ABOUT THE STUDY

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About the study
The study. ""Performance Appraisal" in Banking Sector". highlights the importance of
"Performance Appraisal" in special reference of banking industry. As we know the banking
sector is one of the fastest growing sectors of our country, the study highlights the perspective
of HR in banking sector.

In this study we strive to find out the need of "Performance Appraisal" for banks, and try to
understand how the "Performance Appraisal" is done in banking sector. In this study we take the
case of one of the leading bank, Bank of Baroda bank, as our sample and try to find out their
techniques used for "Performance Appraisal". This study refers to the need of "Performance
Appraisal" for banking industry, importance and emerging trends in the field of "Performance
Appraisal". For easy understanding of the study we have divided the entire study in to several
chapters that gives the specific nature of the subject in question.

We have highlighted several trends of banking industry, growth and prospect of banking in India,
history of Indian banking, Role of RBI as regulatory bank and the industrial importance bank as
an institute to march the nation in economic growth. Further we highlighted the role of HR, its
need and importance and "Performance Appraisal" as its one of the major tools. It signifies the
role of HR in organizational perspective and highlight the rationale of active HR polices in an
organization, this report takes the HR as managerial function rather than the staff activities. In
this report we try to make the role and concept of HRM understood for our readers.

The study is manly conducted on the basis of secondary data rather than the primary data. We
managed to collect the secondary data from Bank of Baroda and got the information about the
HR policy and process of the bank. In our study we highlighted the process of Bank of Baroda
"Performance Appraisal" mechanism and the manner in which "Performance Appraisal" takes
place in Bank of Baroda in special cases like the practical example of Bank of Baroda bank, the
study highlights:

A) Techniques,

B) Approach,

C) Forms,

D) Managerial approach,

E) Employees feedback,

F) Process and other real aspect of the "Performance Appraisal" that provides the realistic view
of the "Performance Appraisal" process that is carried out by the bank in actual work
environment. The study is conducted is a simple manner and most of the data is collected
through various sources. This study refers the "Performance Appraisal" technique as an
effective managerial tool to enhance the efficiency and effectiveness to achieve the

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organizational and individual goals. This study provides the theoretical knowledge about the
"Performance Appraisal's on the issue like

A) Need,

B) Importance,

C) Features,

D) Techniques,

E) Approaches,

F) Model,

G) Trends and other issues related to the banking industry.

This study refers to the role of "Performance Appraisal" in a wide and in a systematic manner
that takes place in a sequential way and covers almost all the aspect of the appraisal from
employees to organization under the universal approach called "Performance Management"

OBJECTIVES

Objective of the Study

 To understand the concept of HR in special reference of "Performance Appraisal"

 To understand the application of "Performance Appraisal" in banking sector

 To understand the practical aspect of "Performance Appraisal" in banking scenario

 To understand the modern trends emerging in "Performance Appraisal"

 To understand the management approach towards "Performance Appraisal"

 To understand the banking scenario of India To gain the knowledge of the practical process
of the "Performance • Appraisal"

 To view the aspect of "Performance Appraisal" from managerial perspective

 To highlight the effectiveness of "Performance Appraisal" in banking sector

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 To understand the need of "Performance Appraisal" for banking industry

Scope of the study

Following aspects are covered under this study: • A brief overview of the nature of the subject

• An introduction to the HR as a managerial function in special reference with ""Performance

Appraisal""

• New dimensions, techniques, approaches and thoughts in ""Performance Appraisal"".

Practical aspect of ""Performance Appraisal"" in Bank of Baroda bank

• Modern techniques emerging in ""Performance Appraisal"". • Need and importance of

"Performance Appraisal" in banking industry brief introduction of Indian banking industry

• Introduction to Bank of Baroda 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

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 RESEARCH
AND
METHODOLOGY

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

Research Design- Descriptive research design

Descriptive research design is a scientific method that is used in this study which helps in
observing and describing the behavior of a subject without influencing it in any way to obtain a
general overview of the subject. This design allows observation without affecting normal
behavior. It is also useful because it is not possible to test and measure the large number of
samples needed for more quantitative types of experimentation

These types of experiments are often used by anthropologists, psychologists and social
scientists to observe natural behaviors without affecting them in any way. It is also used by
market researchers to judge the habits of customers, or by companies wishing to judge the
morale of staff.

Though the results from a descriptive research can in no way be used as a definitive answer or
to disapprove a hypothesis but, if the limitations are understood, they can still be a useful tool in
many areas of scientific and normal study research such as this project.

Type of data - secondary data

Secondary data was used for this study as the research design is descriptive in nature so we
tried to collect the data available through other sources on the subject. Sometimes, 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

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Internet Journals

News papers

Personal sources

Sampling - judgmental sampling

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

on the judgment. This is usually an extension of convenience sampling. We have
decided to draw the entire sample from one "representative" bank even though the
population includes all banks. When using this method, we try to ensure that the chosen
sample is truly representative of the entire population.

Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees
and to understand the abilities of a person for further growth and development.
Performance appraisal is generally done in systematic ways which are as follows:

1. The supervisors measure the pay of employees and compare it with targets and
plans.

2. The supervisor analyses the factors behind work performances of employees.

3. The employers are in position to guide the employees for a

better performance.

Objectives of Performance Appraisal

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 Performance Appraisal can be done with following objectives in

mind:

1. To maintain records in order to determine compensation

packages, wage structure, salaries raises, etc.

2. To identify the strengths and weaknesses of employees to place right men on right
job.

3. To maintain and assess the potential present in a person for further growth and
development.

4. To provide a feedback to employees regarding their performance and related status.

5. To provide a feedback to employees regarding their performance and related status.

6. It serves as a basis for influencing working habits of the employees.

7. To review and retain the promotional and other training programmers.

Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be
justified by following advantages:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion
programmes for efficient employees. In this regards, inefficient workers can be
dismissed or demoted in case.

2. Compensation: Performance Appraisal helps in chalking out compensation

packages for employees. Merit rating is possible through performance appraisal.
Performance Appraisal tries to give worth to a performance. Compensation packages
which include bonus, high salary rates, extra benefits, allowances and pre-requisites are
dependent on performance appraisal. The criteria should be merit rather than seniority.

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3. Employees Development: The systematic procedure of performance appraisal
helps the supervisors to frame training policies and programmers. It helps to analyze
strengths and weaknesses of employees so that new jobs can be designed for efficient
employees. It also helps in framing future development programmes.

4. Selection Validation: Performance Appraisal helps the supervisors to understand

the validity and importance of the selection procedure. The supervisors come to know
the validity and thereby the strengths and weaknesses of selection procedure. Future
changes in selection methods can be made in this regard.

5. Communication: For an organization, effective communication between employees

and employers is very important. Through performance appraisal, communication can
be sought for in the following ways:

a. Through performance appraisal, the employers can understand and accept skills of
subordinates.

b. The subordinates can also understand and create a trust and confidence in superiors.

c. It also helps in maintaining cordial and congenial labor management relationship.

d. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

6. Motivation: Performance appraisal serves as a motivation tool. Through evaluating

performance of employees, a person's efficiency can be determined if the targets are
achieved. This very well motivates a person for better job and helps him to improve his
performance in the future.

Performance Appraisal Tools and Techniques

Following are the tools used by the organizations for Performance Appraisals of their
employees.

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1. Ranking

2. Paired Comparison

3. Forced Distribution

4. Confidential Report

5. Essay Evaluation

6. Critical Incident

7. Checklists

8. Graphic Rating Scale

9. BARS

10. Forced Choice Method

11. MBO

12. Field Review Technique

13. Performance Test

We will be discussing the important performance appraisal tools and techniques in

detail.

 Ranking Method
The ranking system requires the rater to rank his subordinates on overall performance.
This consists in simply putting a man in a rank order. Under this method, the ranking of
an employee in a work group is done against that of another employee. The relative
position of each employee is tested in terms of his numerical rank. It may also be done
by ranking a person on his job performance against another member of the competitive
group.

 Advantages of Ranking Method

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I. Employees are ranked according to their performance levels.

II. It is easier to rank the best and the worst employee.

 Limitations of Ranking Method

III. The "whole man" is compared with another "whole man" in this method. In practice, it
is very difficult to compare individuals possessing various individual traits.

IV. This method speaks only of the position where an employee stands in his group. It
does not test anything about how much better or how much worse an employee is
when compared to another employee.

V. When a large number of employees are working, ranking of individuals become a

difficult issue.

VI. There is no systematic procedure for ranking individuals in the organization. The
ranking system does not eliminate the possibility of snap judgments.

 Forced Distribution method

This is a ranking technique where raters are required to allocate a certain percentage of
rates to certain categories (eg: superior, above average, average) or percentiles (eg: top
10 percent, bottom 20 percent etc). Both the number of categories and percentage of
employees to be allotted to each category are a function of performance appraisal
design and format. The workers of outstanding merit may be placed at top 10 percent
of the scale, the rest may be placed as 20% good, 40% outstanding, 20%.

 Advantages of Forced Distribution

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1. This method tends to eliminate raters bias

2. By forcing the distribution according to pre-determined percentages, the problem of

making use of different raters with different scales is avoided.

Limitations of Forced Distribution

3. The limitation of using this method in salary administration, however, is that it may
lead low morale, low productivity and high absenteeism.

Employees who feel that they are productive, but find themselves in lower grade (than
expected) feelfrustrated and exhibit over a period of time reluctance to work.

 Critical Incident techniques

Under this method, the manager prepares lists of statements of very effective and
ineffective behavior of an employee. These I critical incidents or events represent the
outstanding or poor behavior of employees or the job. The manager maintains logs of
each employee, whereby he periodically records critical incidents of the workers
behavior. At the end of the rating period, these recorded critical incidents are used in the
evaluation of the worker's performance. Example of a good critical incident of a
Customer Relations Officer is: March 12 - The Officer patiently attended to a customer's
complaint. He was very polite and prompts in attending the customer's problem.

 Advantages of Critical Incident techniques

1. This method provides an objective basis for conducting a thorough discussion of an

employee's performance.

2. This method avoids recency bias (most recent incidents are too much emphasized)

 Limitations of Critical Incident techniques

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3. Negative incidents may be more noticeable than positive incidents.

4. The supervisors have a tendency to unload a series of complaints about the

incidents during an annual performance review sessions.

5. It results in very close supervision which may not be liked by an employee.

6. The recording of incidents may be a chore for the manager concerned, who may be
too busy or may forget to do it.

 Checklists and Weighted Checklists

In this system, a large number of statements that describe a specific job are given. Each
statement has a weight or scale value attached to it. While rating an employee the
supervisor checks all those statements that most closely describe the behavior of the
individual under assessment. The rating sheet is then scored by averaging the weights
of all the statements checked by the rater. A checklist is constructed for each job by
having persons who are quite familiar with the jobs. These statements are then
categorized by the judges and weights are assigned to the statements in accordance
with the value attached by the judges.

