1

Project Report

Of

Performance appraisal system

On

Implication to Employee Performance

 2

Submitted to:
Rumana Afroza

Assistant professor

East West University

Submitted by

Name ID

Md. Zillur Rahman Obak 2013-1-10-303

Submission date
17th April, 2018
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Letter of Transmitter

17 April, 2018
Rumana Afroze
Assistant Professor
Department of Business Administration
East West University

Subject: Submission of Project report on “Performance Appraisal System: It’s Implication to

Employee Performance in The City Bank Limited, Ghulsan Branch & Dutch Bangla Bank
Limited, Santinogor Branch”

Dear Madam,
With due respect, I would like to say that it is a great privilege for me to submit my project report
on “Performance Appraisal System: It’s Implication to Employee Performance in The City Bank
Limited, Ghulsan Branch & Dutch Bangla Bank Limited, Santinogor Branch” to complete the
project as a course of a completion of my Bachelor’s degree.

I am very delighted to submit the final term paper, in 07 April 2018, as you requested. My main
incentive was to prepare this term paper according to your guidelines in accordance with your
directions. The internal content of this report is based on a performance appraisal and implication
to employee performance sector that I have worked for during my project topic, and their
performance evaluation according to Bank industry. During the whole preparation of making this
report, I have tried to make it rich covering with all the concerning contents. I want to show my
gratitude to you for your encouragement, effective guideline and valuable support.

Moreover, I am extremely thankful for the opportunities that you gave me to express my innovative
ability and I intently hope that you will like the work that I have done. Kindly, accept my report
and oblige thereby.

Sincerely yours
Md. Zillur Rahman Obak
 4

ACKNOWLEDGEMENT

I was given the opportunity to prepare a project report course under the supervision of our
honorable course supervisor of Internship. It was a great opportunity for me to augment my
knowledge about analyzing critical data and information. This report would have been incomplete
without the help of certain people. The purpose of this part of the report is to pay attribute to all of
those cooperative people who gave their precious time to help me and without whose assistance it
would have been impossible to finish the report.

First of all, I would like to thank and express my gratitude to my honorable faculty Mrs. Rumana
Afroze Assistant Professor, Department of Business Administration, East West University, for her
invaluable feedback and support. Then comes the contribution made by all those respondents
(Fagley Ali Mohammed Anayet Hossain & Iftekher Aam ) who attended the survey. Without their
valuable input, this report and research could not have been successful. In the end, it is necessary
to mention that, this report is the result of days of hard work, I am thankful to the people who have
contributed greatly behind the completion of the report.
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Executive Summary
For my project, I got the opportunity to do research at two of the best performing bank institutions
in Bangladesh. One of them is City Bank LTD and the other one is Dutch Bangla Bank LTD. There
I got an idea about how things work in a corporate office and how the performance appraisal and
motivation factors affect the organization. Which gives a practical learning about those matters.
There are many variables that affect the performance of employees at work place. These variables
include manager’s attitude, organizational culture, personal problems, and job content and
financial rewards. All of these variables have positive impact on the performance of the employees
except personal problems of the employees that hinders the performance of the employees. This
study is quantitative in nature and will see the effect of these variables and the importance of
performance appraisal system on the performance of the employees. The study provides the
cognitive support for developing employee’s motivation level at optimized level through
consciousness towards applied approach and unrealistic ideas. This research shows how the
performance appraisal system can be modified so that it will be more productive tool and all the
employees and the companies can be benefitted from it.
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Table of Content:

Chapter No: Particulars Page No:

Chapter 1: Orientation of 1.1 Introduction 9

the study 1.2 Origin of the study 9
1.3 Objective of the report 9
1.4 Methodology 10
1.4.1 Primary Data 10
1.4.2 Secondary Data 11
1.5 Limitation 11

Chapter 2: Literature Literature Review based on articles 13

Review

Chapter 3: Overview of 3A: Overview of City Bank Limited 22

the organization 3A.1 Introduction 23
3A.2 History 24
3A.3 Product and services 25
3A.3.1 Credit Card 25
3A.3.2 Debit Card 25
3A.3.3 Special Card 26
3A.3.4 Retail Banking Service 26
3A.3.5 SME Banking Service 26
3A.3.6 Wholesale Banking Service 26
3A.4 Vision 27
3A.5 Mission 27
3A.6 Values 27
3B: Overview of DBBL 28
3B.1 Introduction 29
3B.2 History 29
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3B.3 Products and Services 30

3B.3.1 ATM Booths 30
3B.3.2 Card Products 30
3B.3.3 Internet Banking 31
3B.3.4 Mobile Banking of DBBL 31
3B.3.5 Electronic Banking of DBBL 32
3B.4 Vision 32
3B.5 Mission 32
3B.6 Core Objectives 32
Chapter 4: Theoretical 4.1 Performance Appraisal System (PAS) 34
Framework 4.2 History of PAS 34
4.3 Modern Appraisal 35
4.4 Purpose of PAS 35
4.5 Techniques of PAS 36
4.6 Views organization and employee have on PAS 38
4.7 Benefits of PAS 39
4.8 Criticisms related to PAS 40
4.9 Conclusion about PAS 41
Chapter 5: Analysis and 5.1 Data Collection 43
Findings 5.2 Surveys 43
5.3 Usefulness of PAS 46
5.4 Findings 47
Chapter 6: Conclusion Suggestions 50

Chapter 7: Bibliography References 53

and Reference
Chapter 8: Appendix 56
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Chapter 1
Orientation of the study
 9

1.1 Introduction

East West University and my honourable supervisor of internship report gives the responsibility
of preparing a report on “Performance appraisal system: It’s implication to employee
performance”. This report is required as the part of fulfilling the curriculum of BBA program. I
have given my best effort to appropriately apply my potentiality and theoretical knowledge to
make the report reliable and information worthy. Hopefully my sincere effort will be regarded as
successful if this dissertation fulfills the objective of BBA program. It also helps to evaluate and
make decision for business operation. Bank is very old institution that is contributing toward the
development of any economy and is treated as an important service industry in the modern world.
Bank is the most important financial institution in the economic development of a country.
Economic history shows that development has started everywhere with the banking system and its
contribution towards financial development of a country is the highest in the initial stage. As
modern banks, City Bank and Dutch Bangla Bank play an important part in promoting economic
development of our country. These banks provide necessary funds for executing various programs
in the process of economic development. They play a vital role in the economy by providing means
of payment and mobilizing resources. Basically my report will show the effects of performance
appraisal system on the performance of the employees of these two banks.

1.2 Origin of the study

The completion of internship is an integral part of the BBA Program and it serves the purpose
of practical orientation in the related field. I was lucky enough to complete my internship from
The City bank Limited and Dutch Bangla Bank Limited. Since these two are one of the most
renowned bank institutions and provided me with a real life exposure of the activities of a
banking institution, I have decided to work on the topic of “Performance appraisal system:
It’s implication to employee performance” on these two banks.

I have basically included the overview of the company, the analysis & performance evaluation of
the employees of the banks on the basis of performance appraisal system.

1.3 Objective of the report

The objective of the internship is to involve the students with the organizational working
environment and this report is a result of such organizational involvement. The primary objective
of this report is to explain the performance appraisal system and it’s influence upon the employees
 10

of The City Bank Limited (CBL) and Dutch Bangla Bank Limited (DBBL). Performance appraisal
system mainly helps to judge the effectiveness of recruitment, selection, placement and orientation
systems of the organization. And it is useful in analysing training and development needs. These
needs can be assessed because performance appraisal reveals people who require further training
to remove their weaknesses. It also identifies individuals with high potential who can be groomed
up for higher positions and Performance appraisal can be used to improve performance through
appropriate feedback to employees. It serves as a pathway for the superior for conveying a
subordinate about how he or she is performing on the work assigned and suggesting necessary
changes if any with respect to developing field knowledge, improving behavioural aspects and
attitudinal levels. And also motivates the employee-customer relationship because without it the
organization be like a frog in the dark well. As an integral part of my BBA Program, I have enrolled
myself in completing the internship report. It requires me to submit a paper on which I have
worked. To fulfill this requirement, I have prepared this paper and have chosen this topic as my
paper’s topic. We know, theoretical knowledge makes better sense when it’s associate with
practical experience. For me, my exposure to banking started not with the theoretical knowledge
but rather from direct involvement. This report is based on what I have learned from my practical
experiences.

