1

PERFORMANCE APPRAISAL SYSTEM

OF ASKARI BANK
CHAPTER NO.1

INTRODUCTION

INTRODUCTION TO THE TOPIC

The appraisal of employee performance is a key process for
an organization trying to increase or maintain its effectiveness
because the actions of employees affect the optimal use of the
organization's capital, technological, and marketing resources.
Despite the obvious importance of making accurate appraisals of an
employee's performance consist of a list of key traits or cost-related
variables. Both appraisal instruments are limited from the stand
point of counseling and developing an employee.
OBJECTIVES AND PURPOSE OF THE RESEARCH:
There are mainly two main objectives for performance
appraisal, in an organization i.e. evaluative objectives and
developmental objectives. As we know from our theoretical
knowledge that evaluative objectives are those which are mainly to
make compensation or staffing decisions. It also includes the
evaluation of the selection process on the other hand the
developmental objectives are mainly for the development of the
employees by providing them proper feed back and directing their
future performance and it also helps out to indicate the training and
developmental needs.
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In Askari Bank the main objective for performance appraisal is

to motivate the employees to increase their productivity and
earning their loyalty to the organization. They do not have proper
developmental objectives which could be proved beneficial in the
long run. But they believe in giving proper feed back to their
employees so that they should realize that what is expected of
them and what they have to achieve.
Through performance appraisal the organization also try to
develop a sound compensation system. And to carry out their
staffing decisions which would help them to tackle with many
problems.
THE BACKGROUND OF RESEARCH
THE PERFORMANCE APPRAISAL PROCESS
The process of performance appraisal is carried out in
different step. These steps are more or less the same in all
organizations. The following model gives an out look to the
performance appraisal process followed by Askari Bank.

Review Legal Requirements

Conduct Job analysis

Develop Appraisal Instrument

Select Observers

Train Observers

Measure Performance
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Give Employee Results

Establish Performance Goal

Praise/Reward Performance

Reviewing Legal Requirements:

Before carrying out any performance appraisal system the

first step is to take into consideration that what are the legal
requirements. First the organization see that what performances
have to be appraised and upto what extent and it is after reviewing
the laws the organization is ready to conduct job analysis.
APPRAISAL METHODS AND INSTRUMENTS
The methods used for appraisal of the employees are
categorized into two broad categories. First is the "Comparative
methods" and second is the "Absolute standard methods".
The comparative method includes. Ranking, forced
distribution, paired distribution critical incident method and essay
approach. And the absolute standard method includes rating scales
which is further divided into graphic and non-graphic scales, MBO
(management by objective) and finally the combination methods.
Appraisal Methods Followed By Askari Bank
Askari Bank is our local bank which is trying to improve its
approval process and method used by them,. But at this point there
are very few methods used for the appraisal of the employees.
Basically they use critical incident method for the appraisal of
the middle level managers.
METHODS / TECHNIQUES OF PERFORMANCE EVALUATION
There are four methods of performance evaluation.
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1. Rating Scale
In this method you have to give the rate to individual
performance on the scale basis, this method is precise and simple
as compared to other methods.
2. Check List
The rater has to select only that statement which best
described the performance and individual. In order to measure the
performance, we can assign the weight to it will become weighted
check list, it will help to check the performance and this practical is
standard.
3. Forced Choice
It is a method of set choice. In this method you have to
develop a set of employees and give them the numbers on rater's
own observation.
4. Critical Incidence Technique
In this method the rater has keep in account positive and
negative behaviours in sequence, these are called incident critical
techniques. At the end of year in negative report in written on the
individual performance based on this report. This report help to
provide positive feedback to the employees.
Askari Bank has to adopt the rating scale method for given
the rate to their employees performance.