 Advantages of Checklists and Weighted Checklists

1. Most frequently used method in evaluation of the employee's performance.

 Limitations of Checklists and Weighted Checklists

2. This method is very expensive and time consuming

3. Rater may be biased in distinguishing the positive and negative questions.

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4. It becomes difficult for the manager to assemble, analyze and weigh a number of
statements about the employee's characteristics, contributions and behaviors.

There are several techniques of "Performance Appraisal", each with some strong points
as well as limitations. Oberg (1972) has summarized some of the commonly used
"Performance Appraisal" techniques.

 Graphic Rating Scale

A graphic scale 'assesses a person on the quality of his or her work (average; above
average; outstanding; or unsatisfactory).' Assessment could also be trait centered and
cover observable traits, such as reliability, adaptability, communication skills, etc.
Although graphic scales seem simplistic in construction, they have application in a wide
variety of job responsibilities and are more consistent and reliable in comparison with
essay appraisal. The utility of this technique can be enhanced by using it in conjunction
with the essay appraisal technique.

 Management By Objectives
The employees are asked to set or help set their own performance goals. This avoids
the feeling among employees that they are being judged by unfairly high standards. This
method is currently widely used, but not always in its true spirit. Even though the
employees are consulted, in many cases management ends up by imposing its
standards and objectives. In some cases employees may not like 'self-direction or
authority. To avoid such problems, the work standard approach is used.

 Paired Comparison:
The paired comparison method systematizes ranking and enables better comparison
among individuals to be rated. Every individual in the group is compared with all others
in the group. The evaluations received by each person in the group are counted and
turned into percentage scores. The scores provide a fair idea as to how each individual
in the group is judged by the assessor.

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

 Assessment centers
This technique is used to predict future performance of employees were they to be
promoted. The individual whose potential is to be assessed has to work on individual as
well as group assignments similar to those they would be required to handle were they
promoted. The judgment of observers is pooled and paired comparison or alteration
ranking is sometimes used to arrive at a final assessment. The final assessment helps
in making an order-of-merit ranking for each employee. It also involves subjective
judgment by Observers.

A "Performance Appraisal" system could be designed based on intuition, self-analysis,

personality traits, behavioral methods and result-based techniques. Different
approaches and techniques could be blended, depending on the goals of "Performance
Appraisal" in the organization and the type of review. For example, management by
objectives, goal setting and work standard methods are effective for objective coaching,
counseling and motivational purposes. Critical incident appraisal is best suited when
supervisor's personal assessment and criticism are essential.

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

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 Performance Appraisal Biases
Managers commit mistakes while evaluating employees and their performance. Biases
and judgment errors of various kinds may spoil the performance appraisal process. Bias
here refers to inaccurate distortion of a measurement. These are:

1. First Impression (primacy effect): Raters form an overall impression about the ratee
on the basis of some particular characteristics of the ratee identified by them. The
identified qualities and features may not provide adequate base for appraisal.

2. Halo Effect: The individual's performance is completely appraised on the basis of a

perceived positive quality, feature or trait. In other words this is the tendency to rate
a man uniformly high or low in other traits if he is extra- ordinarily high or low in one
particular trait. If a worker has few absences, his supervisor might give him a high
rating in all other areas of work.

3. Horn Effect: The individual's performance is completely appraised on the basis of a

negative quality or feature perceived. This results in an overall lower rating than may
be warranted. "He is not formally dressed up in the office. He may be casual at work
too!"

4. Excessive Stiffness or Lenience: Depending upon the raters own standards, values
and physical and mental makeup at the time of appraisal, ratees may be rated very
strictly or leniently. Some of the managers are likely to take the line of least

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 resistance and rate people high, whereas others, by nature, believe in the tyranny of
exact assessment, considering more particularly the drawbacks of the individual and
thus making the assessment excessively severe. The leniency error can render a
system ineffective. If everyone is to be rated high, the system has not done anything
to differentiate among the employees.

5. Central Tendency: Appraisers rate all employees as average performers. That is, it is
an attitude to rate people as neither high nor low and follow the middle path. For
example, a professor, with a view to play it safe, might give a class grade near the
equal to B, regardless of the differences in individual performances.

6. Personal Biases: The way a supervisor feels about each of the individuals working
under him whether he likes or dislikes them as a tremendous effect on the rating of
their performances. Personal Bias can stem from various sources as a result of
information obtained from colleagues, considerations of faith and thinking, social
and family background and so on.

7. Spillover Effect: The present performance is evaluated much on the basis of past
performance. "The person who was a good performer in distant past is assured to
be okay at present also".

8. Recency Effect: Rating is influenced by the most recent behavior ignoring the
commonly demonstrated behaviors during the entire appraisal period.

Therefore while appraising performances, all the above biases should be avoid.

Communicating Performance Appraisals

Performance appraisals enable superiors to know what their team members are upto,
evaluate their performances and also give them correct feedbacks so that they know
where they are lacking and work on their shortcomings.

The term "Performance Appraisal" generally causes anxiety among employees, which
definitely should not be the case. You really do not have to worry about your appraisal if
you have worked hard throughout the year.

There is definitely a certain way appraisals need to be communicated among

employees. There are organizations where management tends to create unnecessary

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hype about performance appraisal. In such a scenario, trust me, employees think only
about their appraisals and find it extremely difficult to concentrate on their routine
affairs. The appraisal process certainly should not disturb your daily schedule.

Let us understand how performance appraisal needs to be communicated

among employees.
The rating procedure, appraisal form or any other related information ought to be sent
to each and every individual separately. Do not mark a common mail to everyone. If you
do not want to take the pain of sending separate mails to everyone, create a common
login id where each and every individual can register using their passwords and pull out
the appraisal form. The appraisal form generally has information about employee's
designation, grade, level in the hierarchy, responsibilities and thus must be kept
confidential.

Counseling needs to be done on a one on one basis.

Address their queries, confusions in private. Remember, appraisal is a very sensitive
subject and should be handled gracefully. Call the employees one by one either in your
cabin or conference room and try to find out if they need any help or guidance. Trust me,
if you call them in a group, they would never open up. It is unethical to discuss one's
performance or salary in public.

Once the appraisals are done, communicating the same to the employees is another big
challenge. The increment letters or appraisal letters should be handed over to the
employees either by the functional head or human resource team personally. Do not ask
your office peon to distribute the letters. Trust me, it is very insulting. You are not doing
any charity. It is their right.

Employee attrition is one of the major problems faced by organizations

after performance appraisal.
Employees who work only for money quit after a salary hike to negotiate further with
any other organization. Individuals who do not get satisfactory appraisal in any case get
demotivated and look for a change. Any employee who does not agree to his/her

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appraisal or feel has not got what he/she deserves needs to be addressed at the
earliest. Sit with the individual concerned and try to make him/her understand as to why
he/she has got a certain rating. Employees cannot always be wrong. If you feel, an
employee deserves slightly more than what he has got, kindly reconsider your decision.
Remember, it is always better to give a decent salary hike to talented employees than
losing them. After all, if they leave, you in any case have to spend time and energy
searching for a replacement.

Employees need to be motivated after their appraisals.

Congratulate each and every one irrespective of their salary hike or promotion.
Appreciate everyone for being consistent and most importantly loyal towards the
organization. Make sure no one feels left out. Sit with them, give them new realistic
targets and guide them as to how can they work together, come out with more
innovative ideas and show better performances in the years to come.

Performance appraisal should not be the only method to evaluate or acknowledge

employee's performance. Do not be rude to employees who did not perform well. It is
absolutely okay to handhold them and give a second chance.

Understand where the individual went wrong.

All negativities and confusions would disappear if you make the individual understand
where all he/she lacked and why his counterpart has got a decent appraisal while
he/she has not? Yes, employees at this point of time are really not in a mood to listen to
their superiors but you have to assure them that as a Boss, you are always there with
them and would certainly help in future as well. Understand if at all the individual is
facing any problem or not and most importantly try to provide a solution. Yes, after a
bad appraisal, employees tend to become negative but as a Boss it is your responsibility
to change their perception.

Let them speak and come out with their frustrations. Employees should also be careful
with their words. Never cross your limits. Handhold such employees and provide
necessary guidance whenever required. Send them a motivational email. Such small

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initiatives go a long way in motivating employees so that they become a little more
serious and come back with a bang. Make them understand that this is just a temporary
phase and should not act as a demotivating factor for them. Encourage them to work in
unison with their fellow workers, read a lot and most importantly believe in the
organization and its process.

 Personnel Records

Personnel Records are records pertaining to employees of an organization. These

records are accumulated, factual and comprehensive information related to concern
records and detained. All information with effect to human resources in the
organization is kept in a systematic order. Such records are helpful to a manager in
various decisions -making areas.

Personnel records are maintained for formulating and reviewing personnel policies and
procedures. Complete details about all employees are maintained in personnel records,
such as, name, date of birth, marital status, academic qualifications, professional
qualifications, previous employment details, etc.

Types of Personnel Records

1. Records of employment contain applicants past records, list sources, employee's

progress, medical reports, etc.

2. Wages and salaries records contain pay roll records, methods of wages and salaries,
leave records, turnover records and other benefit records.

3. Training and development contains appraisal reports, transfer cases, training

schedule, training methods.

4. Health and safety records include sickness reports, safety provisions, medical
history, insurance reports, etc.

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5. Service Records are the essential records containing bio- data, residential and family
information, academic qualifications, marital status, past address and employment
records.

Purposes of Personnel Records

According to the critics of personnel records, this system is called as wastage of time
and money. According to personnel records, followers of this: Dale Yoder, an economist
of Michigan University, USA has justified the significance of personnel records after
making an in-depth study.

1. It helps to supply crucial information to managers regarding the employees.

2. To keep an update record of leaves, lockouts, transfers, turnover, etc. of the

employees.

3. It helps the managers in framing various training and development programmes on

the basis of present scenario.

4. It helps the government organizations to gather data in respect to rate of turnover,

rate of absenteeism and other personnel matters.

5. It helps the managers to make salary revisions, allowances and other benefits
related to salaries.

6. It also helps the researchers to carry in- depth study with respect to industrial
relations and goodwill of the firm in the market.

Therefore, personnel records are really vital for an organization and are not a wasteful
exercise.

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 Employee Stress - Strategies for managing stress at
workplace

What is Employee Stress?

Employees stress is a growing concern for organizations today. Stress can be

defined as a lively circumstance in which people face constraints, opportunities, or loss
of something they desire and for which the consequence is both unpredictable as well
as crucial. Stress is the response of people to the unreasonable/excessive pressure or
demands placed on them.

