Performance Appraisal System of HDFC Bank

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A project report performance appraisal system of hdfc bank
Bachelor of business management (Veer Narmad South Gujarat University)
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A PROJECT REPORT
“PERFORMANCE APPRAISAL SYSTEM OF HDFC BANK.”
SUBMITTED BY
LEENA SUHAS PARAB
ROLL NO. 36
M.COM (BANKING & FINANCE)
SEMESTER III
(2018-19)
SUBMITTED TO
UNIVERSITY OF MUMBAI
ACADEMIC YEAR
(2018-19)
S.K.SOMAIYA COLLEGE OF ARTS,

COMMERCE & SCIENCE
VIDYAVIHAR,
MUMBAI - 400077.

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DECLARATION BY THE STUDENT
I, Miss Leena Suhas Parab student of M.com part II Roll no. 36 hereby declare that
the project for the paper commercial banking titled, “Performance Appraisal System
of HDFC bank.” Submitted by me for semester-III during the academic year 2018-19,
is based on actual work carried out by me under the guidance and supervision of
PROF. NIKHITA ALMEDIA.
I further state that this work is original and not submitted anywhere else for any
examination.
Leena Suhas Parab

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Evaluation Certificate
This is to certify that the undersigned have assessed and evaluated the project on
“Performance Appraisal System of HDFC bank.” Submitted by Leena Suhas Parab
student of M.com part II.
This project is original to the best of our knowledge and has been accepted for
Internal Assessment.
PROF. NIKHITA ALMEDIA

DR. MANALI LONDHE
Internal Examiner
External Examiner Principal

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Acknowledgment
First of all, I would like to take this opportunity to thank the Mumbai
University for having projects as a part of the M.com Part-2 curriculum.
I want to express my sincere gratitude to PROF. Nikhita Almedia for assigning

the responsibility to prepare Performance Appraisal System of HDFC bank.
I would also like to say that subject was learning, interesting and exhaustive.
I would like to thank my parents, friends and teachers who have helped to
encouraged me throughout the working of the project.
Leena Suhas Parab

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INDEX
Sr no. Topics Page no.

1 Introduction 6
2 Research Methodology, Objective of study 20
3 Literature Review 23
4 Objective of performance appraisal system 27
5 Training Strategies Used in HDFC Banks. 34
6 Innovative Recruitment and Selection Practices of HDFC 37
Bank.
7 Innovative Training and Development Practices of HDFC 39
Bank.
8 Innovative Performance Management Practices of HDFC 40
Bank.
9 Innovative Compensation Management Practices of HDFC 42
Bank.
10 Innovative Career Development Practices. 43
11 Innovative Employee Motivation Practices. 44
12 Innovative Employee Security Practices 47
13 Recruitment Process at HDFC Bank Ltd. 49
14 Employee benefits. 53
15 Conclusion and Recommendation 55
16 References 57
Introduction:
Introduction to Banking Sector

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Banking can be defined in various ways as the definition of the bank varies from
country to country and keeps on changing on the basis of the activities carried out by
the banks. In present dynamic business scenario, banking can be defined as the
activities carried out with the bank on individual or corporate level. We can
understand the concept of the banking by looking into the activities of the bank.
A bank is a well regularized and licensed financial institute to assist the individual and
corporate customer in their financial needs. Normally banks provide the following
services to its retail (individual) and corporate clients:
 Transactional services,
 Services related to monetary transaction through current and saving account,
 Investment services,
 Fixed deposit ,
 Letter of credit ,
 Treasury services ,
 Bill of exchange ,
 Foreign exchange ,
 Assisting in trade through Letter of credit,
 Letter of guarantee,
 Performance bond ,
 Project financing ,
 Personal loan ,
 Credit card ,
 Home loan etc.
Banking sector In India

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Banking in India originated in the last decades of the 18th century. The oldest bank
in existence in India is the ‘State Bank of India’; a government-owned bank that
traces its origins back to June 1806 and that is the largest commercial bank in the
country. Central banking is the responsibility of the Reserve Bank of India, which in
1935 formally took over these responsibilities from the then Imperial Bank of India,
relegating it to commercial banking functions. After India's independence in 1947,
the Reserve Bank was nationalized and given broader powers. In 1969 the
government nationalized the 14 largest commercial banks; the government
nationalized the six next largest in 1980.
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks
(that is with the Government of India holding a stake), 31 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges)
and 38 foreign banks. They have a combined network of over 53,000 branches and
17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public
sector banks hold over 75 percent of total assets of the banking industry, with the
private and foreign banks holding 18.2% and 6.5% respectively.
The banking industry in India seems to be unaffected from the global financial crises
which started from U.S in the last quarter of 2008. Despite the fallout and
nationalization of banks across developed economies, banks in India seems to be on
the strong fundamental base and seems to be well insulated from the financial
turbulence emerging from the western economies. The Indian banking industry is well
placed as compare to their banking industries western counterparts which are
depending upon government bailout and stimulus packages.
The strong economic growth in the past, low defaulter ratio, absence of complex
financial products, regular intervention by central bank, proactive adjustment of
monetary policy and so called close banking culture has favored the banking industry
in India in recent global financial turmoil.
Although there will be no impact on the Indian banking system similar to that in west
but the banks in India will adopt for more of defensive approach in credit disbursal in

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coming period. In order to safe guard their interest; banks will follow stringent norms
for credit disbursal. There will be more focus on analyzing borrower’s financial health
rather than capability.
The report “Indian Banking Sector Forecast to 2012” contains comprehensive

research and rational analysis on various segments, like assets size, income level and
number of cardholders, in the Indian banking industry. It also analyzes the current
performance and key market trends, and helps clients to understand various products
available in the market and their future scope.
The forecast given in this report is not based on a complex economic model but is
intended as a rough guide to the direction in which the market is likely to move. The
future projection is done on the basis of the current market scenario, past trends, and
rules and regulations laid by the regulator and supervisor of the financial system,
Reserve Bank of India (RBI).
The Economic Liberalization process has increasingly exposed the Banking Sector to
international competition. The role of Banking in the process of financial
intermediation has been undergoing a profound transformation, owing to changes in
the global financial system. Consequently, the revolution in information technology
has brought about sea changes in the way banking transaction are carried out.
Almost 80% of the businesses are still controlled by Public Sector Banks (PSBs).
PSBs are still dominating the commercial banking system. Shares of the leading PSBs
are already listed on the stock exchanges.
The RBI has given licenses to new private sector banks as part of the liberalization
process. The RBI has also been granting licensees to industrial houses. Many banks
are successfully running in the retail and consumer segments but are yet to deliver
services to industrial finance, retail trade, small business and agricultural finance.

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The PSBs will play an important role in the industry due to its number of branches
and foreign banks facing the constraint of limited number of branches. Hence, in
order to achieve an efficient banking system, the onus is on the Government to
encourage the PSBs to be run on professional lines.
To promote banking sector in India, Govt. has taken many steps and formed several
committee to review the banking needs and the prospect the current scenario along
with the safeguarding the interest of the customers
Reserve bank of India
Economists and Planners consider monetary stability in an economy as the most

important function of a Central Bank. The Prime function of a Central Bank is to
ensure and secure monetary stability i.e. to ensure that the growth rate of money
supply is consistent with the growth rate of output of goods and services. In an open
economy framework however the Central Banks is additionally entrusted with the
responsibility of managing the exchange rate. Since the inception of the economic
reforms when the Indian Economy embarked on a programme of liberalization and
exchange rate flexibility, the Reserve Bank of India is managing its twin
responsibilities of monetary stability and exchange rate stability. The economy
follows a managed float system with RBI intervening in the event of violent
fluctuations in exchange rate. In an open economy framework with lesser restrictions
on capital flows, managing the monetary stability and exchange rate stability pose a
challenge for the Central Bank. Managing the twin functions simultaneously is
accompanied by trade-offs and conflicts.
The central bank of the country is the Reserve Bank of India (RBI). It was
established in April 1935 with a share capital of Rs. 5 crores on the basis of the
recommendations of the Hilton Young Commission. The share capital was divided
into shares of Rs.
100 each fully paid which was entirely owned by private shareholders in the

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beginning. The Government held shares of nominal value of Rs. 2, 20,000.
Reserve Bank of India was nationalized in the year 1949. The general
superintendence and direction of the Bank is entrusted to Central Board of Directors
of 20 members, the Governor and four Deputy Governors, one Government official
from the Ministry of Finance, ten nominated Directors by the Government to give
representation to important elements in the economic life of the country, and four
nominated Directors by the Central Government to represent the four local Boards
with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Boards
consist of five members each Central Government appointed for a term of four years
to represent territorial and economic interests and the interests of co-operative and
indigenous banks.
The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act,
1934 (II of 1934) provides the statutory basis of the function of the bank.
The Bank was constituted for the need of following:
Ø To regulate the issue of banknotes
Ø To maintain reserves with a view to securing monetary stability and
Ø To operate the credit and currency system of the country to its advantage.
Housing Development Finance Corporation Ltd. (HDFC) is an Indian banking

and financial services company headquartered in Mumbai, Maharashtra. It has 88,253
permanent employees as on 31 March 2018 and has a presence in Bahrain, Hong
Kong and Dubai. HDFC Bank is India’s largest private sector lender by assets. It is
the largest bank in India by market capitalization as of February 2016. It was ranked
69th in 2016 BrandZ Top 100 Most Valuable Global Brands.
In 1994 HDFC Bank was incorporated, with its registered office in Mumbai, India. Its
first corporate office and a full service branch at Sandoz House, Worli were
inaugurated by the then Union Finance Minister, Manmohan Singh.

