction to ICICI bank Role of Performance Appraisal as managerial decision in banking sector in policy making and organizational success Practical challenges, opportunities in banking sector to

implement the effective performance management system

12


13/102

Research Methodology

13


14/102

The study seems to be the observation and a description of the project where wetry to find out the hidden aspect or bring out the concept for further explanation, but some scientific method and techniques classified it as the research, that's why the following research methods, techniques and components are used to facilitate the study

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 experimentationThese types of experiments are often used by anthropologists, psychologists andsocial 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 bycompanies 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 ahypothesis but, if the

14


15/102

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 innature so we tried to collect the data available through other sources on the subject. Some times, primary data is also collected through observation method tofacilitate the research work

Sources of data

The following sources are used for collecting the data for this study:

Books internet Journals News papers Personal sources

Sampling judgmental sampling

15


16/102

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 thepopulation includes all banks. When using this method, we try to ensure that thechosen sample is truly representative of the entire population.

Introduction to Banking Sector16


17/102

Banking can be defined in various ways as the definition of the bank varies fromcountry to country and keeps on changing on the basis of the activities carriedout by the banks. In present dynamic business scenario, banking can be definedas the activities carried out with the bank on individual or corporate level. Wecan understand the concept of the banking by looking into the activities of thebank. 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: ransactional services, Services related to monetary transaction through currentand saving account, Investment services, Fixed deposit , Letter of credit , Treasury services , Bill of exchange , Foreign exchange , Assisting in trade throughLetter of credit, Letter of guarantee, Performance bond , Project financing , Personal loan , Credit card , 17


18/102

Home loan etc.

Banking sector In India

18


19/102

Banking in India originated in the last decades of the 18th century. The oldestbank 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 scheduledcommercial 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. Accordingto a report by ICRA Limited, a rating agency, the public sector banks hold over75 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 seemsto be unaffected from the global financial crises which started from U.S in thelast quarter of 2008. Despite the fallout and nationalization of banks across developed economies, banks in India seems to be on the strong fundamental base and seems to be well insulated from the financial turbulence emerging from the western economies. The Indian banking industry is well placed as compare to their banking industries western counterparts which are depending upon government bailout and

19


20/102

stimulus

packages.

The strong economic growth in the past, low defaulter ratio, absence of complexfinancial 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 inwest but the banks in India will adopt for more of defensive approach in creditdisbursal in coming period. In order to safe guard their interest; banks will follow stringent norms for credit disbursal. There will be more focus on analyzing borrower's financial health rather than capability. 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 theIndian banking industry. It also analyzes the current performance and key markettrends, and helps clients to understand various products available in the market and their future scope.

The forecast given in this report is not based on a complex economic model but is intended as a rough guide to the direction in which the market is likely to move. The future projection is done on the basis of the current market scenario, past trends, and rules and regulations laid by the regulator and supervisor of th

e financial system, Reserve Bank of India (RBI).

20


21/102

The Economic Liberalization process has increasingly exposed the Banking Sectorto international competition. The role of Banking in the process of financial intermediation has been undergoing a profound transformation, owing to changes inthe global financial system. Consequently, the revolution in information technology has brought about sea changes in the way banking transaction are carried outAlmost 80% of the businesses are still controlled by Public Sector Banks (PSBs). PSBs are still dominating the commercial banking system. Shares of the leadingPSBs 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 alsobeen 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 Governmentto encourage the PSBs to be run on professional lines. To promote banking sectorin India, Govt. has taken many steps and formed several committee to review thebanking needs and the prospect the current scenario along with the safeguardingthe interest of the customers

21


22/102

Reserve bank of India Economists and Planners consider monetary stability in aneconomy as the most important function of a Central Bank. The Prime function ofa 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. Sincethe inception of the economic reforms when the Indian Economy embarked on a programme of liberalization and exchange rate flexibility, the Reserve Bank of Indiais managing its twin responsibilities of monetary stability and exchange rate stability. The economy follows a managed float system with RBI intervening in theevent 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 recommendationsof the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which was entirely owned by private shareholders in the beginning. The Government held shares of nominal value of Rs. 2, 20,000. Reserve Bank of India was nationalized in the year 1949. The general superintendence anddirection of the Bank is entrusted to Central

22


23/102

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 representthe four local Boards with the headquarters at Mumbai, Kolkata, Chennai and NewDelhi. 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.