Stress is not always negative. It may also bring out the best in individuals at times. It
may induce an individual to discover innovative and smarter way of doing things. This
positive dimension of stress is called as enstress. But usually, the term stress has a
negative implication and this negative aspect of stress is termed as distress. For
instance When a subordinate is harassed or warned by his superior, unhappiness of
unsuitable job, etc. We can say that "Stress causes some people to break, and other to
break records."

Symptoms of Stress
Some of the symptoms of stress at workplace are as follows-

 Absenteeism, escaping from work responsibilities, arriving , leaving early, etc.

 Deterioration in work performance, more of error prone work, memory loss, etc.

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 Cribbing, over-reacting, arguing, getting irritated, anxiety,etc.

 Deteriorating health, more of accidents, etc.

 Improper eating habits (over-eating or under-eating), excessive smoking and drinking,

sleeplessness, etc.

It is thus very essential to have effective stress management strategies in an

organization so that the detrimental repercussions of stress on the employees as well
as their performance can be reduced and controlled.

Sources/Causes of Stress
.
The factors leading to stress among individual are called as stressors. Some of the
factors/stressors acting on employees are-

 Organizational factors- With the growth in organizational stress and complexity,

there is increase in organizational factors also which cause stress among
employees. Some of such factors are-

a. Discrimination in pay/salary structure

b. Strict rules and regulations

c. Ineffective communication

d. Peer pressure

e. Goals conflicts/goals ambiguity.

f. More of centralized and formal organization Structure.

g. Less promotional opportunities h. Lack of employees participation in decision-

making.

h. Excessive control over the employees by the managers

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 Individual factors- There are various expectations which the family members,
peer, superior and subordinates have from the employee. Failure to understand such
expectations or to convey such expectations lead to role ambiguity/role conflict
which in tum causes employee stress. Other individual factors causing stress
among employees are inherent personality traits such as being impatient,
aggressive, rigid, feeling time pressure always, etc. Similarly, the family issues,
personal financial problems, sudden career changes all lead to stress.

 Job concerning factors- Certain factors related to job which cause stress
among employees are as follows-

a. Monotonous nature of job

b. Unsafe and unhealthy working conditions

c. Lack of confidentiality

d. Crowding

 Extra-organizational factors- There are certain issues outside the organization

which lead to stress among employees. In today's modern and technology savvy
world, stress has increased. Inflation, technological change, social responsibilities
and rapid social changes are other extra- organizational factors causing stress.

Strategies for Managing Stress

Stress experienced by the employees in their job has negative impact on their health,
performance and their behavior in the organization. Thus, stress needs to be managed
effectively so as to set off these harmful consequences. Strategies for managing stress
are as follows-

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Organizational strategies for managing stress
Encouraging more of organizational communication with the employees so that there is
no role ambiguity/conflict. Effective communication can also change employee views.
Managers can use better signs and symbols which are not misinterpreted by the
employees.

1. Encourage employees' participation in decision-making. This will reduce role stress.

2. Grant the employees greater independence, meaningful and timely feedback, and
greater responsibility.

3. The organizational goals should be realistic, stimulating and particular.

4. The employees must be given feedback on how well they are heading towards these
goals.

5. Encourage decentralization.

6. Have a fair and just distribution of incentives and salary structure.

7. Promote job rotation and job enrichment.

8. Create a just and safe working environment.

9. Have effective hiring and orientation procedure.

10. Appreciate the employees on accomplishing and over- exceeding their targets.

Individual strategies for managing stress

1. The employees should make a "to-do" list daily, prioritize the acts in the list and plan
the acts accordingly. Take regular breaks during work to relax you. By effective time
management, the employees can achieve their targets timely and can meet work
pressures and, thus, avoid stress.

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2. Do hard work. Strive to achieve your goals but do not do it to the harm of family,
health, or peer.

3. Indulge in physical exercises. It helps in effective blood circulation, keeps you fit,
diverts mind from work pressures.

4. Encourage a healthy lifestyle. Take a regular sleep, have plenty of water, have
healthy eating habits. Promote relaxation techniques such as yoga, listening music
and meditation.

5. The employees should have optimistic approach about their work. They should avoid
connections with negative approach employees.

6. The employees should have emotional intelligence at workplace. They should have
self-awareness, self-confidence and self-control at workplace.

7. The employees should build social support. They should have close connections
with trustworthy peer who can listen to their problems and boost their confidence
level. This social network will help the employees to overcome stress.

8. Employee counseling is a very good strategy to overcome employee stress. Through

counseling, employees can become aware of their strengths and how to develop
those strengths; their weaknesses and how to eliminate them; and they can develop
strategies for changing their behavior. Employees are also given career counseling
which helps in reducing their ambiguities with regard to career.

9. Find a fun way to release stress, such as, cracking jokes, playing tennis, golf, etc.

26
10. Do not remain pre-occupied with yourself. Turn your focus outwards. Help others.
This will release some stress.

Employee Stress is negatively correlated to their work performance.

In short, more the level of stress, lower is the performance. It was conventionally
perceived that reasonable levels of stress would boost the employees and improve their
work performance. But this perception no longer holds true. Today it is believed that
even a little bit of stress will inhibit employees' work performance. This is due to:

 Even relatively slight stress distracts an employee. People facing stress concentrate
more on the repulsive feelings and emotions rather than on the work/job at hand and
consequently their work performance suffers. Stress affects people's intellectual,
emotional, and interpersonal functioning.

 Extended or repeated exposure even to minor levels of stress may have detrimental
effects on health and this might lower employee's work performance.

 It has been researched that as stimulation increases, work performance initially

increases, but after a point of time begins declining. The exact location of this
variation point (at which the function's direction or trend reverses) appear to depend
on the complication of the work/task/job being performed. The more the work
complication, the less the stimulation levels at which a decline in performance
occurs.

 Employees under stress lose their creativity and innovativeness. Their thinking ability
is narrowed.

But there are certain exceptions to the rule that stress interferes with work performance.
For instance, some people are at their best in times of calamity / crises. They meet the
expectations and show remarkable performance at times of great stress. This may
stem out from the fact that they have great expertise in the tasks being performed,
making their variation/inflection as very high. People who have exceptional skills and

27
competencies at a task may cognitively evaluate a possibly stressful scenario as a
challenge and not as a threat.

Thus, while concluding we can say that whether stress can spoil or increase
performance is dependent on factors such as work complication, the skills and
expertise of the employee in performing a task, personal traits of individuals/employees
involved, etc. Organizations which encourage an open and honest communication
develop an environment in which employees are less likely to be stressed out, enabling
the employees to best utilize their abilities and skills and, thus, stimulating the
employees work performance.

Employee Discipline and Features of a Sound Disciplinary System

Discipline is viewed from two angles/dimensions:

Positive Discipline: Positive Discipline implies discipline without punishment. The main
aim is to ensure and encourage self-discipline among the employees. The employees in
this case identify the group objectives as their own objectives and strive hard to achieve
them. The employees follow and adhere to the rules and regulations not due to the fear
of punishment but due to the inherentdesire to harmonize in achieving organizational
goals. Employees exercise self-control to meet these goals.

Negative Discipline: Employees adhere to rules and regulations in fear of punishment

which may be in form of fines, penalties, demotions or transfers. In this case, the
employees do not perceive organizational goals as their own goals. The action taken by
the management to ensure desired standard of behavior/code of conduct from the
employees in an organization is called negative discipline. The fear of punishment
prevents the employees from going off-track.

28
Characteristics of a Sound Disciplinary System (Red Hot Stove Rule)

Discipline should be imposed without generating resentment. Mc Gregor propounded

the "red hot stove rule" which says that a sound and effective disciplinary system in an
organization should have the following characteristics-

1. Immediate- Just as when you touch a red hot stove, the burn is immediate, similarly
the penalty for violation should be immediate/ immediate disciplinary action must be
taken for violation of rules.

2. Consistent- Just as a red hot stove burns everyone in same manner; likewise, there
should be high consistency in a sound disciplinary system.

3. Impersonal-Just as a person is burned because he touches the red hot stove and
not because of any personal feelings, likewise, impersonality should be maintained
by refraining from personal or subjective feelings.

4. Prior warning and notice- Just as an individual has a warning when he moves closer
to the stove that he would be burned on touching it, likewise, a sound disciplinary
system should give advance warning to the employees as to the implications of not
conforming to the standards of behavior/code of conduct in an organization.

In short, a sound disciplinary system presupposes-

1. Acquaintance/Knowledge of rules- The employees should be well aware of the

desired code of conduct/standards of behavior in the organization. This code of
discipline should be published in employee handbook.

2. Timely action- Timely enquiry should be conducted for breaking the code of conduct
in an organization. The more later the enquiry is made, the more forgetful one
becomes and the more he feels that punishment is not deserved.

3. Fair and just action- There should be same punishment for same offence/
misconduct. There should be no favoritism. Discipline should be uniformly enforced
always.

29
4. Positive approach- The disciplinary system should be preventive and not punitive.
Concentrate on preventing misconduct and not on imposing penalties. The
employees should not only be explained the reason for actions taken against them
but also how such fines and penalties can be avoided in future.

Types of Penalties for Misconduct/Indiscipline

For not following the standards of behavior/code of conduct in an organization, there

are two kinds of penalties categorized as-

a. Major penalties- This transfer, discharge, withholding increments, etc. includes

demotion, dismissal,

b. Minor penalties- This includes oral warning, written warning, fines, loss of privileges,
etc.

Employee Grievance - Effective Ways of Handling Grievance

Employee Training Benefits and Steps in Employee Training Programme

Training implies enhancing the skills and knowledge of the employees for performing a
specific job. Training tries to improve employees' performance in current job and
prepares them for future job. The crucial consequence of training is learning.

Objectives of Employee Training Programmes

1. To prepare employees to meet the varying and challenging needs of the job and
organization.

30
2. To provide knowledge and skills to new entrants and to help them to perform their
role and job well.

3. To coach employees for more complex and higher level jobs.

4. To educate employees new and innovative ways and techniques of performing job.

Benefits of Trained Employees

Training is a significant tool for employee development. Training has assumed great
importance because of exceptional rate of change in the internal and external
organizational environment. The importance/benefits of trained personnel towards
organizational development are as follows-

a) Trained employees do not require tight control and supervision as they are well
aware of how to perform a job.

b) Trained employees can show higher performance by making optimum and best
utilization of the materials, tools, equipments and other resources provided to them.

c) Trained employees minimize wastages of resources in the organization and work

both efficiently and effectively.

d) Training makes employees more committed to organization as the employees are

provided with growth, an advancement and learning opportunities.

e) Training develops a line of proficient and skilled managers as it prepares employees

for complex and higher level tasks.

f) Trained employees adjust to the job better and there are fewer rates of absenteeism
and turnover.

g) Trained employees produce quality and quantity output.

h) Trained employees enable the organization to face competition from rival firms.

i) Trained employees can respond and adapt to the changing technology well. j.
Trained employees become more proficient and, thus, their earning potential
increase.

