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PERFORMANCE MANAGEMENT IN BANKS -A COMPARATIVE STUDY OF ICICI AND SBI ABSTRACT The purpose of this study was to investigate current performance management Practices of ICICI and SBI and determine which practice of performance management has effectiveness and predicted productivity. Study is based on...

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PERFORMANCE MANAGEMENT IN BANKS 1 Prasanna singh

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PERFORMANCE MANAGEMENT IN BANKS -A COMPARATIVE STUDY OF ICICI AND SBI ABSTRACT The purpose of this study was to investigate current performance management Practices of ICICI and SBI and determine which practice of performance management has effectiveness and predicted productivity. Study is based on survey results from Officers, senior Officers and junior officers of ICICI and Managers, Deputy and Assistant Managers of SBI. The objective of this study is to analyse the effect of demographic factors on PMS among the levels of managers within and across the banks of ICICI and SBI and also to study the effect of PMS on Organizational productivity. INTRODUCTION Indian commercial banking movement has passed through hundred years of its existence. At the same time, human resources management has been a neglected field in commercial banks over a period of time and poor image of commercial bank employees in the society affects their morale. Only recently has there been a greater recognition of this function. In this study an attempt has been made to analyze the practices of performance management and the challenges faced in planning, monitoring, rating, developing and rewarding employees of efficient personnel for managing the complex affairs of commercial banks. The management of human resources in the services industry is a major challenge for most human resources practitioners. The challenge arises from the fact that it is very difficult to quantify the contribution of human resources in the service industry. HUMAN RESOURCE DEVELOPMENT PRACTICES IN BANKING SECTOR Human Resource Development signifies an effort aimed at qualitative improvement of human beings in their specific role as assets of an organisation HRD intrinsically recognises that people are the Organisation s singularly important and valuable resources and that they achieving their personal as well as organisational goals is essential for organisational development. Only dynamic people can build dynamic organisation, only competent and motivated people enable an organization to achieve its goals. A primary purpose of HRD is to increase the capacity of people to lead productive, complete, and fulfilling lives, regardless of where they live or work.

HRD in banks is not only the acquisition of new knowledge and skills of their human resources, but also the acquisition of capabilities to manage both internal and external environment, attainment of self-confidence and motivation for the public services. This is especially important as the banking services are under continuous pressure for improvement to meet the rising expectations of the customers and the larger society. HRD as a formal organisational effort of the banks is receiving substantial attention both from the academic and in-house research. A review of the literature, however, revealed that there is a lack of research endeavour comparing the HRD practices in the banking sub-sectors. PERFORMANCE MANAGEMENT Now is the time for organisations to re-think how they approach performance management, and move away from a process-driven method to one that is motivational and engaging for employees. The cost implications of poor performance create a strong case for organisations to invest in getting it right, otherwise they will fail to maximise the return on investment on their employees. High performance is achieved through the quality and nature of the conversations between manager and employee, rather than the process or system itself. Transforming managers from managers of performance into enablers of performance is essential, but these findings highlight the importance of getting the fundamentals right first. Businesses continually face competitive challenges, so cannot to squander the talents and capabilities of their employees

now more than ever is the time to get tough. Ultimately,

this means raising to the challenge of having tougher conversations with people whose contribution is not adding the best value. By creating a motivational and engaging climate that enables everyone to succeed, both individuals and organisations will be liberated to achieve their best, thereby truly unleashing potential. Performance is referred to as being about doing the work, as well as being about the results achieved. It can be defined as the outcomes of work because they provide the strongest linkage to the strategic goals of an organisation, customer satisfaction and economic contributions. The term Performance Management refers to any integrated, systematic

approach to improving organisational performance to achieve strategic aims and promote an organisation s mission and values. In that sense Organisational Performance Management is quite different than individual Performance Management which specifically targets the personal performance of an employee although the latter comprises an essential part of the overall organisational performance framework. In fact, a Performance Management system aims at improving the results of people s efforts by linking these to the organisation s goals and objectives. It is, ideally, the means through which employees performance can be improved by ensuring appropriate recognition and reward for their efforts, and by improving communication, learning and working arrangements. PERFORMANCE MANAGEMENT PRACTICES IN BANKING SECTOR Indian Banking sector believed that for maximizing performance, Performance Management system would be instrumental in its efforts to create a customer-focused culture. PMS practices help to drive focus and clarity in an organization by linking individual performance to organisational goals and values. It also creates a high-involvement environment by placing responsibility for performance on each and every individual. Associates are fully involved in setting their performance objectives, tracking and reviewing their progress, and creating their own development plans. Such performance management system attributes would provide the bank with a means to align associates individual performance objectives with its new cultural strategy. PMS helps in assigning target, tracking their performance, developing their skills and gives the employees, the balanced evaluation and helps them to receive rewards. The review meeting conducted by Reserve Bank for state owned nationalised commercial banks under the banking sector reform initiative, as prescribed by the World Bank

