INTRODUCTION:

The scope of this research is to study the appraisal systems of two organizations and then compare them. The organizations that we chose were Union Bank and Citibank, our focus being the latter. Both the banks are highly renowned and are rated in the top 10, in Pakistan. Both the banks are functioning effectively due to which we decided to take up this challenge. The aspect we chose to study in-depth was how effectively both the banks evaluate their employees at all levels. It is a future oriented activity that provides staff members with useful feedback and coaches them to higher level of performance. It is the process in an organization whereby each employee is evaluated to determine how he or she is performing. Employees seek feedback on their performance as a guide to future obvious among newcomers who are trying to understand their jobs and the work settings. An exercise typically done once or twice a year to identify and discuss job relevant strengths and weaknesses of individuals or work team. This aspect was chosen specifically, because of the upcoming trend of privatization, due to which the efficient blending of skills and knowledge has become a necessity.

LITERATURE REVIEW:
A formal process in an organization whereby each employ is evaluated to determine how he or she is performing. (De Cenzo/ Robins) Performance appraisal is the process by which organization evaluate job performance. (William B. Werther, JR. and Keith Davis) Performance appraisal are designed: To provide feedback on an employees past performance, To assist in the development of the future plans, and To provide supportive documentations for personnel decision.

Performance appraisals must convey to employees how well they have performed on mutually set goals and measures. Superior performance is critical to an organizations success. Yet the typical painstaking performance appraisal process, with its piles of paper and complexity, is an unhappy exercise. Employees seek feedback on their performance as a guide to future behavior. This needs for guidance is most obvious among new comers who are trying to understand their job and the works settings. Longer service worker want positive feedback on the good things they do, although they may resent corrective feedback that feels like criticism. Supervisors and managers need to evaluate performance in order to know what action to take. Detail and specific feedback enables them to better guide employee performance and needed training. Specific feedback also better enable members of management to make comparative judgments about pay increase, promotions and other placement decisions. Performance feedback is compared with standards, prompting the leader to reinforce desired outcomes and take corrective actions for poor performance. Human resource department also use the informations gathered through performance appraisals. Patterns of good or bad evaluations give feedback about the success of recruitment, selection, orientation, placement, training and other activities.

PERFORMANCE APPRAISALS & THE MOTIVATION SYSTEM

EFFORT

PERFORMANCE

ORGANISATIONAL GOALS

INDIVIDAUL GOALS

PERFORMANCE EVALUATION PROCESS

Performance appraisals and their outcomes play a vital part in the model of motivation. If the objective that individuals employees are seeking are unclear, if the criteria for measuring that objective attainment is vague, and if employees lack confidence that their efforts will lead to a satisfactory appraisal of their performance or feel that there will be an unsatisfactory payoff by the organization when their performance objectives are achieved, we can expect individual to work considerably below their potential. If we have done our job to acquire capable people and develop their basic abilities to do the job, we must also make sure that they know what behaviors are required of them, understand how they are going to be appraised, and believe that the appraisal will be conducted in a fair and equitable manner, and that they can expect performance to be recognized by proper rewards. To define performance properly, three key elements must be kept in mind. Goals Measures Assessments Goals: Goal setting has a proven track record of success in improving performance in a variety of settings and cultures. How does they improve performance? Goals direct attention to specific performance in question. They mobilize effort to accomplish higher levels of performance. So set specific, Challenging goals, for this clarifies precisely what is expected and leads to high level of performance.

Measures: The mere presence of goals, however, is not sufficient. Managers must also be able to measure the extent to which goals have been accomplished. Assessment: The third requirement for defining performance is assessment. Here is where the performance appraisal comes in. Regular assessment of progress towards goals focuses the attention and effort of an employee or a team.

PURPOSE OF PERFORMANCE APPRAISAL

It is an exercise in observation and judgment. It is a feedback process; in general it serves a twofold purpose: I). Improve Employee Performances: To Improve employee performances by helping them realize and use their full potential in carrying out their firms and missions. II). Provide Information to Employees & Managers: To provide information to employees and managers for us in making work related decisions. More specifically appraisal serves following purposes: Provide legal and formal organizational justification for employment decisions. Criteria in test validation. Provide feedback to employees. Establish objectives for training programs. Diagnose organizational problems.