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Steps in Employee Training Programme

Training programme involves the following steps:

1. Identifying the training needs- The training needs of each employee should be
identified. Programmes should be developed that are best suited to their needs.

2. Prepare the trainer- The trainer must do his home work well. He should know both
what to teach and how to teach. Time management is required by the trainer.
Training should be delivered in such a manner that the trainee should not lose the
interest in the job.

3. Prepare the trainee- The trainee should remain active during training. He should
know that why is he being trained He should put across the trainer questions and
doubts. The trainee should be put at ease during the training programme.

4. Explain and demonstrate the operations- The trainer should explain the logical
sequence of the job. The trainee should perform the job systematically and explain
the complete job he is performing. His mistakes should be rectified and the complex
step should be done for him once. When the trainee demonstrates that he can do
the job in right manner, he is left to himself. Through repetitive practices, the trainee
acquires more skill.

5. Follow up and feedback- The trainee should be given feedback on how well he
performed the job. He should be asked to give a feedback on the effectiveness of
training programme.

Methods of Training Employees at Workplace 360 Degree Feedback

360 Degree Feedback - Advantages & Pre-requisites

 The top level management must be keen to spend their time and efforts in giving
feedback to their subordinates.

 Status and ego issues shouldn't overwhelm in the organization.

 The subordinates and the peer both should assess and analyze the top-level

32
 managers and the top-level management should be open to accept their feedback.

 Everyone in the organization should take the feedback considerately and

constructively and utilize it for their development.

 Ethics and moral values should be predominant in organization.

 The organization should encourage teamwork.

 There should be self- learning in the organization, especially for the managers.

 The personnel department of the organization should be highly credible.

 There should be no politics in the organization.

 Everyone in the organization should take the feedback seriously and should make an
attempt to benefit from the same.

 It must be ensured that the feedback is confidential.

Following are the essentials of analyzing the candidate's (employee's) preparedness

for the 360 degree approach-

 The employee should have an intention to be better.

 The employee should be open to accept the feedback and should respect the views
of others.

 The employee should have a competitive feeling.

 The employee should be keen in knowing the viewpoints of others towards him.

 The employee should always learn on the job.

33
What is Employee Performance Management?
Employee Performance Management is a process for establishing a shared workforce
understanding about what is to be achieved at an organization level. It is about aligning
the organizational objectives with the employees' agreed measures, skills, competency
requirements, development plans and the delivery of results. The emphasis is on
improvement, learning and development in order to achieve the overall business
strategy and to create a high performance workforce.

History of Performance Management

Performance Management began around 60 years ago as a source of income

justification and was used to determine an employee's wage based on performance.
Organizations used Performance Management to drive behaviors from the employees
to get specific outcomes. In practice this worked well for certain employees who were
solely driven by financial rewards. However, where employees were driven by learning
and development of their skills, it failed miserably. The gap between justification of pay
and the development of skills and knowledge became a huge problem in the use of
Performance Management. This became evident in the late 1980s; the realization that a
more comprehensive approach to manage and reward performance was needed. This
approach of managing performance was developed in the United Kingdom and the
United States much earlier than it was developed in Australia.

34
In recent decades, however, the process of managing people has become more
formalized and specialized. Many of the old performance appraisal methods have been
absorbed into the concept of Performance Management, which aims to be a more
extensive and comprehensive process of management. Some of the developments that
have shaped Performance Management in recent years are the differentiation of
employees or talent management, management by objectives and constant monitoring
and review. Its development was accelerated by the following factors:

The introduction of human resource management as a strategic driver and integrated

approach to the management and development of employees; and

The understanding that the process of Performance Management is something that's

completed by line managers throughout the year it is not a once off annual event
coordinated by the personnel department.

How Annual Appraisals are Different But Part of Performance Management

Most organizations have some type of employee appraisal system, and many are
experiencing the shortcomings of manual staff evaluation systems. When discussing
workforce performance the most commonly asked question is "How does Performance
Management differ from performance appraisals or staff reviews"? Performance
Management is used to ensure that employees' activities and outcomes are congruent
with the organization's objectives and entails specifying those activities and outcomes
that will result in the firm successfully implementing the strategy.An effective
Performance Management process establishes the groundwork for excellence by:

 Linking individual employee objectives with the organization's mission and strategic
plans. The employee has a clear concept on how they contribute to the achievement
the overall business objective,

 Focusing on setting clear performance objectives and expectations through the use
of results, actions and behaviors,

 Defining clear development plans as part of the process, and

 Conducting regular discussions throughout the performance cycle which include

such things as coaching, mentoring,feedback and assessment.

35
Performance appraisal properly describes a process of judging past performance and
not measuring that performance against clear and agreed objectives. Performance
Management shifts the focus away from just an annual event to an on-going process.is
a process diagram that provides a graphical view of the major differences between the
two processes.

Graphical view of the difference between Performance Appraisal and Management

Typical Outcomes from Annual Appraisals

Most recent research suggests that annual staff reviews are generally perceived as a
difficult and painful process by both managers and employees. As there are typically no
objectives which are set in appraisal systems, there is no link to strategic or operational
outcomes. If the CEO's objective was to increase margins by 3%, employees may be
aware of the CEO's intent but they are usually not measured on this objective in their
individual appraisal. Therefore, there is no linkage in the appraisal review and no linkage
at a team or department level.

36
Misdirected Bonuses

This situation has been illustrated many times where employees and managers have
received favorable reviews and bonuses and yet the organization has not achieved its
goals. The organization may be losing millions of dollars and yet still paying out
bonuses to its managers and employees.

Too Painful, Emotionally Charged

High stress levels for both managers and employees also become a factor. They both
know they will be judged on the outcome of the appraisal and the fallout is often
destructive rather than constructive. The reasoning behind this is that there are rarely
any pre-defined measures or objectives and the employee review is not based on any
considered evaluation criteria. The employees' remuneration and future are at stake and
the goodwill of the managers future resources are also at stake. This leads to high
stress in the case of both individuals and this is a poor emotional state in which to have
a thorough discussion about employee performance.

Poor Understanding of Expectations

Where the appraisal system is poorly communicated, both the employee and manager
enter these discussions with low confidence levels. This is due to a lack of "rules" as to
how to go about the appraisal process and a lack of understanding of the expected
outcomes. As this process is infrequent, it is viewed by the employee as an opportunity
to discuss remuneration, promotion prospects and other issues related to the employee.
This means the discussion is dominated by employee content rather than what the
manager needs the employee to do for the next year. This leads to vague definition of
performance goals and perpetuates the system of poorly defined and executed
appraisals.

As an annual staff review is so infrequent, both managers and employees find it difficult
to remember what actually happened during the year. Both typically come to the
meeting ill prepared with little meaningful content to discuss. This makes the appraisal
more difficult and frustrates both the employee and manager.

37
Bad Timing
More often than not, the annual appraisal is executed on the employees' anniversary
which does not coincide with any particular performance period. If appraisals are
conducted annually on the anniversary date, it is only possible to align at best only 50%
of your staff with future objectives, assuming there is an even distribution of start dates
across the employee workforce. Given that most appraisal systems are not automated,
there is poor reporting and therefore low visibility as to who did or did not achieve their
objectives.

Subjective Manager Opinion

This means that an employees' future is wholly dependent on their manager's highly
subjective opinion. The CEO or other executive management does not have clear vision
as to who achieved their objectives and who did not. The outcome for the CEO is that
they do not have the ability to see failure as it is occurring. Instead, they see failure after
the fact and radical adjustments are then required to repair the situation. By using
standalone appraisal systems, the outcome for the line manager is that they have
additional pressure applied to them, to fix a problem which has become a major issue
and which could have been otherwise identified and fixed in a very timely fashion.

Performance Not Aligned to Promotions

Given that annual appraisals are only conducted once yearly, most line managers only
seriously think and plan once a year. The consequences are poor resource management,
put-out-the-fire management and costly and reactive problem fixing on the fly. Given
that most appraisal systems are manual and on paper, the data arising from an
excellent performance typically does not find its way into the succession planning
process. Employees are therefore often disillusioned to find that they have been
passedover for further development or a promotion when they have. performed strongly
for several years.

38
Poor Development Opportunities
This is a primary cause for employees leaving the organization. Most appraisal systems
do not feature a competency assessment or an active development plan that both the
employee and manager have mutually agreed to. Staff often gets disillusioned and
leaves the organization if they can see no personal development prospects or if
personal development has not occurred in practice for the last several years, despite
numerous promises.

No Consequence for Non-Participation

Given that most appraisal systems are manual, reporting is weak and therefore
compliance reporting is not visible. This inevitably means that managers learn that they
do not have to perform reviews and therefore they don't because there is no negative
consequence for them. Equally, employees learn that there is no consequence to not
being reviewed, they lose faith in management and invariably look for somewhere else
to work. Most manual appraisal systems suffer from sub 30% compliance and can get
to this point after only 18 months of operation i.e. roughly one to one and a half
performance terms.

Typical Outcomes from Performance Management

If Performance Management is implemented correctly with specific objectives tied to
the strategic and operational plan, organizational performance outcomes will likely
increase very quickly. For example, if the CEO asked for a 3% increase in gross margin,
this objective would be cascaded down to every department, team and individual who
can influence the increase in gross margin. Those who are successful at achieving this
objective will get a favorable review, those that could not, will get an unfavorable
performance evaluation in the absence of extenuating circumstances. The process of
Performance Management therefore drives organizational performance outcomes.
Employees that achieve the organizational goals are rewarded with favorable reviews
and bonuses in line with their performance and contribution to the organization.

Communication Improves The employee and manager communicate more

frequently and agree on changed objectives to suit continuing changes in conditions
and priorities. This is an inclusive and collaborative process, which ensures that the

39
employee has input and does not feel they have wasted the year. The employee works
towards specific objectives that are relevant. If the organization is using a Performance
Management product that has a performance diary, both the manager and employee
attend the review meeting with copies of their performance diary notes. This contains
content from the performance period to be reviewed. Given that both have content, they
feel much better prepared and stress is lower than if they were attending a meeting not
aware of the subject matter.

Everyone knows the Rules

Where there is a well structured Performance Management system that is effectively

communicated, both the employee and manager enter the process with better levels of
confidence as there are "rules" that clearly stipulate what is being assessed and how.
Employees are assessed on achievement of objectives that have been clearly identified
and agreed to. Managers have a better framework to assess an employees'
performance as they are familiar with the criteria to assess the employee. The outcome
is that both individuals have an informed discussion and focus on achievement of both
personal and business objectives, not on issues that are irrelevant.

