Strategic Human Resource Management -HRM 546 (Section-01)

Group Project: The case study on ‘Building a Culture of Performance at BRAC Bank”

Submitted to
Dr. Ikramul Hasan
Email: kramul@iub.edu.bd
Independent University, Bangladesh,
School of Business, MBA Program

Prepared by
Ahmed Imtiaz Sobhan, Student ID- 2010510,
Tahera Tasnim, Student ID-1910651
Sadia Afrin, Student ID- 1910708,
Seerat Hassan Ahmed, Student ID- 1710958
Jewel Hossain, Student ID- 1930971
Independent University, Bangladesh,
 Group Members and their assigned part

Group member name Student ID No. Contributed in part of the case study

1. Jewel Hossain ID- 1930971 Background, Methodology

Performance Management System (PMS)

analysis At BRAC Bank
2. Ahmed Imtiaz Sobhan ID-2010510

3. Sadia Afrin ID-1910708 Findings

4. Tahera Tasnim ID-1910651 Recommendations

The case study(Company overview),

5. Seerat Hassan Ahmed ID- 1710958
Conclusions,

All team members have been participated in this

Case questions and answers
sections.

BACKGROUND
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Performance Appraisal information is used to find out whether an employee requires additional
training and development. Performance appraisal also assumes that the employee knew what the
performance standards were, and achieved the feedback required to remove any performance
deficiencies. The aim should always be to improve the employee’s, and, thereby, the company’s
performance (Garry Dessler, 1999).

Most organizations maintain their formal evaluation system because they consider performance
evaluation to be fundamental to organizational effectiveness. It is better to maintain the visibility
of a formal program because; it may help to improve systematically the fairness, validity,
usefulness and reliability of the appraisal process (Schuler 1981).

The purpose of performance appraisal process are to (a) control the employee performance
focusing on the past performance, and (b) develop employee to be an effective performer
focusing on the importance of future performance. Performance appraisal is important from the
viewpoints of both the employee and the organization. From the employee point of view
performance appraisal is important, because: (a) employee can modify his work behavior to
become a more effective performer, and (b) it increases the likelihood of receiving increase
compensation and/or recognition. From the organizational point of view it is important, because:
(a) it is used to provide a basis for making decisions on promotion, transfer, demotion, and
termination, (b) it is used as a criterion for validating selection devices and training programs, (c)
it is used to allocate rewards to employees, and (d) it is used to justify feedback to individuals to
aid their personal and career development and accordingly to help assure organizational
effectiveness (Kane and Lawler 1979).

The aim of this case study is to examine the performance appraisal method at BRAC Bank
limited and develop a case study on the performance appraisal system’s effect and its relation
with promotion, reward and further development of employees of BRAC Bank Ltd

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METHODOLOGY:

Both qualitative and quantitative research is focused on the performance appraisal method at
BRAC Bank Limited which will examine the effectiveness of performance appraisal system. It
has been carried out by collecting both primary and secondary data. Quantitative questions are
scaled with well-known Likert method. The population of the study was from different
hierarchies are used as respondents who are working in BRAC Bank Limited. The questionnaire
was designed with both open-ended and close ended questions on promotional criteria. The
primary sources of data were through questionnaire survey and through the observation and face-
to-face conversation with the employees. The secondary sources of data used here are annual
report of BRAC Bank Limited, different textbooks, and web base support from the internet.

THE CASE STUDY:

In 2001 BRAC Bank did not start its journey like any other conventional bank. The visionaries
who led the bank realized that the previously neglected Small and Medium Enterprises (SME)
sector plays significant role in generating growth and creating employment in the country. Over

BRAC Bank is a performance driven dynamic organization, where its values founded at the core
of each and every activity as pillars. It is the only member of the Global Alliance for Banking on
Values (GABV) from Bangladesh. The Global Alliance comprises of 48 (as of May 2018)
financial institutions operating in countries across Asia, Africa, Australia, Latin America, North
America and Europe - serving more than 41 million customers, holding up to USD 127 billion of
combined assets under management and powered by a network of 48,000 co-workers.

