CAB CALLING July-September, 2008 Dr.

Shambhu Nath Chowdhury* *Senior Manager, Personnel Administration and HRD, Paschim Banga Gramin Bank, Howrah Developing Performance Appraisal System for Performance Leadership in Banks c k63 CAB CALLING July-September, 2008 the organizational goals. In short, appraisals frequently fail appraisal system in which the reporting officer is required to to deliver a dependable measure of the value and assess each of his appraisee officers on technical skills, contribution of employees who are assessed. human skills and conceptual skills. All these are defined for different categories of roles and the assessment has to be Many appraisal systems examine performance on traits made on a five-point scale. Corporation Bank, UCO Bank, e x h i b it e d b y i n d i v i d u a l s . Ex amp l e s o f s u c h Central Bank of India, Dena Bank and Bank of Baroda has traits might be oral communication, leadership, awareness introduced similar self-appraisal formats. Punjab National of social environment, initiative, organization and planning. Bank has, primarily, a developmentoriented appraisal form. Review of performance on trait criteria can be justified if the There are ten different formats available for ten different traits relate to the individual's job. However, trait appraisal categories of employees. The bank started the system with a can cause misunderstanding and disagreement between self-appraisal by the appraisee. the manager and his subordinates. If a manager tells his

subordinate that he needs to demonstrate more leadership Studies of the operating system of the successful qualities and show more initiative on projects, it is not much organizations, in general, reveal that a good PAS is the helpful because it does not focus on exactly how the corner stone to navigate an organization successfully in this individual has been deficient and specifically what can be globalized environment of uncertainty and continuous done by him to improve his performance. change. They have, therefore, developed and employed such system and harnessing maximum benefits. But, like PAS is traditionally used as a mechanism of controlling many fields of organizational development, the PSBs are e m p l o y e e t h r o u g h s a l a r y a d m i n i s t r a t i o n , r e w a r d lagging behind in this area too. administration, promotion, and disciplinary actions. Another feature of traditional PAS is its confidentiality. This traditional Most of the PSBs have an Annual Appraisal System that is PAS results in unawareness of employees of their strengths historic in nature and documents the past activities. It is a and weaknesses in relation to their capabilities in different one time annual affair only. Study of the format of annual positions in the organization throughout their career. The appraisal of many of the PSBs reveal that they are basically traditional PAS fails to identify the potentialities of employees uniform in character with emphasis in historical events and in performing the new roles in new positions. This is basically little or no importance for future growth. In comparison with because of the confidential nature of the appraisal. Due to the new generation banks and progressive organizations, these drawbacks, traditional PAS fail to develop employees the appraisal system in PSBs, thus, is basically and organizations. dysfunctional. The PAS, as an important component of

Performance Management System, is yet to be conceived and made operational. But developing and implementing a PAS seems overdue and vitally important. Banking services is one sector where a great degree of attention is being paid to Performance Appraisal Systems. Several of the public sector banks (PSBs) have changed their PAS or are in the process of changing them. State Bank In performance appraisal, a model is a guide that indicates of India has recently adopted an open system of appraisal. how best competencies could be fit into a Performance Its associate banks are likely to follow the same after detailed Appraisal Process. There are onedimensional models, experiences of State Bank of India are available. Several mixed models and three-dimensional models. Onebanks also have self-appraisal as a part of performance dimensional model or the traditional model is based on the appraisal, although mostly such self-appraisal is more of a single factor of performance and the entire focus is on what communication of achievements. to be achieved. The 'How' factor of achievement is not looked into in this type of model and is perhaps not fit for Allahabad Bank has introduced a system that aims in today's world of business where short term survival and long helping officers to identify their strengths and weaknesses term survival is equally important. and encourage improvement of performance on the job. Indian Overseas Bank has a system in which a branch manager gives a self-appraisal on business growth, customer service, internal administration and training In one-dimensional model people are not aware whether an