Better Recording Opens Up Communication

If the organization has a system with a performance diary, then both

parties are prepared with relevant content to discuss. They have diary
notes that relate to performance during the entire performance period. This
raises confidence and reduces stress levels. Both parties feel more
comfortable and they can have a content rich and factual discussion about
performance.

Frequent Communication Reduces Stress

Given that these performance reviews happen more frequently, the

discussion centers on performance of objectives rather than being

40
dominated by the employees' needs. The needs of the business are
discussed more frequently to achieve specific performance outcomes. This
means both the employee and manager communicate more effectively and
achieve better outcomes. Emotionally charged discussions tend to be
displaced by business focused discussions on achievement of objective
outcomes.

As expectations are modified when a Performance Management system is

introduced, most organizations switch to defined performance periods.
This means that strategic and operational objectives are set at the
beginning of the performance period. Formal performance reviews are then
conducted quarterly or half yearly and enable management to direct and
fine tune effort in relation to the objectives.

Appraisals Become Relevant for Everyone

By conducting more frequent reviews, objectives can be adjusted and

modified to suit changing business conditions. This dramatically increases
the probability that the objectives are relevant and are able to be acted
upon during the performance period.

By performing frequent performance reviews, visibility is increased

dramatically. Areas of non performance receive much more focus and
attention and problems can be acted upon much quicker. Most
Performance Management systems provide reporting as to who has or has
not achieved their objectives (departments and individuals). Adjustments
to objectives or strategy can then be made to ensure expectations can be
met. Alternately, expectations can be modified as appropriate. By reviewing
more frequently, all managers and employees start to plan and execute to
clearly thought out objectives. This results in better resource management
and enables managers to work on the business, not in the business.

41
Employee Learning and Development Starts to Happen

Given that most Performance Management systems require managers and

employees to commit to a development plan, employees experience real
personal development and become more engaged with the organization.
They feel part of the organization and start to understand that they and the
organization are interdependent. The organization is developing the
employee and the employee is working towards developing the
organization by achieving its goals. The majority of Performance
Management systems are able to provide graphical compliance reports.
Therefore, the setting of objectives and development plans for employees
can no longer be ignored. Employees see real planning, are involved in
setting meaningful objectives and have input into personal development
plans which benefit both themselves and the organization. In all, this
results in an engaged workforce who are extremely committed to achieving
real outcomes for the organization.

Performance Management Research

Several studies have been conducted in Australia that indicates the

predominant method of assessing employees in Australia is appraisal.
During 2004, Associate Professor Alan Nankervis of Royal Melbourne
Institute of Technology conducted a study of 992 Australian organizations.
One of the outcomes was that only 2.4% of organizations reviewed their
employees against objectives, the remaining 97.5% were a combination of
some type of appraisal.

Furthermore, The Performance Management Institute of Australia

conducted a survey of Australian employees' attitudes towards
Performance Management in the workplace. Approximately 450 employees
responded from a wide variety of businesses and enterprises. The research
found that, over 59% of employees received performance reviews once per

42
year or less. This implies that the majority of Australian managers are
failing to properly engage their employees. Effective management requires
a continual goal setting and review process which gives employees regular
feedback of management expectations and frequent praise for
achievement of desired goals.

Australian Managers Still Doing Standalone Appraisals

What the survey results imply is that Australian managers are performing
appraisals, not performance reviews and objective setting. The results may
also mean that managers are not targeting their teams to achieving
strategic goals which are at all time-bound. Usually, employees who are not
formally reviewed for a year or more are expending work effort in a manner
or direction which is not readily visible to their manager. This lack of
employee engagement is leading to disaffection from the employees who
can make and want to make a difference to the organization. In our view,
appraisals add very little value to the performance of an organization and in
some circumstances may actually be detrimental to organizations who
wish to move towards Performance Management. A contributing factor
may be that line managers who have been conducting appraisals have also
seen little, if any, impact on departmental or team performance as a
consequence of conducting these appraisals.

'PeopleStreme' conducted several research studies in focus groups over

the last four years and during seminars on Performance Management. To
summarise the findings, 87% of organizations have some type of appraisal
system. However, this is usually referred to as the Performance
Management system. Of the 87% that have these systems, 95% were
manual systems without performance objectives or development plans. It
was clear from the research that many organizations incorrectly view
manual annual appraisal systems as Performance Management systems.
Organizations are increasingly adopting Performance Management

43
systems. However, organizations in both Australia and the USA are
experiencing 100% to 300% yearly increases in organizations acquiring
Performance Management systems exceeding the existing forecast rate.

In contrasting Performance Appraisal with Performance Management, it

suggests that performance appraisals are indeed an evaluation of an
employees work. However, Performance Management reflects the
continuous nature of performance improvement and employee
development, recognizing the importance of effective management, work
systems and team contributions.

44
INTRODUCTION TO
BANKING SECTOR

45
Introduction to Banking Sector
Banking can be defined in various ways as the definition of the bank varies
from country to country and keeps on changing on the basis of the
activities carried out by the banks. In present dynamic business scenario,
banking can be defined as the activities carried out with the bank on
individual or corporate level. We can understand the concept of the banking
by looking into the activities of the bank.

A bank is a well regularized and licensed financial institute to assist the

individual and corporate customer in their financial needs. Normally banks
provide the following services to its retail (individual) and corporate clients:

 Transactional services,

 Services related to monetary transaction through current and

 saving account,

 lnvestment services,

 Fixed deposit,

 Letter of credit,

46
 Treasury services,

 Bill of exchange,

 Foreign exchange,

 Assisting in trade through Letter of credit,

 Letter of guarantee,

 Performance bond,

 Project financing,

 Personal loan,

 Credit card,

 Home loan etc.

Banking sector In India

Banking in India originated in the last decades of the 18th century. The
oldest bank in existence in India is the 'State Bank of India', a government-
owned bank that traces its origins back to June 1806 and that is the largest
commercial bank in the country. Central banking is the responsibility of the
Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India, relegating it to
commercial banking functions. After India's independence in 1947, the
Reserve Bank was nationalized and given broader powers. In 1969 the
government nationalized the 14 largest commercial banks; the government
nationalized the six next largest in 1980.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public

sector banks (that is with the Government of India holding a stake), 31

47
private banks (these do not have government stake; they may be publicly
listed and traded on stock exchanges) and 38 foreign banks. They have a
combined network of over 53,000 branches and 17,000 ATMs. According to
a report by ICRA Limited, a rating agency, the public sector banks hold over
75 percent of total assets of the banking industry, with the private and
foreign banks holding 18.2% and 6.5% respectively. The banking industry in
India seems to be unaffected from the global financial crises which started
from U.S in the last quarter of 2008. Despite the fallout and nationalization
of banks across developed economies, banks in India seems to be on the
strong fundamental base and seems to be well insulated from the financial
turbulence emerging from the western economies. The Indian banking
industry is well placed as compare to their banking industries western
counterparts which are depending upon government bailout and stimulus
packages.

The strong economic growth in the past, low defaulter ratio, absence of
complex financial products, regular intervention by central bank, proactive
adjustment of monetary policy and so called close banking culture has
favored the banking industry in India in recent global financial turmoil.

Although there will be no impact on the Indian banking system similar to

that in west but the banks in India will adopt for more of defensive
approach in credit disbursal in coming period. In orde to safe guard their
interest; banks will follow stringent norms for credit disbursal. There will be
more focus on analyzing borrower' financial health rather than capability.

The report "Indian Banking Sector Forecast to 2012" contains

comprehensive research and rational analysis on various segments, like
assets size, income level and number of cardholders, in the Indian banking
industry. It also analyzes the current performance and key market trends,
and helps clients to understand various products available in the market
and their future scope.

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

model but is intended as a rough guide to the direction in which the market

48
is likely to move. The future projection is done on the basis of the current
market scenario, past trends, and rules and regulations laid by the regulator
and supervisor of the financial system, Reserve Bank of India (RBI). The
Economic Liberalization process has increasingly exposed the Banking
Sector to international competition. The role of Banking in the process of
financial intermediation has been undergoing a profound transformation,
owing to changes in the global financial system. Consequently, the
revolution in information technology has brought about sea changes in the
way banking transaction are carried out Almost 80% of the businesses are
still controlled by Public Sector Banks (PSBs). PSBs are still dominating the
commercial banking system. Shares of the leading PSBs are already listed
on the stock exchanges.

The RBI has given licenses to new private sector banks as part of the
liberalization process. The RBI has also been granting licenses to industrial
houses. Many banks are successfully running in the retail and consumer
segments but are yet to deliver services to industrial finance, retail trade,
small business and agricultural finance. The PSBs will play an important
role in the industry due to its number of branches and foreign banks facing
the constraint of limited number of branches. Hence, in order to achieve an
efficient banking system, the onus is on the Government to encourage the
PSBs to be run on professional lines.

To promote banking sector in India, Govt. has taken many steps and
formed several committee to review the banking needs and the prospect
the current scenario along with the safeguarding the interest of the
customers

Reserve bank of India

Economists and Planners consider monetary stability in an economy as the

most important function of a Central Bank. The Prime function of a Central
Bank is to ensure and secure monetary stability i.e. to ensure that the

49
growth rate of money supply is consistent with the growth rate of output of
goods and services. In an open economy framework however the Central
Banks is additionally entrusted with the responsibility of managing the
exchange rate. Since the inception of the economic reforms when the
Indian Economy embarked on a programme of liberalization and exchange
rate flexibility, the Reserve Bank of India is managing its twin
responsibilities of monetary stability and exchange rate stability. The
economy follows a managed float system with RBI intervening in the event
of violent fluctuations in exchange rate. In an open economy framework
with lesser restrictions on capital flows, managing the monetary stability
and exchange rate stability pose a challenge for the Central Bank.
Managing the twin functions simultaneously is accompanied by trade-offs
and conflicts. The central bank of the country is the Reserve Bank of India
(RBI). It was established in April 1935 with a share capital of Rs. 5 crores
on the basis of the recommendations of the Hilton Young Commission.
The share capital was divided into shares of Rs. 100 each fully paid which
was entirely owned by private shareholders in the beginning. The
Government held shares of nominal value of Rs. 2, 20,000.

Reserve Bank of India was nationalized in the year 1949. The general
superintendence and direction of the Bank is entrusted to Central Board of
Directors of 20 members, the Governor and four Deputy Governors, one
Government official from the Ministry of Finance, ten nominated Directors
by the Government to give representation to important elements in the
economic life of the country, and four nominated Directors by the Central
Government to represent the four local Boards with the headquarters at
Mumbai, Kolkata, Chennai and New Delhi. Local Boards consist of five
members each Central Government appointed for a term of four years to
represent territorial and economic interests and the interests of co-
operative and indigenous banks. The Reserve Bank of India Act, 1934 was
commenced on April 1, 1935. The Act, 1934 (II of 1934) provides the
statutory basis of the function of the bank.

