SYNOPSIS of the Ph.D.

thesis entitled

A Study of Performance Appraisal Methods and Techniques used in Banking

Industry
(A Comparative Study of Bank of Baroda and HDFC Bank)

Submitted by

Himanshu Shekhawat

Under Supervision of

Dr. Madhusudhan Sharma

Asst. Professor, University Commerce College, Jaipur

UNIVERSITY OF RAJASTHAN
JAIPUR
The Research Problem

Formulation of the Research Problem is the starting point of every research project. No research
can initiate prior to the selection of appropriate topic. Firstly, the researcher has got to select the
research problem in an appropriate way and thereafter he must consider and decide his choice of
data to be collected, methods to be adopted and tools of analyzing to be prescribed. Before taking
these steps he must formulate the problem of research. This can be judged through the application
of scientific procedures. Formulation of problem involves the task of laying down boundaries
within which a researcher shall study the problem with a predetermined objective in view.

Thomas ‘Wayne’ Brazell once rightly remarked, “When your work speaks for itself, get out of the
way.” Organizations today survive on performance. But what speaks for the performance of an
individual. It is a process known as Performance Appraisal where the management gets to know
how successful and effective it has been in hiring and placing its employees.

Performance Appraisal (PA) concerns all managers today. As the ‘term’ itself suggests, PA is a
tool for qualitative and quantitative assessment of performance. It consists of all formal
procedures used in working organizations to evaluate personalities, contributions and potentials
of employees. According to Flippo, “Performance Appraisal is the systematic, periodic and an
impartial rating of an employee’s excellence in matters pertaining to his present job and his
potential for a better job.” Research findings indicate that PA has a bearing on employee growth
and productivity. The effectiveness of PA as a tool for assessing performance and using it as a
means for employee growth and productivity depends upon the appraisal technique being
employed.
Banking industry is the most important ingredient of the financial sector of any economy. It is an
ingredient as well as the major contributor to economic growth. It provides capital and credit,
renders numerous services and mobilizes savings of the general public. The study aims at
studying the ongoing systems of appraisal in two selected banks, one a public sector bank and
other private sector bank. The Public Sector bank being chosen is Bank of Baroda and Private
Sector bank being chosen is HDFC Bank.
The study aims to study the Performance Appraisal Systems of both the banks viz. Bank of
Baroda and the HDFC Bank. It strives to provide the comparative study of performance appraisal
systems of the two banks so that we can have a clear understanding as to what are the differences
in the appraisal systems of a public sector bank and a private sector bank. Performance Appraisal
is considered as the heart of any “people management” issue in any organization. It is the process
of creating a work environment where people are encouraged to perform to their fullest potential
and rewarded for their effectiveness. In an attempt to better understand and attach values to their
human assets, companies have modified their performance appraisal systems. Hence the study
aims to find as to what extent Performance Appraisal Systems in both the banks are able to raise
the performance of their employees.

Objectives of the Study

The object of the proposed study is to examine the Performance Appraisal Systems of both the
banks i.e. Bank of Baroda and the HDFC Bank. It attempts to study the methods and techniques
employed for Performance Appraisal. It attempts to study the satisfaction level of employees
regarding the Performance Appraisal System. It also seeks to study as to how the results of
Performance Appraisal conducted in these banks are being utilized for Performance Pay and
incentives of employees, training need assessment and Promotion of employees. In view of these
potentialities the proposed study will be designed to achieve the following objectives:

1. To have some understanding of organization and management of Bank of Baroda and the
HDFC Bank.
2. To assess the Performance Appraisal Systems of both the banks i.e. Bank of Baroda and
the HDFC Bank.
3. To find out the significant differences in Performance Appraisal Systems of Bank of
Baroda and the HDFC Bank.
4. To determine which functions are served by Performance Appraisal Systems in both Bank
of Baroda and the HDFC Bank.
5. To find out the satisfaction level of employees regarding the Performance Appraisal
System.
6. To find out the significant differences in perceptions of the appraisers and the appraisees
of Bank of Baroda and the HDFC Bank.
7. To explore as to what extent Performance Appraisal System acts as a tool for employee
growth and enhance productivity.
8. To determine the problems, if any, in the Performance Appraisal Systems in both Bank of
Baroda and the HDFC Bank and to make suitable suggestions to overcome these
problems.

Review of Literature

A Review of Literature is a body of text that aims to review the critical points of current
knowledge on a particular topic. Most often associated with a thesis, the ultimate goal of
literature review is to bring the reader up to date with current literature on a topic and forms the
basis for another goal, such as future research that may be needed in the area.

At the outset, it would be fruitful to review the available existing literature in the area of Human
Resource Management and particularly Performance Appraisals, which are directed to identify
and eventually improve certain key areas of Performance Appraisal. Following literature was
reviewed for the proposed study.

