Performance Management System

ABSTRACT

Performance management is a traditional activity of Human Resource department of most of the leading organizations and it is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization. Therefore, it is the focal point of HR activities such as manpower planning, training & development, compensation & rewards, career planning, succession planning and benefit management. The PMS is a valuable instrument that helps in cascading the organizational objectives down the hierarchy and further helps in planning, monitoring and evaluating performance.

In view of the fact that banking industry is a fast changing industry that has become highly dynamic and competitive, especially in the face of foreign banks knocking at our door, an effort has been made to analyze the existing PMS in the banking industry. After analyzing the existing PMS of the United Kingdom banking industry, it would be possible to detect the weak areas that need immediate attention. With this premise in view, PMS of each bank would be analyzed with particular regard to the internally recognized PMS and then appropriate measures will be proposed to cater the specific needs of the banking industry

Existing culture and mindset of the employees at all levels are the key factors that reflect the attitude of employees that they display on their job. It is one of the leading reasons why banks have not been able to achieve the desired breakthrough in turning the stable culture into hyper turbulent and makes them adaptive to respond to the call of fast changing banking industry. Lack of awareness about the enormous benefits attached to the effective and successful PMS. The old employees of the banks seem to be scared of their positions and are difficult to change.

Having analyzed the PMS being practiced by the world leading organizations and then comparing it with the one being used by United Kingdom banking industry, it can be safely states that true implementation of Performance Management can be achieved if both performance architecture and measuring tool are defined according to the nature of industry and the intensity of competition. The key contributory factor responsible for the successful implementation of PMS is the commitment and attitude displayed by the supervisors in particular and subordinates in general. Appropriate training of employees can guaranty the fair evaluation.

In order to bring the commitment level of Human Resource of Unite kingdom banking industry to a level where they are able to meet the challenges of fast approaching foreign competition, especially with the implementation of WTO, there is an urgent need to first change the existing non-adaptive/ stable culture through consistent training sessions and then to realize the importance of an effective PMS. Besides, a comprehensive but a balanced PMS needs to be instituted in the overall HR function of the industry to reward the good performers and differentiate them from the dead wood.

"This move is very significant for us as it provides unending opportunities and an enhanced lifestyle to our customers as well".

BACKGROUND

Introduction:

It is a universally acclaimed fact that in the emerging highly competitive global market conditions, organizations with excellence in performance will alone survive. A sustained excellence can be maintained only and only by a highly motivated human resource equipped with state-of- the- art equipment. Motivational force is the unique characteristic that drives and inspires the employees to do wonders for their organization. No matter how modern technology is in place and how comprehensive are the procedures laid down, without active role of HR segment of the organization, it is impossible to compete in the present fast changing business world. It is the Human Resource that would create the distinction when properly trained, developed and, above all, suitably motivated through intrinsic and extrinsic rewards/ compensation system.

Performance management is a traditional activity of Human Resource department of most of the leading organizations and it is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities.

What is performance management?

Performance management is a process which contributes to the effective management of individuals and teams in order to achieve high levels of organizational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved'. They go on to stress that it is 'a strategy which relates to every activity of the organization set in the context of its human resource policies, culture, style and communications systems. The nature of the strategy depends on the organizational context and can vary from organization to organization.

In other words performance management should be:

• Strategic - it is about broader issues and longer-term goals
• Integrated - it should link various aspects of the business, people management, and individuals and teams.

It should incorporate:

• Performance improvement - throughout the organization, for individual, team and organizational effectiveness
• Development - unless there is continuous development of individuals and teams, performance will not improve
• Managing behavior - ensuring that individuals are encouraged to behave in a way that allows and fosters better working relationships.

At its best, performance management is a tool to ensure that managers manage effectively; that they ensure the people or teams they manage. It is also about ensuring that managers themselves are aware of the impact of their own behavior on the people they manage and are encouraged to identify and exhibit positive behaviors.

At its best, performance management is a tool to ensure that managers manage effectively; that they ensure the people or teams they manage. It is also about ensuring that managers themselves are aware of the impact of their own behavior on the people they manage and are encouraged to identify and exhibit positive behaviors.

So performance management is about establishing a culture in which individuals and groups take responsibility for the continuous improvement of business processes and of their own skills, behavior and contributions. It is about sharing expectations. Managers can clarify what they expect individual and teams to do; likewise individuals and teams can communicate their expectations of how they should be managed and what they need to do their jobs. It follows that performance management is about interrelationships and about improving the quality of relationships - between managers and individuals, between managers and teams, between members of teams and so on, and is therefore a joint process. It is also about planning - defining expectations expressed as objectives and in business plans - and about measurement; the old dictum is 'If you can't measure it, you can't manage it'. It should apply to all employees, not just managers, and to teams as much as individuals. It is a continuous process, not a one-off event. Last but not least, it is holistic and should pervade every aspect of running an organization.

Historical Background of PMS:

The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago.

Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world's second oldest profession!

There is a basic human tendency to make judgments about those one is working with, as well as about oneself. Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily.

The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate.

Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified. The process was firmly linked to material outcomes. If an employee's performance were found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order.

Little consideration, if any, was given to the developmental possibilities of appraisal. It was felt that a cut in pay, or a raise, should provide the only required impetus for an employee to either improve or continue to perform well.

Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance.

These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence.

As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time.

PROFILE OF THE SELECTED BANKS FOR THE STUDY

BANK OF ENGLAND

Mission Statement:

With 100 years of experience serving the community of England, Arkansas, we're uniquely prepared to meet your banking needs. At Bank of England, you'll find a century of stability -- rare in the world of banking today. And we specialize in agricultural finance. Come by and see us, and let us see what we can do for you. After all - we're your neighbors!

Historical Background:

The Bank of England was founded in 1694 to act as the Government's banker and debt-manager. Since then its role has developed and evolved, centered on the management of the nation's currency and its position at the centre of the UK's financial system.

The history of the Bank is naturally one of interest, but also of continuing relevance to the Bank today. Events and circumstances over the past three hundred or so years have shaped and influenced the role and responsibilities of the Bank. They have molded the culture and traditions, as well as the expertise, of the Bank which are relevant to its reputation and effectiveness as a central bank in the early years of the 21st century. At the same time, much of the history of the Bank runs parallel to the economic and financial history, and often the political history, of the United Kingdom more generally.

If you want to get closer to the Bank's history and are visiting London, the Bank's Museum provides a unique insight into the history of the Bank and its business, alongside a great deal of material about the Bank today.