THE APPRAISAL PROCESS

The appraisal process begins with the establishment of performance standards in accordance with organizations strategic goals. These should have evolved out of the companys strategic direction and more specifically the job analysis and the job description. These performance standards should also be clear and objective enough to be understood and measured.

The steps are illustrated below:

ESTABLISHED PERFORMANCE STANDARDS WITH EMPLOYEES

MUTUALLY SET MEASURABLE GOALS

MEASURE ACTUAL PERFORMANCE

COMPARE ACTUAL PERFORMANCE WITH STANDARDS

DISCUSS THE APPRAISAL WITH THE EMPLOYEE

TAKE CORRECTIVE ACTION

Appraisal Process In the first step, the expectations a manager has in terms of work performance by her employees must be clear enough in her mind so that she will be able to, at some later date, communicate these expectations to her employees. Secondly, they should mutually agree to specific job performance measures, and appraise their performance against these established standards. Once performance standards are established, it is necessary to communicate these expectations. It should not be the part of the employees job to guess what is expected of them. The third step in the appraisal process is the measurement of performance. To determine what actual performance is, it is necessary to acquire information about it.

Managers regarding how to measure actual performance frequently use four common sources of information. These are: Performance Observations, Statistical Reports, Oral Reports, & Written Reports.

Each has its strengths and weaknesses; however, a combination of them increases both the number of input sources and probability of receiving reliable information. What we measure is probably more critical to the evaluation process then how we measure, since the selection of the wrong criteria can result in serious, dysfunctional consequences. And what we measure determine to a great extent, what people in the organizations will attempt to excel at. The criteria we measure must represent performance as it was mutually set in the first two steps of the appraisal process. The fourth step in the appraisal process is the comparison of actual performance with the standards. The point of this step is to note deviations between standard performance and actual performance so that we can proceed to the fifth step in the process. In the fifth step the discussion of the appraisal can have negative as well as positive motivational consequences. The final step in the appraisal is the initiation of corrective actions where necessary. Corrective actions can be of two types 1. Immediate and deals predominantly with symptoms. 2. Basic and deals into causes. Immediate corrective action is often describe as putting out fires whereas basic corrective actions get to the source of deviation and seeks to adjust the difference permanently. Immediate actions correct some things right now and get them back on track. A basic corrective action asks how and why performance deviated.

ELEMENTS OF PERFORMANCE SYSTEM

HUMAN PERFORMANCE

PERFORMANCE APPRAISAL

EMPLOYEES FEEDBACK

PERFORMANCE MEASURES

PERFORMANCE-RELATED STANDARDS

HUMAN RESOURCE decision Key elements of Performance appraisal systems

EMPLOYEE RECORD

The above figure shows the elements of an effective appraisal system. The approaches must identify performance-related standards, measure those criteria, and then feedback to employees and to the human resource department. The end result, of course, is to improve performance. If performance standards or measures are not job related, the evaluations can lead to inaccurate or biased result. Without feedback, improvement in human behaviors is not likely and the department lacks accurate records in its human resource information system upon which to base other personnels decisions, ranging from job design to compensation. The department usually designs and administers the performance appraisal system for employees in all departments. Centralizations is done to insure uniformity, which means result are more likely to be comparable among employees. Although the department may develop different approaches for managers, professionals, workers, and other groups, uniformity with each group is needed to insure useful results.

Although the department usually designs the appraisal system, it seldom evaluates actual performance. Instead, according to one study, the employees immediate supervisor performs the evaluations 90% of the times. Although other may rate performance, the immediate supervisors are often in the best position to make the appraisal. However, multiple raters-including peers and even subordinate offer additional perspectives.