50
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.

THE PROCESS OF PERFORMANCE APPRAISAL

a) "Performance Appraisal" System: The Process "Performance

Appraisal" involves an evaluation of actual against desired performance.
It also helps in reviewing various factors which influence performance.
Managers should plan performance development strategies in a
structured manner for each employee. In doing so, they should keep the
goals of the organization in mind and aim at optimal utilization of all
available resources, including financial. "Performance Appraisal" is a
multistage process in which communication plays an important role.
Craig, Beatty and Baird (1986) suggested an eight-stage "Performance
Appraisal" process:

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.

51
There are various methods available for assessing results, behavior and
personal characteristics of an employee. These methods can be used
according to the particular circumstances and requirements.

Communicating Job Expectations

The second step in the appraisal process is communicating to employee

the measures and standards which will be used in the appraisal process.
Such communication should clarify expectations and create a feeling of
involvement.

Planning

In this stage, the manager plans for the realization of performance

expectations, arranging for the resources to be available which are required
for attaining the goals set. This is an enabling role.

Monitoring Performance

"Performance Appraisal" is a continuous process, involving ongoing

feedback. Even though performance is appraised annually, it has to be
managed 'each day, all year long.' Monitoring is a key part of the
"Performance Appraisal" process. It should involve providing assistance as
necessary and removing obstacles rather than interfering. The best way to
effectively monitor is to walk around, thus creating continuous contacts,
providing first-hand information, and identifying problems, which can then
be solved promptly.

52
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.

Feedback

After the formal appraisal stage, a feedback session is desirable. This

session should involve verbal communication, listening, problem solving,
negotiating, compromising, conflict resolution and reaching consensus.

Decision Making

On the basis of appraisal and feedback results, various decisions can be

made about giving rewards (e.g., promotion, incentives, etc.) and
punishments (e.g., demotion). The outcome of an appraisal system should
also be used for career development.

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:

Documentation - means continuous noting and documenting the

performance. It also helps the evaluators to give a proof and the basis of

53
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?

 Correlated with the organization's philosophies and mission.

 Cover assessment of performance as well as potential for development

 Look after the needs of both the individual and the organization.

 Help create a clean environment.

 Rewards linked to achievements

 Generate information for personnel development and career planning

 suggesting appropriate person-task matching

HOW CAN THE "PERFORMANCE APPRAISAL" SYSTEM HELP?

 Promote better understanding of an employee's role and clarity about

his or her functions

 Give a better understanding of personal strengths and weaknesses in

relation to expected roles and functions

 Identify development needs of an employee

 Establish common ground between the employee and the supervisor

 Increase communication

54
 Provide an employee with the opportunity for self-reflection and
individual goal setting

 Help an employee internalize the culture, norms and values of the

organization. This helps develop an identity with and commitment to the
organization and prepares an employee for higher-level positions in the
hierarchy.

 Assist in a variety of personnel decisions.

APPROACHES IN "PERFORMANCE APPRAISAL"

 Intuitive

 Self-appraisal

 Achievement of results

 Group

 Trait

TECHNIQUES OF "PERFORMANCE APPRAISAL"

 Easy appraisal method

 Graphic rating scales Field review method

 Forced choice rating method

 Critical incident appraisal method

 Management by objectives

55
 Work standard approach

 Ranking methods

 Methods

 Alteration ranking

 Paired comparison

 Person-to-person rating

 Checklist

 Behaviorally anchored rating scales

 Assessment centers

56
COMPANY PROFILE

57
COMPANY PROFILE
Bank of Baroda (BOB or BoB) is an Indian public sector bank headquartered
in Vadodara, Gujarat. It is the second largest public sector bank in India
after State Bank of India, with 132 million customers, a total business of
US$218 billion, and a global presence of 100 overseas offices. Based on
2019 data, it is ranked 1145 on Forbes Global 2000 list.

The Maharaja of Baroda, Sayajirao Gaekwad III, founded the bank on 20

July 1908 in the princely state of Baroda, in Gujarat. The Government of
India nationalized the Bank of Baroda, along with 13 other major
commercial banks of India, on 19 July 1969 and the bank was designated
as a profit-making public sector undertaking (PSU).

History
In 1908, Sayajirao Gaekwad III, set up the Bank of Baroda (BoB), with other
stalwarts of industry such as Sampatrao Gaekwad, Ralph Whitenack,
Vithaldas Thakersey, Lallubhai Samaldas, Tulsidas Kilachand and NM
Chokshi. Two years later, BoB established its first branch in Ahmedabad.
The bank grew domestically until after World War II. Then in 1953 it
crossed the Indian Ocean to serve the communities of Indians in Kenya and
Indians in Uganda by establishing a branch each in Mombasa and Kampala.
The next year it opened a second branch in Kenya, in Nairobi, and in 1956 it
opened a branch in Tanzania at Dar-es-Salaam. Then in 1957, BoB took a
big step abroad by establishing a branch in London. London was the center
of the British Commonwealth and the most important international banking
center. In 1958 BoB acquired Hind Bank (Calcutta; est. 1943), which
became BoB's first domestic acquisition.

1960s

In 1961, BoB acquired New Citizen Bank of India. This merger helped it
increase its branch network in Maharashtra. BoB also opened a branch in
Fiji. The next year it opened a branch in Mauritius.

58
In 1963, BoB acquired Surat Banking Corporation in Surat, Gujarat. The next
year BoB acquired two banks: Umbergaon People's Bank in southern
Gujarat and Tamil Nadu Central Bank in Tamil Nadu state.

In 1965, BoB opened a branch in Guyana. That same year BoB lost its
branch in Narayanganj (East Pakistan) due to the Indo-Pakistani War of
1965. It is unclear when BoB had opened the branch. In 1967 it suffered a
second loss of branches when the Tanzanian government nationalised
BoB's three branches there at (Dar es Salaam, Mwanga, and Moshi), and
transferred their operations to the Tanzanian government-owned National
Banking Corporation.

In 1969, the Indian government nationalised 14 top banks including BoB.

BoB incorporated its operations in Uganda as a 51% subsidiary, with the
government owning the rest.

1970s

In 1972, BoB acquired Bank of India's operations in Uganda. Two years later,
BoB opened a branch each in Dubai and Abu Dhabi.

Back in India, in 1975, BoB acquired the majority shareholding and

management control of Bareilly Corporation Bank (est. 1954) and Nainital
Bank (est. in 1922), both in Uttar Pradesh and Uttarakhand respectively.
Since then, Nainital Bank has expanded to Uttarakhand, Uttar Pradesh,
Haryana, Rajasthan and Delhi state. Right now BoB have 99% shareholding
in Nainital Bank.

International expansion continued in 1976 with the opening of a branch in

Oman and another in Brussels. The Brussels branch was aimed at Indian
firms from Mumbai (Bombay) engaged in diamond cutting and jewellery
having business in Antwerp, a major center for diamond cutting.

Two years later, BoB opened a branch in New York and another in the
Seychelles. Then in 1979, BoB opened a branch in Nassau, the Bahamas.

59
1980s

In 1980, BoB opened a branch in Bahrain and a representative office in

Sydney, Australia. BoB, Union Bank of India and Indian Bank established
IUB International Finance, a licensed deposit taker, in Hong Kong. Each of
the three banks took an equal share. Eventually (in 1999), BoB would buy
out its partners.

A second consortium or joint-venture bank followed in 1985. BoB (20%),

Bank of India (20%), Central Bank of India (20%) and ZIMCO (Zambian
government; 40%) established Indo-Zambia Bank in Lusaka. That same
year BoB also opened an Offshore Banking Unit (OBU) in Bahrain (Gulf).

Back in India, in 1988, BoB acquired Traders Bank, which had a network of
34 branches in Delhi.

1990s
In 1992, BoB opened an OBU in Mauritius, but closed its representative
office in Sydney. The next year BoB took over the London branches of
Union Bank of India and Punjab & Sind Bank (P&S). P&S's branch had been
established before 1970 and Union Bank's after 1980. The Reserve Bank of
India ordered the takeover of the two following the banks' involvement in
the Sethia fraud in 1987 and subsequent losses.

In 1996, BoB Bank entered the capital market in December with an initial
public offering (IPO). The government of India is still the largest
shareholder, owning 66% of the bank's equity.

In 1997, BoB opened a branch in Durban. The next year BoB bought out its
partners in IUB International Finance in Hong Kong. Apparently this was a
response to regulatory changes following Hong Kong's reversion to the
People's Republic of China. The now wholly owned subsidiary became Bank
of Baroda (Hong Kong), a restricted license bank. BoB also acquired Punjab
Cooperative Bank in a rescue. BoB incorporate a wholly–owned subsidiary,
BOB Capital Markets, for broking business.

60
In 1999, BoB merged in Bareilly Corporation Bank in another rescue. At the
time, Bareilly had 64 branches, including four in Delhi. In Guyana, BoB
incorporated its branch as a subsidiary, Bank of Baroda Guyana. BoB added
a branch in Mauritius and closed its Harrow Branch in London.

2000s
In 2000 BoB established Bank of Baroda (Botswana). The bank has three
banking offices, two in Gaborone and one in Francistown. In 2002, BoB
converted its subsidiary in Hong Kong from deposit taking company to a
Restricted License Bank.

In 2002 BoB acquired Benares State Bank (BSB) at the Reserve Bank of
India's request. BSB had been established in 1946 but traced its origins
back to 1871 and its function as the treasury office of the Benares state. In
1964 BSB had acquired Bareilly Bank (est. 1934), with seven branches in
western districts of Uttar Pradesh; BSB also had taken over Lucknow Bank
in 1968. The acquisition of BSB brought BoB 105 new branches. Lucknow
Bank, a unit bank with its only office in Aminabad, had been established in
1913. Also in 2002, BoB listed Bank of Baroda (Uganda) on the Uganda
Securities Exchange (USE). The next year BoB opened an OBU in Mumbai.

In 2004 BoB acquired the failed south Gujarat Local Area Bank. BoB also
returned to Tanzania by establishing a subsidiary in Dar-es-Salaam. BoB
also opened a representative office each in Kuala Lumpur, Malaysia, and
Guangdong, China.

In 2005 BoB built a Global Data Centre (DC) in Mumbai for running its
centralised banking solution (CBS) and other applications in more than
1,900 branches across India and 20 other counties where the bank
operates. BoB also opened a representative office in Thailand.

In 2006 BoB established an Offshore Banking Unit (OBU) in Singapore.

In 2007, its centenary year, BoB's total business crossed 2.09 trillion (short
scale), its branches crossed 2000, and its global customer base 29 million

61
people. In Hong Kong, Bank got Full Fledged Banking license and business
of its Restricted License Banking subsidiary was taken over Bank of Baroda
branch in Hong Kong w.e.f.01.04.2007.