PROBLEMS IN PERFORMANCE APPRAISAL

AMBIVALENCE AND AVOIDANCE
Supervisors and subordinates are often ambivalent about
participating in the performance appraisal process. Superiors are
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uncomfortable because their organizational role places them in the

position of being both judge and jury. They must make decisions
that affect people's careers and lives in significant ways.
Furthermore most managers are not trained to handle the
interpersonally difficult situations that are likely to arise when
feedback is negative. This is particularly a problem because
managers would like to maintain good relations with their
subordinates in order to carry on with their jobs. All this leads to
uncertainty about their subjective judgments and anxiety about
meeting with subordinates to discuss performance. Yet supervisors
also know that both Askari Bank and the subordinate want such a
discussion to be held. Finally, supervisors often feel personally
bound to let people know where they stand. If they are not open
with their subordinates, the knowledge that they have been less
than truthful keeps them from building a relationship of mutual
trust. In short, supervisors are likely to be extremely ambivalent
about the performance appraisal process.
Subordinates are likely to be very ambivalent about receiving
negative feedback. They are likely to want to discuss negative
aspects of their performance so they can improve and develop, but
will not want to jeopardize promotions, pay, or their own self-image.
The ambivalence of superiors and subordinates has led to the
vanishing performance appraisal. In Askari Bank, supervisors report
that they hold periodic appraisal interviews and give honest
feedback, while their subordinates report they have not had a
performance appraisal for many years or that they heard nothing
negative. Probably the supervisors, fearful of the appraisal process,
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have expressed themselves in such a way that the subordinates do

not receive the unwelcome messages. The supervisor may carefully
package his negative feedback between heavy doses of positive
feedback (the sandwich approach) or may make only very general
statements, without referring to specific problems. That is,
supervisors provide negative feedback, but immediately
counterbalance it with positive statements when their own anxiety
or the defensiveness of the subordinate signals potential problems.
Because of their fear of learning things that will affect their
self-image, subordinates collude with the supervisor in avoiding
negative feedback. This sometimes results in long conversations
only marginally related to the purpose of the appraisal interview.
Sometimes avoidance is manifested in small talk or humor that
conveys an oblique message, or the use of phrases that do not have
clear meaning to either the supervisor or subordinate. Thus,
negative feedback is often not explored in depth and is not fully
understood and internalized by the subordinate.
As a result, no real appraisal occurs or, more likely, a shallow
appraisal just skims the surface. Both parties collude in meeting the
Askari Bank's requirement for appraisal but avoid the tough issues.
Is it surprising then that subordinates do not think they have been
given negative feedback, or had an appraisal at all?
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CHAPTER NO.2

LITERATURE REVIEW

According to David Peele, the British have still another approach

to performance appraisal. Drawing on E.V. Corbett's work and his
own experience in both countries, he shows what the differences
are, and suggests that Americans use some elements of the British
system that would result in a less formalized system. The British
system appears to be halfway between the highly structured
American system and the very informal Scandinavian approach.
Although Peele does not directly question the need for an appraisal,
he does show that variations exist, and each seems to work equally
well. Or, perhaps it is more accurate to say that no clear evidence
exists that any system helps improve staff performance.

No matter what the goal(s) may be for the process, staff members
need a clear explanation of what those goals are and how to
accomplish them. Anyone with experience in examining a large
number of performance evaluation forms is struck by the fact that
the vast majority of the staff are rated "average" or above average-
a rather interesting phenomenon (where is the lower half of the
statistical curve?). Some academic libraries state in their personnel
policies that a person must be excellent to be hired and outstanding
to move up to the next rank; later advancements in rank require the
person to be rated as superior, exceptional, and distinguished. With
such a system, is it a wonder that few people ever get rated less
than excellent, or that people begin to doubt the value of such an
appraisal system as a true assessment of ability or a means of
promoting greater productivity? All too often, only the
administrative goal is achieved because the staff sees this as the
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sole purpose of the process and really have no training in using the
system to achieve the behavioral goals such as improvement of an
individual's performance or for growth and development.

In summary, a review of the literature and the informal data

collection indicates that a formal performance appraisal is
considered essential for good management in the United States-
essential because it provides a means of control over employee job
performance and, thus, over individual and organizational
productivity (behavior goals). It also carries with it what many
managers and supervisors believe to be a powerful sanction for
failing to achieve a satisfactory performance and level of
productivity (administrative goals). That sanction is the granting or
withholding of economic rewards, opportunities for advancement
and promotion, and in the case of totally unsatisfactory
performance, dismissal from the organization. What is assumed is
there is a direct relationship between conducting performance
appraisals and maintaining or improving 'an 'individual's
contribution to the organization (productivity). One does not find in
the literature any articles that supply evidence that the assumption
is valid. Nor does one find, other than indirectly, any questioning of
the need for such a system. Yet, as we have seen, at least one
working alternative exists to the highly structured American system
in Scandinavia and possibly a less structured approach in use in
Great Britain.

