Performance appraisals serve multiple purposes in an organisation. It can be used as a basic developmental tool for the organisation. It is the system to evaluate the performance of an individual in an organised way. The parameters of the measurement of performance can be many factors like leadership abilities, quality work by the employee, quantity of output, initiatives taken by the employee, dependability, versatility, cooperation, job-related skills etc.
As per Famous writer K Aswathappa ‘It is the systematic evaluation of the individual with respect to his/ her performance on the job and his/her potential for the development.’
Need of Performance Appraisal System
Transparent and efficient Performance Management System (PMS) is the backbone of any organisation. It is the system that ensures that human resources are utilised properly to achieve business goals. It is also the important tool to ensure that individual and organisational goals are aligned.
PMS plays a vital role in the development of potentials and competencies of employees. Now, Indian Banking sector needs more focus on its performance appraisal system. Most of the public sectors banks have already adopted new performance appraisal system or in the process of adopting the change in order to retain the talent and utilise their resource efficiently.
Applications of Performance Appraisal System: With serving some specific purposes the performance appraisal system has many general applications too. The system helps an organization to decide the Organisational Objectives viz; HR Planning, to identify organisational goals, to evaluate organisation goals, Documentation viz; documentation for HR decisions, Administrative decision viz; Promotion, Salary, Management decisions viz; to identify poor performers, Lay-offs, Recognition of individual performers, etc.
Performance Appraisal System in SBI:
India's most valued Public Sector Company, SBI is introducing largest Performance appraisal system in the Indian banking industry. The system aims to make individual accountability and provides input for merit-based rewards, promotions, recognition, fair practices, talent management etc.
- SBI has over 2 lakh employees on its rolls. This will be the very first time in India’s largest commercial bank that, each and every employee can analyse their monthly performance against assigned targets.
- SBI launched Performance appraisal system named ‘Saksham’. The new system has five types of grades viz: AAA, AA, A, B and C and there are three roles in the new system: budgetary, measurable and non-measurable.
- For all roles, 70 percent of marks are based on ‘key result areas’ and 30 percent on assessment by supervisor. The system also compared employees with each other having similar work profile.
- KRA have been standardised across officers/clerical staff assigned to similar work profile.
- The new system aims op reward high performers through monetary benefits, taking decisions on an extension in service, and requests for transfers.
SBI also states that introduction of the new appraisal system is ‘not meant to identify low performers’.
Challenges in the system
The new system is not able to differentiate properly the one employee from the other in terms of performance. 80 percent of assessed employees scored more than 90 marks.
Some employees returned incentives declared under the new appraisal System as they were not found proficient. For example, the computerised criteria for the appraisal system were decided arbitrarily and without any application. So that even women staffs who had gone on maternity leave were awarded 'AAA'.
It is noticed that the prestigious Boston Consulting Group (BCG) advised the SBI on developing this system.
Performance Appraisal is a part and parcel of every business organisation. It requires more research in the banking industry.
The appraisal system in one of the India’s largest commercial (SBI) is an eye opener regarding the best practices that are followed in the banking industry. In contemporary times, it is the work efficiency of the employee that has surpassed the superiority in gaining promotions. Your seniority in terms of age and qualifications are a basis of promotions and salary increment but not the sole means if you does not put your heart and soul in your job profile.
Someone has rightly put it “Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do” The performance appraisal system at SBI is an epitome of the above saying.