TYPICAL PERFORMANCE
The appraisal should create an accurate picture of an individuals typical job performance. Appraisal is not just to uncover poor performance; acceptable and good performance, they also need to be identified to achieve goals. Thus, appraisal system should be job related and practical, have standards, and use dependable measures. Job related means that the system evaluates critical behaviors that constitute job success. These behaviors normally are identified as part of the job analysis process. If the evaluation is not job related, it is invalid. Without validity and reliability, the system may discriminate in violation of equal opportunity laws. Even when discrimination does not occur appraisal may be inaccurate and useless if they are not job related. Evaluators and employees understand a practical system. A complicated, impractical approach may cause resentment, confusion, and non-use. The method of identifying these elements would most likely be through job analysis procedures. But whatever method is used, there must be a written record of the standards. The employee also must be advised of these standards before the evaluation occurs, not afterwards. The appraisal of each employees performance must be based upon actual performance of the critical element.

REQUIREMENTS OF EFFECTIVE APPRAISAL SYSTEMS

Legally, scientifically and in the context of ongoing operations the key requirements of any appraisal system are: Strategic Congruence, Validity, Sensitivity, Reliability, Acceptability, & Practicality.

These attributes are briefly explained one by one.

10

Strategic Congruence: Strategic congruence is the extent to which the performance management system elicits job performance that is congruent with the organizations strategy, goals and culture. Validity: Validity is the extent to which the performance measure assesses all the relevant aspects of performance otherwise it is deficient. Sensitivity: Performance appraisal systems should be capable to distinguish between effective from ineffective performers. Reliability: There should be consistency of judgment. Different raters with different perspectives may see the same individual very differently. To provide reliable data, each rater must have opportunity to observe what the employee has done and the conditions under which he or she has done. Acceptability: Human resource programs must have the support of those who will use them. It refers to whether the people who use the performance measure accept it. Practicality: Appraisal instruments must be easy for managers and employees to understand and use.

APPROACHES TO MEASURING PERFORMANCE

There are five main approaches to measure performance, which are: 1. 2. 3. 4. 5. Comparative, Attribute, Behavioral, Results, & Quality.

These approaches consist of certain methods, which will be discussed in detail below.

11

PERFORMANCE APPRAISAL METHODS

Three different approaches exist for doing appraisals. Employees can be appraised against: Absolute standards Relative standards Objectives No one approach is always best each has strength and weaknesses. Absolute Standards: The first group of appraisal method uses absolute standards. In absolute standards we measure an employees performance against some established standards. In this group the following methods are included: The Easy Appraisal, The Critical Incident Appraisal, The Checklist, The Rating Scales, Forced Choice, & Behaviorally Anchored Rating Scales (BARS).

THE EASY APPRAISAL

A performance appraisal method in which an appraiser writes or narrates about the employee. It requires no complex forms or extensive training to complete, but has many weaknesses. Because the essays are unstructured, they are likely to vary widely in term of length and contents. This makes it difficult to compare individuals across the organizations.

THE CRITICAL INCIDENT APPRAISAL

A performance appraisal method that focuses on the key behaviors that makes the difference between doing the job effectively or ineffectively. The appraisal write down anecdotes describing that the employees did that was especially effective or ineffective 1. Its drawbacks are basically: Appraisal are required to regularly write these incidents down, and doing this on a daily or weakly basis for all subordinates is time consuming and burden-some for managers. Critical incidents suffer from the same comparison problem found in essays.

See Appendix 1

12

THE CHECKLIST APPRAISALS

A performance appraisal type in which a rater checks off those attribute of an employee that apply. In the checklist appraisal2, the evaluator uses a list of behavioral description and check of those behaviors that apply to the employee. RATING SCALES

A rating scale3 requires the rater to provide a subjective evaluation of an individuals performance along a scale from low to high. Rating scale is the oldest and most widely used form of performance appraisal. FORCED CHOICE APPRAISAL

It is a special type of checklist, but the rater must choose between two or more statements, all of which is favorable or unfavorable. The appraisals job is to identify which statement is most descriptive in each pair of statements about the employee being rated. Often both statements in the pair are positive or negative. For example, 1. Learns quickly Work hard 2. Work is reliable.. Performance is a good example for other. 3. Absent too often. Usually tardy. BEHAVIORALLY ANCHORED RATING SCALE (BARS)

A performance appraisal technique4 that generates critical incidents and develops behavioral dimension of performance. The evaluator appraises behavior rather than traits. Relative Standards: In the second general category of appraisal methods, individuals are compared against other individuals. These methods are relative standards rather than absolute measuring devices. The most popular of the relative methods are:
2 3

Group Order Ranking, Individual Ranking, & Paired Comparison.