Thus there is a need for extensive research in this area. This article
is filled with "it seems," "it appears," "perhaps," which reflects the
current lack of evidence about the following areas: (a) the
effectiveness of performance appraisal practices; (b) influence of
performance appraisal on work relationship (superior/subordinate
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and peer); (c) relationship between performance appraisal and

productivity; and, (d) the cost benefit of conducting performance
appraisals. Each of the areas could be further subdivided into a
number of smaller more manageable research topics. We hope a
number of persons will begin to investigate these areas in general
and specifically in terms of libraries. As noted before, the Graduate
School of Librarianship and Information Management at the
University of Denver, and the Norwegian Library School hope to
secure funding to examine one very small portion of this highly
complex subject.

According to Helen Smeaton (1983) described in his article

“Library technicians in Australia: past, present and future”.
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CHAPTER NO.3

THEORETICAL FRAMEWORK

PERFORMANCE APPRAISAL & COMPENSATION

Often, "an excessively high turnover rate compared to the industry
standard is a symptom of problems within the organization" 1.
Managers must realize that "high staff turnover can prove costly,
particularly to small businesses" (Oliver 1998). Strategies have to
be crafted that will minimize turnover and the costs associated with
it. Although strategies used to retain employees can be expensive,
turnover is a cyclical problem that usually becomes more expensive
in the long run (Brannick 1998). Costs that organizations face when
employees depart include recruitment costs associated with finding
replacements, selection costs associated with interviewing,
relocating and screening, training costs and separation costs such
as severance pay (Gomez-Mejia, Balkin, & Cardy 1998). Managers
can reward employees with tangible or intangible compensation
(Brannick 1998). Tangible compensation includes salary increases,
benefits, bonuses, potential for advancement and stock options
(Brannick 1998). The good news for managers is that there are also
inexpensive strategies that can be implemented to make and keep
employees happy with their jobs. Intangible compensation includes
respect, feedback, recognition, the opportunity to be heard and
encouragement (Armentrout 1998). All of these means of
compensation can be effective if managers take the time to get to
know their employees and what makes them happy. The human

1
Gomez-Mejia, Balkin & Cardy (1998)
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resource function, compensation management is at the center of all

of these issues.
THE EFFECTS OF PERFORMANCE APPRAISAL
Employee turnover rate is defined as the measure of the rate at
which employees leave a firm2. Turnover has become a serious
dilemma facing organizations today (Davison 1997). Consistent
problems with turnover can lead to significant costs to organizations
(Auxillium 1998). The loss of productivity is detrimental as it often
takes 45 to 60 days to refill a position (Auxillium 1998). There are
costs associated with training new employees (Auxillium 1998).
Estimates from the U.S. Department of Labor indicate the significant
impact employee turnover has on the financial performance of an
organization. According to these estimates, "it costs a company
one-third of a new hire's annual salary to replace an employee"
(Brannick 1998). For an employee whose wage rate is only six
dollars per hour, it costs a company $3,600 when he or she departs
(Brannick 1998). The fast-food industry has done their own
calculations on the costs associated with turnover and has found
that it costs $500 to replace a crew person and $1,500 to replace a
manager (Brannick 1998). A fast-food operation with 500 total
employees and 100 percent turnover faces annual turnover costs of
$250,000 (Brannick 1998). Managers in the trucking industry
estimate the cost of replacing one driver to be between $3,000 and
$5,000 (Brannick 1998). These estimates are an indication of the
direct costs associated with employee turnover. Direct costs
encompass the time involved in the recruitment, selection and
training processes, and the costs associated with advertising
2
Gomez-Mejia, Luis, Balkin & Cardy (1998)
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expenses and manpower (Brannick 1998). When a manager has to

take time out of his or her schedule to select new employees this is
a direct cost of turnover (Brannick 1998). The manager would be
much better off using that time to carry out the basic
responsibilities of a manager (Brannick 1998).
Indirect costs also become a factor for organizations experiencing
turnover (Brannick 1998). Current employees may see an increase
in their workloads while positions are unfilled and productivity may
diminish due to low employee morale (Brannick 1998). Indirect
costs seep down through an organization and only compound the
problem as other workers may resign due to perceived unfairness
related to increased workloads (Brannick 1998).
3