Major Banks in India

23


24/102

Public sector banks

State Bank of India State Bank of Bikaner & Jaipur State Bank of Hyderabad StateBank 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 Vijaya Bank

24


25/102

Private sector banks

Bank of Rajasthan 25


26/102

Bharat Overseas Bank Catholic Syrian Bank Centurion Bank of Punjab (Merged withHDFC 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 Tamil Nadu Mercantile Bank Thane Janata Sahakari Bank Bassein Catholic Bank United Western Bank ( now IDBI Bank) YES Bank

26


27/102

Foreign Banks

ABN Amro bank

27


28/102

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 DeutscheBank HSBC (Hongkong & Shanghai Banking Corporation) JPMorgan Chase Bank Krung Thai Bank Mashreq Bank Mizuho Corporate Bank Oman International Bank Shinhan BankSocit Gnrale Sonali Bank Standard Chartered Bank State Bank of Mauritius

28


29/102

Banks with Representative Offices in India:American Banks

The Bank of New York 29


30/102

Wachovia Bank

Australian Banks

Commonwealth Bank National Bank Australia Westpac Banking Corporation

Austrian Banks

Raiffeisen Zentral Bank Osterreich

Belgian Banks

Fortis Bank K.B.C. Bank N.V.

Canadian Banks

Royal bank of Canada

UAE Banks

Emirates Bank International

French Banks

Credit Industriel et Commercial Natixis

German Banks

Bayerische Hypo und Vereinsbank Commerzbank

30


31/102

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 ENovara Banca Popolare di Vicenza BPU Banca Banche Popolari Unite Monte Dei PaschiDi Sienna Sanpaolo IMI Bank Uni Credito Italiano

Nepalese Banks

Everest Bank

Portuguese Banks

Caixa Geral de Depositos

Russian Banks

Vnesheconombank VTB India Promsvyazbank

31


32/102

South African Banks

First Rand Bank

South Korean Banks

Wori Bank

Spanish Banks

Banco de Sabadell Banco Bilbao Vizcaya Argentaria

SriLankan Banks

Hatton National Bank

Swiss Banks

UBS Zurcher Kantonalbank

Rural Banks

Adhiyaman Grama Bank Alaknanda Gramin Bank ( Now Uttranchal Gramin Bank) AndhraPragathi Grameena Bank Avadh Gramin Bank

32


33/102

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 GodavariGrameena Bank Chambal Kshetriya Gramin Bank Champaran Kshetriya Gramin Bank Chhatrasal Gramin Bank Chhindwara Seoni Kshetriya Gramin Bank Chitradurga Gramin Bank Cuttack Gramya Bank Damoh Panna Sagar Kshetriya Gramin Bank Devipatan Kshetriya Gramin Bank Dhenkanal Gramya Bank Dungarpur Banswara Kshetriya Gramin Bank Ellaquai Dehati Bank Farrukhabad Gramin Bank Gaur Gramin Bank Gurgaon Gramin Bank Hadoti Kshetriya Gramin Bank

33


34/102

Himachal Gramin Bank Hissar-Sirsa Kshetriya Gramin Bank Indore Ujjain KshetriyaGramin Bank Jaipur Nagaur Aanchalik Gramin Bank Jamnagar Rajkot Gramin Bank Jamuna Gramin Bank Jhabua-Dhar Kshetriya Gramin Bank Jharkhand Gramin Bank KakathiyaGrameena Bank Kalpatharu Grameena Bank Kamraz Rural Bank Kanpur Kshetriya Gramin Bank Kapurthala Ferozpur Kshetriya Gramin Bank Kashi Gomti Samyut Gramin BankKisan Gramin Bank,Budaun Kolar Gramin Bank Krishna Grameena Bank Kshetriya Gramin Bank,Hoshangabad Kutch Grameen Bank Malaprabha Grameena Bank Mandla Balaghat Kshetriya Gramin Bank Manjira Grameena Bank Marwar Ganganagar Bikaner Gramin Bank(Previously : Marwar Gramin Bank) Mewar Aanchalik Gramin Bank Nagarjuna Grameena Bank Netravati Grameena Bank Nimar Kshetriya Gramin Bank North Malabar GraminBank