King William & Queen Mary

When William and Mary came to the throne in 1688, public finances were weak. The system of money and credit was in disarray. A national bank was needed to mobilize the nation's resources.

William Paterson proposed a loan of £1,200,000 to the Government. In return the subscribers would be incorporated as the Governor and Company of the Bank of England.

The Royal Charter

The money was raised in a few weeks and the Royal Charter was sealed on 27th July 1694. The Bank started life as the Government's banker and debt-manager, with 17 clerks and 2 gatekeepers. In 1734 the Bank moved to Thread-needle Street, gradually acquiring land and premises to create the site seen today.

The 19th Century

The 1844 Bank Charter Act tied the note issue to the Bank's gold reserves. The Bank was required to keep the accounts of the note issue separate from those of its banking operations and produce a weekly summary of both accounts. The Bank Return, as it's called, is still published every week.

Lender of last resort

In the 19th Century the Bank took on the role of lender of last resort, providing stability during several financial crises.

The First World War: 1914-18

During the First World War the National Debt jumped to £7 billion. The Bank helped manage Government borrowing and resist inflationary pressures.

Gold

In 1931 the United Kingdom left the gold standard; its gold and foreign exchange reserves were transferred to the Treasury. But their management was still handled by the Bank and this remains the case today.

HSBC

Mission Statement:

• To provide value-added services to our customers.
• To provide high-tech innovative solutions to meet customers' requirements.
• To create sustainable value through growth, efficiency and diversity for all stakeholders.
• To provide a challenging work environment and reward dedicated team members according to their abilities and performance.
• To play a proactive role in contributing towards the society.

Historical Background:

HSBC (originally the "Honking and Shanghai Banking Corporation") was founded in 1865. HSBC Holdings was established in 1990 and became the parent company to The Honking and Shanghai Banking Corporation in preparation for its purchase of Midland Bank and a change of domicile for the transfer of sovereignty of Hong Kong. Shares in HSBC Holdings, which gave HSBC a substantial presence in the UK, was completed in 1992. As part of the takeover conditions for the purchase of Midland, HSBC was forced to move its world headquarters from Hong Kong to London in 1993.

Headquartered in London, HSBC is one of the largest banking and financial services organizations in the world. HSBC's international network comprises around 8,500 offices in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by around 220,000 shareholders in 119 countries and territories. The shares are traded on the New York Stock Exchange in the form of American Depositary Receipts.

Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services: personal financial services; commercial banking; corporate, investment banking and markets; private banking; and other activities.

LOGO

The hexagon symbol was originally adopted by The Hongkong and Shanghai Banking Corporation as its logo in 1983. It was developed from the bank's house flag, a white rectangle divided diagonally to produce a red hourglass shape. Like many other Hong Kong company flags that originated in the 19th century, and because of its founder's nationality, the design was based on the cross of Saint Andrew. The logo was designed by graphic artist Henry Steiner.

Subprime crisis

In November 2002 HSBC expanded further in the United States. Under the chairmanship of Sir John Bond, it spent £9bn (US$15.5bn) to acquire Household Finance Corporation (HFC), a US credit card issuer and subprime lender. In a 2003 cover story, The Banker noted "when banking historians look back, they may conclude that was the deal of the first decade of the 21st century". Under the new name of HSBC Finance, the division was the second largest subprime lender in the US.

The business turned sour, costing HSBC US$62bn. In March 2009, HSBC announced that it would shut down the branch network of its HSBC Finance arm in the U.S., leading to nearly 6,000 job losses and leaving only the credit card business to continue operating.

Chairman Stephen Green stated, "HSBC has a reputation for telling it as it is. With the benefit of hindsight, this is an acquisition we wish we had not undertaken." analyst Colin Morton said, "The takeover was an absolute disaster".

Although it was at the centre of the subprime storm, the wider group has weathered the economic crisis better than other global banks. According to Bloomberg, "HSBC is one of world's strongest banks by some measures." When HM Treasury required all UK banks to increase their capital in October 2007, the group transferred £750 million to London within hours, and announced that it had just lent £4 billion to other UK banks. In March 2009, it announced that it had made US$9.3bn of profit in 2008 and announced a £12.5bn (US$17.7bn; HK$138bn) rights issue to enable it to buy other banks that were struggling to survive. However, uncertainty over the rights' issue's implications for institutional investors caused volatility in the Hong Kong stock market: on 9 March 2009 HSBC's share price fell 24.14%, with 12 million shares sold in the last few seconds of trading.

Standard Chartered Bank

Mission Statement:

To be recognized as the leading financial institution of Pakistan and a dynamic international bank in the emerging markets, providing our customers with a premium set of innovative products and services, and granting superior value to our stakeholders - shareholders, customers and employees.

Historical Background:

The early years

The name Standard Chartered comes from the two original banks from which it was founded and which merged in 1869 — The Chartered Bank of India, Australia and China, and The Standard Bank of British South Africa.

The Chartered Bank was founded by Scotsman James Wilson following the grant of a Royal Charter by Queen Victoria in 1853, while The Standard Bank was founded in the Cape Province of South Africa in 1862 by another Scotsman John Paterson. Both companies were keen to capitalize on the huge expansion of trade and to earn the handsome profits to be made from financing the movement of goods from Europe to the East and to Africa.

In those early years, both banks prospered. Chartered opened its first branches in Bombay, Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in 1859. With the opening of the Suez Canal in 1869 and the extension of the telegraph to China in 1871, Chartered was well placed to expand and develop its business.

In South Africa, Standard, having established a considerable number of branches was prominent in financing the development of the diamond fields of Kimberley from 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885. Half the output of the second largest gold field in the world passed through The Standard Bank on its way to London.

Standard Chartered Bank is a British bank headquartered in London with operations in more than seventy countries. It operates a network of over 1,700 branches and outlets (including subsidiaries, associates and joint ventures) and employs 73,000 people.

Despite its British base, it has few customers in the United Kingdom and 90% of its profits come from Asia, Africa, and the Middle East. Because the bank's history is entwined with the development of the British Empire its operations lie predominantly in former British colonies, though over the past two decades it has expanded into countries that have historically had little British influence. It aims to provide a safe regulatory bridge between these developing economies.

It now focuses on consumer, corporate, and institutional banking, and on the provision of treasury services—areas in which the Group had particular strength and expertise.

United Kingdom Rescue Plan

STATEMENT OF THE PROBLEM

Because performance management is (or should be) so all-pervasive, it needs structures to support it. Therefore my problem statement is

"Evaluating up to what extent Performance management system is effective

In United Kingdom banking sector and how it impacts on Organization's success"

The key concerns of this study are:

• To be clear about what is meant by performance
• Understanding what the organization is and needs to be in its performance culture
• To evaluate how individual employees will benefit and play their part in the process
• Understanding that it is a tool for line managers and its success will depend on their ability to use it effectively.