(WB), is simultaneously encouraging and alarming. It is encouraging because the move represents preference for a better and efficient management systems

performance

management system, which most of the western advanced countries introduced long ago. If it can be successfully implemented on a wholesome basis and pursued, this new management system will lead to improved performance of the banks and their organisational growth. This report of World Bank became a cause of study and is alarming, as performance management to be successful has to be introduced on an institutional basis. It requires the support of a favourable broad administrative culture, which, again, for its own growth and continuation, requires a congenial social culture that, some say, is the product of a positive political culture. As it is obvious that the management system sought to be introduced in the state owned banks is incomplete. What is being planned for introduction has semblance with performance management as far as the job of the employees is concerned. But without effecting identical changes in the service conditions of all employees from the top to the bottom, the system that will come into effect will be something like useless

performance management practices at the

top and the traditional management practices downward. It is thus, unlikely to be workable. It is universally known that self-motivated good managers of all levels are always committed to their organisational goals. They cannot and do not compromise on such goals even under pressure. They cannot be universally popular as they cannot satisfy all for the same reason. At the same time, every, good performance

oriented management system recognizes

that there are often some employees and officers in every organisation who are branded as hopeless cases. Their apathy to work and conduct cannot be amended through either persuasion or training. It asserts that symmetrical terms of service for all employees of an organisation are essential to ensure the success of Performance Management in order to enable the system to reject those who cannot or do not contribute to the attainment of the organisational goals. Without a wholesome change of the management system, bringing everyone in the related banks within its fold, Managers performance management

with their changed terms of service as per

may become islands in the oceans of loneliness in the pursuit of

their set goals. The ultimate results may not be happy both for themselves and the banks. The

basic principles of management under the contemplated change direction and Span of control

Unity of command, Unity of

will stand negated if all employees are not integrated into the

new system with identical service conditions, which may vary only to the extent that their relative positions within the organisation set the requirements of their individual contributions towards the attainment of organisational goals. It has to be appreciated that every modern management system is based on the scientific problem-solving approach that underlines that symmetry in thought on, and commitment to, the organisational goals that permeate at all levels of the organisation to fulfill the essential pre-condition for its success. OBJECTIVES OF THE STUDY The study is undertaken with the following objectives. i.

To study practices of performance management system in ICICI across the levels of managers, deputy managers and assistant managers.

ii.

To study practices of performance management system in SBI across the levels of managers, deputy managers and assistant managers.

iii.

To carry out comparative study of adoption of performance management practices among ICICI and SBI

iv.

To study the impact of performance management practices on organisational productivity in ICICI and SBI. The purpose of this study is to investigate current performance management practices of the select banks and determine which system characteristics or qualities influenced effectiveness and predicted success. The basic purpose is to study the impact of these practices on performance of employees.

HYPOTHESES H0 - Performance management practices of employees is not associated with

demographic

factors with ICICI and SBI. H0 - There is no category wise difference among the performance management practices of ICICI and SBI. H0

There is no difference in application of performance management practices between ICICI

and SBI. H0 - There is no difference between the effective Performance Management practices, and organisation productivity

METHODOLOGY OF THE STUDY Research design is a master plan specifying the method and procedure for collection and analysing needed information. The research design for the present study is descriptive, where the data is collected through the questionnaire. The information is gathered from the three levels of managers of the two banks selected for the study viz., ICICI and SBI located in Hyderabad and Secunderabad. The data was collected through questionnaires. These questionnaires were distributed to 150 employees of ICICI and SBI. Due care was taken to look into the way they filled the questions with serious concern but not for the routine. This data was collected only from those employees who completed a minimum of one year in their organisation i.e., ICICI or SBI. The designations of ICICI are officer, senior officer and junior officer. Then officers are called as managers, deputy manager and assistant manager in SBI. The selection of managers is at random sampling for the study. Questions of 1

6 are related to planning, 7

12 related to monitoring, 13

18 related to

developing, 19- 24 related to rating and 25 30 related to rewarding. Questions of 31

33 are

related to factors affecting performance management practices. Respondents also answered questions about environmental support factors (e.g., supervisor support, development policies and culture, and coworker support) that might enhance or impede effective performance management practices.

FINDINGS OF THE STUDY HYPOTHESIS I H0 - Performance management practices of employees are not associated with demographic factors of ICICI and SBI. This hypothesis is analysed into two parts i.e., demographic factors affect on PMS among the three levels of officers in ICICI and among the three levels of managers in SBI. INFERENCES HYPOTHESES (A) EFEECT OF DEMOGRAPHIC FACTORS ACROSS THE LEVELS OF MANGERS AT ICICI AND SBI Demographic factors at ICICI and SBI

Particulars

Value

Asymp. Sig.