34


35/102

Panchmahal Vadodara Gramin Bank Pandyan Grama Bank Pinakini Grameena Bank (merged to form Andhra Pragathi Grameena Bank) Pragjyotish Gaonlia Bank Prathama BankRaigarh 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 KshetriyaGramin Bank Sangameshwara Grameena Bank Shahjahanpur Kshetriya Gramin Bank Shreyas Gramin Bank (Aligarh,Etah,Agra,Mathura,Firozabad) Shivpuri Guna Kshetriya Gramin Bank South Malabar Gramin Bank Sree Anantha Grameena Bank (merged to form Andhra Pragathi Grameena Bank) Sri Saraswati Grameena Bank Sri Visakha Grameena Bank Surat Bharuch Gramin Bank Thar Aanchalik Gramin Bank Tripura Gramin Bank Tungabhadra Gramin Bank Vidur Gramin Bank MCB

35


36/102

Madhya Bharat Gramin Bank

Human Resources Management Approach (H.R M Approach)

36


37/102

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 bewell understood as a model of personnel management that focuses on the individual rather than taking a collective approach. Responsibility for human resource management is often devolved to line management. It is characterized by an emphasis on strategic integration, employee commitment, workforce flexibility, and quality of goods and services. Human resource is an increasingly prominent field that is taking shape throughout industries and workplaces world wide. Recognizingthe fact that people are a company's greatest asset, business leaders across the globe are coming to rely more and more upon an effective management policy that applies specifically to the area of human resources. With a rapid increase a boom, in fact of professionals, generalists and specialists in the area of human relations, there has also been a major rise in the amount of knowledge and innovation pertaining to the most efficient and productive methods of streamlining workforce management policy. When applied, there are already a great number

37


38/102

of proven techniques which result in the actual increases of profit margins. Butwhat, exactly, is the definition of human resources? Essentially, HR applies tothe 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 businessleader, employees need to be properly managed in order for optimal efficacy tobe achieved. Now, properly managing a workforce is a lot more complicated than,say, the maintenance of a company's material capital such as machinery, computer systems, etc. Indeed, the mechanistic approach to employee relations has often failed. Fortunately, this failure has prompted close study into how to effectivelysee that human capital is treated right and is able to reach its full potential. That's why the application of human resources management focuses largely on a more sensitive and human analysis to determine what really works with employees. One of the major aspects of HR maintenance involves employee recruitment, training and development as a function of human capital management. Making sure that employees' abilities are correctly and optimally nurtured is essential to seeing a worthwhile return on investment come from their contribution to the company, oncetheir 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.

38


39/102

In addition, human resources departments take care of a variety of concerns suchas 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 actuallymake or break an organization. Human Resources Management (HRM) is the strategic management of the employees, who individually and collectively contribute to the achievement of the strategic objectives of the organization. Assuming that the employees of an organization are individuals with own mental maps and perceptions, own goals and own personalities and as such they cannot be perceived as a whole, HRM holds that the organization should be able to employ both individual and group psychology in order to commit employees to the achievement of organizational goals. Aiming to enable the organization to achieve its strategic goals byattracting, retaining and developing employees, HRM functions as the

39


40/102

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 mustbe 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.

The main goals / responsibilities of HRM are: To retain low employee turnover rate by inspiring people to work for the company

40


41/102

To attract new employees To contribute to employee development To achieve thesegoals, 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 thatare 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. Newchallenges arise even now for the organization, and it is certain that new challenges will never cease to emerge. Therefore, the use of proper Human Resources techniques is a really powerful way for organizations to overcome these challenges, and to improve not only their quantitative goals but also their organizational culture, and their qualitative, cognitive aspects.

41


42/102

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 42


43/102

role of HR manager is shifting from that of a protector and screener to the roleof 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 relationsare in order. Over the years, highly skilled and knowledge based jobs are increasing while low skilled jobs are decreasing. This calls for future skill mappingthrough proper HRM initiatives. Indian organizations are also witnessing a change in systems, management cultures and philosophy due to the global alignment ofIndian organizations. There is a need for multi skill development. Role of HRM is becoming all the more important.

Functions of H. R 1. Recruitment & Selection 2. Training and Development (People& Organization) 3. Performance Evaluation and Management 43


44/102

4. Promotions 5. Redundancy 6. Industrial and Employee Relations 7. Record keeping of all personal data. 8. Compensation, pensions, bonuses etc in liaison withPayroll 9. Confidential advice to internal customers in relation to problems at work 10. Career development

Performance Appraisal A Systematic Approach

44


45/102

Performance Appraisal, also known as employee appraisal, is a method by which thejob 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. Forma 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 EmploymentOpportunity requirements.

