A RESEARCH REPORT ON

PERFORMANCE APPRAISAL IN BANKING SECTOR

Submitted for the fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION
(Sikkim Manipal University)
(SESSION: 2009-2010)
Submitted To: Mr. Pankaj Upadhyay Lecturer Sikkim Manipal University Under the G
uidance of: Mr. Pankaj Upadhyay Lecturer Sikkim Manipal University
Submitted By: Ekta Bhatia MBA IV Semester Roll No. 510919106
1

DECLARATION
I, Ekta Bhatia, hereby declare that the project titled
PERFORMANCE APPRAISAL IN BANKING SECTOR is my own work and efforts which is complete
d under the supervision of Mr. Pankaj Upadhyay, senior lecturer of IIMT Manageme
nt 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 fulfillme
nt of Master of Business Administration (M.B.A.).
Date: Place: Roll No.:
Ekta Bhatia MBA-4th Sem. 510919106
2

List of contents
Preface Acknowledgement Objective Of The Study About The Study Scope Of The Stud
y Research Methodology Introduction To Banking

Sector HRM Approach Performance Appraisal

A Systematic Approach

ICICI Bank Company Profile Needs And Importance Of

Performance Appraisal In Banking

3

Performance Appraisal
And Performance Management In ICICI Bank Banner Corporation Banks

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

Recommendation Bibliography

Preface
This study is done for fulfillment of the requirement of Sikkim Manipal Universi
ty to obtain the degree of Master of business management. In this study, we stri
ve 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 t
he importance of HR in banking industry in specific with Performance Appraisal. In
this report we discuss the banking industry, HR overview, need of Performance Ap
praisal in banks, Indian banking scenario, techniques and approaches of Performanc
e Appraisal pertaining to the banking industry. As we know that in present scenar
io 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, individu
al and both as a mutual entity
5

Acknowledgement
I would like to thank Mr.Pankaj Upadhyay for his guidance & support with his val
uable inputs & knowledge. I would like to thank my colleagues, friends, and fami
ly 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
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To understand the concept of HR in special reference of Performance Appraisal

To u
nderstand the application of Performance Appraisal in banking sector To understand
the practical aspect of Performance Appraisal in banking scenario To understand t
he modern trends emerging in Performance Appraisal To understand the management ap
proach towards Performance Appraisal To understand the banking scenario of India
T
o gain the knowledge of the practical process of the
Performance Appraisal
To view the aspect of Performance Appraisal from managerial pe
rspective To highlight the effectiveness of Performance Appraisal in banking secto
r To understand the need of Performance Appraisal for banking industry
7

About the study

8

The study, Performance Appraisal in Banking Sector, highlights the importance of Perf
ormance Appraisal in special reference of banking industry. As we know the bankin
g sector is one of the fastest growing sectors of our country, the study highlig
hts 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 Perform
ance Appraisal is done in banking sector. In this study we take the case of one o
f the leading bank, ICICI bank, as our sample and try to find out their techniqu
es used for Performance Appraisal. This study refers to the need of Performance App
raisal for banking industry, importance and emerging trends in the field of Perfor
mance Appraisal. For easy understanding of the study we have divided the entire s
tudy in to several chapters that gives the specific nature of the subject in que
stion. We have highlighted several trends of banking industry, growth and prospe
ct of banking in India, history of Indian banking, Role of RBI as regulatory ban
k and the industrial importance bank as an institute to march the nation in econ
omic growth. Further we highlighted the role of HR, its need and importance and P
erformance Appraisal as its one of the major tools. It signifies the role of HR i
n organizational perspective and highlight the rationale of active HR polices in
an organization , this reports takes the HR as
9

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 manage
d to collect the secondary data from ICICI bank and got the information about th
e 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 Appr
aisal takes place in ICICI bank In special cases like the practical example of IC
ICI bank ,the study highlights: a) techniques , b) approach, c) forms, d) manage
rial approach, e) employees feedback, f) process and other real aspect of the Per
formance Appraisal that provides the realistic view of the Performance Appraisal pr
ocess 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 thro
ugh various sources. This study refers the Performance Appraisal technique as an e
ffective managerial tool to enhance the efficiency and effectiveness to achieve
the organizational and individual goals. This study provides the theoretical kno
wledge about the Performance Appraisals on the issue like a)need , b)importance ,
c)features , d)techniques , e)approaches , f)model , g)trends and
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other issues related to the banking industry . This study refers to the role of P
erformance Appraisal in a wide and in a systematic manner that takes place in a s
equential way and covers almost all the aspect of the appraisal from employees t
o organization under the universal approach called Performance Management
Scope of the study
11

Following aspects are covered under this study:

A brief overview of the nature o
f the subject An introduction to the HR as a managerial function in special refe
rence with Performance Appraisal New dimensions, techniques, approaches and thoughts
in

Performance Appraisal. Practical aspect of Performance Appraisal in ICICI bank

Mo
chniques emerging in Performance Appraisal.
Need and importance of Performance Apprai
sal in banking industry brief introduction of Indian banking industry
Introductio
n to ICICI bank
Role of Performance Appraisal as managerial decision in banking se
ctor in policy making and organizational success Practical challenges, opportuni
ties in banking sector to
implement the effective performance management system
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Research Methodology
13

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 explanati
on, but some scientific method and techniques classified it as the research, tha
ts why the following research methods, techniques and components are used to faci
litate the study
Research Design- Descriptive research design Descriptive research design is a sc
ientific method that is used in this study which helps in observing and describi
ng the behavior of a subject without influencing it in any way to obtain a gener
al overview of the subject. This design allows observation without affecting nor
mal behavior. It is also useful because it is not possible to test and measure t
he large number of samples needed for more quantitative types of experimentation
These types of experiments are often used by anthropologists, psychologists and
social scientists to observe natural behaviors without affecting them in any wa
y. 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 descr
iptive research can in no way be used as a definitive answer or to disapprove a
hypothesis but, if the
14

limitations are understood, they can still be a useful tool in many areas of sci
entific 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 su
bject. 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

Sampling judgmental sampling

15

News papers

Personal sources

Judgment sampling is a common no probability method. This sampling is selected o

n the judgment. This is usually and extension of convenience sampling. We have d
ecided 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.
Introduction to Banking Sector
16

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 t
he individual and corporate customer in their financial needs. Normally banks pr
ovide the following services to its retail (individual) and corporate clients:
ransactional services, Services related to monetary transaction through current
and saving account, Investment services, Fixed deposit , Letter of credit , Trea
sury services , Bill of exchange , Foreign exchange , Assisting in trade through
Letter of credit, Letter of guarantee, Performance bond , Project financing , P
ersonal loan , Credit card , 17