1.4 Methodology

This part of the report contains which data sources I have used to gather all the related information
about City Bank Limited and Dutch Bangla Bank Limited and their activities. There are two types
of data sources:

 Primary data &

 Secondary data

 1.4.1. Primary data

The primary data was collected through different ways and some of the ways are:

 Discussion with the officials of City Bank Limited.

 Informal interview and individual conversation with employee.
 Personal observation on the procedure of employees working activities.
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 1.4.2 Secondary data

The primary data was collected through different ways and some of the ways are:

 Online data from the website of City Bank Limited.

 Relevant journals and research papers.
 Relevant file study as provided by the officers concerned.

1.5 Limitations

During my internship I was able to learn a lot of things with all the good aspects. But there were
also some barriers which did not enable me to put forward all the information that I was expecting
to provide in the report.

• The time span was not sufficient enough to learn all the activities of the organization
properly; therefore it was difficult to carry out the whole analysis.
• The information which could have enriched this report could not be given because of the
confidentiality the company has been imposed.
• The time period was not sufficient to come up with the necessary information
• Organizational restriction to disclose some confidential information
• Appropriate journals and publications are not available.

However, in spite of all of those limitations I tried my level best to come up with the relevant
information in order to make the report more informative and analytical. I believe that, the
information that I accumulated in this report will be really helpful for any further research
regarding this topic.
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Chapter 2

Literature Overview
 13

Literature Review based on articles:

Performance appraisal system is important to any organizational work performance; it determines
the organization's success or failure. The aim of this study is to evaluate the factors that influence
the effectiveness of performance appraisal system at Bank. A series of financial underperformance
while an enhanced Performance Appraisal System was in existence formed the basis of the
statement of the problem. The research objectives included to; establish whether the attitude of the
appraiser and those who are appraised influence the effectiveness of performance appraisal in
Banks determine whether the appraisal design and the process of conducting affect the
effectiveness of appraisal system used in there, find out if employee preparedness and training
influence the effectiveness of performance appraisal. It establishes whether performance feedback
influences an effective performance appraisal exercise and to find out if linking payer rewards to
performance appraisal system influences its effectiveness. The dependent variable was
effectiveness of performance appraisal system while the independent variables included; attitude
of the employees, performance feedback, the design of the appraisal system, training and linking
rewards to Performance Appraisal System. The key findings were: Firstly; the attitude of the
supervisors and the appraised which needs. To be changed. Majority of the subordinate staff
disagreed and remained neutral on attributes related to their attitude while managers agreed with
these attributes in a way to justify on how they deliver on their managerial duties. Secondly, is the
design of the appraisal form? Analysis results revealed that the appraisal form was designed
without participation of employees and its goals were not meaningful measures to the employees.
From this description, it was possible to infer that the standards against which employees
‘performance were judged were vague and highly subjective if these employees didn’t understand
its goals as meaningful measures. Thirdly was training of employees. Lack of sufficient training
across all cadres of employees was revealed through the analysis which the researcher carried out.
The other important factor that affected effectiveness of performance appraisal system at Bank
was performance feedback. A good number of respondents strongly agreed that they hardly
received meaningful feedback therefore they could not capitalize on their strengths and improve
on the weak areas. Finally; it was linking rewards to the performance appraisal results. The analysis
of the results revealed that although this practice existed, employees were given bonuses related
to performance on a flat rate. This in particular showed that the system could not distinguish
between performers and non-performers.
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Maximizing the performance of organizations is the main issue for an organization (Bob cardy,
1997).Good organization performance refers to the employee’s performance. Satisfactory
performance of employees does not happen automatically. Managerial standards, Knowledge and
Skill, Commitment and Performance appraisals effecting employee’s performance. But we are
focusing on performance appraisal. The history of performance appraisal is quite brief. There are
number of banks in Bangladesh that using the performance management system for making better
their employee’s performance because it leads to achieve organizational performance. However,
performance appraisal is very important process but it deemed to be the “weak point” of managing
human force (Pulakios, 2009). Therefore, performance appraisal is important to manage
employee’s work effectively. (Armstrong, 2001) tells performance as behavior – the way in which
organization’s teams and individuals get work done. (Mooney, 2009) suggested that performance
is not only related to results but it also relates with activities and behaviors of employees that they
adopted to achieve their given goals. (Dessler, 2005) define performance appraisal as “comparing
the employee’s present and past performance to his/her performance standards”. (Grubb, 2007)
says performance appraisals a procedure to evaluate how individual personnel are performing and
how they can improve their performance and contribute to overall organizational performance.
(Beach, 2001).

Performance appraisal is the systematic evacuation of employees according to their job and
potential development. (Pınar Güngör, 2011) says “Motivation is the ability of person to modify
his/her behavior”. Motivation is a driven force that leads and directed a person toward some
specific goals. After employee selection, probably the most powerful tool managers have to
examine employee’s performance and getting results is the performance appraisal. (Todd Grubb,
2007). Performance appraisal involves an employee knowing what is expected of him and remain
focused with the help of the supervisor, tells them how well they have done that motivates the
employees toward the good performance (Casio, 2003). Performance management system is the
process that strongly involves assurance and participation of employees within the organization
and that determine the organizational results. The evaluation system identifies the gap of
performance (if any). This gap is the problem that occurs when performance does not meet the
standards that are set by the organization. The feedback system tells the employee about the quality
of his or her work performance (NCN report HR Department’2010). Performance appraisal can
enhance the benefits for the organization; the human resource management is a blend of managerial
 15

and operative functions. The operative functions are concerned with clear actions of procuring,
developing, compensating and maintaining a proficient work force. In order to make proper
implementation of development functions the role of human resource development is of key
importance as it is the process of improving the skills, aptitudes and value of employees so that
they can perform the current and future jobs more efficiently. The development function comprises
the activities of performance appraisal, training, and career planning. Performance appraisal and
motivation sector undoubtedly play vital role in any organization and my report is also about these
two important issues which affects the Bank. An effective employee is a combination of a good
skill set and a productive work environment. Many factors affect employee performance that
managers need to be aware of and should work to improve at all times. To get the maximum
performance from employees, you need to provide them with the tools they need to succeed.

Performance appraisal is the process of assessing the performance and progress of an employee or
of a group of employees on a given job and his/her potential for future development. It is an
objective study. Its main purpose is to secure necessary information for making objective and
correct decisions on employees. Being the process of determining the performance of the
employees on the job it helps in communicating to them the scope for improvement if any with a
proper plan of action which leads to enhancement of performance along with building good
relations amongst superior and subordinates. It also plays an important role in the managers to take
the administrative decisions effectively relating to promotions, fringes, payoffs and merit pay. So,
performance appraisal is a must for all organizations. Employers always need to believe that
Motivation is the inner driver to behave or act in a certain manner. These inner conditions are
wishes, desires, goals, activate to move in a particular direction. In this branch, Branch Manager
believe that it is the general desire or willingness to do something. And also some factors such as
intensity of the desire or need, incentive or reward value of the goal and expectations of the
individual. These factors play a vital role to promote the individual towards the specific goal. So
it is the important feature in any organization, to motive the employees towards the success of the
organization. Actually motivation is an internal process that makes the person move toward a goal.
Motivation can’t be measured. Performance appraisal system (PAS) is the tool for measuring the
performance of an individual and identifies the gaps and plan future development in order to enable
a better performance between the jobs and the incumbent. Performance appraisal system is quite
structured that it can measure of assess both goal (What) and the management competencies
 16

(How).Overall performance of City bank limited is good. In some area they need to focus more.
The report is conduct to evaluate performance and motivation sector. This report gives more focus
on performance appraisal of the bank. How they perform within the organization and compete with
other organization. As I have gone through all the departments, I have come up with some points,
which can improve the efficiency of the Bank. Though the bank was found as a productive concern,
the study reveals that the bank could do much more if it was handled more efficiently. However,
some steps may be taken to improve the efficiency and to increase the performance of the Bank in
future.