Performance Appraisal is a management tool which is helpful in motivating and effectively utilizing human resources. Assessment of human potential is difficult, no matter how well designed and appropriates the performance planning and appraisal system is, the Performance Appraisal system should: 45


46/102

be correlated with the organizational mission, philosophies and value system; cover assessment of performance as well as potential for development; take care oforganizational as well as individual needs; and help in creating a clean environment by - Linking the rewards with achievements, - generating information for the growth of the employee as well as of 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.

THE PROCESS OF PERFORMANCE APPRAISAL

46


47/102

(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 47


48/102

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 variousmethods available for assessing results, behavior and personal characteristics of an employee. These methods can be used according to the particular circumstances and requirements.

(ii) Communicating Job Expectations

48


49/102

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 attainingthe goals set. This is an enabling role. (iv) Monitoring Performance PerformanceAppraisal 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 assistance as Appraisal necessary process. and It should involve providing than removing obstacles rather

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.

(vi) Feedback 49


50/102

After the formal appraisal stage, a feedback session is desirable. This sessionshould involve verbal communication, listening, problem solving, negotiating, compromising, conflict resolution and reaching consensus. (vii) Decision Making Onthe 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.

The ESSENTIALS of an effective performance system are as follows:

50


51/102

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.

WHAT SHOULD A PERFORMANCE SYSTEM BE? 51


52/102

Correlated with the organization s philosophies and mission Cover assessment ofperformance as well as potential for development Look after the needs of both the individual and the organization Help create a clean environment Rewards linkedto achievements Generate information for personnel development and career planning suggesting appropriate person-task matching

HOW CAN THE PERFORMANCE APPRAISAL SYSTEM HELP? Promote better understanding of anemployee

s role and clarity about his or her functions 52


53/102

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 supervisorIncrease communication Provide an employee with the opportunity for self-reflection and individual goal setting Help an employee internalize the culture, normsand 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

APPROACHES IN PERFORMANCE APPRAISAL Intuitive Self-appraisal Group 53


54/102

Trait Achievement of results

TECHNIQUES OF PERFORMANCE APPRAISAL Easy appraisal method Graphic rating scales

54


55/102

Field review method Forced choice rating method Critical incident appraisal method Management by objectives Work standard approach Ranking methods methods Alation ranking - Paired comparison - Person-to-person rating - Checklist - Behaviorally anchored rating scales - Assessment centers

PERFORMANCE APPRAISAL SYSTEMS

55


56/102

PROBLEMS Measurement evaluate Judgement performance Policy of the appraisal Organization managers work and the organization culture SYMPTOMS Ambiguity in rolesand responsibilities of each job Job performance is difficult to quantify No clear statement of overall objectives of units or the organization Appraisal contains only numerical indices POTENTIAL CURES Job analysis and credible job description Observable, behaviorally Top management actually uses Implement Performance ppraisal using Disagreement Top on ratings Official review changes ratings Apps, grievances, accusations of bias, discrimination to reward managers who are excellent in staff assessment and development Marginal performers receive promotions or salary increases Appraisal forms management fails not completed Managers com plain about time needed System seen as belonging to the designers, not the users Personnel/HR specialists take enforcer not adviser role system revised frequently Deciding what to Appraising Using the results Recognizing how

56


57/102

Outcomes of each job identified Overall goals set for units and the organizationTrain managers to make documented judgements

based criteria Performance time rater training and practice Effective communication of performance expectations

Performance Appraisal itself

the Performance Management (PM)

documented over Polices for Performance Appraisal consistently applied performanccontingent reward system operates

ICICI BANK company profile

Overview ICICI Bank is India

s second-largest bank with total assets of Rs. 3,744.10 billion (US$ 77 billion) at December 31, 2008 and profit after tax Rs. 30.14 billion for the nine months ended December 31, 2008.

57


58/102

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 ofinvestment 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, Qatarand Dubai International Finance Centre and representative offices in United ArabEmirates, 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 StockExchange of India Limited and its American Depositary Receipts (ADRs) are listedon 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 shareholdingin ICICI Bank was reduced to 46% through a public offering of shares in India infiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank s

58


59/102

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 2001and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank,the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide varietyof products and services, both directly and through a number of subsidiaries andaffiliates like ICICI Bank. In 1999, ICICI become the first Indian company andthe first bank or financial institution from non-Japan Asia to be listed on theNYSE.