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As of October 9, 2018, the bank's distributions network was at 4,805 branches and
12,260 ATMs across 2,657 cities and towns. The bank also installed 4.30 Lacs POS
terminals and issued 235.7 Lacs debit cards and 85.4 Lacs credit card in FY 2017.
HDFC Bank is a dynamic bank; with a youthful and enthusiastic team determine to
accomplish the vision of becoming a world-class Indian bank. Our business
philosophy is based on four core values – Customer Focus, Operational Excellence,
Product Leadership and People. We believe that the ultimate identity and success of
our bank will reside in the exceptional quality of our people and their extraordinary
efforts. For this reason, we are committed to hiring, developing, motivating, and
retaining the best people in the industry.
Mission and Business Strategy
Our mission is to be a “World-Class Indian Bank,” benchmarking ourselves against

international standards and be practices in terms of product offerings, technology,
service level, risk management and audit and compliance. The objective is to build
sound customer franchises across distinct business so as to be a preferred provider of
banking service for target retail and wholesale customer segment, and to achieve a
healthy growth in probability, consistent with the Bank’s risk appetite. We are
committed to do this while ensuring the highest levels of ethical standards,
professional integrity, corporate governance and regulatory compliance.
Our business strategy emphasizes the following:
Ø Focus on high earnings growth with low volatility.
Ø Maintain our current standards for asset quality through disciplined credit risk
management.
Ø Continue to develop products and service that reduces our cost of funds.

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Ø Develop innovative product and services that attract our targeted customers and
address inefficiencies in the Indian financial sector.
Ø Leverage our technology platform and open saleable systems to deliver more
products to more customers and to control operating costs.
Products and services

HDFC Bank provides a number of products and services including wholesale
banking, retail banking, treasury, auto loans, two wheeler loans, personal loans, loans
against property, consumer durable loan, lifestyle loan and cards. Along with this
various digital products are Payzapp and Chillr.
Retail Banking
o Loan products: o Depository products:

 Auto Loans  Savings
 Loan against  Current
securities  Fixed Deposits
 Personal Loans
 Credit Cards
 2-wheeler Loans
 Home Loans
 Commercial
Vehicle Finance

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Wholesale Banking
o Commercial Banking o Transactional Banking o Key Segments

 Credit Substitutes  Cash Management  Large corporate
 Term Loans  Custodial Services  Supply Chain
 Bill Collection  Clearing Bank  Emerging Coop
 Forex & Services  Financial Inst
Derivatives  Correspondent  Government
 Wholesale Banking
Deposits  Tax Collectios
 Letters of Credit  Banker to public
 Guarantees Issue
 Working Capital
Treasury
o Products o Other Functions

 Foreign Exchange  Asset Liability
 Debt Securities Management
 Derivatives  Statutory Reserve
 Equity Management
Awards
 Best Banking Performer, India in 2016 by Global Brands Magazine Award.
 Best Performing Branch in Microfinance among private sector banks by

NABARD, 2016
 Award for Best Performance in Microfinance
 KPMG study of India's Best Banks
 Bank of the year & best digital banking initiative award 2016

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 AIMA Managing India Awards 2015
 Business leader of the year- Aditya Puri
 BrandZ Rankings
 Best managed public company – India
 FinanceAsia poll on Asia's Best Companies 2015
 J. P. Morgan Quality Recognition Award
 World's 30 Best CEOs - Aditya Puri
 Best in class straight through processing rates
“Performance Appraisal” – A Systematic Approach
Meaning and Definition
Performance appraisal is a formal system that evaluates the quality of a employee’s

performance. An appraisal should not be viewed as an end in itself, but rather as an
important process within a broader performance management system that links:
• Organizational objectives
• Day-to-day performance
• Professional development
• Rewards and incentives
In simple terms, appraisal may be understood as the assessment of an individual’s

performance in a systematic way, the performance being measured against such
factors as job knowledge, quality, and quantity of output, initiative, leadership
abilities, supervision, dependability, co-operation, judgment, versatility, health, and
the like. Assessment should not be confined to past performance alone. Potentials of
the employee for future performance must also be assessed.
A formal definition of performance appraisal is:

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“It is the systematic evaluation of the individual with respect to his or her
performance on the job and his or her potential for development.”
A more comprehensive definition is:
“Performance appraisal is a formal, structured system of measuring and evaluating an

employee’s job related behaviors and outcomes to discover how and why the
employee is presently performing on the job and how the employee can perform more
effectively in the future so that the employee, organization, and society all benefit.”
“Performance appraisal is the process of obtaining, analyzing and recognition

information about the relative worth of an employee.”
Performance appraisal is also known as performance management,

performance evaluation and performance review.
“Performance Appraisal” In Banking Sector
“Performance Appraisal” is a vehicle to (1) validate and refine organizational actions

(e.g. selection, training); and (2) provide feedback to employees with an eye on
improving future performance.
Validating and refining organizational action or banks action
Employee selection, training and just about any cultural or management practice—
such as the introduction of a new pruning method or an incentive pay program—may
be evaluated in part by obtaining worker performance data.
The evaluation may provide ideas for refining established practices or instituting new
ones. For instance, appraisal data may show that a farm supervisor has had a number
of interpersonal conflicts with other managers and employees. Some options include:
1) Paying more attention to interpersonal skills when selecting new supervisors,

2) Encouraging present supervisors to attend communication or conflict
management Classes at the local community college, or
3) Providing the supervisor one-on-one counseling.

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Traditional Performance Appraisal
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. During the First World War, appraisals concept was
adopted by US army which was in the form of merit rating. It was man-to-man rating
system for evaluation of military personnel. From the army this concept entered the
business field and was restricted to hourly-paid workers. During 1920s, relational
wage structures for hourly- paid workers were adopted in industrial units and each
worker were used to be rated in comparison to other for determining wages rates. This
system was called merit rating.
The process was firmly linked to material outcomes. If an employee's performance

was 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. If was
felt that a cut in pay, or a rise, 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

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motivation and development was gradually recognized. The general model of

performance appraisal, as it is known today, began from that time.
Modern Performance Appraisal
Performance appraisal may be defined as a structured formal interaction between a

subordinate and supervisor, that usually takes the form of a periodic interview (annual
or semi-annual), in which the work performance of the subordinate is examined and
discussed, with a view to identifying weaknesses and strengths as well as
opportunities for improvement and skills development.
In many organizations - but not all - appraisal results are used, either directly or
indirectly, to help determine reward outcomes. That is, the appraisal results are used
to identify the better performing employees who should get the majority of available
merit pay increases, bonuses, and promotion.
By the same token, appraisal results are used to identify the poorer performers who
may require some form of counseling, or in extreme cases, demotion, dismissal or
decreases in pay. (Organizations need to be aware of laws in their country that might
restrict their capacity to dismiss employees or decrease pay.) Whether this is an
appropriate use of performance appraisal - the assignment and justification of
rewards and penalties - is a very uncertain and contentious matter.
Indian banking has entered the new era of technology enabled and customer centric
banking. The HRD managers as well as the employees, especially in the higher cadre,
need to update their knowledge and skills constantly, and consciously. Technology is
changing the world at a frightening speed. Therefore, the ongoing process of training
and learning should not only be based on sound and proven theories and concepts, but
also laced with practical aspects and implementation. Overall, the HRD enables the
employees to make a long-term commitment to all the managerial values narrated
above and to build a good employer employee relationship. To become world-class
banks, it is therefore clear that HDFC have to embrace and enthusiastically