SIGNIFICANCE OF STUDY

The objectives of the conducting research on the vital HR component are multifold; salient ones are appended below:

The Performance Management System has significantly expanded over the period of time, particularly in the last two decades and it is difficult to cover all aspects. However, a dedicated effort has been made to study the various stages of PMS that have been tried in the past by the leading organizations and proved highly successful. Recommended models of world-renowned practitioners have been studied to obtain a fair idea about the specific benefits attached to various components of this tool.

• To study the theoretical architecture of PMS of the international renowned authors and then help professionals to understand concept in united kingdom setting
• To study the existing PMS in the banking sector, especially in three leading banks - Bank of England, HSBC bank and Standard Chartered Bank, and enhance implication of performance management in these banks
• To propose a PMS model based on international systems and then to carry out a comparative analysis of this proposed model with the PMS existing in the banking industry.
• To find the strengths and weaknesses of both the proposed system and the one being practiced in domestic environment.
• In light of the findings of the comparative analysis, further suggest improvements in the proposed framework.

OBJECTIVE OF THE STUDY

The research study has been carried out on the Performance Management System (PMS). This is a traditional activity of the Human Resource Department. The main rationale behind the selection of this topic by me is that in my opinion this process is the focal point of all HR activities such as manpower planning, training & development, reward and compensation, career path, succession planning, benefit management etc. so I will follow the descriptive research because subject material is already available. This report is conducted to get clear insight of this issue and suggest ways to cope that issue.

The research study has been carried out on the Performance Management System (PMS), with particular reference to applicability of the system to UK banking industry.

SAMPLING LOCATION

As far as my thesis is concerned, employees and managers who are working in the banking sector will be the respondents of my study. My sample size is 60; randomly selected employees and managers of banking sector of UK. Evaluated employees of this sample will help me a lot to understand role of employee's performance management system.

Literature Review

The Swan's Approach to Performance management:

William S. Swan, who is considered an authority over PMS, has given a model of PMS that provides insight into the issues. It's based on assumption that every job has two components: behaviors and activity or outcomes.

Behaviors. How do employees do their job on an ongoing basis? What is the standard by which we measure their performance of these ongoing duties? Some sophisticated performance appraisal systems refer to these standards as "competencies". These behaviors or at least the standards by which we measure them are usually the same for every employee in the given role. Many of them are the same for every employee in the organization

Performance activities or objectives. Some objectives are unique and different from one appraisal period to the next. It's quite possible that one may manage several employee in the same role, all of whom would be responsible for completely different goals or objectives during a given appraisal period. These performance objectives have the additional advantage of helping to use the performance appraisal as an aviate part of the managerial process: at the beginning of each appraisal period, one can coordinate employee responsibilities with the plan for the coming year, by building their unique conurbation into the strategy for this year's department or unit performance objectives.

Seeing the need to revitalize the bank and also in pursuit of privatization and de-regulation of economy, Banks was included in list of banking institutions earmarked for privatization in late 90's by the government.

The management appointed consultants to review and define a new strategy for the bank's future, which now concentrates on technology development, new products and staff for the bank to become an agent of change. The bank also consolidated its operations in this region. The bank is making every effort to meet the up-coming challenges through strategic planning and making the best use of the resources at its command.

Dick Grote's Model of Performance Appraisal:

Dick Grote suggests that Performance appraisal is not an event, rather it is a process. Even the isolated incident we normally refer to as "giving somebody his performance appraisal" actually involves a large number of events. These events happen in a predictable and sequential fashion, with one completed before the next begins. The links vary from one company to another, but the following chain of events in well-managed companies is reasonably typical:

1. As performance appraisal time approaches, the manager reflects on how well each of his subordinates has done his job over the course of the year.
2. The manager assembles the various forms and paperwork designed by the organization to capture that information and fills them out.
3. The manager decides whether to recommend a compensation change and, if so, the amount of the increase.
4. Forms and recommendations are approved by the manager's supervisor, that person's supervisor, the organization's compensation administrator, and perhaps some other people. The manager then prepares for a discussion with the individual about his performance in the part year.
5. The manager and subordinate meet for about an hour. They talk about the past (how well the person did his job over the past twelvemonths), the present (the new amount of compensation the employee will now be receiving), and the future (what organizational goals and personal development plans the individual will be expected to achieved during the upcoming twelve months).
6. Both review the paperwork and sign the forms to acknowledge that the process has been completed.
7. With the completion of discussion, the meeting ends. The manager concludes the sequence by noting any additional comments and sending the paperwork to the personnel department for filing.

Reviewing the list demonstrates that it is actually a process we are dealing with and not an individual event.

The Link to Rewards and PMS

Recent research has reported that appraises seem to have greater acceptance of the appraisal process, and feel more satisfied with it, when the process is directly linked to rewards. Such findings are a serious challenge to those who feel that appraisal results and reward outcomes must be strictly isolated from each other.

There is also a group who argues that the evaluation of employees for reward purposes, and frank communication with them about their performance, are part of the basic responsibilities of management. The practice of not discussing reward issues while appraising performance is, say critics, based on inconsistent and muddled ideas of motivation.

In many organizations, this inconsistency is aggravated by the practice of having separate wage and salary reviews, in which supervisors and managers decide pay raises and bonuses arbitrarily, and often secretly. (https://www.performance-appraisal.com/intro.htm)

Common Mistakes:

Where performance appraisal fails to work as well as it should, lack of support from the top levels of management is often cited as a major contributing reason. Opposition may be based on political motives, or more simply, on ignorance or disbelief in the effectiveness of the appraisal process.

It is crucial that top management believe in the value of appraisal and express their visible commitment to it. Top managers are powerful role models for other managers and employees.

Those attempting to introduce performance appraisal, or even to reform an existing system, must be acutely aware of the importance of political issues and symbolism in the success of such projects

Performance Management - an ongoing process:

One of the most common mistakes in the practice of performance appraisal is to perceive appraisal is not an isolated event rather than an ongoing process. Employees generally require more feedback, and more frequently, than can be provided in an annual appraisal. While it may not be necessary to conduct full appraisal sessions more than once or twice a year, performance management should be viewed as an ongoing process.

Frequent mini-appraisals and feedback sessions will help ensure that employees receive the ongoing guidance, support and encouragement they need. Of course many supervisors complain they don't have the time to provide this sort of ongoing feedback. This is hardly likely. What supervisors really mean when they say this is that the supervision and development of subordinates is not as high a priority as certain other tasks.