Home loan etc.
Banking sector In India
18

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 tha
t traces its origins back to June 1806 and that is the largest commercial bank i
n the country. Central banking is the responsibility of the Reserve Bank of Indi
a, which in 1935 formally took over these responsibilities from the then Imperia
l Bank of India, relegating it to commercial banking functions. After India s in
dependence in 1947, the Reserve Bank was nationalized and given broader powers.
In 1969 the government nationalized the 14 largest commercial banks; the governm
ent nationalized the six next largest in 1980. Currently, India has 88 scheduled
commercial banks (SCBs) - 27 public sector banks (that is with the Government o
f 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 foreig
n banks holding 18.2% and 6.5% respectively. The banking industry in India seems
to be unaffected from the global financial crises which started from U.S in the
last quarter of 2008. Despite the fallout and nationalization of banks across d
eveloped economies, banks in India seems to be on the strong fundamental base an
d seems to be well insulated from the financial turbulence emerging from the wes
tern economies. The Indian banking industry is well placed as compare to their b
anking industries western counterparts which are depending upon government bailo
ut and
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stimulus
packages.
The strong economic growth in the past, low defaulter ratio, absence of complex
financial products, regular intervention by central bank, proactive adjustment o
f monetary policy and so called close banking culture has favored the banking in
dustry 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 f
ollow stringent norms for credit disbursal. There will be more focus on analyzin
g borrowers financial health rather than capability. The report Indian Banking Sec
tor Forecast to 2012 contains comprehensive research and rational analysis on var
ious 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 marke
t and their future scope.
The forecast given in this report is not based on a complex economic model but i
s intended as a rough guide to the direction in which the market is likely to mo
ve. The future projection is done on the basis of the current market scenario, p
ast trends, and rules and regulations laid by the regulator and supervisor of th
e financial system, Reserve Bank of India (RBI).
20

The Economic Liberalization process has increasingly exposed the Banking Sector
to international competition. The role of Banking in the process of financial in
termediation has been undergoing a profound transformation, owing to changes in
the global financial system. Consequently, the revolution in information technol
ogy 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 n
ew private sector banks as part of the liberalization process. The RBI has also
been granting licensees to industrial houses. Many banks are successfully runnin
g in the retail and consumer segments but are yet to deliver services to industr
ial finance, retail trade, small business and agricultural finance.
The PSBs will play an important role in the industry due to its number of branch
es and foreign banks facing the constraint of limited number of branches. Hence,
in order to achieve an efficient banking system, the onus is on the Government
to encourage the PSBs to be run on professional lines. To promote banking sector
in India, Govt. has taken many steps and formed several committee to review the
banking needs and the prospect the current scenario along with the safeguarding
the interest of the customers
21

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 th
e growth rate of money supply is consistent with the growth rate of output of go
ods and services. In an open economy framework however the Central Banks is addi
tionally entrusted with the responsibility of managing the exchange rate. Since
the inception of the economic reforms when the Indian Economy embarked on a prog
ramme of liberalization and exchange rate flexibility, the Reserve Bank of India
is managing its twin responsibilities of monetary stability and exchange rate s
tability. The economy follows a managed float system with RBI intervening in the
event of violent fluctuations in exchange rate. In an open economy framework wi
th lesser restrictions on capital flows, managing the monetary stability and exc
hange rate stability pose a challenge for the Central Bank. Managing the twin fu
nctions simultaneously is accompanied by trade-offs and conflicts. The central b
ank of the country is the Reserve Bank of India (RBI). It was established in Apr
il 1935 with a share capital of Rs. 5 crores on the basis of the recommendations
of the Hilton Young Commission. The share capital was divided into shares of Rs
. 100 each fully paid which was entirely owned by private shareholders in the be
ginning. The Government held shares of nominal value of Rs. 2, 20,000. Reserve B
ank of India was nationalized in the year 1949. The general superintendence and
direction of the Bank is entrusted to Central
22

Board of Directors of 20 members, the Governor and four Deputy Governors, one Go
vernment official from the Ministry of Finance, ten nominated Directors by the G
overnment to give representation to important elements in the economic life of t
he 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 fo
r a term of four years to represent territorial and economic interests and the i
nterests of co-operative and indigenous banks.
The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 193
4 (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 ban
knotes To maintain reserves with a view to securing monetary stability and To op
erate the credit and currency system of the country to its advantage.
Major Banks in India
23

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 Saurash
tra State Bank of Travancore

Dena Bank IDBI Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce P
unjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of Ind
ia United Bank of India Vijaya Bank
24

Private sector banks

Bank of Rajasthan 25


Bharat Overseas Bank Catholic Syrian Bank Centurion Bank of Punjab (Merged with
HDFC bank) City Union Bank Development Credit Bank Dhanalakshmi Bank Federal Ban
k HDFC Bank ICICI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnata
ka Bank Karur Vysya Bank Kotak Mahindra Bank Lakshmi Vilas Bank Lord Krishna Ban
k ( now Centurion Bank of Punjab) Nainital Bank Nedungadi Bank (now Punjab Natio
nal Bank) Ratnakar Bank Rupee Bank Saraswat Bank SBI Commercial and Internationa
l Bank South Indian Bank Tamil Nadu Mercantile Bank Thane Janata Sahakari Bank B
assein Catholic Bank United Western Bank ( now IDBI Bank) YES Bank
26

Foreign Banks

ABN Amro bank

27


Abu Dhabi Commercial Bank Ltd American Express Bank Antwerp Diamond Bank Arab Ba
ngladesh Bank Bank International Indonesia Bank of America Bank of Bahrain & Kuw
ait Bank of Ceylon Bank of Nova Scotia Bank of Tokyo Mitsubishi UFJ Barclays Ban
k BNP Paribas Calyon Bank ChinaTrust Commercial Bank Citibank DBS Bank Deutsche
Bank HSBC (Hongkong & Shanghai Banking Corporation) JPMorgan Chase Bank Krung Th
ai Bank Mashreq Bank Mizuho Corporate Bank Oman International Bank Shinhan Bank
Socit Gnrale Sonali Bank Standard Chartered Bank State Bank of Mauritius
28

Banks with Representative Offices in India:

American Banks

The Bank of New York 29


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


Dresdner Bank DZ Bank AG Deutsche Zentral Genossenschafts Bank HSH Nordbank Land
esbank Baden Wurttemberg
Irish Banks

DEPFA Bank
Italian Banks

Banc Intesa Banca Commerciale Italiana Banca di Roma Banca Populare Di Verona E
Novara Banca Popolare di Vicenza BPU Banca Banche Popolari Unite Monte Dei Paschi
Di Sienna Sanpaolo IMI Bank Uni Credito Italiano
Nepalese Banks

Everest Bank
Portuguese Banks

Caixa Geral de Depositos

Russian Banks

Vnesheconombank VTB India Promsvyazbank
31

South African Banks

First Rand Bank

South Korean Banks

Wori Bank
Spanish Banks

Banco de Sabadell Banco Bilbao Vizcaya Argentaria
SriLankan Banks

Hatton National Bank

Swiss Banks

UBS Zurcher Kantonalbank
Rural Banks

Adhiyaman Grama Bank Alaknanda Gramin Bank ( Now Uttranchal Gramin Bank) Andhra
Pragathi Grameena Bank Avadh Gramin Bank
32