PERFORMANCE MANAGEMENT SYSTEM (PMS) AT BRAC BANK:

BRAC Bank is one of the leading commercial banks in Bangladesh which started its operation in
2001. BRAC Bank believes in continuous change because it always seek for continuous
development. In line with this, BRAC Bank Performance Management System has several
aspects to evaluate its employees. In broad perspective there are two segments to perform their
Performance Management System and they are as follows:

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 Goal
Evaluation
Setting
Set in the begining Half Year
of the year Evaluation

Changes based on Annual Evaluation

Business needs

Theoretically the process that BRAC Bank follows it is widely known as “Management by
Objective (MBO)”. Management by objectives (MBO) is a strategic management model that
aims to improve the performance of an organization by clearly defining objectives that are
agreed to by both management and employees. According to the theory, having a say in goal
setting and action plans encourages participation and commitment among employees, as well as
aligning objectives across the organization.

Based on the assigned objectives all the employees of BRAC Bank perform their duties and they
have been evaluated twice (02) in a year. One evaluation is known as “Half-Yearly” and this
evaluation takes place in July-August and another one is “Annually” which usually takes place in
January- February of the following year.

At BRAC Bank, 70% employees of total population belongs to the “Incentive Groups” and they
have been evaluated every month based on their KPIs and KRAs. However, still they have been
consider in the “Annual Evaluation Process” just to keep their spirit high so that they do not
think they are a left out group of employee. These employees evaluation process is pretty simply
and their evaluation totally takes place on their individual & cumulative target. Following job
grade hierarchy will describe which group of employees usually fall under this category.

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 Non

Job Grade Hierarchy

Incentive
Group

Incentive
Group

While setting goals following categories being considered and this allows varies from job role to
job role. It is to be noted that, those who are in incentive group level they are more focused on
“business” because BRAC Bank’s main portfolio of business is SME which is around 44%.
Goal/Objective setting categories are as follows:

1. Business Growth
2. Operational Excellence
3. Regulatory Compliance
4. Customer Experience
5. Self-Development

In addition to this, objectives varies from role to role as well. Objectives of SME Division varies
from Retail Banking Division as well as Branch Banking. Once the objective setting is done
employees being evaluated twice in a year.

In Performance Evaluation system there are two (02) sections and they are as follows:

1. Evaluation based on Assigned Objectives/ Goals

2. Evaluation based on Organizational Values

Organizational values plays a pivotal role in the motivation of the employees of BRAC Bank.
This Values being set by the owner Sir Fazle Abed Hossain, KCMG himself. This values mean a

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lot to the people of the organization and they always try to live on this values. The core values of
BRAC Bank mentioned follows:

CREATIVE Open mind towards new possibilities | Less is More | Simplicity

RELIABLE Teamwork based on mutual Trust & Respect

YOUTHFULNESS Engage & Energize the Team by being a Coach rather than a Boss or a LM

STRONG Open to Receive & Give Feedback | Delegate Appropriately

TRANSPARENT Consistency in Approach | Open & Transparent Communication

ACCOUNTABILITY Freedom through Responsibility | Focus on Results rather than Managing Tasks

LOYAL Proud to be part of BRAC Family

There are two rating scale follows in BRAC Bank’s PMS and this is an alphanumeric rating
scale. In case of Goal Setting the rating which followed is 1 to 5 where 1 is the “Outstanding” &
5 is “Poor”. Also, to evaluate the values the rating scale is followed is A to D where A denotes
“Role Model” & D means “Not Acceptable”. Following is the 20-Box rating scale which is
followed at BRAC Bank:
Objectives = WHAT?

