MANAGEMENT

Table of Contents
Introduction of the Company .............................................................................................. 1 Scope of the Study .............................................................................................................. 1 Performance Management System ..................................................................................... 2 Objective of Performance Management System (PMS) ..................................................... 2 Principles of PMS in Bank Alfalah ..................................................................................... 4 Performance Management Process ..................................................................................... 5 1. Planning ...................................................................................................................... 5 2. Coaching ..................................................................................................................... 6 3. Reviewing ................................................................................................................... 7 4.Rewarding .................................................................................................................... 8 Analysis of Bank Alfalah Performance Appraisal System ................................................. 9 1. Strengths of Performance Management System: ........................................................ 9 2. Weaknesses of Performance Appraisal ..................................................................... 11 Recommendations: ............................................................................................................ 12 Conclusion: ....................................................................................................................... 14

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Introduction of the Company

Bank Alfalah Limited is a private bank in Pakistan owned by the Abu Dhabi Group. Bank Alfalah was incorporated on June 21, 1992 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1, 1992. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. Bank Alfalah is the 6th largest bank of Pakistan with 471 branches spanning

163 cities across the country. After a few years, the bank introduced its new identity of H.C.E.B after the privatization in 1997. The management of the bank had implemented strategies and policies so the bank would become a major player in the market. With a partnership with the Abu Dhabi Group the position of the bank became stronger which allowed the bank to invest more in technology to increase its range of products and services The last year was particularly significant in the Banks history - a year of transformation, productivity and forward-looking change in order to maximize value for shareholders. Over the last year, the bank has drawn upon the strengths and witnessed increasing successes whilst attempting to positively tackle periodic challenges. The bank has reassessed their operating priorities, whilst ensuring that overall growth trajectory sustains its momentum. The bank is proud to report that it has emerged well by following its strategic roadmap, despite the challenging macro-economic environment. They have closed the year with solid financial results, premier industry-wise rankings and robust expansion and growth. Due to the efforts of their entire team, they are pleased to report that their deposits, advances and profitability have all witnessed significant growth over the last year

Scope of the Study

The study focused on analysis of currently implemented system of Bank Alfalah Limited, integration of PMS into existing HR functions and use of PMS in organization processes. The target population to study the system was managers and lower staff. The primary information was collected from 15-20 employees of head office by conducting informal interviews.

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Performance Management System

Performance Management is a process for establishing a share understanding (two way communications between employee and supervisor) a pout what is to be achieved and how it is to be achieved, and an approach to manage people that increases the profitability of achieving success. Performance Management is a continuously improvement process, which defines, develops, reviews, and recognizes performances and support the individual, the business unit and the entire organization. The document sets out to explain the essential points of the Performance Management Cycle in Bank Alfalah which consists of following points; 1. Planning. 2. Coaching. 3. Reviewing. 4. Rewarding.

Objective of Performance Management System (PMS)

The major objective of PMS is to provide and unambiguous introduction to the changes to the performance management cycle and about what the various stages involved in the process mean. The objective of PMS can be set in two dimension; one for employees performance and second for organizational performance. The major objectives of performance management are discussed below:

To enable the employees towards achievement of superior standards of work performance.

To help the employees in identifying the knowledge and skills required for performing the job efficiently as this would drive their focus towards performing the right task in the right way.

Boosting the performance of the employees by encouraging employee empowerment, motivation and implementation of an effective reward mechanism.

Promoting a two way system of communication between the supervisors and the employees for clarifying expectations about the roles and accountabilities, communicating the functional and organizational goals, providing a regular

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and a transparent feedback for improving employee performance and continuous coaching.

Identifying the barriers to effective performance and resolving those barriers through constant monitoring, coaching and development interventions.

Creating a basis for several administrative decisions strategic planning, succession planning, promotions and performance based payment.

Promoting personal growth and advancement in the career of the employees by helping them in acquiring the desired knowledge and skills.

Some of the key goals of a performance management system in an organization are:

Concerned with the output (the results achieved), outcomes, processes required for reaching the results and also the inputs (knowledge, skills and attitudes).

Concerned with measurement of results and review of progress in the achievement of set targets.

Concerned with defining business plans in advance for shaping a successful future.

Striving for continuous improvement and continuous development by creating a learning culture and an open system.

Concerned with establishing a culture of trust and mutual understanding that fosters free flow of communication at all levels in matters such as clarification of expectations and sharing of information on the core values of an organization which binds the team together.

Concerned with the provision of procedural fairness and transparency in the process of decision making.

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Principles of PMS in Bank Alfalah

The Bank Alfalah Performance Management Cycle is built on number of guiding principles; Performance Management is a comprehensive process which; Aligns individuals, teams and organizational objectives Stretches performance Informs compensations Supports individual and career developments There should be a consistent methodology for assessment of every Bank employee performance across all areas. Good performance management is based on the continuous, honest and constructive dialogue between supervisor and employee. Performance assessment is based on individuals total contribution throughout the performance year. Goals and objectives, as laid out at the beginning of the appraisal process, should be SMART. The sufficient support and training is given to both employees and people supervisors to reach the agreed performance level, where this might not be happening.

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Performance Management Process

The Performance Management Process is shown as under;

1. Planning The Process consists of following points; The 1st step in the Performance Management Process is to set challenging goals. To be effective, goals must be SMART; i.e. specific, measureable, attainable, relevant and timed. Document the established goals on the Performance Planning Form and send a copy of it to HR at the start of the PM cycle. Employee should actively set goals, consider the Whats and Hows which are most applicable to you and your role in the next 12 months. What Goals; for each area of contribution, identify how you can stretch your performance in the following performance indicators; Quality, Quantity, Cost, Timeliness. How Goals; You should read and understand the core Behavioral competencies, especially the behavioral expectation of each competencies.

-6 Discuss and complete your Performance Agreement with your supervisor. Each employee must be assessed against both SMART goals with account for 70% of their final performance assessment and the Core Behavioral Competencies which make up other 30% of the performance assessment score. Each SMART goal is weighted (%) according to the importance it has in the employees job. The weighting of all SMART goals adds up to 100%. 2. Coaching The Process consists of following steps; Both you and your supervisor will need to commit to setting aside time to share Performance Feedback. Your supervisor will give you feedback informally throughout the year to track progress and provide coaching. It is mandatory that you have one face to face mid-year review of performance. Ask your supervisor for this feedback if you do not receive it. Ongoing dialogue, one to one discussions, no matter how brief or informal, is at the heart to good performance management. It is the quality of this ongoing feedback and coaching that will determine whether we meet the performance challenges. Documentation of Performance (Performance Log) and 1 to 1s (One to One Form) will serve as valuable guidance and evidence for full-year review and you are encouraged to do so for each employee and to encourage employees to maintain their own performance Log. During mid-year review and feedback discussions, SMART goals should be reviewed by Supervisors to confirm continued relevance if needed, any adjusted Performance Planning Form must be sent to HR for their record. These adjustments are not to be used to reduce the challenge of the goals already set, but for realignment to Bank Alfalah strategy if required. If underperformance is observed then a performance improvement plan may need to be created.

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3. Reviewing Every Bank Alfalah employee will participate in a formal, documented annual performance review with their supervisor. The review will assess each individuals total contribution during that year, including SMART goal achievement and role performance and displays behavior and competencies. The process consists of following steps. Consider the overall performance in the year. What has gone well and what has been difficult (Self evaluation form is used for it). Also consult the Performance Log that has been maintained in order to make a holistic and fair self evaluation. Thinking ahead, what can be done to improve performance in the next year. (SMART Goal Worksheet) Supervisor should use the annual review to consolidate a clear view of the employees total contribution for the whole performance year. It is essential that the supervisor has the courage to provide honest and high quality feedback. This level of maturity in the relationship is necessary to make a genuine difference. Ensure to communicate a clear assessment of the employees performance for the year. This covers total contribution, including the Whats and Hows and that each employees knows what is required to improve performance and what support will be provided in the coming year to achieve this. Complete all parts of the performance agreement and calculate the employees final performance rating and category.

Overall Performance Rating 2.60 3.00 1.50 02.59 Up to 1.49

Performance Category Excellent Performing Partially performing

Definition Consistently exceeded expectations. Consistently met expectation. Did not consistently meet expectations.

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4. Rewarding The classification of individuals into Performance Categories is intended to help catalyze honest feedback, focus improvement and distribute compensation fairly. There will however be a necessarily broad range of performance within each of these categories. Therefore supervisor must provide specific feedback to individuals. To help maintain consistent standards and further encourage management accountability for challenging debates around performance, bank would normally expect the majority of pools to be distributed broadly as fellows; Performance Category Excelling Performing Partially Performing Around 25% Around 60% Around 15% Definition

This resulting distribution will be reviewed by the manager at the next level and overall by the Head of Department.

Linkage with the System: This rewarding system is directly or indirectly linked with compensation and development of employees.

Link to Compensation: Banks performance management system is driven by a combination of annual inflation officially announced by the Govt of Pakistan for the period under review and overall performance in the job. Official inflation figures announced by Govt source will guide the management in determining inflation related increases in salary. The overall performance in the job will be assessed by a combination of measured performance and management judgment which will lead to comparative ranking within pools of similar jobs. The performance bonus payout is therefore a combination of inflation related, plus merit related increase. For each performance category there is a range defined and it is the Head of Departments accountability to manage and differentiate the payout in line with the Performance rating given.

Link to Development:

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Performance Management has two equally important outcomes, the appropriate distribution of the reward and the identification of the development needs. Bank Alfalah is committed to providing employees, the necessary support through training, coaching and on the job experience to enable them to fully develop both in the short term and long term. The dialogue between you and your supervisor during the performance management cycle should identify areas which need to be strengthened and the actions required to achieve this. The Personal Development Plan documents short term career development actionable steps.

Analysis of Bank Alfalah Performance Appraisal System

After careful analysis and survey from the employees of Bank Alfalah Limited, we analyze some good points of Performance Management System and some short coming of the system. These are as under, one by one:

1. Strengths of Performance Management System:

Impartiality Calculated system PMS at Bank Alfalah is based on right and calculated system as it will decide between Employee and Manager in a meeting where they agree and signed the Form-B, as declared Performance Agreement.

Identify Training needs PMS process at Bank Alfalah can provide a basis for improving the performance of employees. It helps to identify the training and development needs for employees who do not meet the set standards.

Employee Motivation & Linkage to Reward System Performance appraisal helps to evaluate the actual performance of employees against the expected performance. It recognizes and rewards potential employees and motivates them to excel further. It provides a basis for determining the salary hikes, perks, promotions and bonuses payout based on performance.

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Pre Assessment of Employee Performance Through performance evaluation at Bank Alfalah, the supervisors can identify the strengths, weaknesses, job knowledge, skills and commitment of an employee. An employee comes to know about his key work areas and also the areas he needs improvement and has to work upon. He also gets a better understanding of the organization's needs and expectations.

Right Placement of Employee It helps to recognize the goals and objectives of an employee. Sometimes, through the appraisal, the managers may tap the interests, skills and proficiencies of an employee that may be suitable for some other job in the organization. This helps to ensure that an employee is being utilized effectively. Identifying people with right skills helps an organization achieve its mission and objectives and contributes to an employee's overall growth as well.

Employee Commitment This process is a viable tool for establishing and maintaining an open communication between supervisors and employees, and enhances employee commitment and productivity.

Continuous Feedback: The performance management system at Bank Alafalah Limited encourages continuous feedback on employee performance and ensures midterm review of performance enabling the system to provide continuous feedback throughout the year.

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Objective Evidence:

The PMS of the Bank provides objective evidence of the performance and encourages maintaining a PERFORMANCE LOG at both ends at supervisor end and employee end. This performance log helps to reach an agreement on performance between employee and the supervisor.

2. Weaknesses of Performance Appraisal On the downside, appraisals have been criticized on a lot of grounds. One of the arguments against performance appraisals is that they get affected by office politics.

Personal Assessment The superior or the manager may not assess his subordinates fairly. Instead of basing his evaluation on the employee's actual behavior, the manager might give his feedback on the basis of his personal likings and disliking.

Biased Managers Managers sometimes show bias towards employees with whom they have a friendly relationship as compared to those who are just acquaintances. This creates nepotism and negativity in the workplace and hampers the morale of hard-working employees.

Lack of Training There is need of Training at many areas Employees and Managers do not understand about the PMS forms, and especially for new hired employees.

Transfer of Assignment and Change of Goals Employee transfers after their Goal settings and at new department the new Goals setting assignment performed, at the time of Performance appraisal the employee performance evaluated from two departments and the calculation of goals at current PMS is not possible there is not any other option for change of goals or assessment from more than one department.

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Relating Research Article with Bank Alfalah PMS

We have selected and relating research Article by Ann P. Bartel on the topic of "Human Resource Management and Organizational Performance: Evidence from Retail Banking published in Cornell University ILR School research journal, Volume 57, No.2

Dimensions of high performance system as discussed in article

1. When employee performs well his contributions should be recognized 2. Employee should have clear understanding that how their performance is evaluated 3. Supervisor should gave frequent feedback to let employee know that how they are doing their job on regular basis. 4. The research reveals that branches that rank high on the incentives dimension are better performers 5. Controlling the characteristics of the market in which branch is located and unobserved fixed branch & manager characteristic had a positive and statistically significant relationship with performance. 6. Employees perceptions of the performance feedback & recognition system at their branch. 7. Research reveals that positive effect of the Quality of communication between the manager & the staff and among staff members is important dimension of high performance management system.

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Recommendations:
Although Bank Alfalah Performance management system is working good but still there are some chances of improvement so we suggest the following recommendation: 1. We recommend that Bank Alfalah which has successfully implemented the Performance Management System should, as further step, consider the advisability of reviewing the PM cycle every year for further improvement. 2. We recommend that Supervisors should be unbiased during conducting Performance Appraisal because this creates nepotism and negativity at work place and moral of the other workers get down. This also increases turn over in the organization. 3. We also further recommend that proper training should be given to supervisory staff conducting and implementing performance management system. 4. We further recommend that organization should ensure the timely implementing and monitoring of PMS in all departments of the Bank. 5. We recommend that Bank focus on development programs to: a. Motivate employees to give their best. b. Support succession planning, career and personal development. 6. We recommend that regular customer service survey should be carried out to track the degree of dissatisfaction from stakeholders on namely; timeliness in the provision of services, competency of staff in delivery and effectiveness of service deliver. 7. We also recommend that strong communication should be established between supervisors and staff for effective implementation of Performance Management System. 8. We also recommend that feedback on performance should always be constructive it should based on CEDAR approach i.e.

Clarify the performance expectations Explain how you think that person has performed Discuss the reason of difference between. Agree on steps to fix the problems Review the outcome

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Conclusion:
The performance management system at Bank Alfalah Limited is designed to achieve the objectives of a good performance management system. The implementation part has been noticed to be good.

This system has incorporated many necessary elements of a fruitful Performance Management System, but still there are some issues this system does not address. The system has no any answer to the question, what if objectives of all the employees are not set within time. Similarly, all the objectives are reached to HR department, but there is no guideline for HR department for any value addition to the objective setting from HR department like; does HR department check at the end of the performance year if the employee is evaluated on the basis of the objectives already set or the objectives have been changed without any justification and information to HR Department. There is no linkage between the individual objectives and organizational objectives. Who is responsible to align individual objectives with strategic objectives?

This system also does not elaborate the mechanism to eliminate bias. On changing job responsibilities during the year, how employee will be evaluated to his previous objectives and current objectives?

The PMS of Bank Alfalah Limited is one of the good performance management systems which contain all the necessary elements but there is always lot of room for further improvements.