Aryavart Gramin Bank Balasore Gramya Bank Ballia Kshetriya Gramin Bank Banaskant
ha Mehsana Gramin Bank Bangiya Grameen Vikash Bank Bareilly Kshetriya Gramin Ban
k Baroda Uttar Pradesh Gramin Bank Bijapur Grameena Bank Bilaspur-Raipur Kshetri
ya Gramin Bank Bolangir Anchalik Gramya Bank Bundelkhand Kshetriya Gramin Bank B
undi Chittorgarh Kshetriya Gramin Bank Cauvery Grameena Bank Chaitanya Godavari
Grameena Bank Chambal Kshetriya Gramin Bank Champaran Kshetriya Gramin Bank Chha
trasal Gramin Bank Chhindwara Seoni Kshetriya Gramin Bank Chitradurga Gramin Ban
k Cuttack Gramya Bank Damoh Panna Sagar Kshetriya Gramin Bank Devipatan Kshetriy
a Gramin Bank Dhenkanal Gramya Bank Dungarpur Banswara Kshetriya Gramin Bank Ell
aquai Dehati Bank Farrukhabad Gramin Bank Gaur Gramin Bank Gurgaon Gramin Bank H
adoti Kshetriya Gramin Bank
33


Himachal Gramin Bank Hissar-Sirsa Kshetriya Gramin Bank Indore Ujjain Kshetriya
Gramin Bank Jaipur Nagaur Aanchalik Gramin Bank Jamnagar Rajkot Gramin Bank Jamu
na Gramin Bank Jhabua-Dhar Kshetriya Gramin Bank Jharkhand Gramin Bank Kakathiya
Grameena Bank Kalpatharu Grameena Bank Kamraz Rural Bank Kanpur Kshetriya Grami
n Bank Kapurthala Ferozpur Kshetriya Gramin Bank Kashi Gomti Samyut Gramin Bank
Kisan Gramin Bank,Budaun Kolar Gramin Bank Krishna Grameena Bank Kshetriya Grami
n Bank,Hoshangabad Kutch Grameen Bank Malaprabha Grameena Bank Mandla Balaghat K
shetriya Gramin Bank Manjira Grameena Bank Marwar Ganganagar Bikaner Gramin Bank
(Previously : Marwar Gramin Bank) Mewar Aanchalik Gramin Bank Nagarjuna Grameen
a Bank Netravati Grameena Bank Nimar Kshetriya Gramin Bank North Malabar Gramin
Bank

34


Panchmahal Vadodara Gramin Bank Pandyan Grama Bank Pinakini Grameena Bank (merge
d to form Andhra Pragathi Grameena Bank) Pragjyotish Gaonlia Bank Prathama Bank
Raigarh Kshetriya Gramin Bank Rani Lakshmi Bai Kshetriya Gramin Bank Ratlam Mand
saur Kshetriya Gramin Bank Rayalaseema Grameena Bank (merged to form Andhra Prag
athi Grameena Bank) Rewa-Sidhi Gramin Bank Sahyadri Gramin Bank Samyut Kshetriya
Gramin Bank Sangameshwara Grameena Bank Shahjahanpur Kshetriya Gramin Bank Shre
yas Gramin Bank (Aligarh,Etah,Agra,Mathura,Firozabad) Shivpuri Guna Kshetriya Gr
amin Bank South Malabar Gramin Bank Sree Anantha Grameena Bank (merged to form A
ndhra Pragathi Grameena Bank) Sri Saraswati Grameena Bank Sri Visakha Grameena B
ank Surat Bharuch Gramin Bank Thar Aanchalik Gramin Bank Tripura Gramin Bank Tun
gabhadra Gramin Bank Vidur Gramin Bank MCB



35


Madhya Bharat Gramin Bank
Human Resources Management Approach (H.R M Approach)
36

Human resource management s objective is to maximize the return on investment fro

m the organization s human capital and minimize financial risk. It is the respon
sibility of human resource managers in a corporate context to conduct these acti
vities in an effective, legal, fair, and consistent manner The Human Resources (H
R) function provides significant support and advice to line management. The attr
action, preservation and development of high caliber people are a source of comp
etitive 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 individu
al rather than taking a collective approach. Responsibility for human resource m
anagement is often devolved to line management. It is characterized by an emphas
is on strategic integration, employee commitment, workforce flexibility, and qua
lity of goods and services. Human resource is an increasingly prominent field th
at is taking shape throughout industries and workplaces world wide. Recognizing
the fact that people are a companys greatest asset, business leaders across the g
lobe are coming to rely more and more upon an effective management policy that a
pplies 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 rel
ations, there has also been a major rise in the amount of knowledge and innovati
on pertaining to the most efficient and productive methods of streamlining workf
orce management policy. When applied, there are already a great number
37

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 i
n 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 s
ystems, etc. Indeed, the mechanistic approach to employee relations has often fa
iled. 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 mo
re sensitive and human analysis to determine what really works with employees. O
ne of the major aspects of HR maintenance involves employee recruitment, trainin
g and development as a function of human capital management. Making sure that em
ployees abilities are correctly and optimally nurtured is essential to seeing a w
orthwhile return on investment come from their contribution to the company, once
their training period is over. Along with employee training, human resources de
partments also delve into the area of applicant tracking. How to find the best t
alent available on the global labor market place is often a problem that the hum
an resources department will strive to tackle.
38

In addition, human resources departments take care of a variety of concerns such

as labor relations the crucial and highly sensitive negotiations between employ
ees and management the production of job descriptions, the monitoring of interpl
ay between workers in order to design a more efficient employee management syste
m, the compilation of benefits packages as well as a variety of other vital func
tions that relate directly to the employee workforce Organizational Psychology h
olds that successful organizations do not owe their success solely to market rea
lities and sustainable competitive advantages. Actually, there is a lot more. Su
ccessful companies are those that consider their human capital as their most imp
ortant asset. Facts and figures are the quantitative elements of successful mana
gement, yet the qualitative, i.e. the cognitive aspects, are those that actually
make or break an organization. Human Resources Management (HRM) is the strategi
c management of the employees, who individually and collectively contribute to t
he achievement of the strategic objectives of the organization. Assuming that th
e employees of an organization are individuals with own mental maps and percepti
ons, own goals and own personalities and as such they cannot be perceived as a w
hole, HRM holds that the organization should be able to employ both individual a
nd group psychology in order to commit employees to the achievement of organizat
ional goals. Aiming to enable the organization to achieve its strategic goals by
attracting, retaining and developing employees, HRM functions as the
39

link between the organization and the employees. A company should first become a
ware of the needs of its employees, and at a later stage, understand and evaluat
e these needs in order to make its employees perceive their job as a part of the
ir personal life, and not as a routine obligation. To that end, HRM is very cruc
ial for the whole function of an organization because it assists the organizatio
n to create loyal employees, who are ready to offer their best. The HRM activiti
es in modern organizations are typically performed in communication with the Gen
eral 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 percepti
ons of the HR or the General Manager, but it becomes the outcome of strategic co
nsensus.
The main goals / responsibilities of HRM are: To retain low employee turnover ra
te by inspiring people to work for the company
40