In this case, the organization may need to review the priorities and values that it has instilled in its supervisory ranks. After all, supervisors who haven't got time to monitor and facilitate the performance of their subordinates are like chefs who haven't got time to cook, or dentists who are too busy to look at teeth. It just doesn't make sense.

If appraisal is viewed as an isolated event, it is only natural that supervisors will come to view their responsibilities in the same way. Just as worrying, employees may come to see their own effort and commitment levels as something that needs a bit of a polish up in the month or two preceding appraisal.

Performance Management for Retail Banking

Infection Point empowers CFO's of European banks drive performance improvement, effect strategic change and assures control using software built for the retail banking sector.

At BPH, Poland's third largest bank, Inflection Point has deployed our retail banking performance management system to 800 users, leading to 106% growth on ROAE (return on average equity) in the first year and a 14.7% improvement in BPH's CI factor (cost income).

The CFO is unable to accurately explain why performance is up or down at the end of the reporting period. The reason for this is often that there is an inconsistency in the financial and operations figures used for management purposes.

The finance and controlling department spends a huge amount of time preparing reports for its customers and no time is left to analyze them. As a result, board packs and reports can lack the level of commentary and insight required to explain financial performance. This reduces the banks ability to respond to changes in the market in a timely manner, often management's response is a month or so after events have taken place.

Therefore, implementing strategic change is difficult and can restrict the CFO and the banks management team's ability to effect the behavioral changes that will lead to performance improvement.

Inflection Point Solution

Our solution is aligned to the banks strategic initiatives and enables the best execution of strategy. The primary objective of our software is to empower the CFO to increase the banks RAROC. This is done through insight into the drivers behind performance that was previously unavailable by providing finance with full control by ensuring the numbers are accurate and that the entire bank works from one set of figures.

Key Solution Features Inflection Point is the only performance management software to include pre-built retail banking models

Our software includes best practices in performance management and in retail banking, Integration workflow within the software to address the behavioral challenges of strategic change. Our solution is built on the expertise and experience gained from successfully delivering performance management systems at leading retail banks Inflection Point offers the most visual and engaging reporting and analysis software designed for end users Inflection Point is the only strategy management software designed for specifically for retail banks

Where lays the effectiveness of Performance Management System?

Meritocracy, the system we all espouse, in order to succeed requires not only well designed appraisal formats to assess the performance of employees, but more importantly a well planned and conducted appraisal process. Appraisal process must be conducted with great objectivity, sincerity and commitment giving the importance it deserves.

Generally there are two things which determine how successful a performance appraisal system is in place in an organization: 1) The contents/design of the performance appraisal form, and 2) the manner in which Performance Appraisal is conducted. While organizations lay great emphasis on the contents/design part, spending much of time, money and energy on designing most suitable, objective, comprehensive…. formats, it comes to a naught if the appraising process is not conducted properly. Effectiveness of the performance appraisal system depends on how seriously it is perceived, importance given to it by both the subordinate and reporting officer, and the impact it is going to have on possible rewards and punishments.

Self appraisal is an important feature of the appraisal format for it provides a perspective from employees' point of view. It communicates his contributions, accomplishments and reflections on various facilitating and inhibiting factors which played a role on attaining or otherwise of the goals he set for himself. His failures, and the capabilities he could discover within himself in the process or the capabilities he felt he lacked and the support or otherwise he obtained from his reporting officers and other colleagues and his views on how plans to overcome them. It provides a viewpoint or a perspective to the reporting officer to objectively form his opinion on the performance of employee and expected future levels of performance from him. Analysis of performance of the employee through mutual discussion is a very crucial aspect where the design of the performance appraisal format is of less importance than the process of conducting it.

Top management should exhibit its commitment towards a fair and objective performance appraisal process and actions taken on appraisal records should be timely, objective and specific. Line managers should be impressed on conducting appraisal and utilizing it properly for organizations' benefit and conducting appraisal should get integrated with counseling, mentoring and proper implementation of training policy. An appropriately conducted appraisal process will result in better placement of employees, brings role clarity and leads to job satisfaction which is great motivating factor for an employee.

Banking System in United Kingdom

The trend of loan advances on political consideration and practices of professional dishonesty were at their height during 1980-90.Merger of small banks into a single entity and the expansion in bank operations for the benefit of the people living in the remote and rural areas of the country, yet the expansion in banking network proved counterproductive later on as the branches operating in smaller areas started showing losses during 1970-80. The United Kingdom Banking Council which was supposed to monitor banking sector decided to close down the operations of the bank branches running in losses which ultimately affected growth of the banking sector in 1980s as compared to the growth achieved in 70s.

It is worth mentioning that after 90s, the banking sector continued to experience the ups and downs and failed to achieve a sustainable growth rate due to excessive politicization in the financial sector.

From 1974, which was the year of privatization, and 1977 the size of the bank deposits were doubled, however this pace of growth became stagnant during 1977-80. The next five year from 1980 to '85 showed some improvement but again suffered a slow growth rate from 1985 to 1988.

MATERIALS AND METHODS

Research Instruments

Primary Data Source

Data collection is the step which needs much more concentration of the researcher because if this step is good enough then the research will be effective and efficient. I have used both the Questionnaire and the Interview as my instruments for primary data collection.

Questionnaire

Questionnaire is a very rich source of primary data collection methods. I prepared the questionnaire in a manner that one can easily give the answers of asked questions. I used like scale, Dichotomous Scale, Numerical scale, and open ended questions in my questionnaire. I distribute the questionnaires to the employees working at different Banks.

Interviews

I have conducted interviews from the other managers and HR manager to acquire the accurate information. I have conducted structured interviews for collecting information.

Secondary Sources of Data

The already existing data has about the banking sector had been collected from the following secondary sources:

Web site of the Banks

I collected the information about the history, mission, and vision statements from the website of the Banks. I used internet to collect more information that comes in secondary source of data.

Following are the other sources that also helped me to better understand the procedures and methods being used in PMS in the banking sector

CALIBRATION OF EQUIPMENT

The data that has been collected is in the form of theory. Questionnaire and interviews have been used, so few statistical figures have been used by me in this thesis, as the respondents' were reluctant to provide any figure. Still efforts have been made to include charts, graphs, and tables into the study, which would give a better idea about the facts and findings.

RESEARCH METHODOLOGY

The main components through which requisite data can be gathered and analyzed to reach solution are:

Type of the Study

The type of my study is descriptive because this study is undertaken in order to ascertain and be able describe the characteristics of the variables involved in the situation.