In 2008 BoB opened a branch in Guangzhou, China (02/08/2008) and in

Kenton, Harrow United Kingdom. BoB opened a joint venture life insurance
company with Andhra Bank and Legal & General (UK) called IndiaFirst Life
Insurance Company.

In 2009 Bank of Baroda (New Zealand) was registered.[9] As of 2017 BoB

(NZ) has 3 branches: two in Auckland, one in Wellington.

2010s
In 2010 Malaysia awarded a commercial banking licence to a locally
incorporated bank to be jointly owned by Bank of Baroda, Indian Overseas
Bank and Andhra Bank.

In 2011 BoB opened an Electronic Banking Service Unit (EBSU) at Hamriya

Free Zone, Sharjah (UAE). It also opened four new branches in existing
operations in Uganda, Kenya (2), and Guyana. BoB closed its representative
office in Malaysia in anticipation of the opening of its consortium bank
there. BoB received 'In Principle' approval for the upgrading of its
representative office in Australia to a branch. Bob also acquired Mumbai-
based Memon Cooperative Bank, which had 225 employees and 15
branches in Maharashtra and three in Gujarat. It had to suspend operations
in May 2009 due to its precarious financial condition.

The Malaysian consortium bank, India International Bank Malaysia (IIBM),

finally opened in Kuala Lumpur, which has a large population of Indians.
BOB owns 40%, Andhra Bank owns 25%, and IOB the remaining 35% of the
share capital. IIBM seeks to open five branches within its first year of
operations in Malaysia, and intends to grow to 15 branches within the next
three years.

On 17 September 2018, the government of India proposed the merger of

62
Dena Bank and Vijaya Bank with the Bank of Baroda, pending approval from
the boards of the three banks, effectively creating the third largest lender in
the country. The merger was approved by the Union Cabinet and the boards
of the banks on 2 January 2019. Under the terms of the merger, Dena Bank
and Vijaya Bank shareholders received 110 and 402 equity shares of the
Bank of Baroda, respectively, of face value ₹2 for every 1,000 shares they
held. The merger came into effect on 1 April 2019. Post-merger, the Bank
of Baroda is the third largest bank in India, after State Bank of India and
HDFC Bank. The consolidated entity has over 9,500 branches,13,400 ATMs,
85,000 employees and serves 120 million customers. The amalgamation is
the first-ever three-way consolidation of banks in the country, with a
combined business of Rs14.82 trillion (short scale), making it the third
largest bank after State Bank of India (SBI) and ICICI Bank. Post-merger
effective 1 April 2019, the bank has become the India's third largest lender
behind SBI and ICICI Bank.

Bank of Baroda announced in May 2019 that it would either close or

rationalise 800–900 branches to increase operational efficiency and reduce
duplication post-merger. The regional and zonal offices of the merged
companies would also be closed. PTI quoted an unnamed senior bank
official as stating that Bank of Baroda would look to expand in eastern
India as it already had a strong presence in the other regions.

Services
Retail banking

The bank offers lending services to individuals and small businesses, along
with liability products, card services, Internet banking, automated teller
machines (ATM) services, depository, financial advisory services, and Non-
resident Indian (NRI) services.Bank of Baroda is a participant in RBI's NEFT
enabled participating banks list.

63
Corporate banking

Transaction banking: Bank of Baroda provides products and services

related to transaction banking to customers in areas of current accounts,
cash management services, capital market services, trade, foreign
exchange and derivatives, cross-border trade and correspondent banking
services, and tax collections on behalf of the Government and various State
Governments in India.

Investment banking and trustee services: The bank provides investment

banking and trusteeship services through its owned subsidiaries. Bank of
Baroda Capital Limited provides investment banking services relating to
equity capital markets, institutional stock brokering besides M&A advisory.
Bank of Baroda Trustee Services Limited is engaged in trusteeship
activities, acting as a debenture trustee and as a trustee to various
securitization trusts.

International banking

The bank offers corporate banking, trade finance, treasury and risk
management through the branches at Singapore, Hong Kong, DIFC,
Shanghai and Colombo, and as also retail liability products from its
branches at Hong Kong and Colombo.The representative office at Dhaka
was inaugurated during the current financial year.

Awards
2010

Best Debt House in India – Euromoney

Best Domestic Debt House in India – Asiamoney

64
Overall Winner & Consistent Performer – (Large Banks Category) –
Business Today Best Bank Awards 2010

2011

Bank of the Year – India –The Banker Awards 2011

2012

Bank of the Year – Money Today FPCIL Awards 2012–13

Best Private Sector Bank – CNBC-TV18 India's Best Bank and Financial
Institution Awards 2012

2013

Ranked No 1 in the IT Biz Award – large enterprises category by Express IT

Awards

Joint winner under the ‘Most Innovative Broad Based Product Offering’
category - IBA Innovations Award.

2014

Best Domestic Bank in India- Asiamoney Best Banks 2014

Best Bank Award among Large Banks for IT For Business Innovation -
IDRBT Banking Technology Excellence Awards 2014

Best Bank for Rural Reach in the Private Sector and Best Retail Growth
Performance in the Private Sector category – Dun & Bradstreet - Polaris
Financial Technology Banking Awards 2014

2015

Bank of Baroda has been adjudged winner in the Best Bank Category,
Outlook Money Awards 2015

Bank of Baroda awarded for the Best Security among Private Sector Banks
in India by Data Security Council of India (DSCI).

65
Best Domestic Bank in India – Asiamoney Best Banks 2015

Bank of Baroda has been featured in Limca Book of Records 2015 for
creating a National Record for its campaign – 'Plant a Sapling'

No. 1 Promising Banking Brand of 2015, Economic Times Awards 2015

Needs and Importance For "Performance Appraisal" in Banking

The butt of many a corporate joke, these hard working professionals are
often relegated to small back offices where their activities, viewed as little
more than administrative functions, are carried out without much
recognition. But in an increasingly aggressive corporate world, where every
competitive edge counts, leading organizations would do well to recognize
the human potential that can be unleashed by adopting effective human
resource management strategies that realize the potential of employees
and earn their respect and loyalty. Dealing with the mundane personal
matters of corporate life has traditionally been seen as the sole purpose of
the HR department. From hiring workers and providing transportation and
meals services, to processing housing, medical and insurance benefits, the
functions of HR professionals have been recognized as essential, but have
not always inspired respect for those involved in executing them.

Essentially, people remain the strongest and most competitive assets of a

business.

This should, and is, changing. In a region where business growth is rapid,
and organizations are competing to secure talent from the same pool,
investing in and revering effective HR departments to find, train and help
retain this talent is increasingly important. Testament to the fact many
banks in the region are now recognizing 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 be persuaded to take real action in

66
developing their HR departments Banking industry is facing a cut throat
completion in present banking scenario where the motivation of the
employee can be a competitive advantage to retain its customer.

"Performance Appraisal" In Banking Sector

"Performance Appraisal" is a vehicle to

1. validate and refine organizational actions (e.g. selection, training);

2. provide feedback to employees with an eye on improving future

performance.

Validating and refining organizational action or banks action

Employee selection, training and just about any cultural or management

practice-such as the introduction of a new pruning method or an incentive
pay program-may be evaluated in part by obtaining worker performance
data. The evaluation may provide ideas for refining established practices or
instituting new ones. For instance, appraisal data may show that a farm
supervisor has had a number of interpersonal conflicts with other
managers and employees. Some options include

1. Paying more attention to interpersonal skills when selecting new

supervisors,

2. Encouraging present supervisors to attend communication or conflict

management Classes at the local community college, or

3. Providing the supervisor one-on-one counseling.

Data from "Performance Appraisal's can also help farmers

1) Plan for long-term staffing and worker development,

67
 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 evaluate performance data

when large numbers of workers are involved such as in banks. Useful
performance data may still be collected when employees are
evaluated singly, but it may take years to obtain significant data
trends.

Employee need for feedback

Although employees vary in their desire for improvement, generally workers

want to know how well they are performing. A successful farmer recalled
with sadness how as a youth he had worked very hard, along with his
immigrant family, for a farmer who never seemed to notice the effort. Years
later he met the former employer and asked why he had never made any
positive comments about their work. The response from the former boss
was, "I feared you would stop working as hard."

People need positive feedback and validation on a regular basis. Once an

employee has been selected, few management actions can have as
positive an effect on worker performance as encouraging affirmation.
These are, in effect, good-will deposits, without which withdrawals cannot
be made. This does not mean you should gloss over areas needing
improvement. When presented in a constructive fashion, workers will often
be grateful for information on how to improve shortcomings. Such
constructive feedback, however, "can happen only within the context of
listening to and caring about the person." In general, supervisors who tend
to look for worker's positive behaviors-and do so in a sincere,
nonmanipulative way-will have less difficulty giving constructive feedback
or suggestions. Furthermore, in the negotiated approach, the burden for

68
performance analysis does not fall on the supervisor alone, but requires
introspection on the part of the individual being evaluated. Feedback may
be qualitative or quantitative. Qualitative comments are descriptive, such
as telling the shop mechanic you appreciate the timeliness and quality of
her repairs. In contrast, quantitative feedback is based on numerical figures,
such as the percentage of plant grafts that have taken. Some researchers
feel feedback is particularly useful when workers have an achievement
objective By focusing the attention on performance, performance appraisal
goes to the heart of personnel management and reflects the
management's interest in the progress of the employees.

Objectives of Performance appraisal:

 To review the performance of the employees over a given period of time.

 To judge the gap between the actual and the desired performance.

 To help the management in exercising organizational control.

 Helps to strengthen the relationship and communication between

superior subordinates and management - employees.

 To diagnose the strengths and weaknesses of the individuals so as to

identify the training and development needs of the future.

 To provide feedback to the employees regarding their past performance.

 Provide information to assist in the other personal decisions in the

organization.

 Provide clarity of the expectations and responsibilities of the functions

to be performed by the employees.

To judge the effectiveness of the other human resource functions of the

organization such as recruitment, selection, training and development. To
reduce the grievances of the employees.

69
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 be a
top down process or an opportunity for one person to ask questions and
the other to reply. It should be a free flowing conversation in which a range
of views are exchanged.

"Performance Appraisal's usually review past behavior and so provide an

opportunity to reflect on past performance of the bank employees. But to
be successful they should also be used as a basis for making development
and improvement plans and reaching agreement about what should be
done in the future to enhance the bank's effect and effectiveness. The
"Performance Appraisal" is often the central pillar of performance
management in the bank to keep the motivation of the employees high.

"Performance Appraisal" And Performance Management In Bank

of Baroda.
The facilitation of high achievement by employees. Performance

70
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 Bank of Baroda , a culture of collective and individual
responsibility for the continuing improvement of business processes needs
to be established, and individual skills and contributions need to be
encouraged and nurtured as the bank deals in service sector where the
employees are the main factor of making the difference . One tool for
monitoring performance management is "Performance Appraisal" that the
banks use for rewarding its employees. For the bank, performance
management is usually known as company performance and is monitored
through. business appraisal.