 To attract new employees To contribute to employee development To achieve these

goals, Human Resources Management trains and motivates the employees by communic
ating ethical policies and socially responsible behavior to them. In doing so, i
t plays a significant role in clarifying the organization s problems and providi
ng solutions, while making employees working more efficiently. On the other hand
, challenges do not cease for the HRM. Modern organizations can survive in the d
ynamic, competitive environment of today only if they capitalize on the full pot
ential of each employee. Unfortunately, many companies have not understood the i
mportance of the human capital in successful operations. The recruitment and sel
ection 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 w
ork 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 chall
enges will never cease to emerge. Therefore, the use of proper Human Resources t
echniques is a really powerful way for organizations to overcome these challenge
s, and to improve not only their quantitative goals but also their organizationa
l culture, and their qualitative, cognitive aspects.
41

Current trends in HR Human resource management is a process of bringing people a

nd organizations together so that the goals of each other are met. The 42

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 possib
le 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 increa
sing while low skilled jobs are decreasing. This calls for future skill mapping
through proper HRM initiatives. Indian organizations are also witnessing a chang
e 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 i
s becoming all the more important.
Functions of H. R 1. Recruitment & Selection 2. Training and Development (People
& Organization) 3. Performance Evaluation and Management 43

4. Promotions 5. Redundancy 6. Industrial and Employee Relations 7. Record keepi

ng of all personal data. 8. Compensation, pensions, bonuses etc in liaison with
Payroll 9. Confidential advice to internal customers in relation to problems a
t work 10. Career development
Performance Appraisal A Systematic Approach
44

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, quan
tity, cost and time). Performance Appraisal is a part of career development. Perfor
mance Appraisals are regular reviews of employee
performance within organizations. Generally, the aims of a Performance Appraisal a
re to: 1. Give feedback on performance to employees. 2. Identify employee traini
ng needs. 3. Document criteria used to allocate organizational rewards. 4. Form
a basis for personnel decisions: salary increases, promotions, disciplinary acti
ons, etc. 5. Provide the opportunity for organizational diagnosis and developmen
t. 6. Facilitate communication between employee and administration 7. Validate s
election techniques and human resource policies to meet federal Equal Employment
Opportunity requirements.
Performance Appraisal is a management tool which is helpful in motivating and effe
ctively utilizing human resources. Assessment of human potential is difficult, n
o matter how well designed and appropriates the performance planning and apprais
al system is, the Performance Appraisal system should: 45

be correlated with the organizational mission, philosophies and value system;

co
ver assessment of performance as well as potential for development; take care of
organizational as well as individual needs; and help in creating a clean enviro
nment by - Linking the rewards with achievements, - generating information for t
he growth of the employee as well as of organization, - suggesting appropriate p
erson-task matching and career plans.
Feedback is an important component of Performance Appraisal. While positive feedba
ck is easily accepted, negative feedback often meets with resistance unless it i
s objective, based on a credible source and given in a skilful manner.
THE PROCESS OF PERFORMANCE APPRAISAL
46

(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. Manage
rs should plan performance 47

development strategies in a structured manner for each employee. In doing so, th

ey should keep the goals of the organization in mind and aim at optimal utilizat
ion of all available resources, including financial. Performance Appraisal is a mu
ltistage process in which communication plays an important role. Craig, Beatty a
nd Baird (1986) suggested an eight-stage Performance Appraisal process:
(i) Establishing Standards and Measures The first step is to identify and establ
ish measures which would differentiate between successful and unsuccessful perfo
rmances. These measures should be under the control of the employees being appra
ised. The methods for assessing performance should be decided next. Basically, m
anagement wants to:
know the behavior and personal characteristics of each emplo
yee; and assess their performance and achievement in the job. There are various
methods available for assessing results, behavior and personal characteristics o
f an employee. These methods can be used according to the particular circumstanc
es and requirements.
(ii) Communicating Job Expectations
48

The second step in the appraisal process is communicating to employees the measu
res and standards which will be used in the appraisal process. Such communicatio
n should clarify expectations and create a feeling of involvement. (iii) Plannin
g In this stage, the manager plans for the realization of performance expectatio
ns, 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 perfo
rmance is appraised annually, it has to be managed each day, all year long. Mo
nitoring is a key part of the Performance assistance as Appraisal necessary proces
s. and It should involve providing than removing obstacles rather
interfering. The best way to effectively monitor is to walk around, thus creatin
g continuous contacts, providing first-hand information, and identifying problem
s, which can then be solved promptly. (v) Appraising This stage involves documen
ting performance through observing, recalling, evaluating, written communication
, judgment and analysis of data. This is like putting together an appraisal reco
rd.
(vi) Feedback 49

After the formal appraisal stage, a feedback session is desirable. This session
should involve verbal communication, listening, problem solving, negotiating, co
mpromising, conflict resolution and reaching consensus. (vii) Decision Making On
the basis of appraisal and feedback results, various decisions can be made abou
t giving rewards (e.g., promotion, incentives, etc.) and punishments (e.g., demo
tion). The outcome of an appraisal system should also be used for career develop
ment. (viii) Development of performance The last stage of Performance Appraisal is
development of
performance, or professional development, by providing opportunities for upgrad
ing skills and professional interactions. This can be done by supporting partici
pation in professional conferences or by providing opportunities for further stu
dy. Such opportunities can also act as incentives or rewards to employees.
The ESSENTIALS of an effective performance system are as follows:
50

Documentation means continuous noting and documenting the performance. It also h

elps the evaluators to give a proof and the basis of their ratings.
Standards /
Goals the standards set should be clear, easy to understand, achievable, motivat
ing, time bound and measurable. Practical and simple format - The appraisal form
at should be
simple, clear, fair and objective. Long and complicated formats are time consumi
ng, difficult to understand, and do not elicit much useful information.
WHAT SHOULD A PERFORMANCE SYSTEM BE? 51

Correlated with the organization s philosophies and mission

Cover assessment of
performance as well as potential for development
Look after the needs of both th
e individual and the organization
Help create a clean environment
Rewards linked
to achievements Generate information for personnel development and career plann
ing suggesting appropriate person-task matching
HOW CAN THE PERFORMANCE APPRAISAL SYSTEM HELP?
Promote better understanding of an
employee s role and clarity about his or her functions 52