Extent of interference

The extent of my interference in my research settings is minimal, I do not manipulate any variable to come up with the results and I am working in a normal environment within a normal setting.

Study Settings

The setting of my study is non-contrived because I am working in a natural environment where work proceeds normally. The descriptive studies are invariably conducted in non contrived settings.

Unit of Analysis

The unit of analysis of my study is individuals because my topic is on the performance management system and its effect over organizational success, so I will be analyzing that how organizational performance is being effected through employee's performance management.

Delimitations

Performance management is difficult to implement. The limitations of this study are that sample size too small that it might not represent view of all managers. And the major limitation is that this study is about performance management, which is concerned with organizational policy ,so therefore managers are reluctant to provide information about their policies of organization, but still efforts has been made to show correct scenario of targeted banks regarding performance management. Study can be less successful if policies of banks are changed.

CRITICAL ANALYSIS OF PMS OF THE BANKS:

All big and small organizations, planning to compete in domestic and international markets, keep a close eye on the environment, especially on the fast approaching competitors to ensure their survival. Critical analysis is a step to precisely know the business trends and to take proactive actions to avoid any surprise. An effective and reliable analysis clearly depicts merits and demerits of the existing system and helps take appropriate actions to make improvements.

In view of the fact that banking industry is a fast changing industry that has become highly dynamic and competitive, especially in the face of foreign banks knocking at our door, an effort has been made to analyze the existing PMS in the banking industry. After analyzing the existing PMS of the United Kingdom banking industry, it would be possible to detect the weak areas that need immediate attention. With this premise in view, PMS of each bank would be analyzed with particular regard to the internally recognized PMS and then appropriate measures will be proposed to cater the specific needs of the banking industry.

For any PMS to be effective, it must clearly specify planning, execution and evaluation phases. Having laid down detailed instructions, the most important issue is the training of supervisors and subordinates to ensure that they understand the main purpose of the whole exercise.

Bank of England

Although Bank of England is the central bank of UK and is well equipped to manage the HR practices, the prevailing culture is the main hindrance in keeping pace with fast changing banking industry. For any PMS to be effective, it must specify planning, execution and evaluation phases. Bank of England has been conducting training of employees on regular basis to ensure that they understand the main purpose of the whole exercise; mostly supervisors take performance appraisal as annual exercise. The PMS architecture of the system is quite elaborate but appraisal tool is not well defined. Phase-wise analysis is appended below:

Planning Phase. At Bank of England, appraiser and appraise decide about targets and goals within the KRAs implemented by the corporate headquarters, in a formal meeting usually held in January each year. The foremost discrepancy in the appraisal form is the fact that same KRAs are used for employees of all functions, which can't justified to be a fair system. Evaluating all employees against same KRAs irrespective of the job description is prone to create dissatisfaction among most of the employees. Moreover, targets within each KRA are not prioritized to allocate appropriate weightings, which prevent the appraise to set his/ her priorities and allocate appropriate time and resources to each KRA/ target. Competencies are not well defined, which may lead to a conflict situation due to different interpretations (of competencies) by appraisers and appraises. Some of the skills are not equally important for the employees of all functions that make the validity of the system questionable - evaluation would be either deficient or contaminated.

Execution Phase. Monitoring of the appraisee's performance progress on quarterly basis is considered to be in the interest of both the appraiser as well as appraise, as it provides an early warning to take appropriate actions to avoid any delay in meeting the targets. It affords them an opportunity to mutually interact and overview the pace of progress, timely detecting the barriers to smooth completion of the targets and taking remedial actions. Maintenance of progress record by both the appraiser and appraise helps in justifying and achieving just evaluation. Similarly, recording situational factors that may cause hindrance in the pace of work would provide evidence and help justify the final grading.

Evaluation Phase. Performance evaluation, being last phase of PMS, is conducted towards the end of performance period. Evaluation, by virtue of trained supervisors, is taken seriously as promotions and rewards are directly linked to it. The final grading/ evaluation by the boss of appraiser (who is often interacting with the appraise), reduces the element of biasness to some extent, making the system less subjective to abuse and biasness. Concept of self-evaluation, bottom up or 360-degree evaluation is missing from the system, preventing the appraiser from exactly knowing the appraisee's viewpoint about his/ her performance evaluation. Providing feedback to appraise and discussing various aspects of performance during performance interview is considered an essential activity that would always create/ improve interpersonal relationship and would open avenue to remove confusions and doubts, if any. Involvement of appraise in development plans is appropriate, as it would allow the appraise to actively participate in deciding what is good for him/ her. However, final grading is not shown to the employees, which questions the transparency of the system.

Standard Chartered:

Despite the fact that banking industry is a fast changing industry that has become highly dynamic and competitive, especially in the face of foreign banks knocking at our door, Standard chartered has yet not realized the facts on ground. There are serious pitfalls in the culture of Standard chartered that are considered to be the main barrier in the way to adaptation and change. The top management is considered to be non-supportive and has apparently failed to allocate requisite resources to make the PMS a critical part of HR function. Having laid down detailed instructions, the most important issue is the training of all supervisors and subordinates to ensure that they understand the main purpose of the whole exercise.

The PMS architecture and the measurement tool both lack the essential ingredients. Phase - wise analysis of the system is appended below:

Planning Phase. Planning, being the base of the entire PMS cycle is the starting point that is being neglected at the bank leaving defects right from the outset. At Standard chartered, in the planning phase of performance, there are no pre-determined targets and even the KRAs are imposed by the corporate headquarters, making the system non-receptive to employees of various functions. General areas of responsibility are pre-decided and there is no discussion session at the beginning of year to deliberate on the KRAs/ Competencies. Since competencies are not well defined, it is likely to lead different interpretation by appraiser and appraise. The existing system is not aligned with the overall strategy of the bank - decision of financial targets at top level and then cascading down simply does not ensure clear understanding of the strategic goals by the field level managers. Certainly, such a directionless planning phase would certainly take the organization nowhere. A senior officer at regional office informed that there was a communication gap between corporate headquarters and field offices/ branches as far as strategic goals were concerned. There seems to be no change in the culture even at higher level, and non-competitive attitude prevails at the bank.

Execution Phase. It is quite clear that Standard chartered is not truly using its PMS for strategic purposes because strategic goals are not disseminated to all employees. PMS is rather just a formality that has to be carried out at the end of year. There is no evidence from the contents of the appraisal form that targets are set at the start of the appraisal period. Without clearly defining Key Result Areas (KRAs) or Competency Dictionaries according to job description is considered non-valid approach to evaluation. Evaluating appraise in irrelevant areas will put the validity doubtful. In the absence of proper planning at gross root level at the outset, execution would remain faulty (you can achieve what you can plan). Moreover, monitoring of the progress would not be possible as this is not formally included in the system.