After consideration of various corporate structuring alternatives in the contextof the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed theview 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 inthe 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 59


60/102

five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talentpool of ICICI and its subsidiaries. In October 2001, the Boards of Directors ofICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICICapital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group s financing and banking operations, both wholesale and retail, have been integrated ina single entity.

Board MembersMr. K. V. Kamath, Chairman Mr. Sridar Iyengar Mr. Lakshmi N. Mittal Mr. NarendraMurkumbi Dr. Anup K. Pujari Mr. Anupam Puri Mr. M.S. Ramachandran

60


61/102

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 Mr. K. Ramkumar, Executive Director Mr. N. S. Kannan, Executive Director & CFO

Board CommitteesAudit Committee Mr. Sridar Iyengar Mr. Narendra Murkumbi Mr. M. K. Sharma BoardGovernance & Remuneration Committee Mr. M. K. Sharma Mr. K. V. Kamath Mr. AnupamPuri Mr. P. M. Sinha Prof. Marti G. Subrahmanyam Customer Service Committee Mr.K. V. Kamath Mr. Narendra Murkumbi Mr. M.K. Sharma Mr. P.M. Sinha Ms. Chanda Kochhar Credit Committee Mr. K. V. Kamath Mr. Narendra Murkumbi Mr. M .K. Sharma Mr. P. M. Sinha Ms. Chanda Kochhar

61


62/102

Fraud Monitoring Committee Mr. M. K. Sharma Mr. K. V. Kamath Mr. Narendra Murkumbi Ms. Chanda Kochhar Mr. Sandeep Bakhshi Share Transfer & Shareholders

/ Investors Grievance Committee Mr. M. K. Sharma Mr. Narendra Murkumbi Mr. N. S. Kannan

Risk Committee Mr. K. V. Kamath Mr. Sridar Iyengar Prof. Marti G. Subrahmanyam Mr. V. Prem Watsa Ms. Chanda Kochhar Committee of Directors Ms. Chanda Kochhar Mr. Sandeep Bakhshi Mr. Sonjoy Chatterjee Mr. K. Ramkumar Mr. N. S. Kannan

62


63/102

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 BusinessModel Innovation Award in the eighth Asian Banker Excellence in Retail FinancialServices 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. Theseawards were given for Cattle Loan Kamdhenu respectively. ICICI Bank s Germany Branch has been certified by Stiftung 63 Campaign

and

Talkies on the move campaign


64/102

Warrentest. ICICI Bank is ranked 2nd amongst 57 savings products across 19 banksICICI 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 Business Intelligence and Excellence Award for Asia Pacific for its BusinessIntelligence 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 Custodianin India ICICI Bank has bagged the Best Cash Management Bank in India award forthe 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 Awardat 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.

64


65/102

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 thanadministrative functions, are carried out without much recognition. But in an increasingly aggressive corporate world, where every competitive edge counts, leading organisations would do well to recognise the human potential that can be unleashed by adopting effective human resource management strategies that realisethe potential of employees and earn their respect and loyalty. Dealing with themundane 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, thefunctions of HR professionals have been recognised as essential, but have not always inspired respect for those involved in executing them. Essentially, peopleremain 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 65


66/102

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 professionals. But can everyone bepersuaded 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 itscustomer.

66


67/102

Performance Sector

Appraisal

In

Banking

Performance Appraisal is a vehicle to (1) validate and refine organizational actions (e.g. selection, training); and (2) provide feedback to employees with an eyeon improving future performance. Validating and refining organizational actionor 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 conflictmanagement Classes at the local community college, or (3) Providing the supervisor one-on-one counseling.

Data from Performance Appraisals can also help farmers

67


68/102

(1) Plan for long-term staffing and worker development, (2) give pay raises or other rewards, (3) Set up an employee counseling session, or (4) Institute discipline or discharge procedures. For validation purposes, it is easier to evaluateperformance 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

68


69/102

Although employees vary in their desire for improvement, generally workers wantto know how well they are performing. A successful farmer recalled with sadnesshow 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. Theresponse from the former boss was, "I feared you would stop working as hard." People need positive feedback and validation on a regular basis. Once an employeehas 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. Suchconstructive feedback, however, "can happen only within the context of listening to and caring about the person." In general, supervisors who tend to look forworker's positive behaviors and do so in a sincere, non-manipulative 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 andquality of her repairs. In contrast, quantitative feedback is based on numericalfigures, such as the percentage of plant grafts

69


70/102

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 progressof the employees.