See Appendix 2 See Appendix 3 4 See Appendix 4

13

GROUP ORDER RANKING

A relative standard of performance characterized as placing employees into a particular classification, such as the top one-fifth.

INDIVIDUAL RANKING

This method require the evaluator merely to list the employee in order from highest to lowest, and only one can be best. If the evaluator is required to appraise thirty individual, this method assume that difference between the first and second employee is the same as that between the twenty-first and twenty-second. PAIRED COMPARISON The paired comparison method is calculated by taking the total of [n (n-1)]/2 comparison. A score is obtained from each employee by simply by accounting the number of pair in which the individual is the preferred member. It ranks each individual in relation to all other on a one-on-one basis. If ten people are being evaluated, the first person is compared, one by one, with each of the other nine, and the number of time this person is preferred in any of the nine pairs is tabulated. Each of the remaining nine persons, in turn, is compared in the same way, and the greatest number of preferred victories forms a ranking. This method insures that each employee is compared against every other, but the method can become unwieldy when large number of employees is being compared. Objectives: The third approach to appraisal makes use of objectives. Employees are evaluated by how well they accomplish a specific set of objectives that have been determined to be critical in the successful completion of their job. This approach is frequently referred to as Management by objectives (MBO). MANAGEMENT BY OBJECTIVES (MBO) A performance appraisal method that includes mutual objective setting and evaluation based on the attainment of the specific objectives. Management by objectives is a process that converts organizational objectives into individual objectives. It consists of four steps: 1. 2. 3. 4. Goal setting Action planning Self-control Periodic reviews.

14

MULTI RATER OR 360-DEGREE FEEDBACK It is performance appraisal process in which supervisors, peers, employees, customers, suppliers and the like evaluate the individuals. We use this information to provide perspective on performance from all angles (360 degrees). Here we use a tailored, multisource feedback process, which includes three steps. Employees and manager identify key customers for each of employees goals and commitments. Contract with customers regarding their expectations. The objective is to pay attention to the same things that the customer thinks are important. Meet regularly to each customer to assess progress, to plan for future performance, and to receive feedback.

USES OF PERFORMANCE APPRAISAL

Performance Improvement:

Performance feedback allows the employee, manager, and personnel specialists to intervene with appropriate actions to improve performance. Compensation Adjustments:

Performance evaluation help decisions makers determine who should receive pay raises. Many firms grant part or all of their pay increases and bonuses based upon merit, which is determined mostly through performance appraisals. Placement Decisions:

Promotions, transfers, and demotions are usually based on past or anticipated performance. Often promotions are a reward for past performance. Training & Development Needs:

Poor performance may indicate the need for retraining; likewise, good performance may indicate untapped potential that should be developed. Career Planning & Development:

Performance feed back guides career decisions about specific career path one should investigate. Staffing Process Deficiencies:

15

Good or bad performance implies strengths or weaknesses in the personnel departments staffing procedures. Informational Inaccuracies: Poor performance may indicate errors in job analysis information, human resource plans, or other parts of the personnel management information system. Reliance on inaccurate information may have led to inappropriate hiring, training, or counseling decisions. Job Design Errors:

Poor performance may be a symptom of ill-conceived job design. Appraisals help diagnose these errors. Equal Employment Opportunities:

Accurate performance appraisal that actually measure job related performance ensures that internal placement decisions are not discriminatory. External Challenges:

Sometime performance is influenced by factors outside the work environment, such as family, financial, health, or other personal matters. If uncovered through appraisals, the human resource department may be able to provide assistance. Feedback To Human Resource:

Good or bad performance throughout the organization indicates how well the human resource function is performing.

