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Objective of the Study:

The main objective is to study the concept of HR in special reference of
Performance Appraisal narrowing it down to study its application in the banking
sector. The study is undertaken to understand the practical application of the
appraisal system in the emerging and ever growing banking sector.
The study also aims to highlight the new trends in the performance appraisal
system and also highlights the views / approach of the management and
employees. The study also aims to explore the next level of performance appraisal
systems , also known as Performance Management.
About the Study:
Keeping the objective of the study in mind, the approach adopted is to study the
application of performance appraisal system via two case studies. The study is thus
conducted by studying the appraisal system adopted by a private bank HSBC and a
public sector bank Bank of Baroda. This is mainly a secondary research by
studying its policies and HR systems. It highlights the techniques , approaches,
forms, processes followed / used by both the banks. It also highlights the difference
in the approach adopted by private sector and public sector banks.














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Performance Appraisal in General
Nearly all organizations seek to monitor job performance of their members through
an evaluation system. Employees who perform their jobs well are usually rewarded;
those who do not may be penalized. There is perhaps no single issue in personnel
administration that is more important to an employee that an impartial and
accurate appraisal of his contribution to the organization.
Although most organizations have adopted methods for personnel appraisal, their
effectiveness is still a matter of dispute. A major part of the controversy holds that
some appraisals reflect the personal preference and prejudices of the evaluator
instead of the performance of the individual being rated. Another principal
shortcoming is that although the evaluator may be unbiased, he looks more at the
behaviour of the ratee than at his contribution to organizational effectiveness.
Behaviour and performance may, of course, be related to one another, but focusing
exclusively on behaviour can cloud the ratees true performance achievement.
Performance appraisal is a systematic evaluation of an individual employee with
respect to his performance on the job and his potential for development.
Performance is carrying out the work entrusted by the employer directly or through
his agents. The management expects all the employees to perform the specified
task for the payment it makes. Once the work is entrusted to the employee, it is
necessary to measure the performance to see whether the employee has done the
work entrusted to him in the way it was expected. Whether there is any wastage in
time, money, energy and skill.
Despite persistent attempts to refine and improve traditional performance appraisal
procedures, the supervisors or subordinates do not enthusiastically approve most
current programmes. On the contrary , they are widely disliked as a time
consuming nuisance, a source of friction and employee resentment, and a barrier
to the fulfilment of the organizational goals. In short, appraisals frequently fail to
deliver a dependable measure of the value and contribution of employees who are
assessed.
Many appraisal systems examine performance on traits Example of such traits
might be oral communication, leadership, awareness of social environment,
initiative, organization and planning. Review of performance on trait criteria can be
justified if the traits relate to the individual's job. However, trait appraisal can
cause misunderstanding and disagreement between the manager and his
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subordinates. If a manager tells his subordinate that he needs to demonstrate more
leadership qualities and show more initiative on projects, it is not much helpful
because it does not focus on exactly how the individual has been deficient and
specifically what can be done by him to improve his performance.
PAS is traditionally used as a mechanism of controlling employee through salary
administration, reward administration, promotion, and disciplinary actions.
Another feature of traditional PAS is its confidentiality. This traditional PAS results
in unawareness of employees of their strengths and weaknesses in relation to their
capabilities in different positions in the organization throughout their career. The
traditional PAS fails to identify the potentialities of employees in performing the
new roles in new positions. This is basically because of the confidential nature of
the appraisal. Due to these drawbacks, traditional PAS fail to develop employees
and organizations.

















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Models of Performance Appraisal
In performance appraisal, a model is a guide that indicates how best competencies
could be fit into a Performance Appraisal Process. There are one-dimensional
models, mixed models and three-dimensional models. One-dimensional model or
the traditional model is based on the single factor of performance and the entire
focus is on what to be achieved. The 'How' factor of achievement is not looked into
in this type of model and is perhaps not fit for today's world of business where
short term survival and long term survival is equally important.
One Dimensional Model
In one-dimensional model people are not aware whether an achievement is one
time and situational. Employees can adopt practices that can boost their
performance in the short run making colossal losses for the future. There are
enough examples of the loopholes of the one-dimensional model. The following is a
one-dimensional model where the key stress is on what is to be performed.













Mixed model
A performance appraisal process that combines planning, managing and reviewing
both results and competencies is 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.
The Job
Define what results have
to be achieved
Accountabilities
Define a set of key
objectives against the
accountabilities

Review performance
against the key objectives
ONE DIMENTIONAL
MODEL
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The mixed model represents a more powerful and long lasting approach to
performance management than what one-dimensional objective-based approach. A
'competency based' approach brings a different perspective to performance
management. It employs a wider, a more comprehensive tool to describe the
performance expected from an individual. Here, performance is defined not only in
terms of what is to be achieved but how it is to be achieved and what competencies
must be utilized as is depicted in the following model.


