Objectives Of Performance appraisal:70


71/102

To review the performance of the employees over a given period of time. To judgethe performance. gap between the actual and the desired

To help the management in exercising organizational control. Helps to strengthenthe relationship and communication between superior subordinates and management employees. To diagnose the strengths and weaknesses of the individuals so as toidentify the training and development needs of the future. To provide feedbackto the employees regarding their past performance. Provide information to assistin 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.

71


72/102

Followings should kept in the mind for effective Performance Appraisal in a bank Select what performance data to collect Determine who conducts the appraisal

Decide on a rating philosophy Overcome rating deficiencies Create a rating instrument Deliver useful information to employees

The Performance Appraisal or review is essentially an opportunity for the individual and those concerned with their performance in the bank , most usually their line manager - to get together to engage in a dialogue about the individual's performance, development and the support required from the manager. It should not bea 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 viewsare exchanged.

Performance Appraisals usually review past behavior and so provide an opportunityto reflect on past performance of the bank employees. But to be successful theyshould also be used as a basis for making development and improvement plans andreaching agreement about what should be done in the future to enhance the bank's effect and effectiveness.

72


73/102

The Performance Appraisal is often the central pillar of performance management inthe bank to keep the motivation of the employees high.

73


74/102

Performance

Appraisal

And

Performance Management In ICICI Bank

The facilitation of high achievement by employees. Performance management involves enabling people to perform their work to the best of their ability, meeting and perhaps exceeding targets and standards. Performance management can be coordinated by an interrelated framework between manager and employee. Key areas of the framework to be agreed are objectives, human resource management, standards and performance indicators, and means of reward. For successful performance management in ICICI , a culture of collective and individual responsibility for the continuing improvement of business processes needs to be established, and individual skills and contributions need to be encouraged and nurtured as the bank dealsin service sector where the employees are the main factor of making the difference . One tool for monitoring performance management is Performance Appraisal thatthe banks use for rewarding its employees. For the bank, performance managementis usually known as company performance and is monitored through business appraisal.

74


75/102

75


76/102

Reasons for Performance Appraisal in ICICI

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

76


77/102

Modern Trends In Banks for P.A A growing number of front running banks like ICICI, and others have adopted a Performance Appraisal model in which best-to-worst 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 intheir performance. In cases where the employee fails to improve his performancehe 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 andno 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 andteam spirit is not nurtured.

Effective banks are not build merely on investment and returns but more on the quality of the workforce, its commitment to the organizational goals and investments made to attract train and retain superior human capital. An integrated Performance Management system is essential to get the best out of its people. Employee performance is linked to the bank's performance. This helps in achieving the organizational goal and creates a performance culture in

77


78/102

the bank. Invention, creativity, diversity of perspectives is fostered. Employees act as one bank one brand.

78


79/102

ICICI BANK PEFORMENCE APPRAISAL ENVIRONMENT

The bank is using the Management by Objectives (MBO) method. In this method thesubordinate in consultation with the supervisor chalks out short term objectivesfollowed 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 theperformance 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 thoughtout 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 becomesaware 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.

79


80/102

The Effective Components of ICICI P .A System

Performance Planning (includes employee goal setting / objective setting) Ongoing Performance Communication Data Gathering, Observation and Documentation Performance Appraisal Meetings 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) b) c) What How How task well 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 asa mechanism of control and provide a rational compensation structure. In shortthe appraisal system establishes and upholds the principle of accountability inthe absence of which bank failure is the only possible outcome.

80


81/102

Finally, talking about mutual goals, the emphasis is on growth and development,harmony, effectiveness and profitability of the bank

81


82/102

ICICI HR Philosophy on P.A Performance Appraisal is one such method that allows for the optimisation of employees. In a broad sense , it is a formal structure that allows for the continued measuring and evaluation of individual behavior and performance, whilst influencing an employees job related attributes through suchfactors as increased job satisfaction and recognition (with the use of promotional aids such as better equipment, duties, and salaries). The purpose of any suchsystem, 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 tothe 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 valuableasset within itself. This simply is the provision for maintaining records of workers that are legally viable, that can protect the business when dealing in cases of dismissals and demotions. This is especially important in today's society because of the "increasing legislation and regulation dealing with victimization and discrimination" making bank liable for all their actions.