Give
a
better
understanding
of
personal
strengths
and
weaknesses in relation to expected roles and functions
Identify development need
s of an employee Establish common ground between the employee and the supervisor
Increase communication
Provide an employee with the opportunity for self-reflec
tion and individual goal setting Help an employee internalize the culture, norms
and values of the organization. This helps develop an identity with and commitm
ent to the organization and prepares an employee for higher-level positions in t
he hierarchy Assist in a variety of personnel decisions
APPROACHES IN PERFORMANCE APPRAISAL

Intuitive

Self-appraisal

Group 53

Trait

Achievement of results

TECHNIQUES OF PERFORMANCE APPRAISAL

54

Easy appraisal method

Graphic rating scales

Field review method

Forced choice rating method
Critical incident appraisal meth
od Management by objectives
Work standard approach Ranking methods
methods Alter
ation ranking - Paired comparison - Person-to-person rating - Checklist - Behavi
orally anchored rating scales - Assessment centers
PERFORMANCE APPRAISAL SYSTEMS
55

PROBLEMS Measurement evaluate Judgement performance Policy of the appraisal Orga

nization managers work and the organization culture SYMPTOMS
Ambiguity in roles
and responsibilities of each job Job performance is difficult to quantify
No cle
ar statement of overall objectives of units or the organization Appraisal contai
ns only numerical indices POTENTIAL CURES Job analysis and credible job descript
ion Observable, behaviorally
Top management actually uses
Implement Performance A
ppraisal using Disagreement Top on ratings
Official review changes ratings
Appeal
s, grievances, accusations of bias, discrimination to reward managers who are ex
cellent in staff assessment and development Marginal performers receive promotio
ns or salary increases Appraisal forms management fails not completed
Managers c
om plain about time needed System seen as belonging to the designers, not the us
ers Personnel/HR specialists take enforcer not adviser role
system revised frequ
ently Deciding what to Appraising Using the results Recognizing how
56

Outcomes of each job identified

Overall goals set for units and the organization
Train managers to make documented judgements
based criteria
Performance time
ion of performance expectations

rater training and practice

Effective communicat

Performance Appraisal itself

the Performance Management (PM)
documented over Polices for Performance Appraisal consistently applied
contingent reward system operates

performance

ICICI BANK company profile

Overview ICICI Bank is India s second-largest bank with total assets of Rs. 3,74
4.10 billion (US$ 77 billion) at December 31, 2008 and profit after tax Rs. 30.1
4 billion for the nine months ended December 31, 2008.
57

The Bank has a network of 1,438 branches and about 4,644 ATMs in India and prese
nce in 18 countries. ICICI Bank offers a wide range of banking products and fina
ncial services to corporate and retail customers through a variety of delivery c
hannels and through its specialized subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset manag
ement. The Bank currently has subsidiaries in the United Kingdom, Russia and Can
ada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar
and Dubai International Finance Centre and representative offices in United Arab
Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Ou
r UK subsidiary has established branches in Belgium and Germany. ICICI Bank s eq
uity 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 f
inancial 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 fisca
l 2000, ICICI Bank s
58

acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 200

1, 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 ob
jective was to create a development financial institution for providing medium-t
erm and long-term project financing to Indian businesses. In the 1990s, ICICI tr
ansformed its business from a development financial institution offering only pr
oject finance to a diversified financial services group offering a wide variety
of products and services, both directly and through a number of subsidiaries and
affiliates like ICICI Bank. In 1999, ICICI become the first Indian 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 mo
ve 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 al
ternative for both entities, and would create the optimal legal structure for th
e ICICI group s universal banking strategy. The merger would enhance value for I
CICI shareholders through the merged entity s access to low-cost deposits, great
er opportunities for earning fee-based income and the ability to participate in
the payments system and provide transactionbanking services. The merger would en
hance value for ICICI Bank shareholders through a large capital base and scale o
f operations, seamless access to ICICI s strong corporate relationships built up
over 59

five decades, entry into new business segments, higher market share in various b
usiness 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 r
etail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI
Capital Services Limited, with ICICI Bank. The merger was approved by shareholde
rs of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahme
dabad in March 2002, and by the High Court of Judicature at Mumbai and the Reser
ve Bank of India in April 2002. Consequent to the merger, the ICICI group s fina
ncing 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
60

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, E
xecutive Director Mr. Sonjoy Chatterjee, Executive Director Mr. K. Ramkumar, Exe
cutive Director Mr. N. S. Kannan, Executive Director & CFO
Board Committees
Audit Committee Mr. Sridar Iyengar Mr. Narendra Murkumbi Mr. M. K. Sharma Board
Governance & Remuneration Committee Mr. M. K. Sharma Mr. K. V. Kamath Mr. Anupam
Puri 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 Ko
chhar Credit Committee Mr. K. V. Kamath Mr. Narendra Murkumbi Mr. M .K. Sharma M
r. P. M. Sinha Ms. Chanda Kochhar
61

Fraud Monitoring Committee Mr. M. K. Sharma Mr. K. V. Kamath Mr. Narendra Murkum
bi Ms. Chanda Kochhar Mr. Sandeep Bakhshi Share Transfer & Shareholders / Invest
ors 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 M
r. 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

Extra Mile for ICICI bank

ICICI Bank
2009
ICICI Bank bags the Best bank in SME financing (Private Sector) at the Dun & Brads
treet 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 G
roup win WOW Event & Experiential Marketing Award in two categories - Rural Marke
ting programme of the year and Small Budget On Ground Promotion of the Year. These
awards were given for Cattle Loan Kamdhenu respectively. ICICI Bank s Germany B
ranch has been certified by Stiftung 63 Campaign and Talkies on the move campai
gn

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 th
e call moneycategory. The ICICI Bank was awarded the runner s up position in Gartn
er Business Intelligence and Excellence Award for Asia Pacific for its Business
Intelligence functions. ICICI Bank s Organizational Excellence Group was recentl
y awarded ISO 9001:2008 certification by TUV Nord. The scope of certification co
mprised processes around consulting and capability building on methods of qualit
y & improvements. ICICI Bank has been awarded the following titles under The Ass
et Triple A Country Awards for 2009: Best Transaction Bank in India Best Trade F
inance 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 i
n 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 awar
d was given to ICICI Bank its long-standing support to this unique training cent
re for people who are deaf-blind.
64

Needs and Importance For Performance Appraisal in Banking

The butt of many a corporate joke, these hard working professionals are often re
legated to small back offices where their activities, viewed as little more than
administrative functions, are carried out without much recognition. But in an i
ncreasingly aggressive corporate world, where every competitive edge counts, lea
ding organisations would do well to recognise the human potential that can be un
leashed by adopting effective human resource management strategies that realise
the potential of employees and earn their respect and loyalty. Dealing with the
mundane personal matters of corporate life has traditionally been seen as the so
le purpose of the HR department. From hiring workers and providing transportatio
n and meals services, to processing housing, medical and insurance benefits, the
functions of HR professionals have been recognised as essential, but have not a
lways inspired respect for those involved in executing them. Essentially, people
remain the strongest and most competitive assets of a business. This should, an
d is, changing. In a region where business growth is rapid, and organisations ar
e competing to secure talent from the same pool, investing in and revering effec
tive HR departments to find, train 65

and help retain this talent is increasingly important. Testament to the fact man
y banks in the region are now recognising the value of developing their human re
sources, Abu Dhabi recently hosted the Middle East Human Resource Summit - the a
nnual conference and exhibition for industry professionals. But can everyone be
persuaded to take real action in developing their HR departments
Banking industry is facing a cut throat completion in present banking scenario w
here the motivation of the employee can be a competitive advantage to retain its
customer.
66