requirements in great detail. Union Bank of India has an achievement is one time and situational. Employees can Models of Performance Appraisal One Dimnsional Model Performance Appraisal Systems in Indian Banks c k64 CAB CALLING July-September, 2008 adopt practices that can boost their performance in the short from an individual. Here, performance is defined not only in run making colossal losses for the future. There are enough terms of what is to be achieved but how it is to be achieved examples of the loopholes of the one-dimensional model. and what competencies must be utilized as is depicted in the The following is a one-dimensional model where the key following model. stress is on what is to be performed. The next model takes another dimension besides objectives and competencies. The most important dimension customer - fits in this model. The customer is involved in setting the performance contract and on giving feedback to the performance review. When the whole banking industry is going for CBS, its time to make PAS IT enabled in such a way that once submitted online, there will be no provision of editing or rectification after the date of submission. The objective portion of the PAS should generate immediate feedback and the system should be so oriented that within a specified time of say, seven days the entire feedback should reach the appraisee for developing weak (opportunity) areas. This will reduce the

A performance appraisal process that combines planning, criticism of bias or alteration of opinion by the reviewer in managing and reviewing both results and competencies is subsequent period. called a mixed model. Mixed model or the competency based performance models for their added advantage are becoming the performance management model of the future. These mixed models assess and reward both results and competencies demonstrated on the job. It shows what the employees achieved and how they have achieved it. Besides, the raters (appraiser and reviewer) should be adequately trained so that they are capable to overcome gender bias, personality bias and other sort of biases. They should focus more on performance and less on personality. The leniency error and the 'hallo' effect (a good perception in The mixed model represents a more powerful and long one area leads to rating good in all areas) and thorn effect (a lasting approach to performance management than what biased perception in one area leading to bad rating in all one-dimensional objective-based approach. A 'competency areas) in appraisal system can be corrected only through based' approach brings a different perspective to appropriate training of the rater. Appraisees may also be performance management. It employs a wider, a more trained suitably for providing accurate rating in their self comprehensive tool to describe the performance expected appraisal. Three Dimensional Model Mixed model Define what results have to be achieved

The Job Define a set of key objectives against the accountabilities Review performance against the key objectives Accountabilities i.e. outputs Model 1: One Dimensional Model Define what results have to be achieved

+ + The Job Performance Contract Define how results have to be achieved Key competencies i.e- inputs Accountability Define a set of key objectives

Define asset of behavioural objectives against key competencies Review performance against key objectives and key competencies Model 2 : Mixed Model Define what results have to be ac hie ve d

+ Define how results have to be achieved Customer Expectation Performance Contract The Job Key Objectives Key Competencies Customer Review performance

Feedback against key objectives and key competencies Model 3: Three Dimensional Model c kCAB CALLING July-September, 2008 Guidelines for Building a Model Performance Appraisal System Performance Elements and Performance Standards : Critical Elements (CE) : Non Critical Elements (NCE) : Additional Performance Elements (APE) : Activity Trap : Concept of Ideal Performance Plan (IPA) : l Outstanding Performance Level (OPL) : who scores 100% l Standard Performance Level (SPL): who scores 60% or Performance is concerned with means as well as ends, above inputs (competence) as well as outputs (results). Performance is about everyday actions and behaviours l Acceptable But Poor Performance Level (ABPPL): who which, as individuals, we take to reach planned objectives. scores 50% or above l Unacceptable Performance Level (UPL): who scores Performance elements tell us what we have to do and less than 50% performance standards tell us how well we have to do. There