Reasons for "Performance Appraisal" in Bank of Baroda

 Increase motivation to perform effectively

 lncrease staff self-esteem

 Gain new insight into staff and supervisors

 Better clarify and define job functions and responsibilities

 Develop participants valuable communication among appraisal

 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,

71
 and development of training programs

Modern Trends in Banks for P.A

A growing number of front running banks like Bank of Baroda , and others
have adopted a "Performance Appraisal" model in which best-to- worst
ranking methods are used to identify poor performers. The identified poor
performers are then given a time period during which they have to show an
improvement in their performance. In cases where the employee fails to
improve his performance he is asked to leave the organization gracefully
and a severance package is offered to him. If the employee refuses to
leave then his service is terminated and no compensation is offered. This
system is called "rank and yank strategy". Advocates of this system feel
that it continually motivates employees to better their performance since
nobody would like to be included in the poor performance band. But the flip
side of this strategy is that employees become too competitive and team
spirit is not nurtured. Effective banks are not build merely on investment
and returns but more on the quality of the workforce, its commitment to the
organizational goals and investments made to attract train and retain
superior human capital. An integrated Performance Management system is
essential to get the best out of its people. Employee performance is linked
to the bank's performance. This helps in achieving the organizational goal
and creates a performance culture in the bank. Invention, creativity,
diversity of perspectives is fostered. Employees act as one bank one brand.

Bank of Baroda Performance 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.

72
The goals are finally set and are action oriented. The goals set are specific,
measurable, achievable, review able and time bound and most importantly
they use to be aligned with the goal of the organization. At the end of a
specified time period, the activities are jointly reviewed by both the
subordinate and his supervisor. Depending on the performance of the
subordinate, the goals are modified or redesigned for the next period of
time.

The MBO is thus a performance oriented system. A well thought out MBO
system provides multiple benefits. It establishes a link between the
performance of the individual and the bank it is easy to implement because
those who carry out the plan also participate in setting it up. Each
employee becomes aware of the task he has to perform in the bank. This
leads to better utilization of capacity and talent. It promotes better
communication and information sharing. It provides guidelines for self
evaluation as well as evaluation by the superior against set tasks and goals.
It facilitates guidance and counseling.

The Effective Components of Bank of Baroda P.A System

 Performance Planning (includes employee goal setting / objective

setting)

 Data Gathering, Observation and Documentation

 Ongoing Performance Communication

 "Performance Appraisal" Meetings

 Performance Diagnosis and Coaching

An effective "Performance Appraisal" system in Bank of Baroda

emphasizes individual objectives, Bank objectives and also mutual
objectives. From the viewpoint of individual objective the "Performance
Appraisal" talks about

73
a) What task the individual is expected to do?

b) How well the individual has done the task?

c) How can his performance be further improved?

d) His reward for doing well.

From the bank view point a "Performance Appraisal" should generate

manpower information, improve efficiency and effectiveness serve as a
mechanism of control and provide a rational compensation structure. In
short the appraisal system establishes and upholds the principle of
accountability in the absence of which bank failure is the only possible
outcome. Finally, talking about mutual goals, the emphasis is on growth
and development, harmony, effectiveness and profitability of the bank

Bank of Baroda HR Philosophy on P.A

"Performance Appraisal" is one such method that allows for the

optimization 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 employee's job related attributes
through such factors as increased job satisfaction and recognition (with
the use of promotional aids such as better equipment, duties, and salaries).
The purpose of any such system, is not only to measure the performance
of human resources but also to find areas of skill deficit for further
development (through employee feedback), identify excess potential that
could be better utilized, and communicate objectives more accurately to
workers. By doing so, businesses move one step closer to the achievement
of their set goals and objectives. Included here is also one other factor that
is not a direct objective of appraisals, but becomes a valuable asset within
itself. This simply is the provision for maintaining records of workers that
are legally viable, that can protect the business when dealing in cases of

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dismissals and demotions. This is especially important in today's society
because of the "increasing legislation and regulation dealing with
victimization and discrimination" making bank liable for all their actions.
The annual "Performance Appraisal" is usually done in two steps. First, the
employees and their manager complete the "Performance Appraisal" form -
doing a self assessment. Often the bank also uses a 60 degree feedback
process, asking for input from peers. Secondly, the bank employees and
manager participate in a formal "Performance Appraisal" interview. The
appraisal form, used in the first step, consists of performance standards
and criteria that are used to judge evaluate your performance. The items
comprising your job description are usually the performance standards that
are used in employees annual appraisal .The performance standards are
derived from a job analysis, which is a detailed list of all of the skills
involved in performing a task. For example, what are the skills necessary to
perform a complete blood count? The criteria are used to determine the
level of performance, which can be excellent, average, or poor (or
alternatively meets, exceeds or does not meet standards). Once appraisal
is complete, score is averaged and merit raise (if applicable)

Forms Used By the Bank for P.A

1. General "Performance Appraisal" Form I

Six-page form includes evaluation sections for three categories:

a) Objectives from last review period;

b) Current job duties (which are customizable), and

c) Organization core values (e.g., maturity, vision).

2. General "Performance Appraisal" Form II

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 Four-page form has three sections:

a) Overall performance,

b) Communication skills, and

c) people/self development skills.

3. General "Performance Appraisal" Form III

Two-page "short form" has numerical rankings for two sections:

a) General work attributes and

b) Managerial attributes. Includes a weighted average calculation.

4. 360-Degree "Performance Appraisal" Form I

Two-page form for peers, outside suppliers and customers to fill out.
Also can be used for "upwards" feedback about managers.

5. 360-Degree "Performance Appraisal" Form II

Two-page form for peers and outsiders - all open-ended questions,

without numerical rankings.

6. Manager "Performance Appraisal" Form

Six-page form with all sections related to managerial skills. Also includes
a section for listing future objectives.

7. Administrative/Technical "Performance Appraisal" Form

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 Four-page form perfect for administrative, technical and customer service
workers.

8. Sales "Performance Appraisal" Form

Five-page form focused on sales personnel. Includes four sections:

A) Actual vs. plan performance,

b) Lead generation,

c) Selling skills and

d) Account maintenance.

9. Project Evaluation Review Form

Four-page form geared towards specific projects, individuals' role on a

given project.

10. Employee Self-Assessment Form

Two-page open-ended form for an employee to fill-out before his or her

own review. Sections include:

a) success in meeting goals from last review,

b) accomplishments and

c) areas for improvement.

Approaches and Techniques in "Performance Appraisal" Used By the Bank

"Performance Appraisal" is a multistage process involving several activities,

which can be administered using a variety of approaches. Some of these

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approaches are being used by the banks for "Performance Appraisal" •

 Intuitive Approach: In this approach, a supervisor or manager judges the

employee based on their perception of the employee's behavior.

 Self-Appraisal Approach: Employees evaluate their own performance

using a common format.

 Group Approach: The employee is evaluated by a group persons.

 Trait Approach: This is the conventional approach. The manager or

supervisor evaluates the employee on the basis of observable
dimensions of personality, such as integrity,honesty, dependability,
punctuality, etc.

 Appraisal Based on Achieved Results: In this type of approach,

appraisal is based on concrete, measurable, work achievements judged
against fixed targets or goals set mutually by the subject and the
assessor.

 Behavioral Method: This method focuses on observed behavior and

observable critical incidents.

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CONCLUSION
&
SUGGESTION

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 Conclusion

To summarize our discussion we can say that the "Performance Appraisal"

is an integral part of performance management and has become the
important component of the HRM. Performance management includes
activities to ensure that goals are consistently being met in an effective and
efficient manner. Performance management can focus on performance of
the organization, banks, a department, processes to build a product or
service, employees, etc.

Performance management reminds us that being busy is not the same as

producing results. It reminds us that training, strong commitment and lots
of hard works alone are not results. The major contribution of performance
management is its focus on achieving results - useful products and
services for customers inside and outside the bank and organization.
Performance management redirects our efforts away from busyness
toward effectiveness. Recently, organizations have been faced with
challenges like never before. Increasing competition from businesses
across the world has meant that all businesses must be much more careful
about the choice of strategies to remain competitive. Everyone (and
everything) in the organization must be doing what they're supposed to be
doing to ensure strategies are implemented effectively. This situation has
put more focus on effectiveness, that systems and processes in the
organization be applied in the right way to the right things: to achieve
results. All of the results across the organization must continue to be
aligned to achieve the overall results desired by the organization for it to
survive and thrive. Only then it be said that the organization and its various
parts are really performing.

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We can say that Performance management should be:

 Strategic - it is about broader issues and longer-term goals.

 Integrated - it should link various aspects of the business, people

management, and individuals and teams. A well designed "Performance
Appraisal" system helps an organization, bank Know and understand
what is expected of them Have the skills and ability to deliver on these
expectations Are supported by the organization to develop the capacity
to meet these expectations are given feedback on their performance
have the opportunity to discuss and contribute to individual and team
aims and objectives. Ongoing banking scenario has changed the scope
of the performance management system as the competition is
extensive and to retain the employees has become the challenging task
for the management. With the help of "Performance Appraisal" the bank
can recognize its true personnel inventory and formulate the strategy for
man power planning and career development. "Performance Appraisal"
directly affects the other sub system of HRM such as manpower
planning, selection, career development, potential development,
recruitment, compensation etc.

To wind up our discussion we can say that "Performance Appraisal" is an

integrated and widen approach to guide the employees in the right direction
to achieve organizational as wellas individual objectives mainly in banking
sector because of the dominancy of personal skill and service level to
interact with the customers

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 SUGGESTIONS

Though it is the basic rule of the report writing that suggestion and
recommendation should not be given until it's asked for but to keeping in
the mind the academic nature of the report we would like to recommend
the followings.

 Management and employees should see "Performance Appraisal" as a

positive tools to determine the organizational efficiency and
effectiveness

 Banks should use a well communicative method of "Performance

Appraisal" to avoid any resistance from the employees

 The outcome of the "Performance Appraisal" should be shared with the

concerned employees and corrective action should be taken in the light
of the outcome.

 "Performance Appraisal" should be treated as an integral part of the

organizational development not just the formality

 If the external agency is hired for "Performance Appraisal", it will be

appreciated to remove the possibility of biasness

 "Performance Appraisal" should be done on both basis qualitative and

quantitative

 There should be a cost and benefit study of "Performance Appraisal"

process

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 BIBLIOGRAPHY

✓ Books -

1. Human Resource Management (VSP Rao)

2. Performance Management (Herman Aguinis)

✓Internal report of banks

✓Internet (Wikipedia) and bank's website

✓ Personal sources

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