PERFORMANCE APPRAISAL CHALLENGES

The design of the performance appraisal system often contributes directly or indirectly to the challenges facing human resource professionals. Important challenges include: Legal constraints Rater biases Appraisal acceptance

Legal Constraints: Performance appraisal must be free from discrimination. Whether form of evaluation the department uses, it should be both valid and reliable. Rater Biases:

16

Biases are the inaccurate distortion of a measurement. Although training in the conduct of performance appraisal can help reduce bias, raters who failed to remain emotionally detached while they evaluate employee performance usually cause it. The most common rater biases include: The Halo Effect The Error of Central Tendency The Leniency & Strictness Biases Cross-cultural Biases Personal Prejudice The Regency Effect

17

INTRODUCTION TO THE BANKS: CITIBANK:

Vision: To be the organization of choice dedicated to our customer & employees. Providing exceptional service quality and delivering consistently superior financial Performance. History: The largest of the citys banks in 1811 was the Bank of the United States, established by Congress the request of Alexander Hamilton to finance and promote the development of commerce and industry. The demise of the Bank of United States was a major blow to the local merchants, prompting proposals for, new banks, including that of City Bank. The first petition to organize a sixth New York City bank was defeated in the State Legislature in March 1811, due to internal rivalry in the Republican Party (not to be confused with todays political party of the same name). Colonel Samuel Osgood, a senior statesman of the Republican Party, stepped forward to unite the rival factions behind the City Bank petition. He wrote: if a republican bank be incorporated, surely it ought to be done on principles that will tend to harmonize the republicans of the City of New York. Colonel Osgood was well established in banking serving as a director of the Bank of North America in 1781 and as cashier of the Massachusetts Bank in 1784. In 1799, he helped Aaron Burr establish the Bank of the Manhattan Company, where he remained a director until 1803. As a result of Colonel Osgoods intervention, each faction within the Republican Party named six members to the new banks board of directors, helping the second petition to sail through the State Legislature. On June 16, 1812, with $2 million of capital, City Bank of New York (now Citibank) opened for business at 52 Wall Street. Colonel Samuel Osgood was the banks first president. Citibank Operations in 57 Countries: For more than 20 million customers in 42 countries, more than 1,100 branches and a variety of electronic access systems are the gateway to state-of-the-art banking products and the best ideas from around the world. The only truly global consumer bank, Citibank is creating the global products and global platforms that meet the expanding banking needs of a middle class that is rapidly growing throughout the world. Regions: Citibank operates all over the word by classifying its business in the following five regions:

18

Asia Pacific Central & Eastern Europe, Middle East, Africa & South Asia Latin America North America Western Europe

Citibank Operations In Pakistan: Citibank's presence in Pakistan dates back to 1962. Citibank is one of Pakistan's most innovative commercial and investment bank, having won more international citations for deals done in Pakistan and having more landmark transactions to its credit than any other financial institution. Citibank is the market leader in innovation and product development. A full range of commercial banking activities are carried out by Citibank including cash management, custodial services, advisory services, foreign exchange transactions, trade financing, and working capital finance. Citibank also has a full-fledged consumer bank functioning at each of the branches. Today Citibank's portfolio includes over 200 Corporate, Public Sector and Financial Institutes. Organizational Structure: Organization structure is the formal system of rules and task and authority relationships that control how people corporate and use resources to achieve the organizations goal. Citibank as an international firm tends to maintain centralized control over their core competencies and to decentralize other decisions to foreign subsidiaries. Citibank has centralized research and development and marketing in the home country with little variation in marketing strategies in major countries and has decentralized operating decisions to the foreign subsidiaries5. Citibanks Culture: The culture of the Citibank contains the followings: Physical surroundings Values Functions, Events and Ceremonies The Dress Code Goals Stories Slogans
5