Values= How

Performance Evaluation process at BRAC Bank starts from his employees and then it goes on to
the next stage. Following work flow is a glimpse how the performance evaluation process works
at BRAC Bank:

Step-1

Step-2

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Usually this whole process takes One & Half Months to Two months to complete. Lastly, when
all the performance ratings being completed in the system, those ratings were compiled in HR
and shared with the management. This meeting is known as “Performance Calibration Meeting”.
During this meeting they usually discuss the “Bell Curve” which they will follow consider the
“Business Scenario” and other factors both internal & external. Subsequently, which ever
divisions’ bell curve are not aligned with the “Desired Curve” those functional heads need to re-
think and scrutinize their evaluation process. Following is a sample of “Bell Curve” usually
BRAC Bank follows in their performance appraisal process:

Once the performance ratings being approved by the management it is uploaded in the system
and being communicated with the line managers to share with the employees in the system.
Following stages are the post- performance evaluation process at BRAC Bank:

Share Acknowledgment Confirm Review

Review Meeting Final Feedback
Performance of Performance Meeting by the
with Employees from Employee
Document Document Line Manager

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FINDINGS:

From the PMS process, we found 5 key findings as part of current PMS Process.

1. Subjective definition of Organizational Values that are difficult to measure:

Organization value (CRYSTAL framework) is very subjective and difficult to measure. Such as
‘R’ for Reliable- that is be worthy of reliance or trust at work so everyone could depend on you.
All these values are in qualitative term and which are not measureable and it’s difficult to give
rating on the basis of these value. In this case, value judgment is very subjective as it is not
measureable. In most of the cases, managers try to grade employees as ‘B’ if there is no
disciplinary action taken in this regard. But if there is any bad record then they grade ‘C’ grade.
In most of the cases, it reflects personal biasness and preferences.

2. Limited alignment of Organizational and Individual Goals:

There is limited alignment of organizational and individual goals. Goal Sheet preparation
(MBO/BSC) and goal cascading are not done in a defined manner. Therefore, individual goals
are not aligned with properly with organization goal. In this case, 70% employees from core
business support whose performance is KPI/KRA based which is aligned with organization
goals. But there is 30% employees who are from supporting groups. There is no KRA/KPI set for
their performance. As a result, there is a mismatch between organization goals and individual
goals.

3. Rating process at year end ensuring limited scope for course correction and
development:

Employee level performance and rating values exhibited is assessed at the end of the year.
Though there is half yearly assessment just to keep employees on track, but annual assessment is
considered and used for HR related exercise such as promotion, increment, training etc.
Therefore, there is limited scope for employees for correction and development in their
performance.

4. There is no link between performance and reward or recognition:

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HR process should be interlinked. But there is no link between performance and reward or
recognition. Employees receive only inflationary adjustment but they don’t get reward or
recognitions, for high performance i.e. merit increment, incentives, performance bonus,
promotion based on performance. For example, a high performer and a low performance both
will get at 6% of inflation adjustment, but the high performer won’t get merit increment or
incentives or any other reward or recognitions based on performance. It causes dissatisfaction
among employees.

5. There is no HR processes for further development of potential employees:

There is no further plans for high and low performer based on PMS process. Managers don’t
plan for high performer and potential employees for further development i.e. L&D, cross
functional project, special assignments etc. and there is no individual development plan for low
performers as well, so that they can improve themselves and contribute to the organization’s
success. Moreover, “Talent Calibration” meeting which is very important succession is planning,
doesn’t take place every year. As a result, high performer employees don’t get recognized for
their potentials, performance, contributions and Bank hires employees from outside of the
organization for higher position which increase costs as well as employee dissatisfaction.