Performance Sector
Appraisal
In
Banking
Performance Appraisal is a vehicle to (1) validate and refine organizational actio
ns (e.g. selection, training); and (2) provide feedback to employees with an eye
on improving future performance. Validating and refining organizational action
or banks action Employee selection, training and just about any cultural or mana
gement practicesuch as the introduction of a new pruning method or an incentive p
ay programmay be evaluated in part by obtaining worker performance data. The eval
uation may provide ideas for refining established practices or instituting new o
nes. For instance, appraisal data may show that a farm supervisor has had a numb
er of interpersonal conflicts with other managers and employees. Some options in
clude (1) Paying more attention to interpersonal skills when selecting new super
visors, (2) Encouraging present supervisors to attend communication or conflict
management Classes at the local community college, or (3) Providing the supervis
or one-on-one counseling.
Data from Performance Appraisals can also help farmers
67

(1) Plan for long-term staffing and worker development, (2) give pay raises or o
ther rewards, (3) Set up an employee counseling session, or (4) Institute discip
line or discharge procedures. For validation purposes, it is easier to evaluate
performance data when large numbers of workers are involved such as in banks. Us
eful 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

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 f
armer who never seemed to notice the effort. Years later he met the former emplo
yer 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." Pe
ople 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 work
er performance as encouraging affirmation. These are, in effect, good-will depos
its, without which withdrawals cannot be made. This does not mean you should glo
ss over areas needing improvement. When presented in a constructive fashion, wor
kers will often be grateful for information on how to improve shortcomings. Such
constructive feedback, however, "can happen only within the context of listenin
g to and caring about the person." In general, supervisors who tend to look for
workers positive behaviors and do so in a sincere, non-manipulative waywill have le
ss difficulty giving constructive feedback or suggestions. Furthermore, in the n
egotiated approach, the burden for performance analysis does not fall on the sup
ervisor alone, but requires introspection on the part of the individual being ev
aluated. Feedback may be qualitative or quantitative. Qualitative comments are d
escriptive, 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
69

that have taken. Some researchers feel feedback is particularly useful when work
ers have an achievement objective
By focusing the attention on performance, performance appraisal goes to the hear
t of personnel management and reflects the management s interest in the progress
of the employees.
Objectives Of Performance appraisal:
70

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

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. Provide information to assist
in the other personal decisions in the organization. Provide clarity of the exp
ectations and responsibilities of the functions to be performed by the employees
. To judge the effectiveness of the other human resource functions of the organi
zation such as recruitment, selection, training and development. To reduce the g
rievances of the employees.

71

Followings should kept in the mind for effective Performance Appraisal in a bank
elect what performance data to collect Determine who conducts the appraisal
Decide on a rating philosophy
Overcome rating deficiencies
ument
Deliver useful information to employees

Create a rating instr

The Performance Appraisal or review is essentially an opportunity for the individu

al and those concerned with their performance in the bank , most usually their l
ine manager - to get together to engage in a dialogue about the individuals perfo
rmance, 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 oth
er 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 e
ffect and effectiveness.
72

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 involv

es enabling people to perform their work to the best of their ability, meeting a
nd perhaps exceeding targets and standards. Performance management can be coordi
nated by an interrelated framework between manager and employee. Key areas of th
e framework to be agreed are objectives, human resource management, standards an
d performance indicators, and means of reward. For successful performance manage
ment in ICICI , a culture of collective and individual responsibility for the co
ntinuing improvement of business processes needs to be established, and individu
al skills and contributions need to be encouraged and nurtured as the bank deals
in service sector where the employees are the main factor of making the differe
nce . 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 appra
isal.
74

75

Reasons for Performance Appraisal in ICICI

Increase motivation to perform effectively
Increase staff self-esteem
Gain new i
nsight into staff and supervisors Better clarify and define job functions and re
sponsibilities Develop valuable communication among appraisal participants
Encou
rage increased self-understanding among staff as well as insight into the kind o
f development activities that are of value Distribute rewards on a fair and cred
ible basis Clarify organizational goals so they can be more readily accepted
Imp
rove institutional/departmental manpower planning, test validation, and developm
ent of training programs
76

Modern Trends In Banks for P.A A growing number of front running banks like ICIC
I, and others have adopted a Performance Appraisal model in which best-to-worst ra
nking methods are used to identify poor performers. The identified poor performe
rs 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 off
ered 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. Advocat
es of this system feel that it continually motivates employees to better their p
erformance 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 q
uality of the workforce, its commitment to the organizational goals and investme
nts made to attract train and retain superior human capital. An integrated Perfo
rmance Management system is essential to get the best out of its people. Employe
e performance is linked to the banks performance. This helps in achieving the org
anizational goal and creates a performance culture in
77

the bank. Invention, creativity, diversity of perspectives is fostered. Employee

s 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 short term objectives
followed by specific actions that he has to carry out. The goals are finally se
t and are action oriented. The goals set are specific, measurable, achievable, r
eview able and time bound and most importantly they use to be aligned with the g
oal of the organization. At the end of a specified time period, the activities a
re jointly reviewed by both the subordinate and his supervisor. Depending on the
performance of the subordinate, the goals are modified or redesigned for the ne
xt 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 pe
rformance of the individual and the bank It is easy to implement because those w
ho 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 utilizatio
n of capacity and talent. It promotes better communication and information shari
ng. It provides guidelines for self evaluation as well as evaluation by the supe
rior against set tasks and goals. It facilitates guidance and counseling.
79

The Effective Components of ICICI P .A System

Performance Planning (includes employee goal setting / objective setting) Ongoin

g Performance Communication Data Gathering, Observation and Documentation Perform
ance Appraisal Meetings Performance Diagnosis and Coaching

An effective Performance Appraisal system in ICICI bank emphasizes individual obje

ctives, Bank objectives and also mutual objectives. From the viewpoint of indivi
dual objective the Performance Appraisal talks about a) b) c) What How How task we
ll can the the his individual individual performance is has be expected done fur
ther to the do? task?
improved?
d) His reward for doing well. From the bank view point a Performance Appraisal sho
uld 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.
80

