3) Performance Appraisal System In Bankig Sector
What is Performance Appraisal
Performance Appraisal is one of the key elements in the Performance Evaluation System.
Every firm must understand its employees' capacities to perform and improve, and performance appraisal serves as a tool for assessing employee growth potential. It is a methodical assessment of the job done by personnel.
A performance appraisal is a periodical examination of an employee's performance to ensure that they are contributing to the firm. It's also known as a performance evaluation or a yearly review.
It assesses employees' abilities, progress, success, and failure. The performance appraisal is frequently used to explain decisions about promotions, salary raises, bonuses, and employee termination.
Types of Employee Performance Appraisals
Supervisors are in charge of
performance review in the majority of organizations. However, depending on who
is evaluating the employee's performance, there are various sorts of employee
performance appraisals in HRM.
The following are the four major types of performance evaluations:
- Self assessment: Employees rate their job performance and work behavior in this section.
- Peer assessment: Team members, coworkers, and the work group are accountable for the employee's performance rating in this assessment.
- 360-degree performance appraisal: In this type of appraisal the performance rating are collected from employee, their immediate supervisor and peers.
- Negotiated appraisal: In order to avoid the conflicts between employee and their supervisors a new trend of appraisal is utilized. In this type of performance appraisal a mediator evaluates the performance of the employee and put focus on the good side of performance rather than the criticism.
Objectives of Employee Performance Appraisal
The main objective of the employee performance appraisal is often termed as comparison of the standard performance set by the organization with the actual performance by the employee. However there are some other important objectives served by employee performance appraisal system as given below,
- The employee's remuneration and wage structure are determined by the records kept by the performance appraisal system
- It is extremely beneficial in
determining an employee's strengths and weaknesses, as well as assisting
in the placement of the right individual in the correct role.
- It gives you access to a person's potential for future growth and development.
- It has an impact on employees' working habits and motivates them to be more productive.
Advantages and Disadvantages of Performance Appraisal
Advantages of Performance Appraisal
- It aids supervisors in determining which employees should be promoted and which should be fired.
- It aids the organization in determining the employee's salary. Additionally, extra benefits and allowances might be decided utilizing performance appraisal data depending on the employee's performance and extra efforts.
- It assists the company in deciding the wage of an employee. Additionally, based on the employee's performance and extra efforts, additional rewards and allowances may be determined using performance appraisal data.
- Employee development can be aided by taking certain measures. The performance appraisal method will expose the employee's weaknesses, allowing the firm to design a training program around them.
- The performance review also advises modifications to the hiring process that will aid in the hiring of better personnel.
- Performance review is a effective way to communicate the status of the performance of the employee. It is a way to provide feedback about how the employees are doing on their job.
- The evaluation of one's performance can be used as a motivator. It gives a picture of an employee's efficiency and encourages them to enhance their performance.
Disadvantages of Performance Appraisal
- The elements used to evaluate performance have a significant impact on performance appraisal. Failure of performance appraisal can be caused by the use of wrong or irrelevant elements.
- During performance evaluations, crucial aspects that influence performance are sometimes overlooked.
- Attitude, talents, and initiative are all ambiguous and difficult to assess.
- Managers who conduct performance appraisals are sometimes unqualified to appropriately appraise the competence of their employees. As a result, irrelevant data is collected, and performance appraisals fail.
Performance Appraisal In Banking Sector
A stable
financial system is crucial for the growth of a healthy and vibrant economy.
The banking sector is a critical component of the financial system.
Any modern economy's lifeblood. It is one of the financial system's most
critical cornerstones.
A mechanism that is critical to an economy's success or failure. Banks are one
of the most common types of businesses.
The financial system's oldest financial intermediaries They play a
crucial role in the process.
Deposit
mobilization and credit issuance to diverse segments of the economy. The
banking system is the engine that drives economic growth.
By mobilizing savings and distributing them to high-return investments,
efficiency is improved. Countries with a well developed financial sector thrive
faster than those with a less power and the financial system has a
significant impact on the economy.
Similarly, country's economic progress might be aided by the extension of the financial system. Financial intermediaries, monitor investment, manage risk, mobilize savings, and promote the interchange of goods and services are five channels identified by Levine (2005) as having an impact on economic growth. Banks and the stock market were found to have a favorable impact on economic growth in the resent past. The financial system reflects the country's economic health.
Any country's economic strength is largely determined by the strength and
efficiency of its financial system, which is dependent on a healthy and solvent
banking sector.
For a healthy banking body a good work force is a critical factor and the employee satisfaction plays a major role in its performance.
For a satisfied employment, rewords for the employee plays a major role and it is mainly been reworded through the performance appraisals.
In the competitive banking field this recognition is based on few sections such as
- Overall performance of the Bank for the financial year.
- Governments regulations over the banking industry (As to mitigate the risk factor banks make provisions, and it results for the final performance of the bank.)
- Overall performance Branch/ Department (that the employee is assigned) in the bank (Weather the Deposit/ Lending/ Profit/ NPA targets for the financial year is been achieved by the branch).
- Individual performance of the employee for the financial years as per the parameters (Value of loans canvased/ Value of Deposits canvased/ Number of Credit Cards promoted/ Number of Digital products promoted/ Accuracy in cash counters/ ect...) given by the bank.
- Number of leave utilized in the year.
- Punctuality (Late attendance & early departure) at work.
- Contribution for the bank in extra curricular activities (Representing the bank in inter Bank events & global events)
Such evaluation criteria s give a value addition for the high performing employees in the bank and it results for a better reword, financially & in the carrier development.
References
Performance management with KPI can be quite effective if it is correctly planned. However, there are several inconsistencies in setting individual goals. It is rather simple to expand one's deposit or loan portfolio in various areas. However, at a different region with minimal potential, it is a difficult job. On the other hand, a lot depends on the appraiser. How impartial he is. His understanding and updating of each individual's genuine performance. The clearer the goals, the easier it is to evaluate them. Otherwise, there will be more appraisal meditation, which might always result in a problem. Both parties will have opposing viewpoints, which will have a negative impact on the entire evaluation system. As a result, I got to know certain private banks in Sri Lanka do not use a performance-based appraisal system.
ReplyDeleteYes, there are negative impact on such appraisals. To mitigate the impart of the appraiser most of the time such appraisals are rooted through a higher management system as they will make a feedback for each and every evaluation.
DeleteBut in the modern day banking almost of all the private banks do have a performance-based appraisal system.
Romesh, you've laid out some of the most important aspects of the HR role.
ReplyDeleteOrganizations use performance appraisals as a part of a larger system to identify, evaluate, and improve the performance of their employees in order to achieve their goals and objectives. In addition, appraisals benefit employees by providing them with recognition, feedback, career guidance, and development opportunities.
Regular (at least once a year) one-on-one meetings between managers and their employees are part of the performance appraisal process.
Individuals' roles and responsibilities, as well as their contribution to the success of the organization, are outlined.