RECOMMENDATIONS:

 In an organization value gets difficult to measure because it is very subjective. The manager
doesn’t have an indicator to judge the employees. He can’t give every employee same grade.
If an employee is working hard and giving excellent outcome they have to be a category
upper then the average employees. So, classifying every employee by their work should be
done accurately. For that they have to use behavioral competency to judge the employees
instead of evaluating values.
 Limitation of alignment of Organizational has to end. Individual Goal Sheet preparation
(MBO/BSC) and goal cascading has to be done in a defined manner. 70% of the core
employee has KPI/KRA but 30% of the supportive group doesn’t have any type of
KPI/KRA. The 30% employees work is operational. Their objective has to be SMART

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 (Specific, Measurable, Actionable, Relevant, Timely). Also, Drotter’s model objective
setting has to be in five dimensions (Operational, leadership, management, relationship,
innovation). This will help to remove the mismatch between organization goal and
individual goal.
 Performance and reward and recognition should be linked to the organization. As employees
receive only inflationary adjustment and no reward for high performance (for example a
high performer and a low performance both will at 6% of inflation adjustment, but the high
performer won’t get merit increment or incentives based on performance.), the hardworking
employees can get demotivated. That’s why merit implementation is necessary.
 Based on PMS process, there is no further plan for high and low performer based on. To cut
the cost of hiring employees outside from the Bank for higher position, the bank should plan
on further development for high performers. There should be individual development plan
for low performance for their development. Also, Talent Calibration meetings are also
needed to recognize the employee’s potentials.

CONCLUSION:

BRAC Bank limited is a modern commercial bank. It is committed to provide high quality
financial services / products to contribute to the growth of G.D.P. of the country through
stimulating trade & commerce, accelerating the pace of industrialization, boosting up export,
creating employment opportunity for the educated youth, raising standard of living of limited
income group and overall sustainable socio-economic development of the country.

The Bank is operating efficiently with its existing products and services. To achieve these
objectives and to contribute to G.D.P. the performance of the employees should be developed.
And these performance matters should be reviewed periodically and with importance and BRAC
Bank does the job very effectively and efficiently. That is the reason why the bank is growing so
fast than any other local bank in our country. The bank depends on its employees and its
employees depend on the Bank and thus they become a part of the Bank.

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CASE QUESTIONS:

1. At BRAC Bank Limited, values being evaluated for each employees but how can be
values evaluated without any indicator? In such cases, values should be replaced with
what? Justify your answer.
2. In case of Objective Setting what methodology can be followed at BRAC Bank Limited?
What are the probable segment that should be considered in “Objective Setting” exercise?
3. How can be a high performer & low performer may be identified? To keep them distinct
what pay structure or benefit should BRAC Bank take?
4. What are the probable process of identifying successor from performance management
system? How can be they treated?
5. How can a Performance Appraisal Process set the culture in an Organization? Justify
your answer?

REFERENCE:

1. Dessler, G. (1999). Human Resources Management (7th edition), N.J.: Prentice Hall Inc.,
345–367.
2. Schuler, Randall, S. (1981). Personnel and Human Resource Management. West
Publishing Co. N.Y
3. Kane, J. S., and Lawer, E. E. (1979). Performance Appraisal Effectiveness: Its
Assessment and Determinants in Research Organizational Behavior: An Annual Series of
Analytical Essays and Critical Review. B. M. Staw, Greenwich, Conn: JA1 Press Inc
4. BRAC Bank Website, available at: https://www.bracbank.com/en/about-us/

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Questions & Answer:
1. At BRAC Bank Limited, values being evaluated for each employees but how can be
values evaluated without any indicator? In such cases, values should be replaced with
what? Justify your answer.

Answer: At BRAC Bank, there are two parts in Performance Evaluation Process. One is the
Objective Setting part and another one is the Value Section. Value section consist of the seven
(07) core values of the organization. However, these value gets difficult to measure because it is
very subjective from a line manager’s point of view. The manager doesn’t have an indicator/cue
to judge his/her subordinates. As a result, they go by their intuitions and give same type of
ratings in “Value” section. Which creates a major error in the PMS process at BRAC Bank.
Sometime, halo effects comes while they are giving rating to the employees. That’s why we
believe that, behavioral competency can be a proper solution to replace this value section.
Reason behind to select the behavioral competency is that people reacts or do actions against any
deed. Therefore, it shows up in front of us. In case of any employee their attitude or approach
will be showed to the supervisor or line manager. Through that the line managers/supervisor will
get cues what they should be rated in performance evaluation process.