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 Performance Appraisal is one such method that allows fo
r the optimisation of employees. In a broad sense , it is a formal structure tha
t allows for the continued measuring and evaluation of individual behavior and p
erformance, whilst influencing an employees job related attributes through such
factors as increased job satisfaction and recognition (with the use of promotion
al 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 f
ind areas of skill deficit for further development (through employee feedback),
identify excess potential that could be better utilized, and communicate objecti
ves 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 ot
her 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 wor
kers that are legally viable, that can protect the business when dealing in case
s of dismissals and demotions. This is especially important in todays society bec
ause of the "increasing legislation and regulation dealing with victimization an
d discrimination" making bank liable for all their actions.
The annual Performance Appraisal is usually done in two steps. First, the employee
s and their manager complete the Performance Appraisal form - doing a self assessm
ent. Often the bank also uses a 60 degree feedback process, asking for input fro
m peers. Secondly, 82

the bank employees and manager participate in a formal Performance Appraisal inter
view. The appraisal form, used in the first step, consists of performance standa
rds and criteria that are used to judge evaluate your performance. The items com
prising your job description are usually the performance standards that are used
in employees annual appraisal .The performance standards are derived from a job
analysis, which is a detailed list of all of the skills involved in performing
a task. For example, what are the skills necessary to perform a complete blood c
ount? 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 st
andards). Once appraisal is complete, score is averaged and merit raise (if appl
icable)
83

Forms Used By The Bank For P.A 1. General Performance Appraisal Form I Six-page fo
rm includes evaluation sections for three categories: a) objectives from last re
view period; b) current job duties (which are customizable), and c) organization
core values (e.g., maturity, vision). 2. General Performance Appraisal Form II Fo
ur-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 suppli
ers and customers to fill out. Also can be used for "upwards" feedback about man
agers. 5. 360-Degree Performance Appraisal Form II Two-page form for peers and out
siders - all open-ended questions, without numerical rankings.
84

6. Manager Performance Appraisal Form Six-page form with all sections related to m
anagerial skills. Also includes a section for listing future objectives. 7. Admi
nistrative/Technical Performance Appraisal Form Four-page form perfect for adminis
trative, technical and customer service workers. 8. Sales Performance Appraisal Fo
rm Five-page form focused on sales personnel. Includes four sections: a) actual
vs. plan performance, b) lead generation, c) selling skills and d) account maint
enance. 9. Project Evaluation Review Form Four-page form geared towards specific
projects, and an individuals role on a given project. 10. Employee Self-Assess
ment 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.
85

Approaches And Techniques In Performance Appraisal Used By The Bank Performance App
raisal is a multistage process involving several activities, which can be adminis
tered using a variety of approaches. Some of these approaches are being used by
the banks for Performance Appraisal
Intuitive Approach: In this approach, a superv
isor 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 manag
er or supervisor evaluates the employee on the basis of observable dimensions of
personality, such as integrity, honesty, dependability, punctuality, etc. Appra
isal Based On Achieved Results: In this type of approach, appraisal is based on
concrete, measurable, work achievements judged against fixed targets or goals se
t mutually by the subject and the assessor.
86

Behavioral Method: This method focuses on observed behavior and observable criti
cal incidents.
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Appraisal techniques There are several techniques of Performance Appraisal, each w

ith some strong points as well as limitations. Oberg (1972) has summarized some
of the commonly used Performance Appraisal techniques. (i) Essay Appraisal Method:
The assessor writes a brief essay providing an assessment of the strengths, wea
knesses and potential of the subject. In order to do so objectively, it is neces
sary that the assessor knows the subject well and should have interacted with th
em. Since the length and contents of the essay vary between assessors, essay rat
ings are difficult to compare.
(ii) Graphic Rating Scale A graphic scale assesses a person on the quality of h
is or her work (average; above average; outstanding; or unsatisfactory). Assess
ment could also be trait centered and cover observable traits, such as reliabili
ty, adaptability, communication skills, etc. Although graphic scales seem simpli
stic in construction, they have application in a wide variety of job responsibil
ities and are more consistent and reliable in comparison with essay appraisal. T
he utility of this technique can be enhanced by using it in conjunction with the
essay appraisal technique.
(iii) Field Review Method
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Since individual assessors differ in their standards, they inadvertently introdu

ce bias in their ratings. To overcome this assessor-related bias, essay and grap
hic rating techniques can be combined in a systematic review process. In the fie
ld review method, a member of the HRM staff meets a small group of assessors fr
om the supervisory units to discuss each rating, systematically identifying area
s of inter-assessor disagreement. It can then be a mechanism to help each asses
sor to perceive the standards uniformly and thus match the other assessors. Alth
ough field review assessment is considered valid and reliable, it is very time c
onsuming.
(iv) Forced-Choice Rating Method Unlike the field review method, the forced-choi
ce rating method does not involve discussion with supervisors. Although this tec
hnique has several variations, the most common method is to force the assessor t
o choose the best and worst fit statements from a group of statements. These sta
tements 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 s
o 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 object
ive. However, this technique is of little value wherever Performance Appraisal int
erviews are conducted. (v) Critical Incident Appraisal Method In this method, a
supervisor describes critical incidents, giving details of both positive and neg
ative behavior of the employee. These are then discussed with the employee. The
discussion focuses on actual
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behavior rather than on traits. While this technique is well suited for performa
nce occur. That review may interviews, it has and the may drawback delay that th
e to supervisor has to note down the critical incidents as and when they be impr
actical, feedback 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 B
y Objectives The employees are asked to set or help set their own performance go
als. This avoids the feeling among employees that they are being judged by unfai
rly 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 e
nds up by imposing its standards and objectives. In some cases employees may not
like selfdirection or authority. To avoid such problems, the work standard ap
proach 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 empl
oyee has a clear understanding of their duties and knows well what is expected o
f them. Performance Appraisal and interview comments are related to these duties.
This makes the appraisal process objective and more accurate. However, it is dif
ficult 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 som
e form of ranking using pooled judgment.
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(viii) Ranking Methods: Some of the important forms of ranking for Performance Ap
praisal are given below, based on Oberg, 1972; and Monga, 1983: (a) Alteration Ra
nking Method The Individual With The Best performance is chosen as the ideal emp
loyee. Other employees are then ranked against this employee in descending order
of comparative performance on a scale of best to worst performance. The alterat
ion 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 membe
r in the group is determined. While this is a simple method, it is impractical f
or large groups. In addition, there may be wide variations in ability between ra
nks 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 othe
rs in the group. The evaluations received by each person in the group are counte
d and turned into percentage scores. The scores provide a fair idea as to how ea
ch individual in the group is judged by the assessor.
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(c) Person-to-Person Rating: In the person-to-person rating scales, the names of