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implement world-class HRD practices. With India emerging as a dominant knowledge

power, it

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is only in the fitness of things that Indian Banks too should accord high value to
human capital and take momentous steps forward to reach world class HR capital
adequacy.
The employees always assess the management values, work culture, work practices
and credibility of the organization. The Indian companies do have difficulties in
getting the businesses and retain it for a long time. There are always ups and downs in
the business. When there is no focus and in the absence of business plans, non-
availability of the campaigns makes people to quickly move out of the organization.
In the recent decades the Indian industry has changed its outlook. The employment
scene has changed its appearance. The factors like skill sets, job satisfaction drive the
employment and not just the money. The employer hence faces the heat of continuous
employee turnover. Continuous efforts are made by organizations to control the
employee turnover rate as it directly affects the performance of the organization as
many key people leave the organizations for various reasons at crucial points. This
turnover is normally known as attrition.
With global economy the world has become a global village. As a consequence firms
have become more aware of the need for having competent employees and
developing distinguished competencies for every organization. Every well managed
firm should have well defined roles and a list of competencies required for
performing each role effectively. They prefer to build a core competency that will see
them through crisis, if any. The choice is to develop the people because human
resource is seen to be the most valuable resource any organization has. Organizations
of the future will have to rely more on their competent employees than any other
resource. It is a major factor that determines the success of an organization.
Competencies are the inner tools for motivating employees, directing systems and
processes and guiding business towards common goals that allow the organizations to
increase their value. Competencies provide a common language and method that can
integrate all the major HR functions and services like Recruitment, Training,
Performance Management, Remuneration, Performance Appraisal, Career and
Succession Planning and Integrated Human Resource Management System.

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Methods
A) Past-oriented methods
 Rating Scales
 Check-list Method
 Force Choice Method
 Force Distribution Method
 Critical Incident Method
 Essay Method
 Grading
 Performance Tests & Observations
 Confidential Reports
 Comparative Evaluation Method (Ranking & Paired Comparisons)
(B) Future-Oriented Methods
 MBO (management by objective)

 Assessment Center Method
 360o Appraisal
 Psychological Appraisals
RESEARCH METHODOLOGY OF THE STUDY
The importance of Performance Appraisal is capturing importance in the industry. It

has become a focal point in all stages in the industry, since all companies have their
appraisal system. Hence, the concept of Performance Appraisal is a pivotal point to

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judge the performance of the employees. Nowadays, employers are becoming more
and more demanding, thus forcing the HR department to evolve or judge the
performance of the employees.
OBJECTIVE OF THE STUDY
 The project explains the meaning of Performance Appraisal, different

methods used to evaluate the performance of employees, its effective
implementation and the benefits of the system.
 Study the challenges faced during performance management process and
also provide solution for them.
 It also aims at understanding the problems associated with performance
appraisal and suggests measures to be adopted to overcome these issues.
PURPOSE AND NEED OF THE STUDY
o Provide information about the performance ranks basing on which decision

regarding salary fixation, confirmation, promotion, transfer and demotion are
taken.
o Provide feedback information about the level of achievement and behavior of
subordinate. This information helps to review the performance of the
subordinate, rectifying performance deficiencies and to set new standards of
work, if necessary.
o Provide information which helps to counsel the subordinate.
o Provide information to diagnose deficiency in employee regarding skill,
knowledge, determine training and development needs and to prescribe the
means for employee growth provides information for correcting placement.
o To prevent grievances and in disciplinary activities.

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SCOPE OF THE PROJECT
This project report covers the definition and meaning of Performance Appraisal. It
elucidates the benefits and drawbacks of the traditional methods as well as recent
advances in the field of performance appraisal.
The project throws light on the concern areas for different people involved in the
appraisal process and attempts to find out ways to overcome those problems.
Appraisees and appraising managers have both been given guidelines in evaluation
process and subsequently the review meeting. It emphasizes how this approach will
help the appraisees by giving them an opportunity to assess and correct areas that their
supervisors feel may have overlooked. Such incidences do happen due to personal
likes and dislikes of superiors. The system can help management to take informed
decisions on pay-hikes and career enhancement for their employees.
Few formats of the performance appraisal forms have been included in the project to
show the way different companies are evaluating the performance of their employees.
Thus, through this project report one can:

 have a reasonable understanding of the term performance appraisal;
 understand what needs to be done for its effective implementation;
 know the key areas of performance indicators;
 understand the benefits of the system;
 know how it helps in designing the Performance Rated Pay system;
 know how it helps in planning of career of employees;
 know how it helps in the future requirement of the organization as it grows.
METHODOLOGY OF THE STUDY

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Methodology is said to be the procedure or way in which the project work has been
done. In the project work, the methodology adopted is data collection.
DATA COLLECTION
A research has been done to assess the performance of the employees in HDFC
Standard Life Insurance. Generally research means analyzing and collecting the data
regarding the selected topic and editing the collected data and finally making a report
in a formatted way regarding the selected topic.
The source of data through which data is collected for the study is:
SECONDARY SOURCE
The Data which is already documented by someone else for particular purposes are
said to be Secondary Data. The secondary data is compiled using the internet. The
Web provided a lot of information about the Banking Sector and about HDFC. A lot
of important information is collected through this medium.
Sources:
· Records of the organization
· Manuals of the organization
· Internet
With regard to secondary data I studied annual reports, standing orders of the
organization, and the early recruitment records which helped me to form my
hypothesis to know about the employee satisfaction levels, procedures, Participation
of employees, how the company recruits its workforce, the practical concept followed
at the company for measuring performance effectiveness of employees in the
company.
LITERATURE REVIEW
Human Resources Management Approach (H.R M Approach)

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“Human resource management's objective is to maximize the return on investment

from the organization's human capital and minimize financial risk. It is the
responsibility of human resource managers in a corporate context to conduct these
activities in an effective, legal, fair, and consistent manner”
The Human Resources (HR) function provides significant support and advice to line
management. The attraction, preservation and development of high caliber people are
a source of competitive advantage for our business, and are the responsibility of HR.
H.R can be well understood as a model of personnel management that focuses on the
individual rather than taking a collective approach. Responsibility for human resource
management is often devolved to line management. It is characterized by an emphasis
on strategic integration, employee commitment, workforce flexibility, and quality of
goods and services.
Human resource is an increasingly prominent field that is taking shape throughout

industries and workplaces worldwide. Recognizing the fact that people are a
company’s greatest asset, business leaders across the globe are coming to rely more
and more upon an effective management policy that applies specifically to the area of
human resources.
With a rapid increase – a boom, in fact – of professionals, generalists and specialists

in the area of human relations, there has also been a major rise in the amount of
knowledge and innovation pertaining to the most efficient and productive methods of
streamlining workforce management policy. When applied, there are already a great
number of proven techniques which result in the actual increases of profit margins.
But what, exactly, is the definition of human resources? Essentially, HR applies to the
workforce managed by any employer. A business of any size needs employees in
order for it to run. As an important – the most important – asset for any business
leader, employees need to be properly managed in order for optimal efficacy to be
achieved.

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Now, properly managing a workforce is a lot more complicated than, say, the
maintenance of a company’s material capital such as machinery, computer systems,
etc. Indeed, the mechanistic approach to employee relations has often failed.
Fortunately, this failure has prompted close study into how to effectively see that
human capital is treated right and is able to reach its full potential.
That’s why the application of human resources management focuses largely on a

more sensitive and human analysis to determine what really works with employees.
One of the major aspects of HR maintenance involves employee recruitment, training
and development as a function of human capital management.
Making sure that employees’ abilities are correctly and optimally nurtured is essential
to seeing a worthwhile return on investment come from their contribution to the
company, once their training period is over. Along with employee training, human
resources departments also delve into the area of applicant tracking. How to find the
best talent available on the global labor market place is often a problem that the
human resources department will strive to tackle.
In addition, human resources departments take care of a variety of concerns such as

labor relations – the crucial and highly sensitive negotiations between employees and
management – the production of job descriptions, the monitoring of interplay
between workers in order to design a more efficient employee management system,
the compilation of benefits packages as well as a variety of other vital functions that
relate directly to the employee workforce
Organizational Psychology holds that successful organizations do not owe their

success solely to market realities and sustainable competitive advantages. Actually,
there is a lot more. Successful companies are those that consider their human capital
as their most important asset. Facts and figures are the quantitative elements of
successful management, yet the qualitative, i.e. the cognitive aspects, are those that
actually make or break an organization.