Performance Evaluation. Taking performance evaluation as a year-end ritual, without following the activities of entire period, is prone to leave a wrong message to the whole organization. Employees will never give utmost performance unless they have complete trust in the system. Leaving the entire evaluation on a single appraiser‘s discretion, without consulting other related managers, subordinates and peers is likely to breed biasness and partiality. Evaluating against few areas of the performance can't reflect the true potential of the employees. There is no concept of self-evaluation by the appraise, which prevents the appraiser from understanding appraisee's viewpoint about various aspects of performance. The employees are not provided any opportunity to give their own feedback about how they think the things went during the appraisal period.

Having analyzed the appraisal form and interpreting it in relation to the entire PMS, following are the analytical observations:

Lack of Training: Lack of orientation training and PMS related courses is the main reason why managers at all levels are not getting serious in implementing PMS in its true spirit. Not making enough investment on this essential component of HR is bound to cause serious damage to the organization and make it further deficient in achieving its long-term goals. Lack of support by the top management is another factor responsible for getting the required funds/ resources - annual budget allocation.

Poorly defined KRA/ Competencies. Using similar KRAs and competencies for all employees of different functions is killing the very purpose of deciding these areas against which employees could be evaluated. Similarly, without setting targets, it is not possible to a measure the performance level. Evaluation based on personal judgment of the supervisor, does not preclude the element of biasness.

High Subjectivity. Although no PMS can completely get rid of subjectivity, this factor is very prominent in case of Standard Chartered. Since various categories/ labels are not attached any weighting, appraiser may use his/ her authority to settle own personal scores. There is no consideration of situational factors, preventing both appraiser and appraise from discussing the evaluation, environmental factors and creating a close rapport between the two.

Linkage of PMS with Compensation/ Rewards. Although, annual bonuses are given on the basis of evaluation report (performance based), there is no consistency in the policy, which may seriously jeopardize the trust of employees on the system. As informed by one employee, Standard Chartered paid extra-ordinary bonuses to the employees in 2004 that came as a big surprise to the employees. As such, due to inconsistency in the bonus policy, employees can't predict with certainty what they will be getting at the end of year - resulting in lack of commitment and perseverance.

HSBC:

Although HSBC has not carried out any study on the effectiveness of the system, being in its infancy, there are clear-cut pitfalls in the system that can be judged from the appraisal form. The system does not simply satisfy all the three basic purposes i.e. strategic, developmental and administrative purposes, on equal terms. HR function apparently is not playing its strategic role in aligning goals of all departments/ functions with overall strategy of the bank. Additionally, the highly stable culture prevalent at the bank is the main hindrance in implementation of the PMS, making it less competitive in the industry.

Planning Phase. At HSBC, goals are set for the year in five areas, (similar to Balance Scorecard approach), during planning phase of PMS. However, specific targets within the KRAs are not defined in the beginning. General areas of responsibility are part of the appraisal form but there is no discussion session at the beginning of the year to deliberate on the KRAs/ Competencies and targets. In other words, we can say that these areas are imposed on the employees, by the Corporate Headquarters - seriously questioning the validity of the system. Since competencies are not well defined, this leads to a different interpretation by the appraisers and appraises. The existing system is not aligned with the overall strategy of the bank - taking decisions about the financial targets at top level and then cascading down simply does not ensure clear understanding of the strategic goals by the field level managers. Certainly, such a directionless planning phase is bound to create confusion and distress amongst employees.

Execution Phase. Periodic review of the employees' progress is quite important to ensure timely completion of targets and to detect the anomalies at early stage. Although financial figures (i.e. outcomes) can provide necessary clue regarding smooth/ un-smooth progress, neglect to include behavioral aspects in the evaluation would be detrimental to long-term success of the organization.

Performance Evaluation. Assuming performance evaluation just a routine activity reflects the poor attitude with which management is addressing this vital HR component. The entire evaluation is left on the single appraiser's discretion. Supervisor of the appraiser offers his comments, mostly based on what appraiser has come up with. The element of biasness and abuse is inherent in the system that would be a major demoralizing factor for the employees. Just few areas of the performance have been highlighted in the appraisal form that can't portray the true potential of the employees. Without self-evaluation by the appraise, it would be difficult for the appraiser to exactly know the employee's viewpoint about various aspect of performance. The employees are not provided any opportunity to give their own feedback about how they think the things went during the appraisal period.

Following are the general comments:

The MBO based appraisal that is the only performance aspect used, has a built-in system of both rewarding and penalizing the employee for meeting/ exceeding the targets and not being able to meet the targets. The employee's ability to meet the targets entitles him/ her to get rewards while in the opposite case he/ she stand penalized by the same standards.

The system does not cater to the system effects/ situational factors (e.g. economic downturn).

No consideration is given to the behavior or attributes part of employee performance that makes the system highly questionable.

Placing an individual employee in a specific performance category, based of five labels/ categories is also open to questioning, as the areas identified in the form cannot be quantified as such.

Apparently an anniversary approach to performance appraisal is followed.

The system is not truly transparent as the appraisee's comments are obtained about the evaluation summary/ category and remaining parts are not shown to him/ her.

Despite the fact that was privatized just over three years ago, the management at Corporate, has paid due attention to performance appraisal and has come up with a system that is comparable with other local banks. A comprehensive performance appraisal form has also been formulated and implemented. However, appropriate attention has not been paid to raise the awareness level of the employees and there are serious pitfalls in the culture of. Since old/ original staff is still running the affairs even after privatization, purely public service-like culture continues to prevail. Like other banks is equally being affected by the bureaucratic culture. Lack of a dedicated training & development programs are partially responsible for maintaining the status quo.

Notwithstanding the cultural/ stability effect, the management, in a short span of time, has formulated a comprehensive PMS including the appraisal form. Analysis of the system is given below:

Planning Phase. Deciding about the KRAs/ Competencies at Headquarters level does not allow appraisers and appraises to exercise their own options and they are bound to follow what has been decided at the top. Moreover, it is unfair to evaluate employees of different functions in same KRAs. An employee performing ‘X' job can't be evaluated in ‘Y' job, which may not have any direct link to his/ her tasks. They decide about the targets within the KRAs, which act as a performance measure at the end of appraisal period. Since competencies are not well defined, this leads to different interpretation by the employees. The existing system is not aligned with the overall strategy of the bank - decision of targets at top level and then cascading them down simply does not ensure clear understanding of the strategic goals by the field level managers. Certainly, such a faulty planning leads to ineffective execution and evaluation phases.