The annual Performance Appraisal is usually done in two steps. First, the employees and their manager complete the Performance Appraisal form - doing a self assessment. Often the bank also uses a 60 degree feedback process, asking for input from peers. Secondly, 82


83/102

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 usedin employees annual appraisal .The performance standards are derived from a jobanalysis, which is a detailed list of all of the skills involved in performinga 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 beexcellent, average, or poor (or alternatively meets, exceeds or does not meet standards). Once appraisal is complete, score is averaged and merit raise (if applicable)

83


84/102

Forms Used By The Bank For P.A 1. General Performance Appraisal Form I Six-page form includes evaluation sections for three categories: a) objectives from last review period; b) current job duties (which are customizable), and c) organizationcore 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 IIITwo-page "short form" has numerical rankings for two sections: a) general workattributes 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.

84


85/102


86/102

Approaches And Techniques In Performance Appraisal Used By The Bank Performance Appraisal is a multistage process involving several activities, which can be administered using a variety of approaches. Some of these approaches are being used bythe banks for Performance Appraisal Intuitive Approach: In this approach, a supervisor or manager judges the employee based on their perception of the employee sbehavior. Self-Appraisal Approach: Employees evaluate their own

performance using a common format. Group Approach: The employee is evaluated bya group of persons. Trait Approach: This is the conventional approach. The manager or supervisor evaluates the employee on the basis of observable dimensions ofpersonality, such as integrity, honesty, dependability, punctuality, etc. Appraisal Based On Achieved Results: In this type of approach, appraisal is based onconcrete, measurable, work achievements judged against fixed targets or goals set mutually by the subject and the assessor.

86


87/102

Behavioral Method: This method focuses on observed behavior and observable critical incidents.

87


88/102

Appraisal techniques There are several techniques of Performance Appraisal, each with some strong points as well as limitations. Oberg (1972) has summarized someof the commonly used Performance Appraisal techniques. (i) Essay Appraisal Method:The assessor writes a brief essay providing an assessment of the strengths, weaknesses and potential of the subject. In order to do so objectively, it is necessary that the assessor knows the subject well and should have interacted with them. Since the length and contents of the essay vary between assessors, essay ratings are difficult to compare.

(ii) Graphic Rating Scale A graphic scale

assesses a person on the quality of his or her work (average; above average; outstanding; or unsatisfactory). Assessment could also be trait centered and cover observable traits, such as 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 theessay appraisal technique.

(iii) Field Review Method

88


89/102

Since individual assessors differ in their standards, they inadvertently introduce bias in their ratings. To overcome this assessor-related bias, essay and graphic rating techniques can be combined in a systematic review process. In the field review method, a member of the HRM staff meets a small group of assessors from the supervisory units to discuss each rating, systematically identifying areas of inter-assessor disagreement.

It can then be a mechanism to help each assessor to perceive the standards uniformly and thus match the other assessors. Although field review assessment is considered valid and reliable, it is very time consuming.

(iv) Forced-Choice Rating Method Unlike the field review method, the forced-choice rating method does not involve discussion with supervisors. Although this technique has several variations, the most common method is to force the assessor to choose the best and worst fit statements from a group of statements. These statements are weighted or scored in advance to assess the employee. The scores orweights 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 islargely 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, asupervisor describes critical incidents, giving details of both positive and negative behavior of the employee. These are then discussed with the employee. Thediscussion focuses on actual

89


90/102

behavior rather than on traits. While this technique is well suited for performance occur. That review may interviews, it has and the may drawback delay that the to supervisor has to note down the critical incidents as and when they be impractical, feedback employees. It makes little sense to wait six months or a yearto discuss a misdeed, a mistake or good display of initiative. (vi) Management By Objectives The employees are asked to set or help set their own performance goals. This avoids the feeling among employees that they are being judged by unfairly high standards. This method is currently widely used, but not always in itstrue spirit. Even though the employees are consulted, in many cases management ends up by imposing its standards and objectives. In some cases employees may notlike selfdirection or authority. To avoid such problems, the work standard approach is used.