the actual individuals known to all the assessors are used as a series of stand
ards. These standards may be defined as lowest, low, middle, high and highest pe
rformers. Individual employees in the group are then compared with the individua
ls used as the standards, and rated for a standard where they match the best. Th
e advantage of this rating scale is that the standards are concrete and are in t
erms of real individuals. The disadvantage is that the standards set by differen
t assessors may not be consistent. Each assessor constructs their own person-toperson scale which makes comparison of different ratings difficult.
(d) Checklist Method: The assessor is furnished with a checklist of pre-scaled d
escriptions of behavior, which are then used to evaluate the personnel being rat
ed (Monga, 1983). The scale values of the behavior items are unknown to the asse
ssor, who has to check as many items as she or he believes describe the worker b
eing assessed. A final rating is obtained by averaging the scale values of the i
tems that have been marked.
(e) Behaviorally Anchored Rating Scales (BARS): This is a relatively new techniq
ue. It consists of sets of behavioral statements describing good or bad performa
nce with respect to important qualities. These qualities may refer to inter-pers
onal relationships, planning and organizing abilities, adaptability and reliabil
ity. These statements are developed from critical incidents collected both from
the assessor and the subject.
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(f) Assessment centers: This technique is used to predict future performance of

employees were they to be promoted. The individual whose potential is to be asse
ssed has to work on individual as well as group assignments similar to those the
y would be required to handle were they promoted. The judgment of observers is p
ooled 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 rank
ing for each employee. It also involves subjective judgment by observers. A Perfo
rmance Appraisal system could be designed based on intuition, self-analysis, pers
onality traits, behavioral methods and result-based techniques. Different approa
ches and techniques could be blended, depending on the goals of Performance Appra
isal in the organization and the type of review. For example, management by objec
tives, goal-setting and work standard methods are effective for objective coachi
ng, counseling and motivational purposes. Critical incident appraisal is best su
ited when supervisor s personal assessment and criticism are essential. A carefu
lly developed and validated forced-choice rating can provide valuable analysis o
f the individual when considering possible promotion to supervisory positions. C
ombined graphic and essay form is simple, effective in identifying training and
development needs, and facilitates other management decisions.
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Banner Corporation Banks on Halogen for Talent and Learning and performance Mana
gement (For Practical Understanding)
Northwest U.S. based Banner Corporation has selected Halogen Software for a Webbased talent management system to streamline the employee Performance Appraisal pr
ocess and tightly integrate learning into its talent management process. Banner
Corporation, which operates commercial banks in Washington, Oregon and Idaho, is
focused on creating a tightly integrated talent management program, to ensure i
ts 1,200 employees are executing on the bank s strategic vision and delivering o
utstanding customer service. Halogen was selected following a review of more tha
n 20 talent and learning management vendors. "Our number one priority was to imp
rove our learning management processes, and we quickly realized that for this to
work, it was critical that we establish a tight link between employee performan
ce, 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 manag
ement needs."
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The new Web-based system will enable Banner Corporation to automate the employee
appraisal process driving consistency across the organization. Learning functio
ns, such as compliance training, will be tied into the appraisal process, and in
formation 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 Financial is starting Services with and a deployme
nt for of Halogen employee eAppraisal Multi-Rater
performance management and plans to build on the implementation with fully integ
rated Halogen eSuccession and eLMS modules. "The Halogen system is straightforwa
rd and easy to use, and everyone we ve worked with at the company has been wonde
rful," added Ellis. "We are looking forward to continuing to work with Halogen a
nd reaping the benefits of our new approach to talent management." Banner Corpor
ation joins financial services institutions across North America relying on Halo
gen, including AGF, International Finance Corporation, People s Bank and United
Bank and Trust. About Halogen Software A recognized industry leader with over 10
00 customers worldwide, Halogen Software makes powerful, simple-to-use and affor
dable employee performance and talent management applications. The company 360 o
ffers a complete suite of web-based products (pay that for automate, simplify an
d integrate employee Performance Appraisals, degree feedback, succession compensat
ion planning and management learning performance), management.
95

Halogen s offering makes HR best-practices accessible to companies of all sizes

and its healthcare, financial services and professional services specific suites
meet the unique needs of these industries. Halogen is consistently recognized b
y the industry and its customers for its exceptional implementation and support
services, and has won multiple awards for its corporate leadership and product i
nnovation, including HR Technology Product of the Year. For more information, vi
sit 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 offic
es in 29 counties in Washington, Oregon and Idaho. It is also the parent of Isla
nders Bank which operates three branch offices in Washington s San Juan Islands.
Banner serves the Pacific Northwest region with a full range of deposit service
s and business, commercial real estate, construction, residential, agricultural
and consumer loans.
96

Conclusion
To summarize our discussion we can say that the Performance Appraisal is an integr
al part of performance management and has become being the in important an compo
nent and of the HRM. Performance Performance management includes activities to e
nsure that goals are consistently met effective efficient manner. management can
focus on performance of the organization, banks, a department, processes to bui
ld a product or service, employees, etc Performance management reminds us that b
eing busy is not the same as producing results. It reminds us that training, str
ong commitment and lots of hard works alone are not results. The major contribut
ion of performance management is its focus on achieving results -- useful produc
ts and services for customers inside and outside the bank and organization. Perf
ormance management redirects our efforts away from busyness toward effectiveness
. Recently, organizations have been faced with challenges like never before. Inc
reasing competition from businesses across the world has meant that all business
es must be much more careful about the choice of strategies to remain competitiv
e. Everyone (and everything) in the organization must be doing what they re supp
osed to be doing to ensure strategies are implemented effectively. This situatio
n has put more focus on effectiveness, that systems and processes in the organiz
ation be applied in the right way to the right things: to achieve results. All o
f the results across the organization
97

must continue to be aligned to achieve the overall results desired by the organi
zation 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 managem
ent should be:

Strategic - it is about broader issues and longerIntegrated - it should link var

ious aspects of the
term goals

business, people management, and individuals and teams.

A
well
designed
Performance
Appraisal
system
helps
an
organization, bank

know and understand what is expected of them have the skills and ability to deli
ver on these are supported by the organization to develop the
expectations

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 t
he 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 Pe
rformance Appraisal the bank
98

can recognize its true personnel inventory and formulate the strategy for man po
wer planning and career development. Performance Appraisal directly affects the ot
her 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 indiv
idual objectives mainly in banking sector because of the dominancy of personal s
kill 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 recommenda
tion should not be given until its asked for but to keeping in the mind the acade
mic nature of the report we would like to recommend the followings o Management
and employees should see Performance Appraisal o Banks as a positive tools to dete
rmine the of organizational efficiency and effectiveness should use a well commu
nicative method
Performance Appraisal to avoid any resistance from the employees o The outcome of
the Performance Appraisal should be shared with the concerned employees and correc
tive action should be taken in the light of the outcome o Performance Appraisal sh
ould be treated as an integral part of the organizational development not just t
he formality o If the external agency is hired for Performance
Appraisal , it will be appreciated to remove the possibility of biasness o Perform
ance Appraisal should be done on both basis qualitative an quantitative o There s
hould be a cost and benefit study of Performance Appraisal process
100

Bibliography
1- Books and journals 2- Internal report of banks 3- Corporate bulletin and fina
nce magazine 4- Internet and banks website 5- Personal sources
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