3
Andrew P. Newcomb Human Resources Management, (April 11, 1999)
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CHAPTER NO.4

RESEARCH DESIGN

Universe:

For conducting my research on performance appraisal I have

selected a bank i.e. Askari Bank. So all the employees of the bank
are the universe for my study.

Sample:

To make the study simple I have selected the performance

appraisal procedure of the middle level managers of Askari Bank so
this is my sample for conducting this research.

SOURCES OF INFORMATION:

For analysing and carrying out our research the sources

through which we can get our relative information are:

1. Immediate supervisors (Officers)

2. Superiors (CEO, Chief Manager etc.)

3. Middle level managers (Deputy Managers and Managers)

4. Appraisal policies followed by the bank.

5. Relevant literature/books from the library.

6. Other staff of the bank.

SIGNIFICANCE OF THE STUDY

The significance of this study is that it provides a practical

base for what we have learned in a class-room.
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Secondly, it provides us an opportunity to learn by getting

more understanding of the subject through this research
assignment.

Through this research we will find out the existing strengths

and weaknesses in the performance appraisal system in the
selected organization. And it will help to find out the basic reasons
behind. Moreover we will be able to give few suggestions to make
the system of performance appraisal sound and effective.

STATEMENT OF THE PROBLEM

The basic approach of this study is to analyze the

performance appraisal system which is carried out for the middle
level managers in "Askari Bank". Here I am trying to find out that
what are the actual strengths and weaknesses in the system and
that how this system could be improved so that the employees not
only get maximum motivation but the overall productivity of the
institution also increase.
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CHAPTER NO.5

RESEARCH METHODOLOGY

HYPOTHESIS

H1: Hygiene and motivator theory is significantly related to

employees performance appraisal rate.

Ho: Hygiene and motivator theory is not significantly related to

employees performance appraisal rate.

SCOPE OF THE STUDY

Askari Bank was studied as an example for banking industry
on the basis of convenience in collection of data.

DATA COLLECTION:

Source

Data was collected from Askari Bank.

Methods:

I was conduct personal interviews, meetings with employees.

Sample Profile

A sample of 30 individuals was studied as follows:

* 30 employees currently working were studied for measuring

the level of satisfaction in hygiene and motivation theory.

Equipments & Tools Needed

Following was used for this research:

Computer,
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Stationary,

Conveyance.

Time Schedule

Time was spent for this project as follows:

Data collection 3 weeks

Data analyzing & organizing 2 weeks
Data filtering 1 week
1st Draft 2 weeks
2nd Draft 1 week
Final report 1 week
Total Time 10 weeks

Cost Estimation: Cost of this project was:

Computer Rs.5000/=
Stationary Rs.200/=
Conveyance Rs.250/=
Other Expenses Rs.300/=
Total Cost Rs.5750/=
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CHAPTER NO.6

DATA ANALYSIS OF SURVEY QUESTIONNAIRE

QUESTION NO.1
Your Department is?