1. Wayne F. Cascio in his contribution “Managing Human Resources: Productivity, Quality

of Work life, Profits” (2006) makes a premise that the three critical strategic objectives
guide all HR functions: Productivity, Quality of Work life, and Profits. The functions-
employment, development, compensation, labor management accommodation and safety,
health, and international implications- in turn are carried out in multiple environments:
competitive, legal, social, and organizational. The chapter on Performance Management
discusses the purposes of performance appraisal, alternative methods of appraising
employee performance such as Behavior- oriented Rating methods and Result- oriented
Rating methods and answers the questions when and how often should Appraisals be
done.

2. Dreher Dougherty in his contribution “Human Resource Strategy: A Behavioral

Perspective for the General Manager” (2005) praises the concept of an integrated HRM
System, comprised of multiple managerial activities, designed to influence a set of critical
employee behaviors. It differs from other HRM texts, which focus on the traditional
human resource (HR) functions. The chapter on Performance Management Systems
 includes Aligning Performance Management Systems with the firm’s strategy and
describes the improvement in the quality of performance measures by comparing Result-
oriented and Process- oriented measures.

3. Robert L. Cardy in his contribution “Performance Management” (2008) professes that

effective Performance Management involves far more than simply assessing the
performance of workers. Performance Management includes providing meaningful
feedback, collaborating with workers to solve performance problems, and developing
improved levels of performance.

4. John M. Ivancevich in his contribution “Human Resource Management” (2003) takes a

managerial orientation, that is, HRM is viewed as relevant to managers in every unit,
project, or team. Managers constantly face HRM issues, challenges, and decision making.
Each manager must be a human resource problem solver and diagnostician who can deftly
apply HRM concepts, procedures, models, tools, and techniques. The chapter on
Appraising and managing performance presents a case for using formal evaluation of
employees and problems associated with performance evaluation.

5. Gary Dessler in his contribution “Human Resource Management” (2008) provides a

comprehensive review of essential personnel- management concepts and techniques.
Divided into five parts, it begins with an introduction, and then covers recruitment and
placement, training and development, compensation, and labor relations and employee
security. The chapter on Performance Appraisal includes all the methods and techniques
of Performance Appraisal. It also includes problems associated with Performance
Appraisal and the HR Score card includes the new Performance Management System.

6. David A. Decenzo and Stephen P. Robbins in their contribution “Personnel/ Human

Resource Management” (2008) writes in a straightforward and conversational style and
covers all aspects of Human Resource Management in six parts in their book – Important
Environmental Influences; Acquisition of Human Resources; Development of Human
Resources; Motivation of Human Resources; Maintenance of Human Resources; and
Research and the future. Performance Appraisal is taken under Part four i.e. Motivation of
Human Resources. The discussion of Performance Appraisal presents techniques for
improving appraisal system.

7. A. S. Kohli and Tapomoy Deb in their contribution “Performance Management” (2008)

says that Performance Management is an ongoing dynamic process that articulates
organizational vision and objectives, installs performance criteria in the light of these
objectives, and continuously reviews internal procedures to integrate them with
organizational philosophy and culture. Thus Performance Management emerges as a
major element of HRM.

8. R. K. Sahu in his contribution “Performance Management System” (2007) professes that

the fundamental purpose of Performance Management is to establish a culture in which
individuals and groups take responsibility for continuous improvements based on
common understanding of organization’s goals and priorities, clear expectations for
 individuals and teams, capability built through investments in Performance Management
tools and commitment based on meaningful work and rewards linked to business and
personal achievement.

9. Bani Kochar in her contribution “Performance Management Systems in Indian

Organisations” (HRM Review) (July 2008) takes the view in his article that performance
is the lifeline of any organization. The onus of HR people who could either ‘make or
break’ the career of people at large, has been offloaded to the performance of employees
either individually or in teams. Modern Performance Methods attempt to provide a
futuristic insight into the individual’s contribution. No longer do they rely on past
performances and thereby eliminate errors attached to those systems such as recency or
spill over effects. The leveraged Performance Management Systems (PMS) also have an
effect on other systems such as recruitment, training and the compensation structures.

10. Renu Sharma in her dissertation study “Human Resource Management in Public Sector
Banks (With special reference to State Bank of Bikaner and Jaipur)” (2003) seeks to study
the Human Resource Management in Public Sector Banks with special reference to State
Bank of Bikaner and Jaipur. It studies the organizational structure, recruitment and
selection, performance appraisal training, promotion, and service rules etc. It also makes
certain valuable suggestions to the Performance Appraisal System in State Bank of
Bikaner and Jaipur.

11. N. L. Sharma in his dissertation study “Human Resource Management in Central

Undertakings in Rajasthan (A Case Study of Instrumentation Limited, Kota)” (1997)
analyses the various aspects of Human Resource Management in the Instrumentation
Limited, Kota from all angles. It discusses the policies and rules of recruitment, selection,
performance appraisal, transfer, termination, retirement and promotion adopted by the
Instrumentation Limited and the methods exploring the feelings of human resources about
these aspects. It also mentions upon the basic reasons that are responsible for the sickness
of the Instrumentation Limited and explains the reasons of dissatisfaction and the
frustration among the human resources.

12. Manishankar Chakraborty in his contribution “Performance Management Systems: A

Strategic Tool for Competitive Advantage” (HRM Review) (January 2008) in his article
professes that Performance Management Systems is crucial to the functioning of any
organization. The concept of knowledge industries has brought to the fore the new tribe of
knowledge workers who are more conscious, informed and well read, which is resulting
in these employees knowing about their contribution and the deserving emoluments and
remuneration. This is also having a spill over effect on even the non- knowledge sectors as
these days switch sectors like they change their brand of toothpastes and soaps. Under
such circumstances, if their requests for review are not paid heed to, they do not even
think twice before quitting, as they have a plethora of opportunities knocking on their
doors.

13. T. V. Rao in his contribution “Performance Management and Appraisal Systems: HR

Tools for global competitiveness” (2004) aims at giving a point that Performance
Appraisal System should be replaced by Performance Management System. It says that
 Appraisal is only incidental and, at best, it may be called an unavoidable evil. The focus is
on performance improvements. The focus of the system is on learning, development, and
improvement. It states that the objectives are important, the focus is important, and the
structure is important. It is about the structuring of Performance Management Systems
and aligning it with Human Resource Development Systems.

14. Robert E. Lefton, V. R. Buzzotta, Manuel Sherberg and Dean L. Karraker in their
contribution “Effective Motivation through Performance Appraisal: Dimensional
Appraisal Strategies” (1977) show how to conduct Performance Appraisals that pay-off
for your organization in terms of higher profits, greater efficiency, better morale, faster
growth, lower costs, better public image, etc. It uses two new models to explain how and
why people behave as they do in Performance Appraisals. These easy to understand
models- the Dimensional Model of Superior Appraisal Behavior and the Dimensional
Model of Subordinate Appraisal Behavior provide the basis for guidelines that follow.

15. T. V. Rao in his contribution “Lessons from Experience: A New look at Performance
Management Systems” (Vikalpa, The Journal for Decision makers, Indian Institute of
Management, Ahmedabad, India) (July-September 2008) says that the concept of
Performance Appraisal has changed over the years. Performance has been usually equated
with annual appraisals which measure the entire year’s effort of an employee in terms of
numbers. The paper points out the flaws in this system and suggests its replacement with
Performance Management System (PMS), offering a set of changes to make PMS more
effective. Drawing upon his own experiences of designing Integrated HRD Systems for
various companies, Rao stresses upon the importance of understanding the nature,
potential, and complexities of Performance Management Systems (PMS). Evaluating an
employee’s performance on the basis of numbers assigned by another appraiser without an
awareness of the context in which the ratings are assigned could inflict serious injustice to
the performer. The outlook has to shift from an annual exercise to an ongoing activity.
Appraisal focuses on ratings while improvements focus on work, stakeholders, service
levels, productivity, motivation effort and all such performance- related variables.

Research Methodology

Collection of Data

There are two main sources of collection of data, one is Primary and the second source is
Secondary. The primary data are those which are collected afresh and the first time, and thus
happen to be original in character. The Secondary data, on the other hand, are those which have
already been collected by someone else and which have already been passed through the
statistical process. The data and the research materials which are required for this study are based
on the Primary as well as Secondary sources.

Primary data will be collected from employees and it will be collected from three categories of
employees of both the banks i.e. Bank of Baroda and the HDFC Bank. These categories will be
Higher Management, Middle Management and the general employees.
Primary Data:

The following techniques will be adopted for the collection of Primary data in the proposed
Study:

A) Questionnaire

For this purpose, two categories of Questionnaires will be prepared i.e. one questionnaire for the
Higher Management and Middle Management people and the other questionnaire for the general
employees of the banks. Both the questionnaires will have separate questions seeking to find their
perceptions, attitudes and responses regarding the Performance Appraisal System.

B) Interviews

Both the Structured and Non-Structured Interview technique will be adopted to collected
information and data. Both the banks will be personally visited again and again by the research
scholar. Employees from all the categories will be interviewed personally. Various types of
questions relating to various aspects of Performance Appraisal will be put to the respondents.

C) Observations

Under this technique, all departments of both the banks i.e. Bank of Baroda and the HDFC Bank
will be visited by the research scholar. The research scholar himself will observe the working of
all departments, employee behavior, time punctuality, manager’s attitude towards employees and
cooperation among employees and various aspects of Performance Appraisal of employees and
managers from close quarters.