DF

( 2 sided)

ICICI

SBI

ICICI

SBI

ICICI

SBI

Gender

.053

.162

2

2

.974

.922

Qualification

.815

.248

2

2

.665

.883

Experience

257.235

28.729

46

26

.000

.324

Departments

.220

6.064

2

2

.896

.048

Findings: Age, Gender, Qualification have an impact on Designation in relevance to PMS practices in both the banks; however Experience has no impact on Designation in ICICI and has impact in SBI with respect to PMS practices. INFERANCES - HYPOTHESES (B) Effect of demographic factors across the banks of ICICI and SBI.

DEMOGRAPHIC FACTORS ACROSS BANKS : ICICI & SBI Particulars

Value DF

Asymp.sig. (2 sided)

Designation

.000

2

1.0000

Gender

2.256

1

.133

Qualification

43.322 1

.000

Department

1.415

.234

1

Study suggests that, there is not much difference in ICICI and SBI, when comparing gender, designation and department. But a high level of difference exists in Qualification. The study analyses that there are more number of post graduates in ICICI than in SBI. This could be one of the reasons for ICICI to be more productive than SBI. It could also be observed that these demographic factors do not have much impact on the performance of employees.

HYPOTHESIS II H0 - There is no category wise difference among the performance management

practices of

ICICI and SBI. This practice is verified among the grades of managers, deputy managers and assistant managers across ICICI and SBI. Significance levels are examined separately for ICICI and SBI among the managers of each bank. The practice of planning is analysed on various parameters like clarity of objectives, quantifiable goals, communication of objectives, maximum control over resources, integration of individual, team and organizational objectives.

The monitoring practices are analysed on the basis of Implementation of plans, Selection of own methodology of work, Monitoring the work continuously, Quality of time spent and Communication of all matters of importance and e-mail reminders. The practice of rating is analysed through the dimensions of balanced evaluation, positive motivation, appraisal system, performance review meeting and adequate feedback. The practice of development is analysed through the parameters of training programmes, effective training programmes, training programmes in a timely fashion etc., The Rewarding practice is analysed through clear appreciation, accountable performance, rating competencies, management reports and skill based rewards. Three factors affecting Performance management practices are analysed and these factors are work environment, technology related factors and work culture.

PERFORMANCE MANAGEMENT PRACTICES AT ICICI AND SBI

Particulars

Value ICICI

Asym sig.(2sided)

DF SBI

ICICI

SBI

ICICI

SBI .1086

Planning

3.4178 16.604

6

6

.581

Monitoring

4.1733 19.5073 5

6

.5878 .0223

Rating.

5.926

14.583

5

6

.4005 .126

Development

2.9563 18.718

3

4

.5537 .0251

Rewarding

9.6198 26.1223 4

3

.3558 .0251

Factors affecting PMS

7.8083 16.008

6

.1086 .1167

3

PLANNING PRACTICES AT ICICI AND SBI Study of the practice of planning among the cadres of ICICI, suggests that all the three levels of managers agree that there is perfect planning in their organisation. SBI managers accept that there is perfect planning but deputy and assistant managers are not happy with the practice of planning to a certain extent. Only on the parameters of clarity of objectives and control on resources , the study could observe significance levels among the managers. MONITORING PRACTICES AT ICICI AND SBI Monitoring and reviewing is done perfectly according to the statistical data in ICICI but it has to be improved in SBI. Frequent reminders, fortnightly verification reports by team leaders are done in ICICI. SBI accepts monotonous reports and does not go with frequent verifications which could be one of the reasons for the failure of this practice in SBI. Study could observe that SBI managers are happy to some extent in the monitoring by superiors. RATING PRACTICES AT ICICI AND SBI This practice of rating is analysed with the help of various factors like balanced evaluation, positive motivation, timely training programmes and others. This practice of rating i.e., appraisal systems are done in both the banks, perfectly. The appraisal process is updated and designed as per the requirements of the banks in ICICI whereas the SBI follows the old traditional system which were framed some years back. But the strange fact is that SBI has more training institutions than ICICI but effectiveness is less in SBI. Not only this, the appraisal procedures also has to undergo certain changes in SBI. The study could observe that except in e-mail reminders, development review process and application of different skills and talents in the job, all other parameters of this practices is significant in ICICI and SBI. DEVELOPMENT PRACTICES AT ICICI AND SBI The study suggests that the developmental activities like orientation, outbound trainings, and motivational classes and appraisal systems in friendly manner are conducted in ICICI and in this way managers, assistant managers and deputy managers are motivated. SBI has many training institutions but the sessions conducted are not perfectly...