See Appendix 5

19

PHYSICAL SURROUNDINGS Citibank has a well-decorated, organized and impressive interior. The security system is quite infallible and reliable. VALUES It expects all employees of the company to act in accordance with the highest standards of personal and professional integrity in all aspects of their employment and to comply with all the applicable laws, regulations, and company policies. FUNCTIONS, EVENTS AND CEREMONIES Get-togethers are arranged for all of the employees of corporate and consumer department on a yearly basis, so that they can interact and socialize among one another. Special occasions like Pakistan Day, Defense Day and New Year get together and Eid-Milan Parties are arranged. THE DRESS CODE The dress code is formal, consisting of suit and tie for men and formal shalwar kameez for women. On Saturdays, you can dress informally. However, on weekdays, formal dress code is compulsory. GOALS Their main goal is to generate profit, give customer satisfaction and deliver sustained superior value to the clients, and be the most successful financial services firm in the world. STORIES Like each organization, Citibank has learned from experience and keeps relating the story as a source of motivation to lower-level employees as well as managers. SLOGANS Different slogans that Citibank has adopted throughout the years are: The Citi that never sleeps Where money lives

20

Location: While expanding internationally there came a question at which location to operate? Citibank has selected location where it can generate maximum profit by providing the best quality services. In Pakistan Citibank have only seven branches, two in Karachi and one each in Lahore, Rawalpindi, Islamabad, Faisalabad, which are considered as the main cities of Pakistan and also the major business sectors in Pakistan. Citibank Approach: Citibank is handling the situations very effectively by appointing senior managers from the same region so that vast cultural differences can be narrowed down secondly the most common factor of spouse adjustment can be managed. Citibank keep on doing family activities so that the interaction between families increases. Citibank also followed the under mentioned criteria for the selection of its expatriate staff. HRM managers tend to equate domestic performance with overseas performance potential. Domestic performance and overseas performance potential is not the same thing. An executive who performs well in a domestic setting may not be able to adapt to managing in a different cultural setting. Training & Management Development: Citibank is running a complete department of HRM, which considers the backbone of organization. Citibank has a great emphasis on training of its employees and continuously improving their skills. Selection is just the first step in matching a manager with a job. The next step is training the manager to do the specific job. An intensive training program will be used to give expatriate managers the skills required for success in a foreign posting. In management development they develop the manager's skills over his or her career with the firm. Thus, as part of a management development program, a manager will be sent on several foreign postings over a number of years to build her cross-cultural sensitivity and experience. At the same time, along with other managers in the firm, she might attend management education programs at regular intervals. Management development is seen as a tool to help the Citibank to achieve its strategic goals. Management development programs are designed to increase the overall skill levels of managers through a mix of ongoing management education and rotations of managers through a number of jobs within the firm to give them varied experiences. They are attempts to improve the overall productivity and quality of the firm's management resources.

21

Compensation: Citibank is not paying a healthy amount to its lower grade officers however; middle and top management is compensated at very good scales. The components of the typical compensation package are: A base salary, A Foreign Service premium, Allowances of various types, Tax differentials, and Benefits and medical cover.

Staffing Policy: Staffing policy is concerned with the activities include determining the firm's human resource strategy, staffing, performance evaluation, management development, compensation, and labor relations. At one level, this involves selecting individuals who have the skills required to do particular jobs. At another level, staffing policy can be a tool for developing and promoting corporate culture. By corporate culture, we mean the organization's norms and value systems. Citibank pursuing transnational strategies have high needs for a strong unifying culture, HRM function to pay significant attention to selecting individuals whom not only has the skills required to perform particular jobs but who also "fit" the prevailing culture of the firm.