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Human Resources Management (HRM) is the strategic management of the

employees, who individually and collectively contribute to the achievement of the
strategic objectives of the organization. Assuming that the employees of an
organization are individuals with own mental maps and perceptions, own goals and
own personalities and as such they cannot be perceived as a whole, HRM holds that
the organization should be able to employ both individual and group psychology in
order to commit employees to the achievement of organizational goals.
Aiming to enable the organization to achieve its strategic goals by attracting, retaining
and developing employees, HRM functions as the link between the organization and
the employees. A company should first become aware of the needs of its employees,
and at a later stage, understand and evaluate these needs in order to make its
employees perceive their job as a part of their personal life, and not as a routine
obligation. To that end, HRM is very crucial for the whole function of an organization
because it assists the organization to create loyal employees, who are ready to offer
their best.
The HRM activities in modern organizations are typically performed in

communication with the General Management in an effort to provide a variety of
views when a decision must be taken. In that way, decision making is not subject to
the individual perceptions of the HR or the General Manager, but it becomes the
outcome of strategic consensus.
The main goals / responsibilities of HRM are:
• To retain low employee turnover rate by inspiring people to work for the company
• To attract new employees
• To contribute to employee development

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To achieve these goals, Human Resources Management trains and motivates the
employees by communicating ethical policies and socially responsible behavior to
them. In doing so, it plays a significant role in clarifying the organization's problems
and providing solutions, while making employees working more efficiently.
On the other hand, challenges do not cease for the HRM. Modern organizations can
survive in the dynamic, competitive environment of today only if they capitalize on
the full potential of each employee. Unfortunately, many companies have not
understood the importance of the human capital in successful operations. The
recruitment and selection of the best employees is a very difficult obligation. Even
companies that are voted in the top-ten places to work at, often endure long periods of
hard work to realize that human element is all an organization should care about.
New challenges arise even now for the organization, and it is certain that new
challenges will never cease to emerge. Therefore, the use of proper Human Resources
techniques is a really powerful way for organizations to overcome these challenges,
and to improve not only their quantitative goals but also their organizational culture,
and their qualitative, cognitive aspects.
Current trends in HR
Human resource management is a process of bringing people and organizations

together so that the goals of each other are met. The role of HR manager is shifting
from that of a protector and screener to the role of a planner and change agent.
Personnel directors are the new corporate heroes. The name of the game today in
business is personnel. Nowadays it is not possible to show a good financial or
operating report unless your personnel relations are in order.
Over the years, highly skilled and knowledge based jobs are increasing while low
skilled jobs are decreasing. This calls for future skill mapping through proper HRM
initiatives.

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Indian organizations are also witnessing a change in systems, management cultures

and philosophy due to the global alignment of Indian organizations. There is a need
for multi skill development. Role of HRM is becoming all the more important.
Objectives of Performance appraisal:
 To review the performance of the employees over a given period of time.
 To judge the gap between the actual and the desired performance.
 To help the management in exercising organizational control.
 Helps to strengthen the relationship and communication between superior

subordinates and management – employees.
 To diagnose the strengths and weaknesses of the individuals so as to identify

the training and development needs of the future.
 To provide feedback to the employees regarding their past performance.
 Provide information to assist in the other personal decisions in the

organization.
 Provide clarity of the expectations and responsibilities of the functions to be

performed by the employees.
 To judge the effectiveness of the other human resource functions of the

organization such as recruitment, selection, training and development.
 To reduce the grievances of the employees.
Followings should kept in the mind for effective “Performance Appraisal” in a bank
 Select what performance data to collect

 Determine who conducts the appraisal
 Decide on a rating philosophy

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 Overcome rating deficiencies

 Create a rating instrument
 Deliver useful information to employees
The “Performance Appraisal” or review is essentially an opportunity for the

individual and those concerned with their performance in the bank , most usually
their line manager - to get together to engage in a dialogue about the individual’s
performance, development and the support required from the manager. It should not
be a top down process or an opportunity for one person to ask questions and the other
to reply. It should be a free flowing conversation in which a range of views are
exchanged.
“Performance Appraisals” usually reviews past behavior and so provide an

opportunity to reflect on past performance of the bank employees. But to be
successful they should also be used as a basis for making development and
improvement plans and reaching agreement about what should be done in the future
to enhance the bank’s effect and effectiveness.
The “Performance Appraisal” is often the central pillar of performance management

in the bank to keep the motivation of the employees high.
THE PROCESS OF PERFORMANCE APPRAISAL
“Performance Appraisal” System: The Process

“Performance Appraisal” involves an evaluation of actual against desired
performance. It also helps in reviewing various factors which influence performance.

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Managers should plan performance development strategies in a structured manner for

each employee. In doing so, they should keep the goals of the organization in mind
and aim at optimal utilization of all available resources, including financial.
“Performance Appraisal” is a multistage process in which communication plays an
important role.
1) Establishing Standards and Measures

The first step is to identify and establish measures which would differentiate between
successful and unsuccessful performances. These measures should be under the
control of the employees being appraised. The methods for assessing performance
should be decided next. Basically, management wants to:
· know the behavior and personal characteristics of each employee; and
· assess their performance and achievement in the job.
There are various methods available for assessing results, behavior and personal
characteristics of an employee. These methods can be used according to the particular
circumstances and requirements.
2) Communicating Job Expectations

The second step in the appraisal process is communicating to employees the measures
and standards which will be used in the appraisal process. Such communication
should clarify expectations and create a feeling of involvement.
3) Planning
In this stage, the manager plans for the realization of performance expectations,
arranging for the resources to be available which are required for attaining the goals
set. This is an enabling role.
4) Monitoring Performance
“Performance Appraisal” is a continuous process, involving ongoing feedback. Even
though performance is appraised annually, it has to be managed 'each day, all year
long.' Monitoring is a key part of the “Performance Appraisal” process. It should
involve providing assistance as necessary and removing obstacles rather than

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interfering. The best way to effectively monitor is to walk around, thus creating
continuous contacts, providing first-hand information, and identifying problems,
which can then be solved promptly.
5) Appraising
This stage involves documenting performance through observing, recalling,
evaluating, written communication, judgment and analysis of data. This is like putting
together an appraisal record.
6) Feedback
After the formal appraisal stage, a feedback session is desirable. This session should
involve verbal communication, listening, problem solving, negotiating,
compromising, conflict resolution and reaching consensus.
7) Decision Making
On the basis of appraisal and feedback results, various decisions can be made about
giving rewards (e.g., promotion, incentives, etc.) and punishments (e.g., demotion).
The outcome of an appraisal system should also be used for career development.
8) Development of performance
The last stage of “Performance Appraisal” is 'development of performance,' or
professional development, by providing opportunities for upgrading skills and
professional interactions. This can be done by supporting participation in professional
conferences or by providing opportunities for further study. Such opportunities can
also act as incentives or rewards to employees.
Competency Mapping:
Competencies are components of a job which are reflected in behaviour that is

observable in a workplace. The common elements most frequently mentioned are
knowledge, skills, abilities, aptitudes, personal suitability behaviour and impact on

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performance at work. Competence’ means a skill and the standard of performance

reached while competency refers to the behaviour by which it is achieved. The plural
of each word, therefore gives two different meanings. Competences and competencies
are not the same. Competences refer to the range of skills which are satisfactorily
performed, while Competencies refer to the behaviour adopted in competent
performance. Competencies are the characteristics of a manager.
Competency mapping is the process of identifying key competencies for a particular

position in an organization. Once this process is complete, the map becomes an input
for several other HR processes such as job-evaluation; recruitment; training and
development; performance management; and succession planning. For competency
mapping to be productive, the organization has to be clear about its business goals in
the short as well as long-term and the capability-building imperatives for achieving
these business goals.4 The process starts from as macro an endeavour as
understanding the vision and mission of the organization and how that translates into
specific, time-bound business goals. It then goes on to delineating the organization
structure clearly, and identifying the various levels and positions, as well as the
reporting relationships obtaining within that. For each position / level, the mapping
exercise should outline the roles and responsibilities of the position; short-term goals
to the extent that they are qualified; skill sets required for the job; and soft skill sets
required for the job plus interaction with other units / personnel. Though there are
well-accepted guidelines and assessment tools such as psychometric tests, the
assessor’s skill will play an important role in deciding when a gap calls for training
and when it calls for redeployment competency mapping comes in very useful in the
situations like candidate appraisal for recruitment; employee potential appraisal for
promotion; training needs identification; performance diagnostics; and self-
development initiatives.
Competencies are the inner tools for motivating employees, directing systems and
processes and guiding business towards common goals that allow the organizations to
increase their value.5 Competencies provide a common language and method that can
integrate all the major HR functions and services like Recruitment, Training,
Performance Management, Remuneration, Performance Appraisal, Career and