(vii) Work Standard Approach In this technique, management establishes the goalsopenly and sets targets against realistic output standards. These standards areincorporated 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 fromjob to job and from employee to employee. This limitation can be overcome by some form of ranking using pooled judgment.

90


91/102

(viii) Ranking Methods: Some of the important forms of ranking for Performance Appraisal are given below, based on Oberg, 1972; and Monga, 1983: (a) Alteration Ranking Method The Individual With The Best performance is chosen as the ideal employee. Other employees are then ranked against this employee in descending orderof comparative performance on a scale of best to worst performance. The alteration ranking method usually involves rating by more than one assessor. The ranksassigned 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: ranking and

The enables

paired better

comparison comparison

method among

systematizes

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.

91


92/102

(c) Person-to-Person Rating: In the person-to-person rating scales, the names ofthe actual individuals known to all the assessors are used as a series of standards. These standards may be defined as lowest, low, middle, high and highest performers. Individual employees in the group are then compared with the individuals used as the standards, and rated for a standard where they match the best. The advantage of this rating scale is that the standards are concrete and are in terms of real individuals. The disadvantage is that the standards set by different assessors may not be consistent. Each assessor constructs their own person-to-person scale which makes comparison of different ratings difficult.

(d) Checklist Method: The assessor is furnished with a checklist of pre-scaled descriptions of behavior, which are then used to evaluate the personnel being rated (Monga, 1983). The scale values of the behavior items are unknown to the assessor, who has to check as many items as she or he believes describe the worker being assessed. A final rating is obtained by averaging the scale values of the items that have been marked.

(e) Behaviorally Anchored Rating Scales (BARS): This is a relatively new technique. It consists of sets of behavioral statements describing good or bad performance with respect to important qualities. These qualities may refer to inter-personal relationships, planning and organizing abilities, adaptability and reliability. These statements are developed from critical incidents collected both fromthe assessor and the subject.

92


93/102

(f) Assessment centers: This technique is used to predict future performance ofemployees 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 ata final assessment. The final assessment helps in making an order-of-merit ranking for each employee. It also involves subjective judgment by observers. A Performance Appraisal system could be designed based on intuition, self-analysis, personality traits, behavioral methods and result-based techniques. Different approaches and techniques could be blended, depending on the goals of Performance Appraisal in the organization and the type of review. For example, management by objectives, goal-setting and work standard methods are effective for objective coaching, counseling and motivational purposes. Critical incident appraisal is best suited when supervisor

s personal assessment and criticism are essential. A carefully developed and validated forced-choice rating can provide valuable analysis of the individual when considering possible promotion to supervisory positions. Combined graphic and essay form is simple, effective in identifying training anddevelopment needs, and facilitates other management decisions.

93


94/102

Banner Corporation Banks on Halogen for Talent and Learning and performance Management (For Practical Understanding)

Northwest U.S. based Banner Corporation has selected Halogen Software for a Web-based talent management system to streamline the employee Performance Appraisal process and tightly integrate learning into its talent management process. BannerCorporation, which operates commercial banks in Washington, Oregon and Idaho, isfocused 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 towork, it was critical that we establish a tight link between employee performance, talent management and learning functions," explained Mimi Ellis, SVP TalentManagement, Banner Corporation. "We really did our homework and selected Halogenbased on the fact that it would meet all of our current and future talent management needs."

94


95/102

The new Web-based system will enable Banner Corporation to automate the employeeappraisal 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, therebycreating a complete talent management strategy across all its locations in theNorthwest. Banner Corporation Financial is starting Services with and a deployment for of Halogen employee eAppraisal Multi-Rater

performance management and plans to build on the implementation with fully integrated Halogen eSuccession and eLMS modules. "The Halogen system is straightforward and easy to use, and everyone we ve worked with at the company has been wonderful," added Ellis. "We are looking forward to continuing to work with Halogen and reaping the benefits of our new approach to talent management." Banner Corporation joins financial services institutions across North America relying on Halogen, including AGF, International Finance Corporation, People s Bank and UnitedBank and Trust. About Halogen Software A recognized industry leader with over 1000 customers worldwide, Halogen Software makes powerful, simple-to-use and affordable employee performance and talent manageme

127505250 43924014 performance appraisal in banking sector by ekta bhatia

Documents