22

UNION BANK:

Mission: To be the premiere bank, responsive to the needs of our target market customers, recognized for consistently superior service quality and innovative products, thereby delivering superior value to our stakeholders Vision: Union Bank's vision is to provide its clients with complete banking solutions. History: Established in 1991 and backed by a major Middle Eastern Group, Union Bank today is the preferred choice of thousands of satisfied customers throughout Pakistan. In Pakistan the Saigols till 2000 owned it. In the year 2000, Union Bank acquired Bank of America's operations in Pakistan. Keeping on the same strategic run, in July 2001, Union Bank signed an Independent Operator agreement for American Express Cards in Pakistan. As a result of this arrangement, Union Bank now issues, operates and markets American Express cards in Pakistan. The Bank is also in the business of acquiring merchants accepting VISA, MasterCard, American Express and JCB cards. In 2002, Emirates Bank International (Pakistan Operations) has been acquired by Union Bank Limited. With this, Union Bank has become one of the largest private banks in the country. With major investments in international brand acquisitions, branch network and information technology including a state-of-the-art customer contact center, Union Bank is well on its way to offer its customers innovative financial products. This would result in an unmatched level of service quality offered by the Bank in the years to come. Operations: With 42 branches in 17 cities and a correspondent banking network of over 300 banks in 85 countries, Union Bank is rapidly gaining ground in the global financial market. Management at Union Bank: The management at Union Bank comprises of seasoned professionals in the fields of banking and finance thereby encouraging a culture of innovation, and total customer satisfaction.

23

New Corporate Visual Identity:

The new corporate identity, with bright colors yet simple outlook, is designed to reflect a premiere, modern and technology oriented bank. The bright colors not only ensure increased visibility but also create a fresh, energized and vibrant outlook. The simple font portrays a unique appeal of elegance and modernity.

Culture: The culture of the Union bank contains the followings: Physical surroundings Values The Dress Code PHYSICAL SURROUNDINGS Union bank is situated at a very popular place. The branch is decorated very well and security system is also good. VALUES The core values of Union Bank are: Integrity Meritocracy Innovation Team-work

Integrity: Uncompromising honesty to oneself, the customer and the company with mutual relationships based on trust and the rejection of intrigues. Meritocracy: Compensation and career progression based on performance against set goals and objectives without bias to personal relationships, gender, religion or ethnicity.

24

Innovation: Create and implement simple yet creative, new and dynamic future oriented learning's leading to out of the box solutions to the needs of the customer and improved productivity. Teamwork: The ability and willingness to share equally the responsibility of failure and the glory of achievement. DRESS CODE: The dress code at Union Bank is formal, i.e. neck ties for the male and shalwar kameez for the females. Each employee, one by one, is allowed to come casual on Saturday. Structure: The structure6 of Union Bank is centralized with the Branch Manager at the top. They have 4-5 regional heads. Their HRD7 is located in Karachi. Recruitment & Selection: Union Bank hires employees according to requirement. The branch manager informs the regional head if new recruits are needed. The regional head informs the HRD in Karachi who then send the appointment letter. Employees become permanent after duration of 1 year. Training: Before the change in management in 2000, Union Bank had its own training academy in Lahore. Their employees had to go through various tests, interviews, etc. to get selected. After that they were given management training for 6 months in the academy and 6 months on the job. Now, they do not have a formal training place, but they train their employees on the job. Compensation: The starting pay for a fresh graduate is Rs. 12,000. Pay scale also depends upon the qualifications. Instead of the salary, the employees are given extra bonuses with respect to their performance. They are allowed one-month holiday, with pay, each year. They are also allowed personal loans etc. Certain amount of medical is also free for their employees.

ANALYSIS OF PERFORMANCE APPRAISAL SYSTEMS OF CITIBANK & UNION BANK:

6 7

See Appendix 6 Human Resource Department

25

Performance is evaluated at all levels on yearly basis, targets are assigned to every body and mostly appraisals are conducted on their basis. Expatriate managers are evaluated at two levels first in host country and secondly in corporate HQ. Employees are motivated by the fact that it is a private sector and there is intense competition. If a person is not doing well, he wont remain on his seat. Either he will be replaced or transferred. An Annual Evaluation Process is held in which each employees performance is compared with his/her targets. The supervisor ranks each employee on a scale of 1 to 5, where 1 is Excellent and 5 is Poor. Only 10% are graded 1,which is why there is intense competition for scale 1. On an annual basis, bonuses are given to employees whose performance exceeds their targets. The main motivational factors are bonuses, pay-raises, promotions and Awards. Citibank uses appraisal forms8 to evaluate their employees. The evaluation is done once a year. It is done from April to April. If there are 100 points then rating will be in this way that above 95 the person lies in the excellent category then below 95 the person lies in the very good scale then below 70 the person lies in the third category and the person below 60 the person lies in the fourth category and below 50 the person lies in poor category Note: On the fifth category the organization issue two memos to the person and if continuously performance of the person is poor then after two memos the person is terminated from the organization. As the organization has MIS system so productivity is very important. Productivity is divided in to two categories. One is the system utilization and the other is the target. Every department in the organization has different targets. These depend upon the nature of the job. As the sales department and the collection department has the different target. For example, the sales department has the customer-oriented targets and the collection department has the targets of the amount recovery and the legal cases etc. System utilization is very important. Reward System: Rewards are given on the basis of employee performance and according to the job descriptions. Rewards may include bonuses, increments, pay rises, etc.
8

See Appendix 7

26

A Superior Quality Award can be given to anyone at anytime due to good performance. It does not matter how long a person has been in the organization.

Performance is evaluated twice a year, in April and in October. The major evaluation takes place in April every year. This is the time when employees are promoted or demoted. They get pay rises, warning letters, etc. This is a time consuming task thus it takes approximately 1 month for all the discussions and evaluation to take place. Evaluation Process: The performance appraisal at Union Bank is purely performance related and there is no chance of bias- personal neither professional bias. They use forms to evaluate their employees. They have a very good screening process. The evaluation is done by the supervisor first, then the branch manager. Then the form is sent to the regional head. Finally the form is evaluated by the HRD in Karachi. The employee is allowed to give comments till the end of the evaluation process. Therefore, the process is reliable, sensitive and error free. Each and every employee is given a form (part-a)9 in January to fill out the goals for himself/herself for the full year. Then keeping the goals in front and comparing them with the performance evaluate them. Say if there are 20 staff members, then 5% of them should be below average, 25% of them should be average, 30% of them should be good, 30% of them should be very good and 5% of them should be excellent. For employees in the below average category, they are given warnings. First verbal, then written, and if even then they fail to improve then they are terminated. Reward System: Employees are given rewards on their performance. Rewards maybe monetary and they maybe in the form of awards, etc. Monetary rewards include bonuses, pay raises, promotions, etc. This all is done after evaluating the performance of the employee.

CONCLUSION & RECOMMENDATIONS:

See Appendix 8

27

Performance Appraisal is a future oriented activity that provides staff members with useful feedback and coaches them to higher level of performance. It is the process in an organization whereby each employee is evaluated to determine how he or she is performing. Employees seek feedback on their performance as a guide to future. Now employers are more interested towards the knowledge and skill of employees. In this fast moving era, it is the survival of the fittest. Meaning that only those can survive who keep on developing their skills side by side otherwise once one is left behind it is really difficult to catch up again. Therefore, performance appraisal is of vital importance as it keeps a check on employees performance. Due to this the employee can see where he stands and ranks and can then improve himself/herself. Although evaluating is a difficult, time consuming task it has several advantages both for the employee and the employer. After studying the performance appraisal systems of both the banks, we came to certain conclusions. Although both the banks are very prosperous, there is always a need to improve. There were some functions of one bank that were better than the other. There are some aspects of the system, which are contradictory, especially of Citibank. They claim on doing something, which was in contrast with our findings. As our focus was more on Citibank, therefore, we suggest a few recommendations for them: Citibank claims it does 360-degree feedback, but the employees claim that they are not consulted during feedback. Therefore, the evaluators should bring fairness and validity in their process. As this is not only important for the Banks Prestige but it is also very vital for an employee career. They should make the appraisal form more comprehensive, like the Union Bank. This would result in minimum error. There is contradiction between the top level and the lower levels, which shows lack of communication. They should keep a more decentralized structure to help overcome this problem.

28