D) Discussions

The research scholar will held discussions with the executives of the banks including employees,
middle management, and the higher management regarding various aspects of Performance
Appraisal System to assess their perceptions, attitudes and responses regarding Performance
Appraisal System.

Secondary Data

The Secondary data will be collected from the records of various departments of the banks such
as Personnel and HR Department, Public Relations Department, Promotions and Transfer
Section, Training and Management Development Department, Marketing Department, etc.
Moreover, the data will also be collected from the annual reports of both the banks, published
booklets of the Training Center and the Public Relations Cell, House Journal, and House News
Letter, if any, of both the banks, economic survey and published articles in various Journals and
newsletters.
Hypotheses

After extensive literature survey, researcher should state in clear terms the working hypotheses or
hypotheses. Working hypotheses is a tentative assumption made in order to draw out and test its
logical or empirical consequences. As such the manner in which research hypotheses are
developed is particularly important since they provide the focal point for research. The role of the
hypothesis is to guide the researcher by delimiting the area of research and to keep him on the
right track. It sharpens his thinking and focuses attention on the more important facets of the
problem.

The central hypothesis of the proposed study is that “The Performance Appraisal System of Bank
of Baroda is far ahead of the Performance Appraisal System of the HDFC Bank.”

The following Sub hypotheses are proposed for the proposed study:

1. The Performance Appraisal System of the HDFC Bank is unsatisfactory.

2. The Training Need Assessment is not conducted properly the HDFC Bank.
3. The information provided by the Performance Appraisal for personnel decisions like Pay
increase, Promotions, Demotions etc is not properly utilized in the HDFC Bank.
4. The Performance Appraisal does not develop confidence among employees.

Scope of Study

Keeping in view the time and resources at the disposal, the study is confined to the Performance
Appraisal Systems of both Bank of Baroda and the HDFC Bank and seeks to give a comparative
study of the Performance Appraisal Systems of both the banks.

The proposed Study would be confined to the following areas:

1. A study of Performance Appraisal Systems of both Bank of Baroda and the HDFC Bank.
2. A study of how Performance Appraisal System affects the employees of both Bank of
Baroda and the HDFC Bank.
3. A study of what functions are being served by Performance Appraisal System in Bank of
Baroda and the HDFC Bank.
4. A study of Perception, attitudes and responses of employees of Bank of Baroda and the
HDFC Bank towards the Performance Appraisal System.
5. A study of problems in the Performance Appraisal Systems of both Bank of Baroda and
the HDFC Bank and to make suitable suggestions to overcome the specific problems.
Organization of Chapters/ Chapterisation

The proposed Study will have the following proposed Chapters:

1. Introduction

A) Bank of Baroda

i. Brief History
ii. Establishment
iii. Body Corporate
iv. Objectives and Functions
v. Products and Services
vi. Control
vii. Organizational Set up
viii. Management of the Bank
ix. Board of Directors
x. Chairman of the Board
xi. Organizational Structure
xii. Power and Duties of the Board
xiii. Role of Bank of Baroda in Rajasthan’s Economy

B) HDFC Bank

i. Brief History
ii. Establishment
iii. Body Corporate
iv. Objectives and Functions
v. Products and Services
vi. Control
vii. Organizational Set up
viii. Management of the Bank
ix. Board of Directors
x. Chairman of the Board
xi. Organizational Structure
xii. Power and Duties of the Board
xiii. Role of HDFC Bank in Rajasthan’s Economy

2. Research Methodology

i. The Research Problem

ii. Hypotheses
iii. Scope of Study
iv. Objectives of Study
v. The Research Design
vi. Limitations of Study
vii. Organization of Study
3. Performance Appraisal

i. Concept of Performance Appraisal

ii. Objectives of Performance Appraisal
iii. Uses or Importance of Performance Appraisal
iv. Performance Appraisal Process
v. Problems in Performance Appraisal (Limitations of Performance Appraisal)
vi. Essentials of an Effective Performance Appraisal System
vii. Methods or Techniques of Performance Appraisal
viii. Performance Appraisal through MBO
ix. 360 Degree Appraisal Technique
x. Performance Appraisal of Managers
xi. Performance Appraisal Interview

4. Performance Appraisal at Bank of Baroda

(This section is to be studied during Research so Sub points are not given)

5. Performance Appraisal at HDFC Bank

(This section is to be studied during Research so Sub points are not given)

6. Comparative Analysis of Performance Appraisal Systems of Bank of Baroda and the

HDFC Bank

(This section is to be studied during Research so Sub points are not given)

7. Conclusions, Observations and Suggestions

(This section is to be studied during Research so Sub points are not given)

Bibliography
Bibliography

Books

1.