Features No. of Response

Cash Department 12
Advances Department 6
Remittance Department 4
General Banking Department 3
Credit Department 5
Total Respondents 30

QUESTION NO.2

Askari Bank Policy Regarding Employees (H.R)

Features No. of Response

Very good 0
Good 9
Normal 15
Bad 4
Very Bad 2
Total Respondents 30
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IFINDINGS AND INTERPRETATION OF DATA

* There is no significant relationship between hygiene score of

currently working employees and the hygiene score of
employees left during last 5 years.
* Motivation score of currently & emply left have a significant
relation.
r = 0.455
The motivation score of the two groups is positively but
weakly related (45%).
* Motivation score of currently working employees is
significantly related to hygiene score of working employees.
r = 0.577
Motivation level & hygiene score are related with each and
show a correlation of 58%.
APPRAISAL SYSTEM EVALUATION (STRENGTH AND
WEAKNESSES)
The appraisal system of any organization should be evaluated
to remove its weaknesses and to make improvements.
Some of the weaknesses and strengths of the Performance
Appraisal (PA) system of Askari Bank is given as follows:
STRENGTHS
* Their PA system is very systematic as they carryout
evaluations on annual basis.
* Their PA system ensures their employee of getting rewards of
their better performances.
* The basic aim of their PA system is the motivation of the
employees which encourage them a lot.
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* Through their performance appraisal system they encourage

their employees to do handwork with honesty by creating a
favourable environment for them.
WEAKNESSES
* Their appraisal system is annual so if any extraordinary goal is
achieved in any point of time during the year is mostly not
rewarded separately due to which employees are
discouraged.
* The major weakness of their PA system is the supervisory
bias. As most of the employees get the rewards and
appraisals though they have not done any notable work / task
just because they are liked by the supervisor.
* Their appraisal system is going through the process of
evaluation so it is changing all the time which arises a
confusion among the employees that how their performance
will be ultimately evaluated.
* They do not follow any goal setting process on the individual
level which makes the employee feel standing in the middle of
nowhere. It is difficult for him to prove his worthiness.
* Right now The Bank is not following proper developmental
objectives due to which it is difficult to predict about the goal
of future performances and the need for improving them.
* They do not give frequent appraisals because of which
employees feel disheart on their achievements and their
morale decreases.
* Feeling of inequity may arise among the employees due to
biase prevailing which will decrease their productivity.
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* Proper feedback is not given to the employees due to which

they are unable to findout what performance is expected of
them and their goals remain vague.
* Negative marking is also carried out which creates fear
among employees and it reduces their productivity.
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REFERENCES

* Kaldenberg DO, Regrut BA. (1999). Do satisfied patients

depend on satisfied employees? Or do satisfied employees
depend on satisfied patients? The Satisfaction Report
newsletter. Volume 3. South Bend, Ind: Press, Ganey
Associates Inc.

* Andrew P. Newcomb. (1999). Human Resources Management:

April 11, 1999

* Arendt, Laurie (1998). Designing the extras [50 paragraphs].

* Armentrout, Bryan (1995). The five best gifts to give your

employees. HR Focus, p.3.

* Auxillium (1998). Controlling employee turnover [5

paragraphs].

* Brannick, Joan (1998). Decreasing the staggering costs of

turnover in your organization [14 paragraphs]

* Condodina, Jen, Ermel, Lauren (1997). Compensating

packages changing shape. HRFocus, p.S-1.

* Davis, Barbara (1997). Strategies for managing retention.

HRFocus, p.S-3.

* Gomez-Mejia, Luis, Balkin, David, Cardy, Robert (1998).

Managing Human Resources, New Jersey: Prentice Hall.

* Oliver, Judith (1998). High staff turnover- find out why your
staff are leaving. Management Today, p.84.

* Shaw, Jason, Delery, John, Jenkins, Douglas, Gupta, Nina

(1998). An organization-level analysis of voluntary and
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involuntary turnover. Academy of Management Journal, 41,

p.511.

* Campbell and Lee (1988). “Managerial discretion in the

use of self-ratings in an appraisal system: the
antecedents and consequences”.

* Inderrieden, Edward J.; Allen, Robert E.; Keaveny, Timothy J.

(2004). Publication: Journal of Managerial Issues:
Publication Date: 22-DEC-04.

* Gary P. Latham, Kenneth N. Wexley. (2002). “Increasing

productivity through performance appraisal”.

* Helen Smeaton (1983). “Library technicians in Australia: past,

present and future”.

* David W. Belcher (1998). “Compensation”.

* Thomas J. Atchison (1991). Administration, Second Edition.

* Uma Sekaran (1988). Research Methods for Business.

* Koontz (1987). Management