Performances appraisal system provides information to management about and employee’s

performance which can be used for succession plan by identifying people with potentialities. It
helps the management to take administrative decisions such as, pay increase, promotion,
placement, transfer and lay off to help supervisors know their subordinates and gives an
opportunity to the subordinates to know where they stand with the boss (Spriegel and Mumma,
1961 Rudrabsavaraj 1969; Levinson 1970; Monapa 1974 Caroll, 1982 Saiyadain, 1985; Mufeed
1995; Robberts, 1995; and Mufeed, 1998), Unfortunately, the early development of appraisal
systems relied on informal judgments of personality traits. These personalities were difficult to
measure objectively and supervisors tended to evaluate subjectively according to their own
preconceived biases, rating errors rampant, feedback wars viewed as punishment by employees
(Gomez Mejia, 1989). Attempt to improve ratings, to increase the extent to which they are valid
indicators of difference in performance, have proved extremely difficult. A major reason for this,
according to Carrol and Schiner (1990) and Landy and Farr (1983), is that very little is still known
about the cognitive processes that underlie the act of judging the performance of others. They
argue that improvements in performances appraisal rest on a better understanding of such
processes, a view supported by Denisi et al (1984), Feldman (1981) and IIgen and Feldman (1983).
In the recent past, research studies witness that only few organizations are satisfied with their
existing performance appraisal systems and the dissatisfaction is greater enough. Research has also
indicated that quite often appraisal system practices are ill designed in most organizations
(Thathachary 1981, Latham & Wexley 1982 and Rao 1992). This is mainly due to the fact that
existing system is not effective, reason being the objective of this system are not spelled out nor
made known to the employees. Many managers view that PAS occupy too much of their productive
time without adequate rewards, quite a few organizations are in search of perfect performance
 17

appraisal system for their organizations to promote and inculcate a performance culture among the
employees. In the present research efforts will be made to diagnose the factors involved for
discontent among the employees at different levels about the operations of PAS and to know the
remedy for the same. The present piece of research is also an attempt to identity the factors
responsible at the employees and also at the organizational levels to make the appraisals more
acceptable, more effective, more workable and more palatable.

Human Resource Management is a function, which is mainly concerned with the relationships
within the organization. It is the resource, which plans, allocates and provides for all other
resources in organizations and in our day to day life. Most of the managements have sidelined the
HRM function due to lack of immense knowledge about the importance involved in the successful
handling of that function. The term performance appraisal is now increasingly replaced by
performance development, performance planning, development review, work plan and review,
performance analysis etc. While in some cases there may be merely cosmetic changes, most of the
organizations are genuinely interested in improving the efficiency and utility of the performance
appraisal system. With increased competition due to liberalization and with foreign investments
and Multinationals being welcomed in this country there is immense pressure on the Indian
organizations to perform better. This pressure is for survival in some organizations, and in others,
to excel and expand in their own expertise. Some of the organizations have built up very loyal and
experienced work force. They are very comfortable with old technologies and methods, which
yielded good results in the past. The past success combined with values, experience and loyalty to
the organization prevents them from accepting change. In addition to these employees, there has
been an entry of new generation of employees questioning everything and are ready to run the
race. In some cases they want more pay than an employee does with the similar qualification
working for the past decade.

My report is also about motivation sector in the bank. Motivation refers to “the reasons underlying
behavior” (Guay et al., 2010, p. 712). Paraphrasing Gredler, Broussard and Garrison (2004)
broadly define motivation as “the attribute that moves us to do or not to do something” (p. 106).
Intrinsic motivation is motivation that is animated by personal enjoyment, interest, or pleasure. As
Deci et al. (1999) observe, “Intrinsic motivation energizes and sustains activities through the
spontaneous satisfactions inherent in effective volitional action. It is manifest in behaviors such as
 18

play, exploration, and challenge seeking that people often do for external rewards” (p. 658).
Researchers often contrast intrinsic motivation with extrinsic motivation, which is motivation
governed by reinforcement contingencies. Traditionally, educators consider intrinsic motivation
to be more desirable and to result in better learning outcomes than extrinsic motivation (Deci et
al., 1999). Motivation involves a constellation of beliefs, perceptions, values, interests, and actions
that are all closely related. As a result, various approaches to motivation can focus on cognitive
behaviours (such as monitoring and strategy use), non-cognitive aspects (such as perceptions,
beliefs, and attitudes), or both. For example, Gottfried (1990) defines academic motivation as
“enjoyment of school learning characterized by a mastery orientation; curiosity; persistence; task-
endogeny; and the learning of challenging, difficult, and novel tasks” (p. 525). On the other hand,
Turner (1995) considers motivation to be synonymous with cognitive engagement, which he
defines as “voluntary uses of high-level self-regulated learning strategies, such as paying attention,
connection, planning, and monitoring” .

The relationship between employee motivation and job performance has been studied in the past
(Vroom, 1964). But high correlations between the two were not established. However, later
research concluded that employee motivation and job performance are indeed positively correlated
(Petty et al., 1984). This relationship is studied in this thesis and the aim is to provide managers
useful information how employees’ performances can be increased by motivating them
intrinsically and/or extrinsically.

Job satisfaction is one of the most widely studied subjects in the management field (Loi and Yang,
2009), as it is considered as one of the determinants of the quality of the working context in any
organization. The starting point in exploring employees‟ satisfaction and motivation was Taylor‟s
scientific study in 1911, but the real beginning of job satisfaction and motivation researches began
with Mayo‟s Hawthorne studies (1924), which shed light on the importance of the human element
as being the most valuable resource in any organization. Thousands of researches in job
satisfaction have been conducted since the Hawthorne studies and a great number of theories and
models were established to explain the complex nature of the job satisfaction phenomena (Locke,
1983). This chapter is primarily devoted to discuss and outline the literature on job motivation and
satisfaction in general.
 19

Performance of employees is affected by different factors at work place. Job performance assesses
whether a person performs a job well. Employee performance indicates the effectiveness of
employee’s specific actions that contribute to attain organizational goals. It is defined as the way
to perform the job tasks according to the prescribed job description. Performance is the art to
complete the task within the defined boundaries. There are lots of factors that affect the
performance of employees. The main theme of the study revolves around those variables. The
problem statement is about factors affecting the performance of employees at work place in the
scenario of City bank ltd. This study will focus on the banking sector to know about their
performance and factors affecting them along with the motivation. The variables that are
determined to affect the performance at work place include working hours, trainings,
communication barriers, stress and financial rewards. These variables are described in different
studies that affect the performance of employees at work place. This study will find out the impact
of working hours, trainings, communication barriers, stress and financial rewards on the
employees’ performance in the banking sector. It will also highlight how these variables affect the
performance either positive or negative. Although the positive affect has been seen through the
literature review but this study will determine it again. Performance Appraisal may be defined as
a structured formal interaction between a subordinate and supervisor, that usually takes the form
of a periodic interview (annual or semi-annual), in which the work performance of the subordinate
is examined and discussed, with a view to identifying weaknesses and strengths as well as
opportunities for improvement and skills development.

A critical factor related to an organization’s long-term success is its ability to measure how well
employees perform and then use that information to ensure that performance meets present
standards and improves over time. This process is referred to as performance appraisal or
performance evaluation. It can also be defined as the process by which an employee’s contribution
to the organization during a specified period of time is assessed. If used effectively, it can improve
employee motivation and performance.

Banking sector in Bangladesh, with its rapid expansion in the number of branches and the new
functions allotted to them have started feeling pressure on their organizational abilities. The
various valuable factors contributing towards the effectiveness of an organization and highlighting
the organizations ability are the processes of recruitment, placement, training, promotion and
 20

appraisal. Appraisal is one of the important factors of organizational ability which is also the main
mark of the study undertaken. The present study aims to know the opinion of bank employees of
public and the private sector bank on performance appraisal systems and criteria followed in their
banks. The City Bank Limited also gives importance on Performance appraisal and motivation
sector as they are so important for the organization. Performance appraisal provides here valuable
information for personnel decisions such as pay Increases, promotions, demotions, transfers and
terminations. Thus, performance appraisal serves as the basis of suitable personnel policies.

 It helps to judge the effectiveness of recruitment, selection, placement and orientation systems
of the organisation.

 It is useful in analysing training and development needs. These needs can be assessed because
performance appraisal reveals people who require further training to remove their weaknesses. It
also identifies individuals with high potential who can be groomed up for higher positions.

 Performance appraisal can be used to improve performance through appropriate feedback to

employees.