Execution Phase. Subsequent to the weak-planning phase, execution phase is considered equally faulty. Since, employees are not part of the team deciding KRAs/ Competencies; it would be difficult for them to set appropriate targets/ goals. Without reviewing/ monitoring the progress of employee's performance periodically, it is not possible to timely detect the anomalies and take corrective action. Appraiser will not be able to act as a coach and provide expert assistance to the appraise. Moreover, in the absence of maintaining proper record of the activities/ situations, it would not be possible to reach at fair evaluation. Providing feedback to the employees is not part of the system, which prevents the appraiser from assisting the appraise in the deficient areas.

Performance Evaluation. Performance evaluation, being last phase of PMS, is taken as a merely routine activity that has little effect on the performance standard/ level of appraise. Leaving the entire evaluation in the hands of a single appraiser‘s discretion is prone to misuse of power and partiality. Without input from the appraise (i.e. self-evaluation), the evaluation may remain source of disagreement for the appraise. The employees are not provided any opportunity to give their own feedback about how they think the things went during the appraisal period, resulting in resentment. Appraisal interview, not being part of the appraisal form, would result in lack of necessary discussion about the activities conducted by the appraisee throughout the appraisal period. It would not be possible to look back, analyze the performance standard and to chalk out new strategy for better performance in future. Taking PMS just a formality that is carried out at the end of year, without regard to the chain of parallel activities, tantamount to a ritual in isolation.

Additional comments on analysis of the appraisal form mentioned below:

• The appraisal instrument is a mixture of MBO and attribute based standards.
• The MBO based part of the form has a built in system of both rewarding and penalizing the employee for meeting/ exceeding the targets and not being able to meet the targets as in case of the employee's ability to meet the targets he/ she gets extra points on the scoring table while in the opposite case he/ she stands penalized by the same standards.
• Key responsibility areas are decided at the beginning of the year, which serves as the measurement standard at the end of the reporting period. So the issue of measures is decided.
• The attribute based appraisal part (ABA) of the instrument is an attempt to retain the aspect of managerial discretion in the system of appraisal; however the vague nature of the attributes makes its viability wide open to questioning.
• The attempt to quantify ability is also wide open to questioning, as the areas identified in the form cannot be quantified as such.
• The system is apparently transparent as the appraise is shown the final grading that is awarded to him/ her at the end of appraisal period.
• Development needs of the employee are catered for, as there is a separate section addressing this aspect. However, the employee participation seems to be absent from this aspect as there is no column/ space for appraisee's signature.
• The performance reward linkage is not apparent in the form that would not stimulate necessary impetus in the appraise.
• In the developmental needs part, while the appraisee's strengths are mentioned, there is no mention of employee specific weaknesses. The system seems poised to help good employees develop while the week employees are apparently not given adequate chances to improve themselves through extra training etc.
• The ABO part fails to cater for the system effects, putting the appraise in a disadvantageous position.
• In form E, employee input seems to be absent from the goal setting process thus making the system prone to abuse by the appraiser. Additionally, absence of appraisee's input defeats the very spirit of the MBO that the organization seems to be attempting to implement.

SUMMARY OF FINDINGS

• Over 90 percent of the sampled employees believe that the performance evaluation system is a measure for objective analysis of employee performance and a means of enabling employees to enhance performance.
• About 80 percent of the sampled employees are fully satisfied with the existing performance evaluation system; about 10% are partially satisfied
• There is wide variation for duration preferences. About 50% of respondents prefer half yearly or quarterly evaluation.
• About two thirds of the respondents say that they always receive feedback (Option "a"). One third says that they receive feedback seldom or never.
• About two third of the sample usually agree with the evaluation results.
• Most evaluation is in accordance with employee's expectations (Option "a").

Only about half of the respondents are satisfied with their evaluation. About one third are confused or dissatisfied with their evaluation.

• Only a little over half the sample employees are committed to improving their performances in light of their evaluation. A significant minority remains unaffected.
• An equal proportion of employees replied "positive" and "no" impact" on performance and behavior in response to performance evaluation. Almost a third of the sampled employees confessed to be "easy going" and to take little account of performance evaluation.
• The overall conclusion is that the performance evaluation system at the Bank's marketing and human resource development department does not positively influence performance and behavior of employees. Questions 8, 9 and 10 are to some extent loaded questions and expected to generate positive responses. The relatively weak findings show that had an objective analysis of the relationship between actual performance and (appropriately lagged) performance evaluation been done we would probably not be able to come up with encouraging results.

CONCLUSION

Based on the analysis of the banking industry, it can be safely concluded that United Kingdom banking industry is lagging far behind the overseas banks operating in our close proximity, serving the same market. The banking industry is yet not equipped with the systems necessary to compete in a highly dynamic banking environment. The cultural and attitudinal problems are the leading factors that are causing main opposition in transforming the banks to be on the track to success. If United Kingdom banks fail to develop their human resource according to successfully tested new methodologies, their survival as successful financial institutions would remain just a dream. Sooner or later, foreign banks will manage to take major part of the market share, by offering newer and better products and services.

Having analyzed the PMS being practiced by the world leading organizations and then comparing it with the one being used by United Kingdom banking industry, it can be safely states that true implementation of Performance Management can be achieved if both performance architecture and measuring tool are defined according to the nature of industry and the intensity of competition. The key contributory factor responsible for the successful implementation of PMS is the commitment and attitude displayed by the supervisors in particular and subordinates in general. Appropriate training of employees can guaranty the fair evaluation.

It has further been believed by most of the firms that the talented Human Resource, if suitably developed, can provide the competitive edge over the competition for long times to come. However, acquiring and retaining talented employees is not an easy task, and is in fact a dilemma facing organizations. Organizations employ various motivational and loyalty gaining techniques to ensure long-term relationship and high level of employee commitment - PMS being the key tool in this regard.

The existing PMS in United Kingdom banking industry is reflective of the fact that mindset of the employees is not suitable/ ripe for true and impartial evaluation because top management has never taken it in the past and status quo maintaining attitude/ culture persists. The old employees find the system a threat to their positions and believe in old traditional management style. Although, some of the banks have managed to develop the system including appraisal form on new lines, the main issue is the evaluation process. There is a genuine need for almost all the banks to embark upon a regular training program to train the employees aimed at improving their evaluative skills as well as change their mindset.