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Succession Planning and Integrated Human Resource Management System. The

competency framework serves as the bedrock for all the HR applications. As a result
of competency mapping, all the HR processes like talent induction, management
development, appraisal and training yield much better results.
The employees of HDFC Bank have specific skill, ability and knowledge etc. to
perform their job efficiently and efficiently. They possess decision making, power,
and relationship building capacity, sound knowledge of the products etc. which help
the bank for the progress in present and future mangers. Some of the employees have
got success due to some critical incidence during their job. They faced challenges and
accept changes but in a resistant manner so there should be well structured training
schedule for employees and bank’s development. Each of the specified roles should
know their responsibilities and roles to enhance the credibility and profitability of the
bank. Similarly, it has been proved that the competency mapping plays a vital role for
the development of the employees as well as bank.
Training and Development:
Training and Development is an attempt to improve current or future employee

performance by increasing an employee’s ability to perform through learning, usually
by changing the employee’s attitude or increasing his or her skills and knowledge.
Since the beginning of the twentieth century and especially after World War II,
training programs have become widespread among organizations, involving more and
more employees and also expanding in content. In India the banking industry
becoming more competitive than ever, private and public sector banks are competing
with each other to perform well. The executives of the bank are now in the position to
modify their traditional human resources practice in to innovative human resources
practices in order to meet the challenges from other competitive banks.

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The purpose of training need assessment is to add value to an organization. Hence,

evaluation measures the progress in achieving this goal by purposefully improving training
programs and measuring their worth. The training programs are established by the needs
assessment of training. A thorough needs assessment leads to effective and efficient
training, which increases the likelihood that evaluation will demonstrate successful value
added outcomes. In today’s complex and fast changing organizational environment,
developing human resources is of paramount importance and training has now become one
of the important segments of Human Resource Development (HRD) process. That is why the
efficiency of any organization depends directly on how well its employees are trained.
Training motivates employees to work efficiently and it is widely accepted as a problem
solving tool. The Human Resource Development department has to play a more proactive
role in shaping the employees to fight out the challenges.
The banks not only have to make plans and policies and devise strategies, the actual
functionaries have to show willingness, competence and effectiveness in executing the said
policies and strategies. Both training and development are necessary for any organization.
So it is evident that training and development forms an integral part of human resources
development process and should be in unison. In banks, HRD departments have the
advantages of not being excessively burdened with day–to–day problems of running the
banks or ensuring profitability of individual transactions. They are in positions to take
strategic and long term view of the competitive advantage of the human resources as well as
identify areas of professional weaknesses to rectify well before any damage takes place in
the organization. Training is the act of increasing knowledge and skill of an employee for
doing a particular job. Training is the organized procedure by which people learn knowledge
and or skills for a definite purpose.
Training Strategies Used in HDFC Banks:

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Training program should be repeated at regular intervals for individuals to provide

reinforcement of learning. At present the following types of programs is designed and
conducted by the training centres.
1. Standard program on repetitive basis.

2. Role orientation courses in functional areas.
3. Special courses and seminars.
4. Sales training for supervisory and field personnel.
The first category should be attended by all employees at predetermined intervals. A

course will also be given to all officers when they move from one level of job to
another. When an officer is appointed as Branch, Divisional or Zonal Managers for
the first time, he would be assigned to a program to help him understand the demands
of his new role. This will also apply to persons who are appointed as Heads of a
Department in Branch office. The second and third category of courses will be
arranged regularly for officers as they enter into that function at the Divisional, Zonal
of Central office level in case they have not attended a program in that function
earlier. No officer should hold a post in functional area for more than six months
unless he has attended a program in that function. The third categories of courses are
special program depending on the specific requirements of the particular level or the
group. The fourth categories of courses are meant for field staff-development officers
and agents. Training at HDFC is based on up-gradation of competencies and skills. It
is an integral part of their business strategy. Almost all employees have undergone
training to enhance their technical skills or the softer behavioural skills to be able to
deliver the service standards that the company has set for itself. Besides the
mandatory training that financial consultants have to undergo prior to being licensed,
they have developed and implemented various training modules covering various
aspects including product knowledge, selling skills, objection handling skills and so
on. New training initiatives includes Lead Management, rural housing and cross
selling of financial products. Training programs on ‘Personal Effectiveness’,
‘Leadership excellence’ and ‘Art of Living’ are delivered by guest Lecturers.

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Training is necessity in the changing environment, planned and systematic training

should be made compulsory in HDFC banks. It brings changes in behaviour, attitude
at any age and helps in increasing the organizational performance. The organization
should encourage more facilities during training and also off the job training, because
it is one kind of encouragement to improve the interest towards the training and
development program. By providing training, employers support the skill
development of their employees. If the training is good then the employees will
contribute their maximum for the achievement of the organizational objectives.
The result of the present study shown that the training practices in the HDFC are
average and there is lot of scope for improvement. Researcher found that the training
and effectiveness programs have a positive impact on the performance of both male
and female employees but the results shows that it has a greater impact on the
performance of male employees group. This can be due to the reason that mostly
female employees bear additional responsibilities towards their families. The
researchers found that HDFC bank have their own training institute. However, there is
a lack of needs assessment before training. HDFC should take necessary steps in such
a way that employees should feel training is essential to enhance the productivity and
customer satisfaction to meet the present challenges in India. The overall opinion
about the training conducted by the HDFC among the employees is very good and
effective, it is very much helpful to improve the individual career and the organization
growth too and they are satisfied with the training process and method of teaching.
Attrition:

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Attrition is the rate of shrinkage in size or a gradual, natural reduction in membership

or personnel as through retirement, resignation or death. Working environment is the
most important cause of attrition. Today’s Gen-Next employees expect a professional
approach and an international style working environment. They expect a friendly and
learning environment.8 Employees look for freedom, good treatment from the
superiors, good encouragement, friendly approach from one and all, and good
motivation. No doubt the jobs today bring lots of pressure and stress is high. The
employees often switch jobs if there is too much pressure on performance or any work
related pressure. It is quite common that employees are moved from one process to
another. They take time to get adjusted with the new processes while few employees
find it difficult to adjust and consequently leave. Monotony sets in very quickly and
this is one of the main reasons for attrition. Job hopping is very common among
youngsters who look at jobs as being temporary. Another commonly looked option is
to move to such other process where there is little or no pressure of sales and meeting
service level agreements. The employees move out if there are strained relations with
the superiors or with the subordinates or any slightest, discontent.
Innovative Recruitment and Selection Practices of HDFC Bank:

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This factor includes all those innovative HR practices which aim at attracting
maximum number of highly talented applicants and selecting the best to achieve
competitiveness. The nine innovative HRM practices identified under this head have
been explained below:
1. Well Defined R&S: One of the major innovative HRM practices under this head is
that there is a well-defined ‘Recruitment and Selection’ (R&S) policy in the banks.
Earlier, only a few banks had a pattern of recruiting people through employee
referrals. But now a day, a pre-defined policy of hiring people is available in most of
the banks.
2. Selection of Professionals: HDFC Banks have also started selecting professionally

qualified personnel, e.g. MBAs, CAs, Agricultural officers etc. for different posts.
Earlier, only HDFC banks were employing such professionals for their various
departments. Moreover, need for giving special training for such employees has also
been reduced to a certain level.
3. Selection According to Service Attitude: Banks are giving due weightage to the
service attitude and competence in the selection procedure these days. This policy is
being adopted by the HR department of the HDFC banks keeping in mind the fact that
employees with positive service attitude will work more efficiently and increase the
business ultimately.
4. Holding on Policy: One of the major problems that the bank employees were
facing in earlier times was that if they left the organisation due to any work pressure
or other reason, then they were not stopped or hold on by any employer. But now,
even the regional or circle managers of the banks use a ‘Retention’ policy for the
employees so that they may not leave the bank quickly.
5. Availability of Bank Communities on Social Networking Sites: Availability of

bank communities on social networking sites is found to be another innovation in the
recruitment process. Popularity of the social networking sites has forced all the