are three performance elements. Al l appraisees should per form at least Standard Performance Level. However, every bank would want most CE is an assignment or of her employees and officers endeavour to reach responsibility of such critical importance that unacceptable Outstanding Performance Level so that the bank becomes a per formance in these elements would make our high performing and high value organization as embodied in (appraisees) performance altogether unacceptable. The its Mission and Vision statement. number of CEs ranges from a minimum of three (3) and a maximum of eight (8). In the competency evaluation, the following skills may be evaluated with the bank deciding on the number of NCE is an assignment or marks to be allotted on factors as under or may be altered to responsibility of such importance that unacceptable suit to its specific needs and objectives. performance in these elements would make our (Group or Unit) performance altogether unacceptable. This is non critical at individual level but critical at group level. An APE is a dimension or aspect of an individual, team, or organizational performance that is not critical element for individual or group performance evaluation but successful performance may earn credit at individual and group performance level. Example of APE: an employee/officer volunteered to work in a new project that requires new skills, such assignments are non-threatening and an intelligent failure would not be minus mark on performance. Many employees/officers remain busy and active but the ultimate outcome seldom adds to any value addition to the organization. The people who are entrapped

in activities without understanding the purpose of business are said to be in activity trap. An ideal performance plan should have a proper blend of critical, noncritical, and additional performance elements. Such plans should have provisions of apprising employee performance against planned agreement on elements at five levels based on (elements to be weighted) according to specific needs of the organization: Typical Evaluation Sheet for Competency Appraisal 2 3 4 5 6 7 8 9 10 11 12 13 14 15 SL 1 Experience Intelligence

Leadership Communication Team Building Computer Savvy Ethics Willingness Conflict Mgt. Decision making Cooperativeness Innovation Tenacity Industry Knowledge Total Skill Education a) Academic b) Professional 10 05 05 05 05 05 05 10 05 10

05 05 05 05 100 05 Remarks for Marks extreme points in quality fields Appraiser Reviewer Total Marks Allotted by Appraisee 10 c kTy p i c a l P l a n n i n g & E v a l u a t i o n S h e e t f o r Various Performance Elements : Reference : Conclusion is defined in terms of the results and also in terms of behaviours employees use to achieve the job results. CPE The Performance Appraisal System must lead to action. : Critical Performance Elements Appraisal for its own sake should be abandoned. The (Minimum 3 & Maximum 5) NCPE Performance Appraisal System must not be considered as

: Non Critical Performance Elements perfect and to remain so in the long term. Appraisal should be (Minimum 2 & Maximum 5) APE on parameters which are important to the organization and : Additional Performance Elements really needed, not which are easy to measure. Multiple Depending on the strategic HR plan, CPE, NCPE and APE feedback system including feedback from peers, subordinates, customers may give vital clue for development. should be determined by the specific bank to suit their need and appropriate weightage may be fixed. The allotment of performance elements to different departments/units may be different for different banks based on their own strategy. Each bank may devise a general template to suit its specific 1. D a l e Yo d e r, P a u l D . Sta u d ohar: Pers onnel needs. Templates for evaluation of CPEs for branch office as Management & Industrial RelationsPersonnel well as administrative staff may be developed depending on Appraisal; Prentice Hall of India Private Limited the specific circumstances of a bank. Appraisal should be at (1986), pp.202-203. least quarterly so as to take corrective feedback for performance improvement. 2. Gary P. Lathan and Kenneth N. Wexley: Behavioural Observation Scales for Performance Appraisal Purposes , Personnel Psychology, Vol. 30, No.2 (Summer 1977), pp.255-256 The typical traditional Performance Appraisal Process of the 1990s focused almost entirely on defining what is to be

achieved. However, today competency based Performance 3. Herbert E. Meyer: The Science of Telling Executives Management Schemes are plentiful and becoming the How They're Doing , Fortune, January 1974, p.104 model for the future. These mixed models assess and reward both results and demonstration of competencies; 4. N.G. Nayak: Personnel Today - Performance both what employees actually deliver and how they do it. The Appraisal, National Institute of Personnel mixed model represents a more powerful and long lasting Management, July-September 2003, p-3 approach to performance management than just an objective based approach. Competency-based approach brings a different perspective to performance management. 5. T.V.Rao: Human Resources Development in Banks It uses a wider, more comprehensive language to describe Performance Appraisal Systems in Banks, Oxford & the performance expected from an employee. Performance IBH Publishing Co. Pvt. Ltd.(1988), pp 268-271 CAB CALLING July-September, 2008 (Source : Regent Global Business Review) c k