It serves as a pathway for the superior for conveying a subordinate about how he or she is
performing on the work assigned and suggesting necessary changes if any with respect to
developing field knowledge, improving behavioural aspects and attitudinal levels. But apparently
it is not delivering the benefits in many cases (John Mooney, 2009). Most of the organizations
usually include performance appraisal they cannot take the benefits from that because there lay a
huge difference between the anticipations and experiences in the present system (Elverfeldt, 2005).
 21

Chapter 3
Overview of the organization
 22

Chapter 3A

Overview of the City Bank LTD

 23

3A.1 Introduction:

City Bank is one of the most established private Commercial Banks working in Bangladesh. It is
a top bank among the oldest five Commercial Banks in the country which began their operations
in 1983. CBL started their journey on 27th March 1983 through opening its first branch at B. B.
Avenue Branch in the capital, Dhaka city. It was the visionary enterprise of around 13 local
businessmen who overcame the immense instabilities and risks with courage and enthusiasm that
made the foundation & forward walk of the bank conceivable. Those patron chiefs started the
excursion with just Taka 3.4 crore worth of Capital, which now is a respectable Taka 2311.78 crore
as capital & reserve. City Bank is among the very few local banks which do not follow the
traditional, decentralized, geographically managed, branch based business or profit model. Instead
the bank manages its business and operation vertically from the head office through 5 distinct
Units namely:

 Business Unit
 Branch Banking
 Risk Unit
 Operations Unit
 Support

Under a real-time online banking platform, these 5 distinct Units are supported at the back by a
robust service delivery or operations setup and also a smart IT Backbone. Such centralized
business segment based business & operating model ensure specialized treatment and services to
the bank's different customer segments. The bank currently has total 112 branches which includes
99 online branches, 1 full-fledged Islamic Banking branch, 1 SME service center and 11 SME/Agri
branches spread across the length & breadth of the country. Besides these traditional delivery
points, the bank is also very active in the alternative delivery area. It currently has 253 ATMs of
its own; and ATM sharing arrangement with partner banks that has more than 1150 ATMs in place;
SMS Banking; Interest Banking and so on. It already started its Customer Call Center operation.
 24

3A.2 History

CBL founded in 1983, as a first generation private commercial banks in this country and is the
best bank doing so as to regard receiving worldwide best practices away with age-old customary
decentralized banking model. Beforehand it used to take after customary and conventional banking
techniques however the bank has experienced huge rebuilding in 2007 and has actualized brought
together plan of action with the new management group assuming control under the administration
of its new CEO Mr. Mahmood Sattar, serving various customers through 4 particular business
divisions to be specific Corporate & Investment Banking, Retail Banking (incorporates Cards),
SME Banking and Treasury and Market Risks. The center of the "transformation" undertaking was
likewise on enhancing the general nature of benefits; re-propelling the brand anew; utilizing the
innovation potential; enhancing the nature of item offerings and putting much higher benchmarks
for client administration. He led a few imaginative activities to transform the bank into a cutting
edge budgetary grocery store utilizing the most recent innovations. City Bank is an ongoing online
bank having 90 online branches, 11 SME/agribusiness branches, more than 150 ATM and 12
money store machines spread the nation over that incorporates an undeniable Islamic Banking
branch under the brand name 'City Manarah'. In 2009, as a team with American Express, it has
propelled the prestigious American Express Credit Card in Bangladesh and is the sole overseer of
the brand sitting above every single local operation.

City Bank is also the first commercial bank in Bangladesh to have issued Dual Currency Credit
Card, holding a principal membership of VISA and Master Card franchises. Recently CBL has
been named as 'Best Bank in Bangladesh for 2012' by Finance Asia for adopting global best
practices by doing away with age-old traditional decentralized banking model and culture. This is
the first year of Finance Asia's extending the award into local bank category in Bangladesh.
Besides winning this prestigious award, CBL also received "The Strongest Bank in Bangladesh
award" in 2010 from The Asian Banker, "American Express Marketing Award" for Outstanding
New Card launch in 2010 from American Express, "MoneyGram International's Best Corridor
Collaboration – South Asia in 2011" in recognition of its inward remittance growth and the ISO
9001:2008 certification from Moody International, for its entire back end and technology
operations. Recently the Bank became an IFC (International Finance Corporation) client, the 4th
such bank in the entire industry in the country, after going through demanding checks and due
 25

diligence undertaken by IFC. CBL brand is already recognized as the "most reputed transforming
institution in the country" and now it is composed to become the "Most Reputed Financial
Institution Brand" soon. The Bank have launch Priority Banking services for high net worth
individuals in 2013. This year will see the launches of Mobile Banking for unbanked people,
Platinum Amex card for the top end of the market, the country's first Business-to-Business (B2B)
card and so on. Currently a comprehensive business process reengineering (BPR) is also underway
under the consultancy of PWC, India, which is likely to result in a complete overhaul of the Bank's
operational processes and practices.

3A.3 Product and Services

As it is a bank, the products are embedded with all the services. A list of the available products
and services of CBL is enlisted below.

3A.3.1 Credit Cards:

o American Express: From 2010 CBL has franchise the AMEX into the Bangladesh
through 3 categories and also available in dual currency mode. The 3 categories are:
 Silver
 Gold
 Platinum

o VISA: An international card and it issues in both Local Currency (Taka) & Foreign
Currency (US Dollar) in 2 categories and also available in dual currency mode,
 Silver
 Gold

3A.3.2 Debit Cards or ATM Cards

o Master Card: CBL issued the master card as default card for any account holder, so
there for it has no specific categories as compare to credit cards.

o VISA Electron: This is also others debit card issued by the CBL with some special
privileges. Recently this VISA electron restricted by CBL.
 26

3A.3.3 Special Cards

o City Maxx American Express Card: It’s a totally a specialized card which can be use
as American Express but as debit card system.

3A.3.4 Retail Banking Service

o All the general banking services, like Bank Accounts, Student Accounts etc.
o Various type of Schemes are also offered by retail baking, like Deposits, Savings, RMG
Accounts etc.
o Various type of Loans, like Consumer loan, Education loan, Heath Loan etc.

3A.3.5 SME Banking Service

o Medium Segment SME Service.

o Small Segment SME Service.
o Agro SME Service.

3A.3.6 Wholesale Banking Service

CBL also offers wide range of services under the wholesale banking service which are defined

as,

o Lon term Finance

o Midterm Finance
o Structured Finance
o Cash Management
o Project Management

Despite all those services, there are lot of servicers also offered by CBL which can be listed as

below:

o Priority Banking Service

o Corporate Banking Servicer
o City Touch (Advance Internet Banking)
o Trade Services (Foreign and Local)
 27

3A.4 Vision

The financial supermarket with a winning culture offering enjoyable experiences.

3A.5 Missions

o Offer wide array of products and services that differentiate and excite all customer
segments
o Be the “Employer of choice” by offering an environment where people excel and leaders
are created
o Continuously challenge processes and platforms to enhance effectiveness and efficiency
o Promote innovation and automation with a view to guaranteeing and enhancing
excellence in service
o Ensure respect for community, good governance and compliance in everything we do

3A.6 Values

o Result Driven
o Accountable & Transparent
o Courageous & Respectful
o Engaged & Inspired
o Focused on Customer Delight
 28

Chapter 3B
Overview of Dutch Bangla Bank Limited
 29

3B.1 Introduction:

Dutch‐Bangla Bank Ltd. is a leading and outstanding commercial bank in the arrear of banking
business. To gain the precious faith from the customers and to maintain faithfully in the future
period time with all the competitors around the market, DBBL offers different products and
services for different kinds of customer. Making the banking activities easy and acceptable for the
customers is DBBL’s main target and goal. DBBL has sufficient brand elements which are
actually needed to build a brand of banding services. It is continuously changing its branding
strategies to keep it at desirable product life cycle stage that is, at growth stage. To retain its
popularity and to gain the highest popularity it tries to manage its brand crisis as effectively as
possible. And DBBL is able to take the future challenge to gain more customers and promised to
make their products more appreciable and to maintain their excellent services.