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sectors to have this facility enabling the members of the community to seek the
necessary information and to be in touch with each other.
6. Checking the Profile of Candidates on these Sites: These days, most of the
banks, especially private sector, have started using social networking sites for the
purpose of recruitments. With the help of these communities, the HR department
checks the candidate’s profile on social networking sites to decide the candidature for
the job.
7. Written Examination for R&S: There is a policy of written examination in HDFC

banks for selection of each level of employees. Earlier the employees were required to
appear in the written examinations only at the entrance level. But now, the provisions
have been changed and they have to take written tests for the higher levels and
internal recruitment also. Moreover, now a day, HDFC banks have also started
conducting written examination for checking the exact competence and psychology of
the candidates.
8. Result Oriented Policy of R&S: In the present scenario, the HR department of

banks has also started formulating a result oriented recruitment and selection policy
for their banks. This policy helps them to keep only those employees who are
increasing the bank’s profit and fire out or demote the other ones. Even the public
sector banks also don’t give promotions to those whose past records in terms or
branch business are very poor.
9. Formal Induction of New Candidates: There is a formal induction orientation

and familiarization process so as to help new recruits understand the organisation.
This also makes the starters to be comfortable with the work environment of the
organisation. It also argued that without excellent induction, the execution of
organizational strategy may vacillate.
Innovative Training and Development Practices of HDFC Bank:

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This factor incorporates all such practices that generate tangible outcome and
intangible results in terms of enhanced self-esteem, high morale, and satisfaction of
employees due to acquisition of additional knowledge, skills, and abilities. Executive
development practices have also been considered under this variable. Following are
the seven innovative Training and Development practices found in the present study:
1. Test of Trainees: Use of written examination for selecting employees for training
is one of the major innovations by the banks. This helps the employees to be free from
any kind of biasness. HDFC Bank are organising such tests for higher level
employees’ training too.
2. Job Rotation: There is also a provision of job rotation for giving the employees
proper exposure of different departments. With job rotation, an employee is given an
opportunity to perform different jobs, which enriches his skills, experience and ability
to perform different jobs. In HDFC Bank, all employees are involved in the Job
Rotation Schedule. In HDFC Bank, the staffs get rotated in every 6 months and the
officers get rotated every 3 years.
3. Customized Training: Special and separate/customized training programs have

also been designed for different levels of employees in the banks. HDFC bank is
practicing this practice for more than one and a half decades. Other banks are also
following this innovative HR practice. However, the implementation level might be
low in their cases.
4. Continuous Training Need Assessment: In some of the banks, continuous

training need assessment of employees by the HR department is also practised. With
the help of continuous training need assessment, only those employees, who are
actually in the need of the training, are sent for the training.
5. Regular Training: One of the major problems, which were earlier found in the
banking sector, was that the training intervals were very high. Even the employees

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were trained only once in a decade or even in the entire job life. But now, innovations
in HRM have called for the need for regular training for the bank employees too.
6. Encouragement to Apply Training Learning: Employees are also being

encouraged to apply the techniques learnt in their training program. They are given a
chance to apply the information acquired by them during the training practically so
that they may not forget it ever.
7. Arrangement of Special Projects: To make the learning effective, some banks

have the practice of selecting the staff for special project teams meant for bank’s
effectiveness. Private sector banks like HDFC bank are sending their employees for
special projects training so that they can acquire some specialised skills and
knowledge.
Innovative Performance Management Practices of HDFC Bank:
Performance is defined as the record of outcomes produced on a specified job

function or activity during a specified time period. Appraising is a general process of
facilitating interpersonal relationship between employees and managers through
performance related discussions. This category of HR practices includes the new
practices related to goal achievement in an efficient manner, their appraisals and job
assessments.9 HRM practices related to Performance Management were found which
are:
1. Formation of Performance Matrix: The very common innovative HR practice of

performance management has been that the performance matrix or some other
competency mapping models being used for employee’s performance reviews. HDFC
banks under the study are following this innovation in the performance management

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practices for a long time. This has enhanced the performance as well as the morale of
their employees.
2. Goal Review Based Appraisal: The respondents under the study also disclosed
that goal reviews and competency review systems, the two common methods, are
being used for appraising the performance of employees. This helps to match the
performance of the employees with the earlier set goals of the individuals and
organizations.
3. Appraisal on Fair Objective Data: The objectives and fair data helps the
employers to appraise the employees without any biasness and good performers are
benefitted from this.
4. 360 Degree Performance Appraisal: Another innovation is that they are

reviewing the performance from multiple sources e.g. superiors, juniors, peers etc.,
i.e., 360 degree performance review system, which was not prevalent earlier, is being
implemented in HDFC banks.
5. Option to Challenge the Appraisal: These days, the employees of HDFC banks
have the power to challenge their appraisal done by the HR department or by their
superiors, if they disagree on some issue. But for this, they need to represent to the
higher levels with solid proofs and logics.
6. Full Awareness of the Performance Appraisal Policy: Moreover, there is a

complete awareness of the Performance Appraisal policy of HR department among all
the staff members so that they are well aware of what they have done and what they
should not have done. performance of employees. This helps to match the
performance of the employees with the earlier set goals of the individuals and
organizations.

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Innovative Compensation Management Practices of HDFC Bank:
Compensation is all forms of financial returns and tangible services and benefits
employees receive as part of an employment relationship. An effective set of choices
about compensation systems plays a major role in determining firm performance.
Explanation given below is related to the four innovations under this head found
during the present study.
1. Announcing Special Incentive to the Talented Employees: Special incentives

are given to talented employees to encourage better performance. Using incentive
compensation to stimulate better performance and to provide promotion opportunities
through an internal labour market increases satisfaction and self-actualization.
2. Special Increments on Regular Basis: One major innovative practice of

compensation has been identified that is there has been a provision of special
increments for better performance of the employees. This gives the employees an
enough salary growth. It is also found that salary growth had a pronounced effect on
turnover.
3. Special Festival Advance: The HR department has also started one new scheme of
providing special festival advances to the bank employees on either discounted rates
or without any interest so that they can fulfil their family requirements on the festivals
without bearing any special burden. The HR personnel of these banks are of the view
that, due to provision of this scheme, the employees are demanding fewer leaves in
the festive season.
4. Customized Perks: In last couple of years, the perks have also been customised to
the individual needs. This practice is gaining popularity in other Indian organisations
too. HDFC Bank is also using this innovative HR practice.

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Innovative Career Development Practices:
Those innovative HRM practices which include both organizational actions and
individual efforts aimed at setting career goals, formulating and implementing
strategies and monitoring the results are categorized under this head. These help the
employees to groom themselves and manage their careers. It is identified career
development itself as an ideal innovative HRM practice.11 Following are the five
Career Development related innovations:
1. Availability of Educational Opportunities at Workplace: Education related

opportunities are being provided at the work place for the career enhancement of the
bank employees. This has increased their dedication towards work in their present
organizations. HDFC bank is also providing opportunities to their employees to get
enrolled to professional courses so as to enhance their skills as well as degrees. This
boosts up their morale for work.
2. Easy Approval to the Job Applications: This study identified that one latest
innovation in the career development of employees is that the applications sent for the
career opportunities outside the bank are being approved by the HR department and
regional managers quickly, which were either verbally denied by the top management
or delayed for approval. But now a day, these applications are easily approved so that
employees can think of their career development.
3. Preference to Seniority in Promotions: Seniority is given proper weightage in the

promotion decisions in banking sector. Even transfers on promotions are also affected
by the seniority. HDFC bank has a promotion provision to give favourable and closest
transfer to the employees who are senior among others in the promotion process.
4. Promoting on the Basis of Merit: Banks are also organizing written tests and
interviews for the promotion process so that merit can be one of the criteria for
promotions. A well-planned career development system along with internal
advancement opportunities based on merit, results in high motivation among
employees, which has an impact on firm performance.