Instead of following purely MBO or skill based approach, there is a need to evolve appraisal forms based on a hybrid of the behavior, skill and result based approach with suitable balance that should minimize the element of subjectivity. Finally, the system will have to be tested against the criteria meant for judging the strategic congruence, validity and reliability.

RECOMMENDATIONS

The primary goal of an appraisal system is to produce an accurate, objective and fair picture of an employee's performance and then to detect the areas requiring improvement. To accomplish this goal, a formal performance appraisal program should be implemented including systems that require regular, periodic evaluations conducted in accordance with standardized procedures focusing on job related aspects of the employee's performance. This is best accomplished when performance standards and objectives are mutually understood and agreed upon and when performance objectives are reasonably aligned with core competencies and values recognized as being most rewarding and beneficial to the company's overall mission and future business direction.

In order to bring the commitment level of Human Resource of United Kingdom banking industry to a level where they are able to meet the challenges of fast approaching foreign competition, especially with the implementation of WTO, there is an urgent need to first change the existing non-adaptive/ stable culture through consistent training sessions and then to realize the importance of an effective PMS. Besides, a comprehensive but a balanced PMS needs to be instituted in the overall HR function of the industry to reward the good performers and differentiate them from the dead wood.

Based on the research carried out in the earlier parts of the thesis, a new PMS model has been proposed including an appraisal form, for United Kingdom banking industry, as explained in the ensuing paragraphs:

Proposed Framework for PMS:

Having studied various international models of performance management system, a new model for performance management system is recommended, which is considered to be aligned to cater to the needs of the banking industry operating in United Kingdom and will add value to them. The recommended model for PMS includes stepwise process for conducting the exercise and the main focus is on the performance appraisal, which is the most important component of performance management system. There are three stages of performance management system in this model. These are Planning, Execution and Evaluation.

Pre-requisite conditions:

The strategic planning of the organization sets the strategic goals in line with the mission and vision statement of the organization. These goals will be cascaded down to the division, unit and individual levels through annual goal setting process and business planning. It is also believed that almost all large and small banks would adequately fulfill the pre-requisite condition of PMS. Following are different stages of the proposed framework:

Planning:

This is the first stage of PMS in any organization. At this stage the core PMS cycle is set into motion through determining the behavior and results expected from members of the organization. Individuals will know what goals they are expected to achieve during the appraisal period and how they will achieve these goals. These goals will be set with mutual consultation of the employee and the supervisor.

For this purpose, a performance planning form should be developed, which can help in specifying the performance requirements for the coming year. The form basically caters to the results part of the performance by identifying the Key Result Areas, which are broad areas in which the individual is expected to perform in order to carry out his duties effectively. Then these key Result Areas are broken down into key goals that are specifically identified and the time limit and measurement standards are established. These key goals are assigned weight ages, which would help the individual and the supervisor in giving priority and importance to the main goals and separating the routine ones. Then the key goals are further subdivided into Action Plans, which spell out the future course through which the key goals will be achieved.

For the purpose of identifying the behaviors that would constitute the performance factors that would be measured, it is proposed that the banking industry should develop a competency dictionary and competency matrix. The required levels of performance are expressed in the competency matrix of the relevant departments. The detailed description of the different required levels of competencies can be seen in the competency dictionary. The supervisor should identify the competencies that the employee will be rated against and the weight ages. These required levels should be communicated in the beginning of the year, so that there is no ambiguity in what is the expected level of performance for the next year.

Execution:

In this stage the supervisor will monitor employee's performance according to the already established goals in the planning stage. They will informally record events effecting rating of the employee's performance. The employee is provided feedback and is given guidance and coaching by the supervisor in order to improve the performance.

It is also proposed that the supervisor should maintain a record of the situations that the employee had to face during the period under review and for this purpose a situational form need to be designed that will also be part of the appraisal. The situations are identified which require special handling. Then the actions that are taken by the employee to handle those situations are mentioned and the results that are achieved through those actions. The purpose of this situational form is to give a holistic picture of the individual's performance at the time of appraisal and maintain documentation of the main events and situations.

Evaluation:

At this last and final stage of the PMS cycle final appraisal of the employee's performance is carried out to identify the strengths and weaknesses of the employee's performance based on the accomplishment of goals and pre-determined behavioral competencies.

The supervisor would ask the employee to provide feedback in the form of self-appraisal for the period under review. After reviewing self-appraisal of the employee, the supervisor would formally fill in the performance appraisal report on a pre-determined format. The ratings are done on pre defined rating scales and overall scores are calculated on the basis of ratio of goals and competencies.

Then the supervisor conducts an appraisal interview with the employee and provides him/ her feedback on how the employee has been rated in different areas and why the supervisor thinks that the ratings are justified. During the appraisal interview, mutual consent is obtained on the rating and goals and behaviors required for the next year are also agreed upon. In this way the PMS cycle continues again and again as an ongoing process to improve individual and organizational performance.

Bibliography

Text Books:

1. Human Resource Management - Gaining a Competitive Advantage (Third Edition, Raymond A. Noe, Mc Graw Hill,2000)
2. Approaches to Performance Management (By Michael Pearn, 2001, Efficient Offset Printers, Delhi)
3. Performance Management - the new realities (By Michael Armstrong & Angela Baron, Jaico Publishing House, 2002)
4. Swan. William. S "How to do a superior performance appraisal", John Wiley & Sons, Inc 1991.
5. Dick Grote, "The complete Guide to Performance Appraisal" (https://www.groteconsulting.com/resources/books/book-complete-guide.asp)
6. Paul R. Niven, "Balane Scorecard", John Wiley & Sons, Inc. 2002.

Magazines:

1. HSBC Magazine "Dialogue", January 2005.
2. Standard Chartered Magazine "News Update", July 2005.

Internet Web Sites:

1. https://virtual.yosemite.cc.ca.us/smithaj/research_model%20thesis.htm
2. https://www.performance-appraisal.com/freetrial/freetrial.htm
3. https://www.hrpowerhouse.com/personnel_performance_appraisal/overview.asp
4. https://www.performance-appraisal.com/mistakes.htm)
5. https://www.bankofengland.co.uk/
6. https://en.wikipedia.org/wiki/HSBC
7. (https://www.performance-appraisal.com/intro.htm)
8. https://www.hsbc.co.uk/1/2/
9. https://www.performance-appraisal.com/mistakes.htm)
10. https://www.springerlink.com/content/t5706hm076818875/
11. https://www.dailymarkets.com/stocks/2009/11/05/the-uk-banking-sector-the-asset-protection-scheme/

Cite this page