3B.2 History:

Dutch‐Bangla Bank started operation is Bangladesh's first joint venture bank. The bank was an
effort by local shareholders spearheaded by M Sahabuddin Ahmed (founder chairman) and the
Dutch company FMO. From the onset, the focus of the bank has been financing high‐growth
manufacturing industries in Bangladesh. The rationale being that the manufacturing sector exports
Bangladeshi products worldwide. Thereby financing and concentrating on this sector allows
Bangladesh to achieve the desired growth. DBBL's other focus is corporate social responsibility
(CSR). Even though CSR is now a cliche, DBBL is the pioneer in this sector and termed the
contribution simply as 'social responsibility'. Due to its investment in this sector, DBBL has
become one of the largest donors and the largest bank donor in Bangladesh. The bank has won
numerous international awards because of its unique approach as a socially conscious bank.
DBBL was the first bank in Bangladesh to be fully automated. The Electronic‐Banking Division
was established in 2002 to undertake rapid automation and bring modern banking services into
this field. Full automation was completed in 2003 and hereby introduced plastic money to the
Bangladeshi masses. DBBL also operates the nation's largest ATM fleet and in the process
drastically cut consumer costs and fees by 80%. Moreover, DBBL choosing the low profitability
route for this sector has surprised many critics. DBBL had pursued the mass automation in
Banking as a CSR activity and never intended profitability from this sector. As a result, it now
 30

provides unrivaled banking technology offerings to all its customers. Because of this mindset,
most local banks have joined DBBL's banking infrastructure instead of pursuing their own.

Dutch‐Bangla Bank Limited is also a scheduled commercial bank. The Bank was established
under the Bank Companies Act 1991 and incorporated as a public limited company under the
Companies Act 1994 in Bangladesh with the primary objective to carry on all kinds of banking
business in Bangladesh. The Bank is listed with Dhaka Stock Exchange Limited and Chittagong
Stock Exchange Limited. DBBL‐ a Bangladesh European private joint venture scheduled
commercial bank commenced formal operation from June 3, 1996. The head office of the bank is
located at Senakalyan Bhaban (4th floor),195, Motijheel C/A, Dhaka, Bangladesh. The Bank
commenced its banking business with one branch on 4 July 1996.Even with a history of hefty
technological investments and even larger donations, consumer and investor confidence has never
waned. Dutch‐Bangla Bank stock set the record for the highest share price in the Dhaka Stock
Exchange in 2008.

3B.3 Products and services:

3B.3.1 ATM Booths

ATM Booths of DBBL Dutch‐Bangla Bank operates the largest ATM network, more then 849
ATM Booths. DBBL clients have unlimited and free access to all DBBL ATMs nationwide.
Clients of member banks (not DBBL), may be charged a transaction fee as determined by the
member bank.

3B.3.2 Card Products

o Nexus Pro Cards: Nexus PRO is a revolutionary card first and only offered by DBBL in
Bangladesh. It is the most advanced card in the world. Unlike normal cards, Nexus PRO
features a processor chip that makes the card the most secure and faster than any card
worldwide. DBBL has worked with both Visa and Master Card to bring this revolutionary
card to the market.
o Debit Cards: DBBL is the market leader in Debit Cards. All DBBL debit cards gives
unlimited and free access to all DBBL ATMs and POS nationwide. There are no
 31

transactions or hidden costs associated with DBBL cards and accounts. By default, when
opening a DBBL account, all clients will receive the DBBL Nexus Classic card.
o Credit Cards: DBBL offers the most secure credit card in the market. A credit card offers
greater flexibility for international travel in locations which do not accommodate DBBL
Debit Cards. But a credit card is inherently less secure unless it is a Nexu sEMV credit
card. The reason why DBBL entered the credit card market at such a late stage is because
it did not want to comprimise security until DBBL itself implemented Nexus EMV
technologies. All credit card DBBL issues are Nexus EMV credit cards.

3B.3.3 Internet Banking of DBBL

DBBL allows to do seamless internet banking. This allows reviewing account, statements, paying
bills as DBBL as making some transactions. Because of local banking regulations, DBBL is not
allowed to provide some types of transactions even though it is fully capable.

3B.3.4 Mobile Banking of DBBL

DBBL pioneered Mobile Banking in Bangladesh. It was the first bank to offer banking faculties
through a wide range of mobile phones. SMS (Short Messaging System) is an extremely unsecure
method to do mobile banking. DBBL recommends use a HTML browser found on many phones
to access internet banking facilities. The mobile phone networks are unsecure and there is nothing
DBBL can do but to take precautionary steps. Unlike DBBL ATM's, POS and branches mobile
networks and SMS is not encrypted and do not have advanced security features of the DBBL
electronic banking infrastructure. To make the most of this unsecure scenario, DBBL issues a
mobile PIN number which is different from the DBBL pin number for mobile transactions. Not
under any circumstances is the DBBL PIN number to be used in mobile banking. A different PIN
number and a mobile transaction limit imposed by DBBL provides some security (but not all)
over the unsecure phone network. Clients should be aware and cautious that although DBBL does
its best, it cannot guarantee full security over a phone network it has no control over.
 32

3B.3.5 Electronic Banking of DBBL

Dutch‐Bangla Bank offers a complete electronic banking facility for company around the clock.
Most multi‐nationals use this service because it is advanced, secure and affordable. DBBL creates
a custom banking service to suit any business of any size. The services have a wide range that
includes cash flow services, distribution banking and salary accounts. If a company knows what
type of custom and tailored banking service they need, DBBL can provide it instantly and at
minimal cost (usually free of charge).

3B.4 Vision

Dutch‐Bangla Bank dreams of better Bangladesh, where arts and letters, sports and athletics,
music and entertainment, science and education, health and hygiene, clean and pollution free
environment and above all a society based on morality and ethics make all our lives worth living.
DBBL's essence and ethos rest on a cosmos of creativity and the marvel‐magic of a charmed life
that abounds with spirit of life and adventures that contributes towards human development.

3B.5 Mission

Dutch‐Bangla Bank engineers enterprise and creativity in business and industry with a
commitment to social responsibility. "Profits alone" do not hold a central focus in the Bank's
operation; because "man does not live by bread and butter alone".

3B.6 Core Objectives

Dutch‐Bangla Bank believes in its uncompromising commitment to fulfill its customer needs and
satisfaction and to become their first choice in banking. Taking cue from its pool esteemed
clientele, Dutch‐Bangla Bank intends to gave the way for a new era in banking that upholds and
epitomizes its vaunted marques "Your Trusted Partner"
 33

Chapter 4

Theoretical Framework
 34

4.1 Performance Appraisal System (PAS)

Performance appraisal also known as performance review, formally documents the achievements
of an individual with regards to set targets. The system has become an essential management tool
in today's organizations. Managing employees' performance can be said to be as important as any
other work that all managers execute during the year.

Grote (2002) describes performance appraisal as a formal management tool that helps evaluate
the performance quality of an employee. Schneier and Beatty as cited in Patterson (1987) define
it as a process which apart from evaluating also identifies and develops human performance.

According to Karol (1996) performance appraisal includes a communication event planned

between a manager and an employee specifically for the purpose of assessing that employee's past
job performance and discussing areas for future improvement.

4.2 History of PAS

The history of performance appraisal is fairly concise. Appraisal really began with the Second
World War. It was used to assess results. Dulewicz (1989) says that there is an indispensable
human inclination to judge the work of other people as well as one's own work. It can thus be said
that appraisal is both unavoidable and universal. Even without the existence of a planned appraisal
system, one can have a tendency and find it natural to evaluate the job performance of another
easily and subjectively.

Performance appraisal was seen in the industry in early 1800. Randell (1994) identified its use in
Robert Owen's use of "silent monitors" in the cotton mills of Scotland. The Silent monitors were
in terms of blocks of wood with different colors painted on each visible side and it was hung above
each employee's work station. At the end of the day, the block was turned so that a particular
color, representing a grade of the employee's performance, could be seen by everyone.

Spriegel(1962) and Weise and Buckley(1998) affirm that by the early 1950s, 61 per cent of
organizations regularly used performance appraisals, compared with only 15 per cent immediately
after World War II. DeVries et al. (1981) pointed out the primary tool to be the trait-rating system,
which focused on past actions, using a standard, numerical scoring system to appraise people on
the basis of a previously established set of dimensions. The main tool, used under here was trait
rating system.

The concept of Management by Objective (MBO) was first proposed by Peter Drucker in 1954.