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5. Providing Faster Promotions: Fast track promotion process is also one common
innovative practice identified in the study. Earlier the employees had to wait for years
to get promotions. But these days, they get faster promotions, even in two to three
years. This helps the employees to develop their career in their own bank and they
don’t even think of leaving the bank for getting better opportunity outside in other
banks or organizations.
Innovative Employee Motivation Practices:
The effectiveness of skilled employees will be limited if they are not motivated to
perform their jobs. This factor of HR practices includes all those innovations relating
to motivation of the employees through new ways. In the present investigation, eleven
innovative motivation practices have been identified. Accordingly, the employees can
be motivated in the new ways:
1. Using Music at Work Place: Use of music at workplace, to improve the

performance, is one major innovation found in the study. HDFC has introduced the
concept of playing light music in its branches so that a calm and soothing
environment can be provided to the employees as well as to the customers.
2. Providing Day Care Centres: There is an arrangement of day care centres in most
of the surveyed banks for the children of employees, so that they have no difficulty in
maintaining work life balance. In these day care centres, they can drop their children
while they are at work. This won’t even divert their minds towards their family while
working. Young mothers remain satisfied when their little ones are not far away from
them.
3. Work Autonomy: In the last few years, greater work autonomy is also being
provided to the bank employees. This helps them to work according to their best

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possible capability without any interference and they try to give their best. This is a
kind of brain storming exercise through which the employers can get best out of the
minds of their employees.
4. Making Available ESOPs: Availability of Employee Stock Option Plans is a

practice which has been innovated in the banking sector for a last few years so that the
employees feel that they are also the owners of the banks. This feeling makes the
employees more loyal to their organization.
5. Providing Loans at Discounted Rates: Availability of loans and advances at

discounted rates to all the employees is also another common innovative HRM
practice leading to motivation of the employees. They can get loans on simple interest
for getting vehicles, constructing house or even educating their wards. This helps the
employees financially and motivates them to increase their efficiency.
6. Giving an Option of Flexible Working Hours: Some of the banks are also
providing flexible working hours to enhance the productivity of employees. Banking
hours are generally common everywhere, but a few banks have started giving an
option of flexible working hours in two different shifts so that the employees can
work according to their comfort. HDFC bank is an example.
7. Approving Leave Applications Easily: These days, there is an easy availability of

leave on demand in case of urgency which was the common HR issue among the bank
employees. However, this practice prevails in a few banks only. Keeping in mind the
benefits of this innovative practice, other banks have also started this practice for
motivating and retaining their employees in their organisations.
8. Organizing Stress Management Programs: Arrangement of stress management

programmes, art of living classes, yoga sessions etc. are distinct innovations which
have not been there in the banking system earlier. These practices are the best
boosters and relaxers for the bank employees who are mostly under work pressure.
9. Encouraging Team Building Attitude: By encouraging team building attitude in
the employees, the HR department of banks has started a new practice of motivating

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them. They work in teams and learn new skills. This increases their confidence and
hence they feel more motivated.
10. Giving Best Employee Awards: Announcement of best employee awards was a
common practice in the private sector banks, but these days, the public sector banks
have also started the same practice to motivate their employees. A few banks have
recently introduced the practice of writing the best employee’s name on the display
board in the regional centres or even in the branches of their banks. Better-motivated
employees lead to higher individual achievement and improved organizational
performance.
11. Arranging Family Get-togethers: Family get-togethers have become so common

in the banking sector that the employees working there feel closer to each other.
These informal family get-togethers help them to be relaxed for some time. Even, a
few of the respondents were of the view point that with the help of this innovation,
they can live their social lives easily among their own colleagues.

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Innovative Employee Security Practices:
The practices which make the employee feel highly secured in his present job are the best
suited for this category. These practices when implemented through new ways may help an
employee to feel most satisfied in his job. A total of seven Innovative Employee Security
practices found in the present study were:
1. Provision of Sabbatical Leaves: One innovative practice adopted by the HR

department of the banks is that there is a provision of ‘sabbatical leaves’ (part time
leave from organization with 50% or less salary in case of crisis) for employees. This
helps in reducing the employee turnover rate in the banks. Infosys started giving
sabbatical leaves to its employees in India so that they may get job security. This was
followed by HDFC bank.
2. Sufficient Retirement Benefits: Providing proper retirement benefits is another

HR innovation revealed by the employees under the study. Unlike earlier days, now
the employees get enough gratuities, pension and other retirement benefits which can
secure their rest of the life after leaving the job.
3. Option of Voluntary Retirement: Another innovation explored under this study

was that for last few years, VRS has also become common in banking sector. Now,
the employees of the HDFC banks can also enjoy the benefits of this scheme if they
need earlier retirements from their work. This doesn’t interrupt their other retirement
benefits.
4. Insurance of Dependents Banks: also give the facility of dependent’s insurance

which gives a sense of security in the minds of employees for their family too. This
motivates them by satisfying their social as well as security needs.
5. Job Security: Earlier the bank employees were even asked to leave the bank in
case of any default being made by the employees. But now, their genuine grounds are
taken into notice and they are ensured for the job security. This gives surety to an

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employee that he would be the last one to be asked to leave the organisation if any
financial problem arises.
6. Full Support from the Regional or Central Office: The HR department as well
as the controlling office is supporting the employees on the genuine grounds. This full
support from the top level enhances the feeling of security and motivation among the
employees and they work harder. The emotional support from supervisors and self-
esteem mitigated the impact of stressors on stress reactions, job satisfaction,
commitment to the organization and intention to quit.
7. Proper Grievances Procedures: There is a provision of written as well as

operational grievances procedures. The existence of the formal mechanism of dispute
resolution reduces employees’ fear of being unfairly treated and increases their
perception of equitable treatment resulting in a more dedicated workforce and better
performance.

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Recruitment Process at HDFC Bank Ltd.:
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team
determined to accomplish the vision of becoming a world-class Indian bank. The
business philosophy is based on four core values - Customer Focus, Operational
Excellence, Product Leadership and People. The bank believes that the ultimate
identity and success of bank will reside in the exceptional quality of people and their
extraordinary efforts. For this reason, the bank is committed to hiring, developing,
motivating and retaining the best people in the industry
The bank’s mission is to be a ‘World Class Indian Bank’, benchmarking against

international standards and best practices in terms of product offerings, technology,
service levels, risk management and audit and compliance. The objective is to build
sound customer franchises across distinct businesses so as to be a preferred provider
of banking services for target retail and wholesale customer segments, and to achieve
a healthy growth in profitability, consistent with the Bank's risk appetite. The bank is
committed to do this while ensuring the highest levels of ethical standards,
professional integrity, corporate governance and regulatory compliance. The business
strategy emphasizes - Increase market share in India’s expanding banking and
financial services industry by following a disciplined growth strategy focusing on
quality and not on quantity and delivering high quality customer service. Leverage
our technology platform and open scalable systems to deliver more products to more
customers and to control operating costs.

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Recruitment and Selection Process:
Recruiting and selecting the right people is paramount to the success of the Bank and
its ability to retain a workforce of the highest quality. This recruitment and selection
policy sets out the procedure to ensure that the best people are recruited on merit and
that are the recruitment process is free from bias and discrimination.
Following are the guiding principles for recruitment and on-boarding process of
HDFC bank.
1. Attracting and recruiting the right people is one of the most important activities of
the organization and is the responsibility to be owned by each and every employee of
the organization.
2. Merit will be the single most important factor in selection process.
3. They will ensure a diversity, both gender and ethnicity by targeted candidate
sourcing with the help of recruitment vendors and the referral program.
4. While skills and profile matching play an important role, they will hire people who
are team players and have the right attitude most relevant to the culture of the
organization. Attitude is as important as aptitude.
5. They believe in becoming a company of giants and emphasis is in hiring people
who can grow bigger and better than they presently are.
6. They believe in providing their employee with fulfilling career paths. Towards this,
they will post vacancies internally as a preferred option while evaluating external
candidates.
7. They believe that each candidate interviewed irrespective of whether she/he is
selected should become a friend of the organization. They treat all the candidates with
the utmost respect. They will be open and fair in communication with them; this way
they also enhance the brand image of the organization.
8. They will continuously assess, identify and cultivate strategic talent pools including
those at the universities, management schools, and community forums to address their
long term needs.

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9. All recruitment activities shall be undertaken based on the hiring plan as approved
by the Business Head, HR Head and the CEO. For each approved position, a hiring
requisition will be required prior to initiation of any recruitment activity. If the hiring
was not included in the planned budget, it will also require approval from the CEO
based on a recommendation from the Head HR and the CFO.
10. Recruitment expense will be allocated to the concerned business unit, and
expenditure should be budgeted and preapproved by the business unit head and the
HR Head.
11. The hiring manager along with the Human Resource Department would decide the
channel / source to use based on the nature of the recruitment.
The following sources of recruitment may be considered:

Internal Sources:
 Whenever any vacancy arises, the possibility of fulfilling the requirement
internally via reassignment and relocation, re-allocation of the responsibilities or
internal promotion will be explored by the hiring function along with the HR
Department. Internal job postings to explore internal candidates.
 Employee Referrals – HDFC will encourage employees to refer
 suitable candidates for open positions.
Other external sources include:

 Recruitment agencies.
 External job postings.
 College / campus requirement.
 Requirement advertisements.