2. In case of Objective Setting what methodology can be followed at BRAC Bank Limited?
What are the probable segment that should be considered in “Objective Setting”
exercise?

Answer: Currently, 70% core employees making their KRAs or KPIs based on numbers because
all these employees are sales force and they directly or indirectly deals with number at the BRAC
Bank Limited. However, if we consider as a whole only target or number cannot make a person
grow as an individual. There are other factors which needs to be considered and those factors

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will ultimately lead that person to the higher level. Purpose of this process is to prepare leaders at
every level of the organization. Sot that, there should be no shortage of leaders in the pipeline
and the bank can run smoothly. In this scenario following five (05) performance dimensions of
Drotter’s model can be taken and based on that employees will prepare their SMART objectives
which will be aligned with the organizations main strategic objectives:

 Relationship Results
 Operational Results
 Innovation Results
 Management Results
 Leadership Results
We believe this initiative will help to remove the mismatch between organization goal and
individual goal.
3. How can be a high performer & low performer may be identified? To keep them
distinct what pay structure or benefit should BRAC Bank take?

Answer: At BRAC Bank, their Performance Appraisal Process is a single process which has no
direct impact of relationship with the Reward and Recognition scheme. They currently run these
two processes separately and on need basis. However to keep the employees motivated and make
a smooth transactional HR they should link this two (02) separate processes together. Though it
is fourth (4th) generation bank but still it has some practices of old banks such as they give
inflationary adjustment/Cost of living adjustment to all the employees irrespective of their
performance ratings. As a result, there is no reward for high performer or penalty for the low
performer. In such cases it is creating a discomfort among the employees and this process
making the high performed employees demotivated. In such cases, we can introduce “Merit Base
Pay” which will be directly link to the performance rating process. And, this exercise will take
place annually once the Performance Appraisal Process ends.

4. What are the probable process of identifying successor from performance management
system? How can be they treated?

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Answer: Like the Reward & recognition program, there are no such “Talent
Management/Calibration” program exist at BRAC Bank Limited. As a result, employees who are
consistently performing well in the organization their development plan is not being considered.
In this circumstances, employees can be get demotivated and being frustrated about their career.
So, management of BRAC Bank can think of Annual Talent Calibration process just after the
Annual Performance Appraisal Process and review the internal skill/talent inventory. Based on
that, they further prepare or do the exercise of the Succession Management for the critical roles.
This exercise will help them to understand the inner strength of the organization. Also, it will
identify gaps where external skills may require. This process will help both the purpose one is to
identify the internal talents and make development plan for them. Another one is that map out
the positions which may require external recruitment.

5. How can a Performance Appraisal Process set the culture in an Organization? Justify
your answer?

Ans.: In any organization, people are the main source of productivity. It means an organization
runs with people who have heart, head & hand. They create the culture in any organization and
HR is the function which facilitates all the processes linked to people. Culture is such a major
issue which cannot be changed or improved at one day. It requires substantial amount of time
and energy to develop this process. From HR’s perspective PMS is one of the processes that can
start creating a culture within the organization. The main purpose of PMS is to evaluate
employees based on their performance and identify employees who are doing good or bad
against the set standards. In this case, a constructive feedback process, accountability can create
a dynamic PMS process which will help the organization grow. These processes will help
employees to trust the process and they will act accordingly. Since, the line managers are the
main part of this process, so they need to do their work with more vigilant and open mind. This
will set the culture in the organization. And, we believe that, setting a culture at BRAC Bank will
definitely help the productivity & efficiency in future.

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