Three Dimensional Model
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 on-line, 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 criticism of bias or
alteration of opinion by the reviewer in subsequent period.
The
Job
Define what results
have to be achieved
Performance
Contract
Define how results
have to be achieved
Accountability Define a set of key
objectives
Key competencies
i.e inputs
Define a set of behavioural
objectives against key
competencies
Review performance against key
objectives and key competencies
MIXED MODEL
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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 one area leads to rating good in all areas)
and thorn effect (a biased perception in one area leading to bad rating in all areas)
in appraisal system can be corrected only through appropriate training of the rater.
Appraisees may also be trained suitably for providing accurate rating in their self
appraisal.





























The Job Define what results
have to be achieved
Performance
Contract
Key Objectives
Key Competencies
Customer
Expectation
Review Performance
Feedback against key
objectives and key
competencies
Customer
Define how
results have to
be achieved
THREE DIMENSIONAL
MODEL
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The Importance of Performance Appraisals
The most challenging aspect of a performance appraisal is measuring the actual
performance of the employee. Since the performance is measured by tasks
performed, there is a continuous process that must be administered in order to
monitor the performances throughout the appraisal cycle.
Thus, its very important to choose the correct measuring techniques. Its also
important to focus on a desired performance (standardized performance) and then
compare the desired performance to the actual performance of the employee.
All of the planning that goes into the performance appraisal is for the purpose of
evaluating employees, providing employees with valuable feedback and creating a
positive effect on future performance. Although the process may be tedious, the end
result is one of great importance. Some of the positive results of performance
appraisals are:
It encourages employees to perform better in the future
It presents an opportunity for employees to leverage positive performance for an
increase in salary or promotion
During the appraisal, employees can discuss strengths and weaknesses with a
supervisor, in effect, allowing employees to discuss personal concerns
It provides communication between a supervisor and employee on a regular basis
to discuss job duties and issues with work performance
It allows employees to identify what skills may be lacking and need to be acquired
or improved upon. There are instances when education provided by the company is
a necessity to advance success overall
It holds employees accountable for their job performance, and since the employee
knows that an appraisal is coming, the employee has the opportunity to prepare in
advance
It provides the opportunity for managers to explain organizational goals and the
ways in which employees can participate in the achievement of those goals




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Process of Performance Appraisal
Establishing performance standards
The first step in the process of performance appraisal is the setting up of the
standards which will be used to as the base to compare the actual performance of
the employees. This step requires setting the criteria to judge the performance of
the employees as successful or unsuccessful and the degrees of their contribution
to the organizational goals and objectives. The standards set should be clear, easily
understandable and in measurable terms. In case the performance of the employee
cannot be measured, great care should be taken to describe the standards.
Communicating the standards
Once set, it is the responsibility of the management to communicate the standards
to all the employees of the organization.
The employees should be informed and the standards should be clearly explained
to the. This will help them to understand their roles and to know what exactly is
expected from them. The standards should also be communicated to the appraisers
or the evaluators and if required, the standards can also be modified at this stage
itself according to the relevant feedback from the employees or the evaluators.
Measuring the actual performance
The most difficult part of the Performance appraisal process is measuring the
actual performance of the employees that is the work done by the employees during
the specified period of time. It is a continuous process which involves monitoring
the performance throughout the year. This stage requires the careful selection of
the appropriate techniques of measurement, taking care that personal bias does
not affect the outcome of the process and providing assistance rather than
interfering in an employees work.
Comparing the actual with the desired performance
The actual performance is compared with the desired or the standard performance.
The comparison tells the deviations in the performance of the employees from the
standards set. The result can show the actual performance being more than the
desired performance or, the actual performance being less than the desired
performance depicting a negative deviation in the organizational performance. It
includes recalling, evaluating and analysis of data related to the employees
performance.
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Discussing results
The result of the appraisal is communicated and discussed with the employees on
one-to-one basis. The focus of this discussion is on communication and listening.
The results, the problems and the possible solutions are discussed with the aim of
problem solving and reaching consensus. The feedback should be given with a
positive attitude as this can have an effect on the employees future performance.
The purpose of the meeting should be to solve the problems faced and motivate the
employees to perform better.
Decision making
The last step of the process is to take decisions which can be taken either to
improve the performance of the employees, take the required corrective actions, or
the related HR decisions like rewards, promotion s, demotions, transfers etc.


















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Prerequisites of Performance Appraisal
The essentials of an effective performance system are as follows:
Documentation means continuous noting and documenting the performance. It
also helps the evaluators to give a proof and the basis of their ratings.
Standards / Goals the standards set should be clear, easy to understand,
achievable, motivating, time bound and measurable.
Practical and simple format - The appraisal format should be simple, clear, fair
and objective. Long and complicated formats are time consuming, difficult to
understand, and do not elicit much useful information.
Evaluation technique An appropriate evaluation technique should be selected;
the appraisal system should be performance based and uniform. The criteria for
evaluation should be based on observable and measurable characteristics of the
behaviour of the employee.
Communication Communication is an indispensable part of the Performance
appraisal process. The desired behaviour or the expected results should be
communicated to the employees as well as the evaluators. Communication also
plays an important role in the review or feedback meeting. Open communication
system motivates the employees to actively participate in the appraisal process.
Feedback The purpose of the feedback should be developmental rather than
judgmental. To maintain its utility, timely feedback should be provided to the
employees and the manner of giving feedback should be such that it should have a
motivating effect on the employees future performance.
Personal Bias Interpersonal relationships can influence the evaluation and the
decisions in the performance appraisal process. Therefore, the evaluators should be
trained to carry out the processes of appraisals without personal bias and
effectively.






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Challenges of Performance Appraisal
In order to make a performance appraisal system effective and successful, an
organization comes across various challenges and problems. The main challenges
involved in the performance appraisal process are:
Determining the evaluation criteria
Identification of the appraisal criteria is one of the biggest problems faced by the
top management. The performance data to be considered for evaluation should be
carefully selected. For the purpose of evaluation, the criteria selected should be in
quantifiable or measurable terms
Create a rating instrument
The purpose of the Performance appraisal process is to judge the performance of
the employees rather than the employee. The focus of the system should be on the
development of the employees of the organization.
Lack of competence
Top management should choose the raters or the evaluators carefully. They should
have the required expertise and the knowledge to decide the criteria accurately.
They should have the experience and the necessary training to carry out the
appraisal process objectively.
Errors in rating and evaluation
Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait
influencing the evaluators rating for all other traits) etc. may creep in the appraisal
process. Therefore the rater should exercise objectivity and fairness in evaluating
and rating the performance of the employees
Resistance
The appraisal process may face resistance from the employees and the trade
unions for the fear of negative ratings. Therefore, the employees should be
communicated and clearly explained the purpose as well the process of appraisal.
The standards should be clearly communicated and every employee should be
made aware that what exactly is expected from him/her.



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Methods and Techniques of Performance Appraisal
TRADITIONAL APPROACH
1. ESSAY APPRAISAL METHOD
This traditional form of appraisal, also known as Free Form method involves a
description of the performance of an employee by his superior. The description is
an evaluation of the performance of any individual based on the facts and often
includes examples and evidences to support the information. A major drawback of
the method is the inseparability of the bias of the evaluator.
2. STRAIGHT RANKING METHOD
This is one of the oldest and simplest techniques of performance appraisal. In this
method, the appraiser ranks the employees from the best to the poorest on the
basis of their overall performance. It is quite useful for a comparative evaluation.
3. PAIRED COMPARISON
A better technique of comparison than the straight ranking method, this method
compares each employee with all others in the group, one at a time. After all the
comparisons on the basis of the overall comparisons, the employees are given the
final rankings.
4. CRITICAL INCIDENTS METHODS
In this method of Performance appraisal, the evaluator rates the employee on the
basis of critical events and how the employee behaved during those incidents. It
includes both negative and positive points. The drawback of this method is that the
supervisor has to note down the critical incidents and the employee behaviour as
and when they occur.
5. FIELD REVIEW
In this method, a senior member of the HR department or a training officer
discusses and interviews the supervisors to evaluate and rate their respective
subordinates. A major drawback of this method is that it is a very time consuming
method. But this method helps to reduce the superiors personal bias.
6. CHECKLIST METHOD
The rater is given a checklist of the descriptions of the behaviour of the employees
on job. The checklist contains a list of statements on the basis of which the rater
describes the on the job performance of the employees.
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7. GRAPHIC RATING SCALE
In this method, an employees quality and quantity of work is assessed in a graphic
scale indicating different degrees of a particular trait. The factors taken into
consideration include both the personal characteristics and characteristics related
to the on-the-job performance of the employees. For example a trait like Job
Knowledge may be judged on the range of average, above average, outstanding or
unsatisfactory.
8. FORCED DISTRIBUTION
To eliminate the element of bias from the raters ratings, the evaluator is asked to
distribute the employees in some fixed categories of ratings like on a normal
distribution curve. The rater chooses the appropriate fit for the categories on his
own discretion.
MODERN APPROACH
1. ASSESSMENT CENTRES
An assessment centre typically involves the use of methods like social/informal
events, tests and exercises, assignments being given to a group of employees to
assess their competencies to take higher responsibilities in the future. Generally,
employees are given an assignment similar to the job they would be expected to
perform if promoted. The trained evaluators observe and evaluate employees as
they perform the assigned jobs and are evaluated on job related characteristics.
The major competencies that are judged in assessment centres are interpersonal
skills, intellectual capability, planning and organizing capabilities, motivation,
career orientation etc. assessment centres are also an effective way to determine
the training and development needs of the targeted employees.
2. BEHAVIORALLY ANCHORED RATING SCALES
Behaviourally Anchored Rating Scales (BARS) is a relatively new technique which
combines the graphic rating scale and critical incidents method. It consists of
predetermined critical areas of job performance or sets of behavioral statements
describing important job performance qualities as good or bad (for e.g. the qualities
like inter-personal relationships, adaptability and reliability, job knowledge etc).
These statements are developed from critical incidents.

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In this method, an employees actual job behaviour is judged against the desired
behaviour by recording and comparing the behaviour with BARS. Developing and
practicing BARS requires expert knowledge.
3. 360 PERFORMANCE APPRAISAL
It is also known as 'multi-rater feedback', is the most comprehensive appraisal
where the feedback about the employees performance comes from all the sources
that come in contact with the employee on his job.
360 degree respondents for an employee can be his/her peers, managers (i.e.
superior), subordinates, team members, customers, suppliers/ vendors - anyone
who comes into contact with the employee and can provide valuable insights and
information or feedback regarding the on-the-job performance of the employee.
360 degree appraisal has four integral components:
A. Self appraisal
B. Superiors appraisal
C. Subordinates appraisal
D. Peer appraisal.
Self appraisal gives a chance to the employee to look at his/her strengths and
weaknesses, his achievements, and judge his own performance.
Superiors appraisal forms the traditional part of the 360 degree appraisal where
the employees responsibilities and actual performance is rated by the superior.
Subordinates appraisal gives a chance to judge the employee on the parameters
like communication and motivating abilities, superiors ability to delegate the work,
leadership qualities etc.
Also known as internal customers, the correct feedback given by peers can help to
find employees abilities to work in a team, co-operation and sensitivity towards
others.
4. Management by Objectives

The concept of Management by Objectives (MBO) was first given by Peter Ducker
in 1954. It can be defined as a process whereby the employees and the superiors
come together to identify common goals, the employees set their goals to be
achieved, the standards to be taken as the criteria for measurement of their
performance and contribution and deciding the course of action to be followed.
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The essence of MBO is participative goal setting, choosing course of actions and
decision making. An important part of the MBO is the measurement and the
comparison of the employees actual performance with the standards set. Ideally,
when employees themselves have been involved with the goal setting and the
choosing the course of action to be followed by them, they are more likely to fulfill
their responsibilities.
While most of these theoretical approaches very much make sense and can be
applied in reality, very organizations literally go by the theory.





















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Performance Management vs. Performance Appraisal
The terms 'performance management' and 'performance appraisal' are sometimes
used synonymously, but they are different. Performance management is a
comprehensive, continuous and flexible approach to the management of
organisations, teams and individuals which involves the maximum amount of
dialogue between those concerned. Performance appraisal is a more limited
approach which involves managers making top-down assessments and rating the
performance of their subordinates at an annual performance appraisal meeting.
Comparing performance appraisal vs performance management, performance
appraisal sets job standards and evaluates past performance based on such set
standards whereas performance management aims at managing performance real-
time to ensure performance reaches the desired levels. Performance appraisal and
performance management are two employee performance evaluation methods.
Performance management is the traditional approach to evaluating the
performance of an employee. The increased competitive nature of the economy and
rapid changes in the external environment has forced many organizations to shift
from reactive performance appraisals to the proactive performance management to
boost productivity and improve organizational performance.
Scope
The basic difference between performance appraisal vs performance management
lies in the scope.
Both performance appraisals and performance management entail setting
performance targets, reviewing the achievement of targets, and devising ways to
enable employees to meet targets. Both these systems establish clear expectations
on what an employee is expected to do, set the guidelines on what constitutes
successful job performance, and strive to identify barriers to effective performance.
Performance appraisal is, however, a limited and reactive function of evaluating
past performance, undertaken once or twice a year. It is a distinct staff activity with
no direct intervention to the employees day-to-day work.
Performance management is a continuous and on-going proactive mechanism to
manage the performance of an employee and ensure that the employee achieves the
set targets on a real-time basis, without reviews or corrective actions at some point
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in the future. It is a line activity and remains ingrained in the employees day-to-
day work.
In some organizations performance appraisal becomes part of an overall
performance management system. The appraisal takes place at periodic intervals
and becomes the basis to make corrective actions and set further targets.
Approach
In performance management, the manager of the supervisor assumes the role of a
coach or mentor whereas in performance appraisal, the supervisor acts as a judge.
Some performance appraisal techniques such as Management by Objectives (MBO)
allow for joint setting of targets, by the supervisor and the employee, with frequent
reviews, and thereby come close to performance management. Such methods,
however, still fall short of the real-time management and monitoring of targets
offered by performance management.
Methodology
The performance appraisal tends to be more formal and structured. Although most
performance appraisal systems allow customization of key performance areas or
what constitutes performance based on the employee, the system nevertheless
remains rigid with laid down procedures and rating parameters binding on all
employees equally.
Performance management is a comparatively more casual and flexible method of
evaluating an employee's performance. Like performance appraisals, it establishes
guidelines on what constitutes optimal performance, but since the application is
real-time, it allows for considerable relaxation or changes to such guidelines
depending on the specific job situation and circumstances of the time.
Performance management remains customized for the individual employees actual
work, whereas performance appraisal is usually standardized based on the
employee's designation, or at best on the employees job description rather than on
the employees actual work exigencies.
Merits and Demerits
Performance Appraisal vs Performance Management Comparing performance
appraisal vs performance management, both lead to an increase in organizational
productivity, though performance management allows for real-time changes to
boost productivity.
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The real-time monitoring and correcting of performance in performance
management help improve employee performance much better compared to the
traditional performance appraisal system.
Performance management allows for linkage of performance to both long-term and
short-term corporate goals. For instance, if the organization has a short-term aim
to increase margins by ten percent during the season, such a linkage comes only in
the next years performance appraisal, or the linkage might not come at all.
Employees tend to receive favorable reviews and bonuses even when the
organization fails to achieve such short-term goals.
Performance management that focuses on actual results and on-the-job
performance promotes team work. Most performance appraisal systems
focus on individual achievements and focus on results rather than methods,
prompting employees to place individual goals over team goals.
Performance management helps in the successful implementation of
initiatives such as Total Quality Management.
Performance management eliminates rater bias, a major shortcoming of
performance appraisals. In a performance appraisal the employees future
depends not just on performance, but also on the goodwill of the supervisor.
Performance management focuses on actual performance instead of
memories of past performance. As such it removes from the evaluation
distortions that could have either helped with performing the job better or
special circumstances impeding performance.
Performance management eliminates stress arising from the impending
appraisals.
Performance management concentrates on the immediate and most relevant
concerns, whereas performance appraisal forces looking into the past, which
in many causes would remain irrelevant and force time away from pressing
concerns.
The apparent advantages of performance management notwithstanding,
performance appraisal also has its uses and advocates. Performance management
and performance appraisal reflect the notions of hard and soft HRM. Performance
Management entails controlling the employees activity, and is a hard and top-
down approach which might not go down well with highly skilled and
achievement-oriented employees who value autonomy. Performance appraisals
allow for such autonomy, indicating a soft approach.
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Performance Appraisal Systems in Indian Banks
Banking sector is a fast growing sector of India. With swift expansion in the
number of branches and the new functions assigned to them, banks are beginning
to feel a new pressure on their organizational abilities i.e. the processes of
recruitment, placement, training, promotion and appraisal, in order to ensure that
the right number of staff with the right capacities are available at the right time
and for the right places. Appraisal is one of the key factors of organizational ability
which is also the focus of this study. In simple words we can say that performance
appraisal is an analysis of employees recent successes and failures, personal
strengths and weaknesses, and suitability for promotion or further training.
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 of India has
recently adopted an open system of appraisal. Its associate banks are likely to
follow the same after detailed experiences of State Bank of India are available.
Several banks also have self-appraisal as a part of performance appraisal, although
mostly such self-appraisal is more of a communication of achievements.
Allahabad Bank has introduced a system that aims in helping officers to identify
their strengths and weaknesses 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 requirements in great detail. Union Bank of India has an appraisal system
in which the reporting officer is required to assess each of his appraisee officers on
technical skills, human skills and conceptual skills. All these are defined for
different categories of roles and the assessment has to be made on a five-point
scale. Corporation Bank, UCO Bank, Central Bank of India, Dena Bank and Bank
of Baroda has introduced similar self-appraisal formats. Punjab National Bank has,
primarily, a development-oriented appraisal form. There are ten different formats
available for ten different categories of employees. The bank started the system
with a self-appraisal by the appraisee.
Studies of the operating system of the successful organizations, in general, reveal
that a good PAS is the corner stone to navigate an organization successfully in this
globalized environment of uncertainty and continuous change. They have,
therefore, developed and employed such system and harnessing maximum benefits.
But, like many fields of organizational development, the PSBs are lagging behind in
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this area too. Most of the PSBs have an Annual Appraisal System that is historic in
nature and documents the past activities. It is a one time annual affair only. Study
of the format of annual appraisal of many of the PSBs reveal that they are basically
uniform in character with emphasis in historical events and little or no importance
for future growth. In comparison with the new generation banks and progressive
organizations, the appraisal system in PSBs, thus, is basically 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.





















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Case Study: Performance Appraisal in HSBC
HSBC - An equal opportunities employer

HSBC is an equal opportunities employer. They do not discriminate on grounds of
age, gender, colour, race, ethnicity, language, caste, creed, economic or social
status or disability. Being the worlds local bank, they value the diversity of the
markets in which they operate. Diversity is central to HSBCs brand image and is
an integral part of their managing for growth and people strategies. They
recognize that having a workforce that broadly reflects the composition of the local
communities in which they operate places them in a unique position to understand
and respond to the needs of our customers. They thus use diversity as a
competitive differentiator, both in employment and in customer markets.
HSBC India has signed the Confederation of Indian Industrys and ASSOCHAMs
Code of Conduct for Affirmative Action, which comprises of the following guiding
principles:
The Company affirms the recognition that its competitiveness is interlinked
with the well being of all sections of the Indian society.
The Company believes that equal opportunity in employment for all sections
of society is a component of its growth and competitiveness. It further
believes that inclusive growth is a component of growth and development of
the country.
The Company affirms the recognition that diversity to reflect socially
disadvantaged sections of the society in the workplace has a positive impact
on business.
The Company will not practice nor support conscious discrimination in any
form.
The Company does not bias employment away from applicants belonging to
disadvantaged sections of society if such applicants possess competitive
skills and job credentials as made public.
The Company's selection of business partners is not based on any
considerations other than normal business parameters. In case of equal
business offers, the Company will select a business partner belonging to a
socially disadvantaged section of society.
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The Company has / will have a written policy statement on Affirmative
Action in the workplace.
The Company has / will have an employment policy that is in the public
domain. It may place such policies and employment opportunities on its
website to encourage applications from socially disadvantaged sections of
society.
The Company makes / will make all efforts for up-skilling and continual
training of employees from socially disadvantaged sections of society in order
to enhance their capabilities, and competitive skills.
The Company has / will have a partnership programme with educational
institution/s to support and aid students from socially disadvantaged
sections of society.
The Company has / will have a senior executive accountable to the CEO to
oversee and promote its Affirmative Action policies and programmes. The
senior executive presents / will present a biannual report to the Board of the
Company about such policies and programmes.
The Company makes available its learning and experiences as a good
corporate citizen in Affirmative Action to other companies desiring to
incorporate such policies in their own business.













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Appraisal Process:
The appraisal process adopted by HSBC is rather simple and not too complicated.
They have an open-ended approach where they encourage self appraisal.
The process is broken down to team levels, where the first step involves employees
self appraisal. This is done by way of filling the semi open ended appraisal form.
Once the employee has self assessed himself / his achievements, he together with
his immediate line manager will sit for a discussion where in the line manager will
give his inputs / comments on the self appraisal of the employee. He will also in
front of the employee rate the employee on various parameters defined on the form.
Once the line manager has conducted appraisals for his entire team in the fashion
described above, he / she hands over the completed and duly signed forms to the
HR department.
On receipt of the completed forms, the designated HR official goes through each
and every form to make relevant notes. He/ she then sends across a spreadsheet to
the line manager to give the rating of his employees. The rating is defined as
follows:
A Start Performer Cant do without him / her
B Good Performer Good but can be replaced
C Poor Performer Can do without him/her
F Very Poor Performer Want to lose this employee

While there is no limit on how many people fall under any of the categories, there is
a restriction on the A category. Depending on the size of the team the number of
people falling in the A category are restricted. Eg: If it is a 5 member team, then
only one person can be chosen as a star performer.
This rating system helps in deciding how the available budget has to be allocated
and what percent increase in salary is to be given to which employee. The line
manager along with the grades also needs to inform the HR if he / she wants to
recommend any employee for a promotion.
The focus is on performance and hence a person does not automatically become
due for a promotion after a particular number of years. A person if good can be
promoted every year or may stay on the same level for years together. The next
section gives the sample of the appraisal form used by the bank.
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HSBC
Performance Discussion & Feedback
Year: 2013 - 2014


Please provide the following information before starting the discussion:



Name:

Job Title:




Department:




Appraiser:








Contents: Self-Assessment & Discussion Form pages 2 - 4
Competency Feedback Form page 5
Objectives for 2014 - 15 page 6



Discussion Date: ______________________________ (please fill in)


Please fill in this information once the feedback discussion is complete.

Appraisees Feedback:

I am satisfied with the discussion


YES / NO

Appraisees Signature:



Appraisers Signature:


Completed forms to be returned to HR.





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Self-Assessment & Discussion Form

Directions for use: the Appraisee fills up the self-assessment section in preparation and then on the
appointed date / time the Appraisee and Appraiser have a discussion on the same. Discussion points
should be documented in the section provided.


A. Your Current Role

1. What do you feel are the main objectives / responsibilities of your role?
Appraisee Self-Assessment Discussion Comments


2. How well do you feel you are doing overall and what have been your achievements in the last
12 months?
Appraisee Self-Assessment Discussion Comments





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3. What areas of your role have given you the most satisfaction? Why?
Appraisee Self-Assessment Discussion Comments



4. What areas of your role have you found the least satisfying? Why? Any improvements you
can suggest?
Appraisee Self-Assessment Discussion Comments




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B. Other Issues

Document other issues (if any) that came up during the discussion between the Appraiser and
Appraisee.


C. Training Requirements

Document training requirements (if any) that came up during the discussion between the
Appraiser and Appraisee. Please be as specific as possible.



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Competency Feedback Form

Directions for use: To be completed by the Appraiser after discussion / providing feedback to the
Appraisee. Check only those competencies that are relevant to the Appraisees position. Rate each
item using the five point scale (given below), by circling a number to the right of it.


Rating Key

1 Minimal Application Application is not at the level to meet the job requirements
2 Developing Some development required
3 Competent Application Adequately applies this competency to meet the job requirements
4 Advanced Application of competency is continually superior
5 Exceptional Applies this competency to maximum effect - exemplary

Competencies

Please rate a minimum of 5 competencies

a. Initiative & Commitment to Achieve Seizes opportunities and does
significantly more than is required; attitude towards work and willingness
to take on responsibility
1 2 3 4 5
b. Attention to Detail & Quality The ability to produce error-free output;
maintain quality
1 2 3 4 5
c. Leadership Generates commitment and builds team cohesiveness by
allocating work in line with individual capabilities and the needs of the
business, providing constructive feedback to enhance performance and
setting a clear vision
1 2 3 4 5
d. Team Orientation The ability to work with and support others as part
of a team and understand the need to work together to create an
environment of cooperation and mutual responsibility
1 2 3 4 5
e. Organizing for Results Translates objectives and ideas into practical
and achievable actions by prioritizing, planning, coordinating and
managing resources to deliver results in a quality, timely and cost
effective manner
1 2 3 4 5
f. Creativity Is able to conceive original, imaginative and valuable ideas
to improve brands, solve problems and improve processes
1 2 3 4 5
g. Interpersonal Ability Establishes and maintains productive working
relationships with all levels of people
1 2 3 4 5
h. Influence & Negotiation Uses appropriate personal style to gain
acceptance or agreement to an idea or plan; change others opinions by
effective persuasion
1 2 3 4 5
i. Professional Knowledge Possesses a wide understanding of
professional issues related to their specific function: thereby adding value
to work output
1 2 3 4 5


THIS PAGE SHOULD BE COMPLETED BY THE APPRAISER
IN THE PRESENCE OF THE APPRAISEE.






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Objectives for Year 2014 - 2015

Directions for use: The Appraiser and Appraisee should discuss and agree objectives before
documenting them on this page. Objectives should be SMART (Specific, Measurable,
Achievable, Realistic and Time Related). Feel free to use additional pages if required.


Objective Target Date
1.
2.
3.
4.
5.
6.
7.




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Comments / Findings
While tendency is to expect a huge complex appraisal process and the belief that
something simple can never work / be accurate. The simple approach by HSBC has
been of great benefit to the company. The main benefits of this approach adopted
by HSBC are:
1. It gives a platform to the employees to themselves highlight their
achievements which possibly would be missed by their line managers unless
highlighted.
2. It gives them a platform to give a feedback of any role which is not
satisfactory.
3. It gives an opportunity for both employee and line manager to come together
and have a discussion on the employees performance, expectations, etc.
4. There is a clear approach of joint goal setting for the next year to ensure
both the manager and the subordinate are on the same page with clearly
defined objectives.
5. The approach to ensure the employee is rated on the various parameters
listed in the form, in front of the employee is a very good way to give
feedback and highlight areas of improvement.
While there are no major negatives / loopholes visible for the system adopted by
HSBC, what lacks is that it reviews performance only once in a year. Since banks
are dynamic organizations with lot of changes happening on a routine basis with
respect to the roles assigned to the employees, they need to review the performance
/ objectives on a quarterly basis or at least half yearly basis.
There is also a need to possibly have the HR representative present for the
appraisal discussion so that he can have a judgement of his / her own about the
discussion and the fairness of the evaluation.







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Case Study: Performance Appraisal in Bank of Baroda
Bank of Baroda A performance driven organization

An old and successful player in the Public Sector of India with a wide presence all
over the world, Bank of Baroda over the years has made a paradigm shift of focus
to its human resources. Well defined and integrated HR policies, objectives and
processes make it an attractive organization for job seekers.
BOBs HR Objectives
To initiate & institutionalise globally competitive HR practices in the Bank in our
pursuit to become a Bank of international standards and to become an employer of
preferred choice;
To put in place relevant HRD strategies and use modern methodologies to
undertake organizational renewal; identify and nurture talent, bring about marked
changes in the mindset of employees at all levels so as to enhance HR Quality;
To create a performance-driven culture and an exciting workplace for the
employees
To create a pool of entrepreneurial managers and business leaders for future;
To inculcate a strong and effective sales and service culture across levels in the
organization in order to generate strong stakeholder affiliation;
To create a learning organization for employees intellectual growth and creativity;
and to re-skill the workforce to operate in digitally enabled modern core banking
environment.
HR Business Model
The Strategic HR Business Model adopted by Bank of Baroda incorporates its HR
Mission and Philosophy and is focused towards attainment of long-term
organizational goals.
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A very strong Organizational Leadership at different levels forms the key link in the
Model. These are;
Strategic Leadership - Corporate level
Business Leadership - Zonal & Regional level
Operational Leadership - Business unit level i.e. branch








The two vital Human Resource sub-systems i.e. HR Planning & Management Sub-
System & Competency Based HRD Sub-System shape the very crucial Performance
Environment within the Bank which facilitates development of enabling capabilities
of people.
Through proper developmental inputs, Positive Attitude & Right Mindset is created
among people.
Through proper Communication Medium and an Organizational Culture of sharing,
openness, collaboration & confrontation, autonomy etc., people in the organization
are facilitated to give their best output (performance).
The Model is adequately supported by a suitable Learning Platform, which imparts
proper Knowledge and enhances Learning among people (functional, behavioural
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etc) so that their Competence increases and their potential could be properly
leveraged for greater Individual and Organizational Effectiveness.
These create proper Employee Motivation, which ultimately facilitates Goal
Achievement.
HR Initiatives
People oriented Deployment, Promotion and selection policies
Bank has formulated and put in place well documented and comprehensive
deployment, promotion and selection policies oriented towards identifying the best
talent and providing opportunities for fast-track growth and development. Some of
the prominent HR policies put in place are
HR Resourcing policy
Promotion policy for officers
Transfer policy for officers
Promotion policies for clerical and subordinate cadre
Overseas selection policy
Talent identification & Grooming programmes
Various programmes are being run by the Bank for grooming of officers in
specialised areas of Credit, Forex, Treasury / Dealing, Wealth Management, for
grooming of Branch heads, etc.
Customised Leadership development programmes
PROJECT LEAP: Bank has been a forerunner in initiating customised and
focussed leadership development programmes for its operational and strategic
leaders. Project-LEAP (Leadership enhancement and appreciation programme) was
initiated by the Bank for grooming 300 leaders of the Bank and was implemented
during the period 2007-2009. It involved systematic development of identified
leadership competencies after running of an individualized assessment and gap
analysis on those competencies for each participant.
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PROJECT UDAAN: This is a comprehensive leadership development programme
initiated by the Bank covering almost 300 AGMs / DGMs and almost 1200 Branch
Heads of Urban and Metro Branches.
The design of each module encompasses a field and forum approach wherein the
participants are required to attend classroom sessions on various aspects of
leadership and apply the acquired learning to real business situations. The
classroom sessions are also designed to be very experiential with role-plays,
activities, etc. reinforcing various leadership concepts in an off-site location coupled
with coaching sessions in between. .
HRNes (Human Resource Network for Employee Services)
"HRNes" covers the entire gamut of human resources management function in the
Bank currently being performed and also includes many new sub-functions. It
comprises of four broad modules encompassing different functions:
Oracle Core HR Module, covering all current HR processes in the Bank;
Fluous Payroll Module, - centralised payroll, payments of various benefits,
perks, welfare schemes, terminal benefits, etc.;
Employee Self-Service Module.
Oracle Learning Management Module which includes training administration
& e-learning; Various E-Learning modules are gradually being put on the
system for employees to avail of and undergo these courses.
Employee performance management system
A new Performance Management system has been formulated and implemented for
all officers w.e.f. 2009-10 onwards. The new system enables a holistic approach to
the issue of managing performance and does not limit to only an appraisal. It starts
from performance planning and Goal-setting and takes it forward into performance
review discussions, feedback and development. The new system is business-linked,
highly objective and fully transparent, with individuals owning and managing their
own performance themselves.

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Baroda Sujhav and ideaonline@bankofbaroda.com
Idea channels for eliciting new ideas from employees with structured rewards
provisions for the best ideas.
Streamlined Induction schedule for all new Joinees
Bank has put in place a well-defined and properly structured induction
programme, phase-wise for different batches of directly recruited officers, campus
recruitees and newly recruited clerks, which is imparted through a mix of
classroom and on-the-job training.
Role-change programmes and executive development programmes
Executive Development programmes are being regularly conducted for newly
promoted senior and top management people in conjunction with leading Business
schools like ISB, Hyderabad, MDl, Gurgaon, National Institute of Bank
Management, Pune, etc.
Role change programmes are being conducted for newly promoted employees at
Bank's internal training establishments which give them inputs on behavioural
issues, soft skills, team work, leadership, etc. besides ways on how to cope with the
challenges of the new role better.
Grooming and etiquettes programmes
Grooming and etiquettes programmes are being conducted for front-line employees
and also for employees selected for overseas posting in order to improve their
service levels and qualitative interaction with customers and various stakeholders
better.
SEED (Self efficiency and effectiveness development) programme being run for
frontline staff of the Bank in order to improve their service skills and servicing
efficiency.



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Comments / Findings
Though being a public sector bank, they were not in a position to share detailed
procedure / form of appraisal process. However their well documented PMS system
as seen above, clearly shows that the bank has a very performance driven approach
and it has a system to constantly nurture their talent resource.
Unlike a private bank most of its policies even related to promotions is very much
documented. Their pay scales unlike in private are not customized as per
individual and are rather standardized as per grades. Their approach though less
flexible is very holistic and thus gives a fair output.
Their well integrated Performance Management system helps an individual manage
/ track his performance and be benefited not only from individual performance but
also overall performance of the company. Their procedures are clearly defined and
highly transparent and thus keeps the employee fears at bay.

















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Project Conclusion
There is no right or wrong approach when it comes to performance appraisal
process to be followed. What is important is that the approach has to be fair,
transparent and should give the desired output.
While performance appraisal is a practice followed in all organisations it has its
own unique feature when applied to the banking sector. The wide / global network
of banks today has led to an increase in the human resources strength of each
bank. This has in turn made it a must to have an integrated performance
management system to be able to identify the key potential employees who can be
nurtured to make future leaders.
Both the banks studied in this project have vast difference in their approach but
the approaches are unique to their organization and gives them the desired
outcome. While the public sector is more defined and process oriented, the private
sector follows a more flexible approach.