Mcgreror then used it in the appraisal process in the year 1957. He suggested that, employees
should be appraised on the basis of short-term goals, rather than traits, which are jointly set by the
employee and the manager. Weise and Buckley (1998) affirm that this method was very
advantageous as it leads to a transformation of a manager's role from being a judge to a helper. It
also showed that employees' productivity ultimately leads to performance. However, when
employees' performance was measured on the basis of units, then MBO was ineffective. This lead
to new development in the appraisal process and the employees were evaluated on the basis of
 35

'behavior based rating'. Smith and Kendall (1963) designed the first tool to focus on behaviors and
it was the Behaviorally Anchored Rating Scales (BARS).

4.3 Modern Appraisal

Today's performance appraisal process has evolved into a more planned and formal process. It is
used as a means which helps identify and compare employees' performances. The appraisals data
are frequently being used to review several Human Resources decision. It can determine any need
for career developments and trainings. For issues such as raise in salaries, rewards and promotions,
employers are more and more making use of the appraisals' results.

Appraisals have now developed into a regular and intervallic system in organizations, normally
carried out at least once a year. When talking about the modern approach to appraisal, the term
feedback cannot be ignored. The one-to-one discussion between supervisors and subordinates
gives rise to feedback and is referred to as the feedback process. This process can improve
communication all through the organization but also it can reinforce employees' relationships with
their superiors. This is so as the workers have the feeling that they do matter to the organization
and that their needs are being taken into consideration.

The performance appraisal system has most likely become a future-oriented approach as it aims
to improve future performances by considering present problems.

4.4 Purposes of PAS

The most known purpose of performance appraisal is to improve performance of individuals.

Cummings and Shwab (1973) held that performance appraisal has basically two important
purposes, from an organizational point of view and these are:

1. The maintenance of organizational control

2. The measurement of the efficiency with which the organizations human resources are
being utilized.

Still, there are also a variety of other declared purposes for appraisal as per Bratton and Gold
(2003) and Bowles and Coates (1993) and some are; improving motivation and morale of the
employees, clarifying the expectations and reducing the uncertainty about performance,
determining rewards, identifying training and development needs, improving communication,
selecting people for promotion, discipline, planning corrective actions and setting targets.

Furthermore, Bowles and Coates (1993) conducted a postal survey of 250 West Midland
companies in June 1992, where organizations were asked questions pertaining to the use of
Performance management in the organization. These questions included the apparent purpose of
PA in the management of work, its strengths and weaknesses. Through their survey they found
out that PA was beneficial in the following ways:
 36

 PA was favorable in developing the communication between employer and employee

 It was useful in defining performance expectations
 It helped identified training needs.

Performance appraisal can thus be used as an effective tool to improve employees' job
performance by identifying strengths and weaknesses, meeting of targeted goals and providing
training if needed.

4.5 Techniques of PAS

There are several commonly used techniques of performance appraisal as reviewed by Oberg
(1972). They are as follows:

 Check- list Method: Under this method, checklist of “Statements of Traits” of employee
in the form of YES or No based questions is prepared. Here, the rater only does the
reporting or checking and HR department does the actual evaluation. The rater concerned
has to tick appropriate answers relevant to the appraises. When the check-list is completed,
it is sent to HR department for further processing. Various questions in the check list may
have either equal weightage or more weightage may be given to those questions which are
more important. The HR department then calculates the total scores which show the
appraisal result of an employee.

Advantages: Economy, ease of administration, limited training required,

standardization.

Disadvantages: Rater’s biases, use of improper weights by HR Dept., do not allow rater
to give relative ratings.

 Force Choice Method: A series of statements arranged in the blocks of two or more are
given are rater indicates which statement is true or false. The rater is forced to make a
choice. HR department does actual assessment.

Advantages: Absence of personal biases because of forced choice.

Disadvantages: Statements may not be correctly framed.

 Force Distribution Method: One of the problems faced in large organizations is relative
assessment tendencies of raters. Some are too lenient and others too severe. This method
overcomes that problem. It forces everyone to do a comparative rating of all the employees
on a predetermined distribution pattern of good to bad. Say 10% employee in Excellent
Grade, 20% in Good Grade, 40% in Average Grade 20% in Below Average Grade and
10% in unsatisfied grade. The real problem of this method occurs in organizations where
there is a tendency to pack certain key departments with all good employees and some
 37

other discards and laggards. Relatively good employees of key departments get poor rating
and relatively poor employees of laggards’ departments’ get good rating.

 Critical Incident Method: In this method, only critical incidents and behavior associated
with these incidents are taken for evolution. This method involves three steps. A test of
noteworthy on the job behavior is prepared. A group of experts then assigns scale values
to them depending on the degree of desirability for the job. Finally, a checklist of incidents
which define good and bad employees is prepared.

Advantages: This method is very useful for discovering potential of employees who can
be useful in critical situation.

Disadvantages:

a) Negative incidents are, generally, more noticeable than positive ones.

b) The recording of incidents is a core to the superior and may be put off and easily
forgotten.

c) Overly close supervision may result.

 Essay Method: In the essay method approach, the appraiser prepares a written statement
about the employee being appraised. The statement usually concentrates on describing
specific strengths and weakness in job performance. It also suggests courses of action to
remedy the identified problem areas. The statement may be written and edited by the
appraiser alone or it be composed in collaboration with the appraise.

Advantages: The essay method is far less structured and confining than the rating scale
method. It permits the appraiser to examine almost any relevant issuer or attribute of
performance. This contrasts sharply with methods where the appraisal criteria are rigidly
defined. Appraisers may place whatever degree of emphasis on issues or attributes that
they feel appropriate. Thus the process is open- degree of emphasis on issues or attributes
that they feel appraisal system the limits expression or assumes that employee traits can
be neatly dissected and scaled.

Disadvantages: Essay methods are time- consuming and difficult to administer.

Appraisers often find the essay technique more demanding than methods such as rating
scales. The techniques greatest advantage- freedom of expression – is also its greatest
handicap. The varying writing skills of appraisers can upset and distort the whole process.
The process is subjective and, in consequence, it is difficult to compare and contrast the
results of individuals or to dram any broad conclusions about organizational needs.

 Grading: In this method, certain categories of abilities of performance are defined well in
advance and person is put in particular category depending on their traits and
characteristics. Such categories may be definitional like outstanding, good, average, poor,
very poor or may be in terms of letter like A, B, C, D etc. with A indicating the best and
 38

D indicating the worst. This method, however, suffers from one basic limitation that the
rater may rate most of the employees at higher grades.

The above techniques were the traditional ones but the methods most widely used today are:

 Management by Objectives: Employees are requested to put up their own performance

objectives. They are then judged through these objectives by verifying whether they were
satisfied or not. However, in many cases organizations themselves set their standards and
goals even after consulting employees.
 360 Degree Feedback: 360 Degree Feedback is a process in which employees receive
private and anonymous feedback from the people who work around them. Kettley (1997)
says that when an individual receives feedback from different sources of the organization,
including peers, subordinate staff, customers and themselves, the process is called 360
Degree Feedback or appraisal. The employee is then assessed using those received
feedback.

4.6 Views Organizations & Employees have on PAS

Evans (1986) asserts that many employees believe that their promotion or salary increments
depend mostly on their performance. Employees therefore are in a dilemma and consider this
situation as 'survival of the fittest'. They know for a fact that their performance will only be taken
into consideration at the end of the day. So in order to grow in the company, they need to be
proactive towards their work. The feedback the employee receives from his superior, may simply
describe the level of performance achieved.

Hence, it becomes important for the managers to conduct the appraisal technique correctly.
Employees can only accept criticism if it is useful and important to them. Managers should
therefore know how to give information regarding progress made in performance and how to
present criticism as well.

Meyer et.al (1965) carried out a study in General Electric Company where certain points relating
to performance feedback was highlighted. In this study, 92 employees were appraised by their
managers on two occasions over two weeks. The study was carried out using questionnaires,
interviews and observation. The first appraisal highlighted performance and salary while the
second one underlined performance and improvement. It was observed that lots of criticisms were
pointed out by the managers, which lead to defensive behaviour of the employees. The conclusion
of the study was that criticism leads a negative impact on the motivation and performance of the
employees. Also feedback sessions designed to improve performance should not at the same time
consider salary and promotion issues.

Ilgenet. al (1979) add that employees who believe that the appraisal system is under any kind of
bias, are most likely to be dissatisfied by their work and can also leave their jobs.
 39

On the other hand Murphy and Cleveland highlighted one possible reason for the widespread
dissatisfaction with performance appraisal in organization as the systems used by these help
neither them nor their employees in meeting the desired goals.

Landy et al. (1978), Klasson et al. (1980), and Tang and Sarsfield-Baldwin (1996) found evidence
that the assignment of raters influences perceptions of fairness and accuracy in performance
appraisals and hence about the whole process itself.

Nevertheless, according to Jacobs, Kafry&Zedeck (1980) employees perceive PA to give them a

proper understanding of their duties and responsibilities towards the organization. Likewise,
organization sees it as a tool to assess employees on a common ground and one which helps in
salary and promotions decisions, training and development programs.

In many circumstances appraisal plans are interpreted by managers as a system that helps an
organization to change regular priorities and usual ways of working and in so doing to alter its
strategic direction. Hence, in circumstances where change cannot be attained by managerial
proclamation, appraisal takes on the character of an engine of change. When managers look at
appraisal from this angle they hope that it will bring about a change in strategic direction and
organizational behaviour.

Researchers have suggested that reaction to performance appraisal is critical to the acceptance and
use of a performance appraisal system (Bernardin& Beatty, 1984; Cardy& Dobbins, 1994;
Murphy & Cleveland, 1995). Reactions may even contribute to the validity of a system (Ostroff,
1993). Cardy and Dobbins (1994) suggest that "with dissatisfaction and feelings of unfairness in
process and inequity in evaluations, any performance appraisal system will be doomed to failure"
(p. 54). Murphy and Cleveland (1995) stated that "reaction criteria are almost always relevant,
and an unfavorable reaction may doom the carefully constructed appraisal system".

4.7 Benefits of PAS

Possibly the most important benefit of appraisal is that, in the rush and pressure of today's working
life, it allows the supervisor and subordinate to have "time out" for a one-on-one discussion of
indispensable work problems that might not otherwise be addressed.

Likewise, the existence itself of an appraisal system indicates to employees that the organization
is genuinely concerned with their individual performances and advancement. This only can have
a positive impact on the employees' sense of worth, commitment and belonging.

Appraisal offers the rare chance to focus on employment activities and objectives, to spot and
correct existing problems and to enhance favorable future performance. Thus the performance of
the whole organization is improved.

Performance appraisal usually provides employees with acknowledgment for their work efforts,
if any and as a result it brings them satisfaction. Actually, there are facts supporting that human
beings will even prefer negative recognition in rather than no recognition at all.
 40

During performance appraisals, feedbacks are obtained. These provide vital information on
whether training and development needs should be considered. The presence or lack of working
skills, for example, can become very obvious. The supervisor and subordinate can thus agree upon
any demand for training. As far as the organization is concerned, the overall appraisal results can
provide a regular and efficient training needs audit for the organization as a whole.

The information obtained from appraisals can also give indication on an organization's recruitment
and selection practices. This can be done by screening the performance of recently hired workers.
The general quality of the workforce can also be monitored by assessing any improvement or
decline performances. Changes if needed in the recruitment strategies can then be considered.

4.8 Criticisms related to PAS

There are several problems in the actual performance appraisal primarily due to rater bias. Some
supervisors are too lenient and thus have a tendency to rate all employees positively rather than
really measuring their performance. Another problem is the 'central tendency' where supervisors
position the majority of the employees in the center of the performance scale, even though they
deserve a better or worse grade.

The halo effect is another error usually made during appraisals. This arises when a supervisor's
general feeling about an employee influences the overall judgment.

Performance appraisal systems are at times criticized for weaknesses in the system design itself.
Sometimes they assess the wrong behaviors or consequences, or focus on employees' personality
instead of on their work performances. Very often standards for appraising employees are not
related to the work itself. As a consequence, employees may not likely be interested in such a
system where performance standards are unsuccessful in highlighting important aspects of the
jobs.

Some organizations found that PAS is a constant cause of tension, since evaluative and
developmental concerns come often into disagreement. It is said that the appraisal can serve only
one of them at a time. Also they find it dehumanize and demoralize to pass on judgments which
then become source of apprehension and stress to employees.

Many researchers such as Derven (1990) expressed doubts about the effectiveness and
dependability of the appraisal process. Some found the process to be imperfect in nature.
Moreover, Gabris& Mitchell found a disturbing bias in the appraisal process called the Matthew
Effect. It is said to take place in cases where employees keep on receiving the same evaluation
each year. This denotes that there is the belief that if an employee has work well, he or she will
continue on that pace. The Matthew Effect advocates that even if employees struggle to do well,
their past appraisal reports will discriminate their future progress.

Accuracy is important in appraisals. However, for raters to appraise employees accurately, they
should give unbiased results. Unfortunately, accurate ratings are quite impossible as researchers
 41

affirm that personal liking, look, former impressions, gender and race will certainly manipulate
appraisals, that is, there will always be some kind of biasness.

4.9 Conclusion about PAS

There are various schools of beliefs as to the validity and reliability of performance appraisals.
While Derven (1990) doubts about its dependability, Lawrie (1990) finds it to be the most
important aspect of organizations.

A recent survey concluded that more than fifty per cent of the workforce wishes that their
supervisors list the performance objectives much more specifically and clearly. The same survey
revealed that 42 per cent of the employees were rather disappointed their organization's
performance appraisal system.

Many supervisors make the wrong use of appraisal. They use it as a punitive tool rather than
helping their subordinates to improve their performance and overcome work problems.

According to Shelley Riebel, as in the Detroit News (April 11, 1998) often managers are
unsuccessful to explain what they really expect from their employees and fail to well describe the
criteria used for assessing their performance.

The data obtained during the appraisal process should be wisely used and considered. Still, for
performance appraisal to be successful, it is important to carry it out on a regular and consistent
basis. This will allow supervisors to follow and review employees' work. Raters often make the
mistake of emphasizing too much on mistakes committed by the employees. Rather, if ever some
problem is spotted by the supervisor, the issue should be discussed with the employee concerned
and both should try work on a solution.
 42

Chapter-5
Analysis and Findings
 43

5.1 DATA COLLECTION:

I have collected for this research from different websites, articles, newspaper and through the
questionnaire. Data collected through the website such as, Wikipedia, Data collection from,
library, Concerned Management Books and also touch some Newspaper such as Daily Down, the
magazines, the daily Jang. It is good sources to providing help to data collection.

5.2 SURVEYS

The question from the questionnaires.

Q.1. Is your work satisfying and worthwhile and helps contribute to the success of the company?

Answer: Both employees from City Bank LTD and Dutch Bangla Bank LTD strongly agreed to
this question. They both feel that their work is satisfying and worthwhile and contributory to the
success of their company.

Q.2. Would you recommend this company to a friend or relative as a good place to work?

Answer: Both employees would recommend their company to a friend or relative as a good place
to work according to their answers on the questionnaire. However, the employee from DBBL
answered “Definitely Yes” while the employee from CBL answered “Yes”. So, we can say that
the employee from DBBL feels more comfortable with his workplace.

Q.3. Does the manager establish plans and work objectives with you?

Answer: Both employees agreed that their manager establish plans and work objectives with them
beforehand. This indicates that there is a good relationship between the high ranked officers and
relatively lower ranked officers in both companies.
 44

Q.4. Are the goals clearly specified?

Answer: Both employees strongly agreed that their goals are clearly and precisely specified. This
helps them to set their target straight and overcome any difficulties to attain their goals and be
successful.

Q.5. Do you have an annual set of performance standards?

Answer: They both agree to this question. Both of the companies have a performance standards
called KPI (Key Performance Indicator) which plays vital role in their growth in the company and
a high KPI means a better performance throughout the year.

Q.6. How often the performance appraisal form filled or Performance Appraisal is done?

Answer: In CBL, performance appraisal is done annually and in DBBL, it is done half yearly. So,
in DBBL the performance appraisal is done twice more frequently than in CBL.

Q.7. On what basis is the performance appraisal done?

Answer: According to the answers of both employee, in CBL seniority is given preference over
merit and in DBBL, merit is given preference over seniority. As a conclusion, we can say that, in
CBL experience is more valuable and in DBBL creativity and intelligence is more valuable.

Q.8.What methods are being used for performance appraisal?

Answer: In both companies, Forced Choice Distribution method is being used for performance
appraisal system.

Q.9. How do you rate the overall assessment of performance appraisal?

Answer: The employee from CBL rated the overall assessment of performance appraisal of his
company as “Very Good” and the employee from DBBL rated the overall assessment of
performance appraisal of his company as “Satisfactory”. As we can see, the performance appraisal
system is being praised greatly by the employee of CBL than the employee of DBBL.
 45

Q.10. Is compensation linked with performance?

Answer: The employee from CBL did not have any comment regarding this question and the
employee from DBBL agreed that the compensation is linked with performance.

Q.11. Is the promotional policy well defined in the organization?

Answer: Both of them agreed that the promotional policy in their respective company is well
defined.

Q.12. Is the promotional policy linked with the performance appraisal system?

Answer: Both of the employees did not have any comment on this question. They neither agreed
nor disagreed with this question. From he previous answer, we can understand that the
promotional policy in their respective company is well defined but the employees have no idea if
the promotional policy is linked or not linked with performance appraisal system.

Q.13. In your opinion does performance management system of the company identifies the
training needs?

Answer: Both of them agrees with this question. According to them, the performance appraisal
system of their companies identify the training needs.

Q.14. Does the organization provide counseling after the appraisal?

Answer: According to the answers of the employees from CBL and DBBL, the organization
provide counseling after the appraisal. In CBL, the counseling happens always and in DBBL, the
counseling happens often but not always.

Q.15. Does your supervisor recognize your performance?

Answer: Both of the employees agreed that their supervisor or line-in-charge recognize their
performance or what they are doing for their respective companies.
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Q.16. Does your immediate superior deals with all employees fairly?

Answer: Both of the employees agreed that their supervisor or line-in-charge deal fairly with all
employees working under his guidance. So, there is no partiality or favouritism in any of these
two companies which ensures a healthy workplace for all the employees.

Q.17. How do you rate the transparency of the performance appraisal system of the company?

Answer: Both of the employees rated positively about the performance appraisal system of their
companies. The employee from CBL rated their PAS as “Very Good” while the employee from
DBBL rated their PAS as “Outstanding”. So, the employee from DBBL seems to be more satisfied
with his company’s performance appraisal system than the employee from CBL.

Q.18. Does the company maintain salary level that compare well to other companies in this area?

Answer: Both of the employees agreed to this question. So, both of them are pretty happy with
their salary and do not have much complain about it.

5.3 Usefulness of PAS:

From the above answers, the usefulness of regular performance appraisal system can be understood.
Regular performance appraisals provide a useful opportunity to conduct a “check-up” on various
work force development issues that may impact on employee’s effectiveness and well being. The
key useful-nesses are:

 Recognize, reward and support effective performance: Ensuring employees receive

adequate rewards and recognition is a key workforce development issue for the
performance. Performance appraisals provide a good opportunity to formally recognize
employee’s achievements and contributions to the organization, and to ensure a clear link
is maintained between performance and rewards. The appraisal interview can also be used
as a vehicle to demonstrate supervisory and organizational support for employees by
discussing barriers and supports to effective performance, and strategies to address
problems or difficulties.
 47

 Develop and reward effective teamwork: The appraisal interview is also a useful vehicle
for recognizing and rewarding employee’s contributions to various teams in the
organization, especially if appraisal information is gained from team members. An
appraisal of the team as a whole can also be a useful strategy to recognize and reward team
performance, and to identify strategies to improve team functioning.
 Identify and manage issues likely to impact on retention: Open and constructive
performance appraisals can be useful to identify issues that are likely to impact on
employee’s willingness to stay with organization in the longer-term. Key factors
associated with retention include salary and remuneration, professional development
opportunities, and work-related demands and stress. The appraisal interview provides a
good opportunity for a “check- up” regarding employee’s satisfaction with their working
conditions and environment, and a discussion of strategies to address any problem or
issues.
 Monitor and support employee’s well being: Performance appraisal interviews are a
good opportunity to discuss employee’s health and well being in the workplace,
particularly in regard to factors that contribute to feelings of stress and experiences that
promote satisfaction with their work.

5.4 Findings:

 Everyone organization, irrespective of its size, has an appraisal system for its employees.
This implies the performance appraisal has become an indispensable activity in any
organization.
 Most of the companies have separate appraisal system for each level of employees. These
appraisal systems differ on the factors on which a person is rated and the nature of duties
handled by him.
 Even when a same appraisal system exists in different organizations, the probability of its
success is not the same; this can be attributed to the following factors: implementation
problems, organizational climate, and commitment from top management. In most of the
companies it is seen that the employees are not satisfied with the way they are appraised
 48

or they have not been appraised properly. For this matter, almost all the companies have
interview and discussion.
 The frequency of appraisal in all organizations is different. In some company it is done
annually and somewhere it is done half yearly.
 In the most of the cases the immediate supervisors is the appraiser but some times it is also
the HR department or HOD.
 All organizations have goal setting as part of appraisal. The performance is evaluated
against these targets.
 Most of the companies use the data that is maintained for every employee to compare the
performance over a period of time. Some companies also use this data for making decision
regarding job rotation, succession planning. Very few companies make use of this data for
retrenchment as proof of poor performance.
 A good deal of respondents felt that appraisal is likely to be more successful when it is
linked with financial and semi-financial incentives like promotion, bonus, increments.
This increases the commitment from the parties concerned the appraisal and the appraise.
 360 degree feedback system is not very popular in the companies and Forced choice
distribution method is very popular in the companies.
 Almost all the companies are satisfied with the current performance appraisal system and
do not require any changes.
 In the most of the organizations training is provided for the appraisal system one to two
weeks before appraisal and also when new or revised Performance appraisal system
introduced.
 Performance appraisal is surly a good indicator for the training and developmental need
of the employees.
 No monitoring is done to find out any loopholes in the performance appraisal system and
if it exists, it is on informal basis.
 Awareness sessions about the performance appraisal (objectives and importance) are
conduct in a few organizations. It is normally done for new employees.
 49

Chapter 6
Conclusion
 50

Suggestions: Performance appraisal should not be perceived just as a regular activity but its
important should be recognized and communicated down the line to all the employees.

 There should be a review of job analysis, job design and work environment based on the
performance appraisal.
 It should bring more clarity to the goal and vision of the organization.
 It should provide more empowerment to the employees.
 New methods of appraisal should be adopted so that both appraiser and the appraise take
interest in the appraisal process.
 The employees who have excellent performance should be used as a mentor for other
employees who would motivate others to perform better.
 Employees should be given feedback regarding their appraisal. This will help them to
improve on their weak areas.
 Financial and non-financial incentive should be linked to the annual appraisal system so
that employees would be motivated to perform better.
 New mechanisms should be evolved to educe the time factor involved in the procedure of
appraisal. Introducing online-appraisal can do this.
 The frequency of training program for the appraiser should be increased and these sessions
should be made interactive.
 The awareness sessions for the employees/appraises should be made more interactive and
the views and opinion of the appraises regarding appraisal should be given due
consideration.
 Assistance should be sought from specialists for framing a proper appraisal system that
suits the organization climate. Constant monitoring of the appraisal system should be done
through discussions, suggestions, interactions.
 Combing the different methods of appraisal can minimize the element of biasness in an
appraisal. Like the rating method combined with assessment center method would give an
evidence of poor/unfavorable or outstanding behavior of the appraise if any.
 Use of modern appraisal techniques like 360 degree appraisal, assessment centers which
are more effective.
 More transparency should be brought about in the appraisal system.
 51

 The appraisal system should cover all employees in the organization both white collar and
blue-collar jobs.
 Recognizing the good performers i.e., appraises who have accomplished the targets for the
year can help in getting more commitment from the employees.
 Information regarding the performance of the employees should be kept in proper manner.
 Some of the performance appraisals should be conducted by the top management so that
they can understand the employees and their needs, behavior better and to find out the
loopholes.
 Performance appraisal should be effectively link to the performance management system
of the organization.
 52

Chapter 7

Bibliography / Reference
 53

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Chapter 8

Appendix