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Application Processing:
HDFC will process all applications promptly and inform the applicant or source
regarding the status of the application. HDFC will respond to all solicited applications
within 5 working days of receiving the application.
Interview Process: All candidates are required to undergo a face to face interview
 with the interview panel before selection. Interviews may be conducted at a
place at mutually convenient
 locations and time in an effort to maintain confidentiality of the hiring effort.
One on one meeting shall be preferred as the interview format,
 however depending on the constraints panel interviews / telephone / video
conference screening could be used.
 for recruitment at junior levels, job fairs, universities etc.,
 Where large volume of candidates, HDFC will use recruitment tests for purpose
of short listing. The candidate may be tested on the basic aptitude, analytical skills
or other skills required for the job of the candidates. The interview process will
focus on the evaluating the
 candidates suitability in terms of the job description and fit within the
organization. Each interviewer will complete the interview feedback form
 and submit it to HR. HR will compile the results from a various interviews and
provide these to the line manager for the final decision.
Recruitment is essential to effective Human Resources Management. It is the heart of

the whole HR systems in the organization. The effectiveness of many other HR
activities, such as selection and training depends largely on the quality of new
employees attracted through the recruitment the recruitment process. Policies should
always be reviewed as these are affected by the changing environment. Management
should get specific training on the process of recruitment to increase their awareness
on the dangers of wrong placements. Effective recruitment is important in achieving
high organizational performance and minimizing labor turnover. As of now HDFC

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Bank Ltd. has a team of effective human resource which is efficiently managing the
organization at its best. Though the recruitment process adopted by the organization
needs to be improved, challenges are ahead for the HR Department to recruit people
after the effect of recession.
Employee benefits:
1. Gratuity: The HDFC bank provides for gratuity to all employees. The benefit is in
the form of lump sum payments to vested employees on resignation, retirement, or
death while in employment or on termination of employment of an amount equivalent
to 15 days’ basic salary payable for each completed year of service. Vesting occurs
upon completion of five years of service. The Company makes annual contributions
to fund administered by trustees and managed by insurance company for amounts
notified by the said insurance company. The defined benefit plan are valued by an
independent external actuary as at the balance sheet date using the projected unit
credit method to determine the present value of defined benefit obligation and the
related service costs. Under this method, the determination is based on actuarial
calculations, which include assumptions about demographics, early retirement, salary
increases and interest rates. Actuarial gain or loss is recognized in the statement of
profit and loss.
2. Provident fund: All employees are entitled to receive benefits under the Provident
Fund Act, 1952. The Company contributes an amount, on a monthly basis, at a
determined rate (currently 12% of employee’s basic salary) to the Pension Scheme
administered by the Regional Provident Fund Commissioner and the Company has no
liability for future provident fund benefits other than its annual contribution. Since it

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is a defined contribution plan, the contributions are accounted for on an accrual basis
and recognized in the statement of profit and loss.
3. Compensated absences: The Company does not have a policy of encashment of

unveiled leaves for its employees. Employees are permitted to carry forward leaves
subject to a prescribed maximum day. The Company provides for compensated
absences in accordance with AS 15 (revised 2005) Employee Benefits issued by
Institute of Chartered Accountants of India (ICAI). The provision is based on an
independent external actuarial valuation at the balance sheet date.
An efficient human resource practices of a bank is very important in the way of

retaining compete employees, to improve their efficiency, to minimize human
resource expenses, increasing profit of the bank and so on. Human resource practices
relevant to recruitment, training, fixation and revision of salary, performance
appraisal, promotion and transfer are very important aspects. Efficiency of employees
will improve only when they are satisfied with human resource practices followed in
their organization.

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Conclusions
 It has been found that most of the employees think that the performance appraisal
is essential and they think it is used as a tool to improve performance, to
determine organization needs, and to basis for pay increase, promotions, and
transfer.
 The appraisal system facilitates growth & learning of employees and it is used to
distinguish performers.
 The existing appraisal system helps the management to identify potentiality of

employees as well as useful for maintaining efficiency of the individual &
organization.
 Some employees that they do not know which basis their performance is
appraised and most of the employees feel that it help them discover their potential
and enables to know their short coming.

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RECOMMENDATIONS
 The performance appraisal system should facilitate career growth & learning
of employees.
 The short coming of employees should be informed to them after performance

appraisal.
 Promotion should be based on performance rather than seniority or any other

factors.
 Performance appraisal should be appraised by granting awards/ merit

certificate.
 New performance appraisal techniques such as 360 degree performance

appraisal system should be used.
 The performance appraisal should not be assessed by biased mind and

personal grudge.
 Feedback should not be given to the employees more frequently.
 On what basis performance appraisal should be informed to the employees.
 The feedback to performance appraisal shouldn’t only be given to those

employees who are rated ‘below average’ but also to all the employees as is
would motivate the employees to perform even better.
 Gauge the potential for performance of each employee.

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References:
1. https://en.wikipedia.org/wiki/HDFC_Bank
2.Munrer T. J., Raju N.S. and Collins W.C. (1998) - Peer and Subordinates
Performance Appraisal Measurement Equivalence - Journal of Applied Psychology.
3. Agrawal K. P. (2009) - Education and Training System for Banks: A Rejoinder -
The Journal, Prajnan. 4. Rainaye R. (2004) - Training Effectiveness in Public Sector
and Private Sector Commercial Banks -A Micro-Level Comparative Study -
Management & Change Journal.
5. Neale Frances (2002) - Handbook of Performance Management, Jaico publishing
House, New Delhi.
6. Kolekar B.D. (2005) - Human Resource Development - Northern Book Centre,
New Delhi.
7. Sangwan D. S. (2009) - Human Resource Management in Banks - National
Publishing House, New Delhi.
8. Jyothi P. and Venkatesh D.N. (2006) - Human Resource Management - Oxford
University Press, Mumbai.
9. 2. Ashwathappa K. (1997) - Human Resource and Personnel Management - Tata
McGraw hills, New Delhi.
10. Harjeet Kour and Kamlesh Gakhar (2015) - Human Resource Management
Innovations in Indian Banks: A Study From HR Managers’ Perspective -
http://www.serialsjournals.com, Vol. 13, No. 3, (2015)
11. http://www.managementparadise.com
12. Pathak Neetu (2008) - Corporate Training Programme- An Effective Instrument
for Organization - The Indian Journal of Commerce, Vol.61, No.3.
13. Levin, H.Z. (1986) - Performance appraisal at work - Personnel, Vol. 63, No. 6,
pp. 63-71.

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A project report performance appraisal system of hdfc bank

Bachelor of business management (Veer Narmad South Gujarat University)

Studocu is not sponsored or endorsed by any college or university

S.K.SOMAIYA COLLEGE OF ARTS,

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DECLARATION BY THE STUDENT

Leena Suhas Parab

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PROF. NIKHITA ALMEDIA

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I want to express my sincere gratitude to PROF. Nikhita Almedia for assigning

Leena Suhas Parab

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Sr no. Topics Page no.

Introduction to Banking Sector

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 Services related to monetary transaction through current and saving account,

 Assisting in trade through Letter of credit,

 Home loan etc.

Banking sector In India

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The report “Indian Banking Sector Forecast to 2012” contains comprehensive

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Reserve bank of India

Economists and Planners consider monetary stability in an economy as the most

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beginning. The Government held shares of nominal value of Rs. 2, 20,000.

The Bank was constituted for the need of following:

Ø To regulate the issue of banknotes

Ø To maintain reserves with a view to securing monetary stability and

Housing Development Finance Corporation Ltd. (HDFC) is an Indian banking

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Mission and Business Strategy

Our mission is to be a “World-Class Indian Bank,” benchmarking ourselves against

Our business strategy emphasizes the following:

Ø Focus on high earnings growth with low volatility.

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Products and services

o Loan products: o Depository products:

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o Commercial Banking o Transactional Banking o Key Segments

o Products o Other Functions

 Best Banking Performer, India in 2016 by Global Brands Magazine Award.

 Best Performing Branch in Microfinance among private sector banks by

 Award for Best Performance in Microfinance

 KPMG study of India's Best Banks

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 AIMA Managing India Awards 2015

 Business leader of the year- Aditya Puri

 Best managed public company – India

 FinanceAsia poll on Asia's Best Companies 2015

 J. P. Morgan Quality Recognition Award

 World's 30 Best CEOs - Aditya Puri

 Best in class straight through processing rates

“Performance Appraisal” – A Systematic Approach

Meaning and Definition

Performance appraisal is a formal system that evaluates the quality of a employee’s

• Rewards and incentives

In simple terms, appraisal may be understood as the assessment of an individual’s

A formal definition of performance appraisal is: