CHAPTER – 1 - Internship reportsinternshipreports.yolasite.com/resources/Research Report... · Web viewWithout being armed with documents that attest to the appropriateness of a

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION

CHAPTER – 1

INTRODUCTION

In today’s fast paced world the competition is getting more complex and fierce

day by day. Every industry all around the world, in its quest to reach the top and

gain the highest profit margin is fighting with its competitors for all kinds of

resources which are obviously less than what the needs are. In such a race to get

the maximum quantity and the best quality of resources the major problem is to

get the required human resource. There are price wars for service people fueled by

the competition for good talent. Not only is it difficult to recruit skilled workers,

but also to retain them. In the past, companies expected job loyalty, but today, we

hear stories of employees accepting other job offers only weeks after being hired.

We have to wonder if a person have changed or is it that employers are not able to

satisfy employees. To win the battle for workforce share, companies must rethink

their strategies to effectively recruit, motivate, and retain committed employees.

If we analyze the most important tool which helps in motivating the employees so

that the employee benefits the company and the nation as a whole is the

performance management system because of a number of reasons. Performance

management is the only part of human resource which enlightens the employee

and gives him/her a chance to learn and to improve his/her performance. It is the

basic human nature that we want to get a feedback for whatever we do. Whether

that is positive or negative is regardless as long as we know that whatever we do is

noticed by others. Ignorance is worse than negative feedback.

The topic under consideration in this thesis is “Performance Appraisal and

Employee Motivation: A Case Study of the Banking Sector of Pakistan”, in

which the importance of a well established performance appraisal system is

studied and how it is affecting the motivation of employees and the contribution to

the betterment of the banking industry in Pakistan.

Research Report On: Performance Appraisal andResearch Report On: Performance Appraisal and Employee MotivationEmployee Motivation(A Case Study of The Banking Sector of Pakistan)(A Case Study of The Banking Sector of Pakistan)

1

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION 1.1 ACADEMIC AND PRACTICAL IMPORTANCE OF THE

TOPIC

Whatever that I have learnt in my academics related to the performance appraisal

systems and how the employees can be motivated to perform their job can be

applied to the topic e.g. what are the methods the banks can use to prevent

employees being demotivated and how the performance appraisal forms can be

customized to meet the demands of the employees so as to motivate them.

This topic has also its practical implications because human resource has recently

started to come into limelight and the shift from the administration to the human

resources is taking place. Among that as well I think that performance appraisals

are the most important and the most complex part which is not getting the

importance that it should be getting. Apart from that most of the people are just

working for the sake of doing a job and are not really satisfied and motivated to do

what they are doing. This aspect can also be improved by the proper use of the

performance appraisal systems if an effort is made in that direction. Banking

sector is one of the ever-changing sectors in Pakistan and it is an issue for them as

well.

This study would help them analyze their position among the other banks and it

would help them motivate their employees by effectively using the performance

appraisal system.

1.2 NEED FOR PERFORMANCE MANAGEMENT SYSTEM

Performance management is the process of creating a work environment or setting

in which people are enabled to perform to the best of their abilities. Performance

management is a whole work system that begins when a job is defined as needed.

It ends when an employee leaves your organization.

Managers cite performance appraisals or annual reviews as one of their most

disliked tasks. Performance management eliminates the performance appraisal or

annual review as the focus and concentrates on the entire spectrum of performance

management and development issues. Employee performance development,

training, cross-training, the provision of challenging assignments and regular


2

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION performance feedback are included in an effective performance management

system.

Performance management system should be thought of in a broader manner. A

performance management system includes the following actions.

Develop clear job descriptions.

Select appropriate people with an appropriate selection process.

Negotiate requirements and accomplishment-based performance standards,

outcomes, and measures.

Provide effective orientation, education, and training.

Provide on-going coaching and feedback.

Conduct quarterly performance development discussions.

Design effective compensation and recognition systems that reward people for

their contributions.

Provide promotional/career development opportunities for staff.

Assist with exit interviews to understand WHY valued employees leave the

organization.

1.3 BENEFITS OF THE PERFORMANCE MANAGEMENT SYSTEM

An effective PMS should provide the following benefits:

Increase in employee involvement and motivation

Fair measurement of performance and potential

Provision of a career development framework

Equitable reward and compensation

With the attainment of the above mentioned benefits, PMS can also act as a tool

which can retain and motivate the employees for the organization.


3

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION 1.4 STRATEGIC SHIFT

Until recently, performance appraisals had initiated moderate to little interest in

most of the organizations. The issues related to performance appraisals were more

a matter of routine personnel department records and reports than boardroom

strategizing. Typically, statistical information was dutifully recorded, studied, then

filed.

This is no longer the case anymore. Performance appraisals are now into a

position of priority on executive team and boardroom planning schedules. There is

an increasing need for HR to become more proactive in its participation with top

management to develop a comprehensive performance appraisal system which can

cater to the needs of the employees at all levels.

Another issue is that of the motivation of employees. Most of the senior

employees in the banking sector probably were demotivated about their jobs from

the very initial stages but no importance was given to this problem by the

authorities. The shift took place only recently when the lack of motivation on the

part of the employees started affecting the profit margins of the bank. This

scenario is more prevalent and commonly seen at the older banks whose

workforce comprise majority of the older employees.

The linkage between the performance appraisal system and the motivation of

employees must be viewed as a strategic business issue. The only approach that

has the possibility of a successful outcome is a systemic one. It requires full

commitment of management in addition to full alliance with the Human Resource

Department.

Motivation of employees will require a comprehensive process that aligns

appropriate employee wants and needs with the performance appraisal system.

The internal and external situations that cause the employees to be demotivated

are vast and complex. Organizations can do little to control the country's economy

or an employee's preference for mobility. An enterprise can, however, design

internal culture, structures, strategies, programs and above all an effective

performance appraisal system that motivate employees.


4

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION To accomplish this task it is necessary to determine the major issues which cause

the employee’s demotivation for the banking industry. Motivation issues are the

result of very complex and multifaceted phenomenon. There is not just one

strategy, methodology or program that is the definitive answer to motivate

employees. But the problems can be reduced to some extent by having a

comprehensive performance appraisal system which is aligned with the needs of

the employees.

1.5 SCOPE OF THE STUDY

There are twenty-four private banks in Pakistan while some other are government

banks but three have been taken as a sample size among them for detailed study

about their employees. Some other banks are also studied broadly and their

features have been highlighted. The banks that are chosen for the research are:

Bank Alfalah Limited

Habib Bank Limited

Allied Bank Limited

1.6 OBJECTIVES OF THE STUDY

The objective of the study is to find the impact of performance appraisals on the

motivation of employees in today's organizations in general and in the banking

sector of Pakistan in particular. To find about the problems that they face and how

they can focus their energy in a proactive manner to motivate them.

Motivating good employees in the banks requires more than just thinking. For

banks to remain competitive, it has to be a reality and for that reality to be

implemented the linkage of the performance appraisal with the motivation of the

employees is essential.

A huge industrialist once commented, “Take away my factories, my plants; take

away my railroads, my ships, my transportation, take away my money; strip me of

all of these but leave me my key people (who are motivated), and in two or three

years, I will have them all again.”


5

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION The aim of the thesis is to find ways and methods to motivate employees in the

banking sector primarily by improving and designing better performance appraisal

systems.

1.7 LIMITATIONS OF THE RESEARCH

The research has some limitations as well which should be highlighted here for

better understanding of the whole content. Firstly, the sample is relatively small,

which limits the significance of the results. Although maximum efforts were

made to get a large number of responses from each bank but the average size were

about 25 participants from each bank.

Secondly, the biggest problem in the research regarding performance appraisals

was the honestly and integrity of the participants in filling out the forms. As the

research is dependent on questionnaire, so individual concerns in filling out

questionnaire honestly is a limitation. Apart from that in the older banks where

majority of the employees are senior employees were not willing to fill out the

questionnaires and some of them who even did fill were not very interested and

did not take the process very seriously.

Finally, this thesis focused on a fairly broad aspect of motivation. Although a

number of aspects have been defined to find out how motivated an employee is

e.g. learning from the job, communication with the peers, subordinates and

superiors, the level of satisfaction with the whole appraisal process, work

environment and job content etc, but still all the aspects of motivation could not

be taken into consideration. For that reason it is reasonable to believe that there

might be additional moderators operating here that would be worthy of future

investigation

1.8 HYPOTHESIS

Some of the hypothesis which were kept in mind while conducting the research

are as follows:

1. Higher objectivity in questions lead to higher job satisfaction

2. Awareness of the appraiser lead to higher motivation


6

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION 3. More time spent at a bank leads to higher motivation

4. Frequent promotions lead to higher motivation of employees

5. Perception of unfairness of the appraisal forms lead to dissatisfaction of the

employees

1.9 RESEARCH QUESTIONS

Some of the key research questions that would be highlighted and studied in this

thesis are as under:

How frequently are the appraisals being carried out at the bank?

What are the major issues which lead to the demotivation of the employees?

Why is the level of job satisfaction and the motivation due to the performance

appraisal system more in the new banks as compared to the older banks?

Is there a linkage between the performance appraisal system and the

promotion of employees?

Are any steps being taken to improve the whole process?

Is there an effective orientation program which gives the employees a clear

insight into why and how the appraisal process takes place?

Is performance being overseen?

Are the employees being offered any development program in accordance to

the performance appraisal process?

Are the banks meeting individual needs?


7

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION Figure – 1: Theoretical framework flow

Independent Variables Dependent Variables


8

Communication

Awareness of the

appraiserWork Environment

Objectivity appraisal

formsJob Content

Frequent promotions

Perception of unfairness

Motivation of employees

Satisfaction of

employees

Chapter – 1 Chapter – 1 INTRODUCTION INTRODUCTION

1.10 DATA COLLECTION INSTRUMENTS

Questionnaires were the primary data collection instrument; it is appropriate to

discuss here that other quantitative technique have also been used. In addition to

questionnaires, the banks provided various written information, such as corporate

annual statements, co-worker magazines, and brochures and leaflets describing

corporate policies and philosophies.

1.10a Employee’s Surveys (Questionnaire)

Most of the data that was received about the performance appraisals and the

motivation of employees at the banks was through the questionnaires. It was

helpful in getting large amount of information in a more quantitative manner. On

the average a sample size of 25 to 30 employees were questioned in each bank to

have a reliable database about the issues related to the motivation of employees.

1.10b Interviews

Interviews help in getting the information that cannot be gathered through the

questionnaires, therefore some of the top executives from each bank are

interviewed as well, to have a two-way communication and to resolve some

untapped areas.

1.10c Secondary Data

As a part of this thesis a detailed literature review is carried out to gather existing

information and research studies about the issue and to analyze the issues through

certain best practices through out the world. Theories, articles and some surveys

are used and highlighted as to gather information about employee satisfaction and

retention rate.

1.10d Extensive On-line Search

Internet is used to gather information and literature review as well as to gather

information about how to solve the issue.


9

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW

CHAPTER – 2

LITERATURE REVIEW

MOTIVATIONAL PRESPECTIVES AND THEORIES

2.1 EMPLOYEE PERSPECTIVES ABOUT PERFORMANCE APPRAISALS

The concept of performance management is a very broad concept with a number

of terms constituting it. One of the major constituents of the performance

management process is the performance appraisal system. These two terms are

often used interchangeably but in reality they are two entirely different processes.

Performance management system is a whole whereas performance appraisal

system just deals with the measurement of the performance of the people. Not just

the meaning, the concept of performance appraisal systems has different

perceptions for the employees and organizations which is where the major

problem lies.

2.1a Definitions

Before going into the details of the concept, some of the definitions of the

performance appraisal process are given below:

Performance appraisal is a method of acquiring and processing the information

needed to improve an individual employee’s performance and

accomplishments. (Douglass)

It is the process of evaluating the performance of employees, sharing that

information with them and searching for ways to improve their performance.

(Newstorm)

Performance appraisal also known as employee appraisal, is a method by

which the job performance of an employee is evaluated (generally in terms of

quality, quantity, cost and time). Performance appraisal is a part of career

development. (Thomas F. Patterson (1987)


10

http://en.wikipedia.org/wiki/Career_development

http://en.wikipedia.org/wiki/Career_development

http://en.wikipedia.org/wiki/Time

http://en.wikipedia.org/wiki/Cost

http://en.wikipedia.org/wiki/Quantity

http://en.wikipedia.org/wiki/Quality

http://en.wikipedia.org/wiki/Employee

http://en.wikipedia.org/w/index.php?title=Job_performance&action=edit&redlink=1

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW A face-to-face discussion in which one employee's work is discussed,

reviewed, and appraised by another, using an agreed and understood

framework. Usually, line managers conduct the appraisals of their staff,

although peers can appraise each other, and line managers can themselves be

appraised by their staff through 360 degree appraisal. The appraisal process

focuses on behaviors and outcomes, and strives to improve motivation,

growth, and performance of the appraisee. Performance appraisals should be

conducted at least once a year.(Business definition for performance appraisal

by the BNET Dictionary)

2.1b Employee Perspective

Performance appraisal system is prevalent in each and every organization whether

they want it or not. Clearly, for better or for worse, most governmental (and non-

governmental) organizations employ some type of performance appraisal system.

Although the reasons, the outcomes and the ways in which the performance

appraisal systems are implemented in the organizations may vary, the basic

system lies intact.

2.1c Reasons for Performance Appraisal

According to an article by Archer North “mere individual recognition, that is to

say appraising performance, can lead to higher job satisfaction and reduced

absenteeism and turnover rates. “In fact, there is evidence that human beings will

even prefer negative recognition in preference to no recognition at all.” It gives a

certain direction to the employees and they get to know clearly what is expected

of them and their job and how they can do their work in the best possible manner.

2.1d Problems in the Process

In one of the articles “Abolishing performance appraisals by Tom Coens and

Mary Jenkins”, Performance appraisals impede genuine feedback, and there’s no

solid evidence that it motivates people or lead to meaningful improvement. In fact

it usually produces distorted and unreliable data about the contribution of

employees. This isn’t just an opinion. A survey by the Society for Human

Resources Management found that more than 90% of appraisal systems are not


11

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW successful. Hundreds of other studies and surveys also support the gross

inadequacies of performance appraisals.

Some of the reasons for the problems prevalent in the performance appraisal

systems include for example, the lack of skills or training of the rater, the lack of

expertise in designing the performance appraisal, the lack of communication of

the reasons of the appraisal system to the employees etc.

In another article Effects of Performance Appraisal on Employee Attitudes the

author says that “One can find opinions varying from performance appraisal being

“so inherently flawed that it may be impossible to perfect it”, to “the most crucial

aspect of organizational life”.

To show effects of performance appraisal on employee attitudes, a study by

Gabris and Mitchell, made in an organization with a quarterly performance

appraisal system, which focused on Matthew effect, will be used. “Matthew effect

is said to occur where employees tend to keep receiving the same appraisal results,

year in and year out.

Also the article which appeared in the May-June 1997 issue of Corporate

University Review cited that performance appraisals instigated negative emotional

states: worrying, depression, stress, and anguish (on the part of those giving as

well as those receiving appraisals). After first acknowledging the "hard" costs of

performance appraisals, Harry Heflin, an engineer with Intersys who is also

chairman of the IEEE Engineering Management Society in Boston, wrote, "But I

think the real cost is the emotional anguish as everyone anticipates, prepares for,

and works the process."

According to an article “Performance Appraisal Tips” by Dexter Hansen,one

negative aspect of traditional individual performance appraisals is that they can

make employees compete against one another. How can this be done? If the

ratings are known (or assumed, based on the employees rating given by the

manager and their perceptions of where they stand relative to others), it can create

discord in the work group. TQM is based on teamwork, however, if an employee

asks for help, they can be penalized on their appraisals. When trying to encourage


12

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW a TQM environment, the performance ratings should contain elements relating to

teamwork (i.e. rated between teams instead of individuals).

Finally according to the article which appeared in the May-June 1997 issue of

Corporate University Review, performance appraisal systems could be eliminated

with no harm done and with great economic and emotional benefit. Consequently,

change-minded executives should not listen to pleas to redesign their company’s

performance appraisal system but should instead give serious thought to scrapping

it because of the extensive costs of the system mentioned in the article.

Although different authors approached performance appraisals differently, their

research came up with the following comments and findings of the employees

regarding the whole system.

In an article “Perspectives on enduring and emerging issues in performance

appraisal” by Gary E. Roberts, a quotation from a personnel manager

interviewed for a project was mentioned which stated that “In our

organization everyone hates the entire appraisal process. The employee that

gets a good performance appraisal thinks that the system is wonderful; the

employee that gets a bad one thinks that the system is unfair.”

In a research paper “An expert witness perspective on performance appraisal

in universities and colleges” conducted an analysis which proved that the

involvement of the staff in the performance appraisal process should be

increased.

Another paper on "Performance Appraisal Survey Analysis" and similar term

paper topics indicates that the process is not considered fair by over half of

employees.

2.2 MANAGERIAL PERSPECTIVE

If we look at the performance appraisal process from the eyes of the management,

they have a much positive approach and views about it as compared to that of the

employees. Some of the benefits of the performance appraisal process according


13

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW to the article which appeared in the May-June 1997 issue of Corporate University

Review, the viewpoint of senior executives, performance appraisal systems are

generally regarded as a necessary part of the organization’s management system.

This condition seems to exist because of the widely accepted, generally

unquestioned benefits of performance appraisal systems. If asked, a typical

executive might indicate the following benefits:

The system provides employees with an opportunity to receive feedback

regarding their performance, usually at least once a year and often on an

interim basis during the year. This leads to reduced error and waste,

increased productivity, improved quality and service for customers, as well

as enhanced employee motivation, commitment, and a sense of ownership.

The system provides an opportunity for performance related discussions

that include the following aims: setting work objectives for the employee,

aligning individual and organizational goals, identifying training and

development needs, and discussing career progression opportunities.

The system standardizes performance appraisals and makes them objective

by providing uniform processes and criteria. This further results in a fair,

valid, and legally defensible basis for rewarding and recognizing individual

performance.

Perhaps the most significant benefit of appraisal is that, in the rush and

bustle of daily working life, it offers a rare chance for a supervisor and

subordinate to have "time out" for a one-on-one discussion of important

work issues that might not otherwise be addressed.

Appraisal offers a valuable opportunity to focus on work activities and

goals, to identify and correct existing problems, and to encourage better

future performance. Thus the performance of the whole organization is

enhanced.

For many employees, an "official" appraisal interview may be the only time

they get to have exclusive, uninterrupted access to their supervisor. Said

one employee of a large organization after his first formal performance


14


appraisal, "In twenty years of work, that's the first time anyone has ever

bothered to sit down and tell me how I'm doing."

Performance appraisal can have a profound effect on levels of employee

motivation and satisfaction - for better as well as for worse.

Performance appraisal offers an excellent opportunity - perhaps the best

that will ever occur - for a supervisor and subordinate to recognize and

agree upon individual training and development needs.

Appraisal data can be used to monitor the success of the organization's

recruitment and induction practices.

Though often understated or even denied, evaluation is a legitimate and

major objective of performance appraisal.

The system affords the corporation legal protection against employee

lawsuits for discrimination and wrongful termination.

A perhaps less typical but more candid executive might add a final benefit: the

formal performance appraisal system shores up an organization’s hierarchical

authority system. It gives the supervising manager control over the carrots and

sticks in what is essentially a carrot-and-stick management system.

The list of benefits above, with the exception of the last one, represents an

idealized view of performance appraisal systems, a view that is espoused by many

but achieved by few, if any.

2.3 MOTIVATIONAL THEORIES

There are several early and contemporary motivational theories that are discussed

below. They give an idea about different perspectives and views about motivation

and satisfaction of employees.

2.3a Early Motivation Theories

Management needs to be able to make decisions concerning the employees or

people working under them. Many of these are purely how to get the fullest efforts

from the employees and this is where motivation plays an important role. There


15

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW are many theories that have been written about motivation and these are some

classic ones:

2.3a-1 Theory 'X' – Douglas McGregor

According to Douglas McGregor theory X suggests that people are lazy; they hate

work to the extent that they avoid it; they have no ambition, take no initiative and

avoid taking any responsibility; all they want is security, and to get them to do any

work, they must be rewarded, coerced, intimidated and punished. To get work

done they have to police their staff and monitoring is necessary for them.

2.3a-2 Theory 'Y' – Douglas McGregor

This is in sharp contrast to theory 'X'. McGregor believed that people want to

learn and that work is their natural activity to the extent that they develop self-

discipline and self-development. The leader no longer have to use power, he or

she lets people develop freely, and may even enjoy watching the development

and actualizations of people by themselves. Everyone most of all the organization,

gains as a result.

2.3a-3 Maslow's Hierarchy of Needs - Abraham Maslow

Maslow's central theme revolves around the meaning and significance of human

work. Maslow's theory of human motivation is the basis of McGregor's theory 'Y'

briefly described above.

Maslow in 1970 is known for establishing the theory of a hierarchy of needs,

writing that human beings are motivated by unsatisfied needs. A person’s

behavior is seen as dominated by his/her unsatisfied needs and when one need is

satisfied he/she aspires for the next higher one.

According to Maslow, there are general types of needs (physiological, safety,

love, and esteem) that must be satisfied before a person can act unselfishly. He

called these needs "deficiency needs." As long as we are motivated to satisfy these

cravings, we are moving towards growth, toward self-actualization.

The five basic human needs, according to Maslow, are: (1) Physiological: hunger,

thirst, bodily comforts, etc.; (2) Safety/security: be out of danger; (3) Belonginess

and Love: affiliate with others, be accepted; (4) Esteem: to achieve, be competent,


16

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW gain approval and recognition and (5) Self-actualization: to find self-fulfillment

and realize one's potential.


17

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Figure – 2: Maslow's Hierarchy of Needs

2.3a-4 Motivation Hygiene Theory - Frederick Herzberg

According to this theory the intrinsic factors are related to job satisfaction and

motivation while the extrinsic factors are related to the job dissatisfaction.

Herzberg suggests that people's needs are of two types: animal needs (hygiene

factors) and human needs (motivators). Hygiene factors are those which are the

basic needs and when they are absent an employee is dissatisfied and demotivated

while when they are present there is no motivation neither there is any

dissatisfaction. While on the other hand the factors which motivated employees

were motivators.

Herzberg’s theory was widely accepted during 1960’s till 1980’s but it faced

certain criticism after that but it is still considered when designing jobs.


18

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW 2.3b Contemporary Motivational Theories

The theories that would be discussed now represent the current status of

motivation. Although they are not as famous as the early theories but they hare

based on extensive research.

2.3b-1 Three needs theory - David McClelland

McClelland (1968) argues that there are three needs that are essential factors to

get motivation. These needs are achievement, affiliation and power.

The need of affiliation is the desire for close and friendly interpersonal

relationships at the workplace. While the need of power is the need to make

people behave in the manner which they would not have behaved otherwise

Need of achievement can be described as setting up goals or objectives, and

working with them until you get the desirable outcome even if it takes a long time

and some risks to achieve that, but this makes people even more determined to

accomplish the goal. Achievement-motivated people are concerned more with

their personal achievement rather than the rewards of success. They do not reject

the rewards but they are not as essential as the accomplishment itself. Money for

them is a means to measure their performance and compare their achievement

with those of other people, and they don’t seek money for status or economic

security.

The need of achievement has been researched more extensively while other were

also researched upon but less extensively.

2.3b-2 Goal setting theory

This theory states that specific goals tend to increase the performance and difficult

goals when accepted results in higher performance than do easy goals.

Research has proved that specific and hard goals are a motivating factor and they

tend to give a specific direction.

Here there seems to be a contradiction between the need for achievement in the

three need theory and the goal setting theory. According to the need of


19

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW achievement motivation is done by moderately challenging goals while the goals

setting theory depicts that motivation is maximized by difficult goals.

Here the explanation is that the need of achievement differs from economy to

economy; in the developed countries it is high but very low in the under

developed countries. While the goal setting theory is applied to people in general.

There are certain contingencies in the goal setting theory and that is it presumes

that specific goals will give good performance. There are other factors to it as

well, which supports good performance; they include feedback to the employees

on the achievement of the goal, goal commitment, self efficacy (the belief of a

person that he/she is capable of performing a task), and national culture.

The shortcoming of this theory is that it presumes that every culture supports the

achievement of hard and specific goals but it only applies to the developed

countries. The employees in the under developed countries do not necessarily are

motivated by hard goals.

Figure – 3: Goal Setting Theory

2.3b-3 Reinforcement Theory

The theory states that behavior is the function of its consequences. It proposes

that behavior is externally caused. The key to the theory is that it ignores factors

such as goals, expectations and needs, instead it focuses solely on what happens to

the person when he / she takes some action.

Rein forcers shape behavior and help people to learn but the theory is also widely

believed to help motivation. According to BF.Skinner the reinforcement theory

can be explained as follows:


20


People will most likely engage in a behavior if they are rewarded for doing so;

these rewards are most effective if they are immediately followed by a desired

behavior, and the behavior that is not rewarded or is punished is less likely to be

repeated.

There are three types of reinforcement

Positive reinforcement

Negative reinforcement

Non - reinforcement

Following reinforcement theory, managers can influence employee’s behavior

reinforcing actions that are desirable. The emphasis should always be on the

positive reinforcement and not punishment. Even though punishment eliminated

undesired behaviors more quickly than non-reinforcement, its effect is often very

temporary and may have long term negative effects on the employees. It may

increase the turnover rate and the employee absenteeism.

Research has shown that reinforcement is an important influence on the work

behavior. But reinforcement is not the only motivator, goals, levels of motivation,

needs of affiliation, achievement and power also effect motivation.

2.3b-4 Job characteristic model

As managers are interested in motivating the employees as to increase the

productivity, there they need to design jobs in such a way as to motivate

employees. Job deign refers to the way tasks are designed to complete a job.

Some of the ways of designing job are job rotation, job enrichment and job

enlargement.

Job characteristic model (JCM) is a framework for analyzing and designing jobs

that identifies five primary job characteristics, their interrelationships and their

impact on outcomes.

According to the JCM, any job can be described in terms of the five core

dimensions defined as follows:


21

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Skill Variety

The degree to which a job require a variety of activities so that an employees can

use a number of skills and talents.

Task Identity

The degree to which a job requires completion of a whole and identifiable piece of

work.

Task Significance

The degree to which a job has a substantial impact on the lives or work of the

other people.

Autonomy

The degree to which a job provides substantial freedom, independence and

discretion to the individual in scheduling the work and determining the procedures

to be used in carrying it out.

Feedback

The degree to which carrying out work activities required by a job results in the

individual’s obtaining direct and clear information about the effectiveness of

his/her performance.

The figure explains the five dimensions. It shows how the first three dimensions

combine to create meaningful work. It means that these three things in a job

increase the importance of the job. The autonomy gives the employees a feeling of

responsibility while the feedback provides how the employee is working and

performing.

Figure – 4: Job characteristic model


22


Source: JR. Hackman and J.L. Suttle (eds) in improving life at work

From a motivational standpoint the model suggests that internal rewards are

obtained when an employee is given feedback (feedback) and he/she has

personally performed well (autonomy) on the task about which he/ she cares

(experienced meaningfulness of the work). The more of theses three conditions

are present the more motivational the job is and the employees satisfied.

2.3b-5 Equity Theory

It is human being’s tendency that they compare themselves with each other all the

time.

This theory developed by J. Stacey Adams, proposes that an employee compare

his/her job’s input / outcomes ratio with that of relevant others and then correct

any inequity.

If an employee perceives his/her input and output to be equal to others the state of

equity remains. However if the ratio is not perceived to be equal and the inequity

exists then the employee views himself /her self as over or under rewarded.

There are certain expected outcomes and behaviors that are displayed by the

employees when they perceive that they are treated unequally as compared to

others.

Change their input and effort

Change others input or outputs

Choose a different person and start comparing themselves with them

Increase absenteeism


23

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Quit the job

Equity theory is not without its flaws as well. There is the problem that how to

define inputs and outputs, how they change over a period of time, and how do

people choose others to whom, they compare themselves.

2.3b-5-1Equity Theory and Employee Motivation

Is there a relationship between how hard an employee works and how fairly they

have been treated? Some noted economists believe that there is.

In business, the Equity Theory of employee motivation describes the relationship

between how fairly an employee perceives he is treated and how hard he is

motivated to work. Peter Drucker, an author who specialized in economics, first

proposed the link between Equity Theory and employee motivation.

The basic idea behind the Equity Theory is that workers, in an attempt to balance

what they put in to their jobs and what they get from them, will unconsciously

assign values to each of his various contributions.

In addition to their time, workers contribute their experience, their qualifications,

and their capability in addition to their personal strengths such as acumen and

ambition. Money, of course, is the primary motivating outcome for an employee,

but it is not the only, and in some cases not even the most important, factor.

Power and status are also prime motivators, as are flexibility, perquisites and

variety.

According to the Equity Theory, the most highly motivated employee is the one

who perceives his rewards are equal to his contributions. If he feels that he is

working and being rewarded at about the same rate as his peers, then he will judge

that he is being treated fairly.

This doesn’t mean that every manager should treat every employee identically,

because every worker does not measure his contributions in the same way. For

example, flexible working hours might motivate a working mother even more than

a pay raise. Conversely, though an across-the-board wage increase may delight


24

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW most employees, the highest producers may become less motivated if they

perceive that they are not being rewarded for their ambition. Research on Equity

Theory and employee motivation has shown that, in general, over-rewarded

employees will produce more and of a higher quality than will under-rewarded,

less motivated employees.

2.3b-6 Expectancy Theory - Victor Vroom

According to Vroom's “expectancy theory”, it states that an individual tends to act

in a certain manner based on the expectations that the act will be followed by a

given outcome and on the attractiveness of that outcome to the individual.

It includes three variables that are as under:

Expectancy or the Effort – Performance Linkage

The expectations of an individual that a certain level of effort put in to

accomplish a job will give a certain level of performance.

Instrumentality or the Performance - Reward Linkage

The degree to which a certain performance will help attain a certain reward.

Valence or the Attractiveness of the Reward

Valence is the degree to which the reward has value to the individual performing

the job. The answer lies in understanding their inner motives and then providing

them with appropriate rewards.

This theory contributes an insight into the study of motivation by explaining how

individual goals influence individual performance.

Figure – 5: Expectancy Theory

To sum up, the theories discussed above show that people have inner motives,

needs and desires that drive them. Different authors have different approaches,

some believe in monetary rewards while others suggest non-monetary rewards.


25

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW 2.4 EMPLOYEE MOTIVATION: THEORY AND PRACTICE The job of a manager in the workplace is to get things done through employees.

To do this the manager should be able to motivate employees. But that's easier

said than done! Motivation practice and theory are difficult subjects, touching on

several disciplines.

In spite of enormous research, basic as well as applied, the subject of motivation is

not clearly understood and more often than not poorly practiced. To understand

motivation one must understand human nature itself.

Human nature can be very simple, yet very complex too. An understanding and

appreciation of this is a prerequisite to effective employee motivation in the

workplace and therefore effective management and leadership.

2.4a Why Study and Apply Employee Motivation Principles?

Quite apart from the benefit and moral value of an altruistic approach to treating

colleagues as human beings and respecting human dignity in all its forms,

research and observations show that well motivated employees are more

productive and creative. The inverse also holds true. The schematic below

indicates the potential contribution the practical application of the principles this

paper has on reducing work content in the organization.

2.4a-1 Motivation is the Key to Performance ImprovementThere is an old saying you can take a horse to the water but you cannot force it to

drink; it will drink only if it's thirsty - so with people. They will do what they want

to do or otherwise motivated to do. Whether it is to excel on the workshop floor or

in the 'ivory tower' they must be motivated or driven to it, either by themselves or

through external stimulus.

Are they born with the self-motivation or drive? Yes and no. If no, they can be

motivated, for motivation is a skill which can and must be learnt. This is essential

for any business to survive and succeed.

Performance is considered to be a function of ability and motivation, thus:

Job Performance = f (Ability)(Motivation)


26

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Ability in turn depends on education, experience and training and its improvement

is a slow and long process. On the other hand motivation can be improved

quickly. There are many options and an uninitiated manager may not even know

where to start. As a guideline, there are broadly seven strategies for motivation.

Positive reinforcement

Effective discipline and punishment

Treating people fairly

Satisfying employees needs

Setting work related goals

Restructuring jobs

Base rewards on job performance

These are the basic strategies, though the mix in the final 'recipe' will vary from

workplace situation to situation. Essentially, there is a gap between an individuals

actual state and some desired state and the manager tries to reduce this gap.

Motivation is, in effect, a means to reduce and manipulate this gap. It is inducing

others in a specific way towards goals specifically stated by the motivator.

Naturally, these goals as also the motivation system must conform to the corporate

policy of the organization. The motivational system must be tailored to the

situation and to the organization.

In one of the most elaborate studies on employee motivation, involving 31,000

men and 13,000 women, the Minneapolis Gas Company sought to determine what

their potential employees desire most from a job. This study was carried out

during a 20 year period from 1945 to 1965 and was quite revealing. The ratings

for the various factors differed only slightly between men and women, but both

groups considered security as the highest rated factor. The next three factors were;

advancement

type of work

company - proud to work for

Surprisingly, factors such as pay, benefits and working conditions were given a

low rating by both groups. So after all, and contrary to common belief, money is


27

http://www.accel-team.com/motivation/employeeRewards_00.html

http://www.accel-team.com/work_design/index.html

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW not the prime motivator. (Though this should not be regarded as a signal to reward

employees poorly or unfairly.)

2.4b Application of Employee Motivation Theory to the Workplace

Management literature is replete with actual case histories of what does and what

does not motivate people. Presented here is a tentative initial broad selection of

the various practices that have been tried in order to draw lessons for the future.


28

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW 2.4b-1'Stick' or 'Carrot' Approach

The traditional Victorian style of strict discipline and punishment has not only

failed to deliver the goods, but it has also left a mood of discontent amongst the

"working class".

Punishment appears to have produced negative rather than positive results and has

increased the hostility between 'them' (the management) and 'us' (the workers). In

contrast to this, the 'carrot' approach, involving approval, praise and recognition of

effort has markedly improved the work atmosphere, leading to more productive

work places and giving workers greater job satisfaction.

2.4b-2 Manager's Motivation 'Toolkit'

The manager's main task is to develop a productive work place, with and through

those he or she is in charge of. The manager should motivate his or her team, both

individually and collectively so that a productive work place is maintained and

developed and at the same time employees derive satisfaction from their jobs.

This may appear somewhat contradictory, but it seems to work. The main tools in

the manager's kitbag for motivating the team are:

approval, praise and recognition

trust, respect and high expectations

loyalty, given that it may be received

removing organizational barriers that stand in the way of individual and group performance

job enrichment

good communications

financial incentives

These are arranged in order of importance and it is interesting to note that cash is

way down the ladder of motivators. Given below are some of the examples taken

from real life situations.

The Swedish shipbuilding company, Kockums, turned a 15 million dollar loss into

a 100 million dollar profit in the course of ten years due entirely to a changed

perception of the workforce brought about by better motivation. At Western


29

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Electric there was a dramatic improvement in output after the supervisors and

managers started taking greater interest in their employees.

2.4b-3 Don't Coerce - Persuade

Persuasion is far more powerful than coercion, just as the pen is mightier than the

sword. Managers have a much better chance of success if they use persuasion

rather than coercion. The former builds morale, initiative and motivation, whilst

the latter quite effectively kills such qualities. The three basic components in

persuasion are:

suggest;

play on the person's sentiments; and

appeal to logic.

Once convinced, the person is so motivated as to deliver the 'goods'. The manager

will have achieved the goal quietly, gently and with the minimum of effort. It is,

in effect, an effortless achievement.

2.5 MOTIVATION

Motivation is the reason why employees want to work hard and effectively for the

business. People work for a variety of reasons, some want to earn money while

other do it to fulfill their inner needs. There is a wide range of motivators to

motivate people and they differ from individual to individual. Highly motivated

employees increase the productivity level and thus the profits are increased and

vice versa.

Figure – 6: Motivation and Profit

There is always a chance that the output is increased due to new technology and

improved external conditions but the quality of the output always relies on how

well motivated the employees are and how satisfied they are with their job.


30

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW 2.6 SOURCES OF MOTIVATION

When an employee is satisfied he/she is motivated to work and thus he/she is

retained There can be number of motivating factors as shown in the figure which

can be put into main sources of motivation which are:

Monetary

Non-monetary

Therefore, they can be termed as rewards given to employees that may result in

their satisfaction and retention. They are as under:

Intrinsic rewards –these rewards are related to the internal satisfaction of

the employee e.g. it includes recognition, awards, moral satisfaction etc.

Extrinsic rewards- theses rewards are related to the external factors of

satisfaction of the employee e.g. bonuses, promotion, benefits etc.

Figure – 7: Motivating Factors

2.7 DETERMINANTS OF PERFORMANCE

Employees are the most important assets of any organization. The success of any

organization depends on the achievements and the performance of its employees.

If they are not enthusiastic about their jobs and are not achieving the performance

benchmarks, then the success of the organization itself is at stake. One major

challenge that is faced by the employers is how to improve the performance of its

employees which makes it mandatory for them to take into account the

determinants of performance some of which are as follows:


31

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Do the employees have a clear understanding of their job roles

One of the most important determinants of the performance of the employees in

any organization is the job description and the job design. It determines the level

of knowledge and awareness that the employee has regarding his/her job. If they

are not aware of what is expected of them, how will they ever achieve the

performance levels and the performance benchmarks that have been set for them?

How routine are the tasks performed

Another very vital determinant of performance is the frequency of the task or the

job being done. If the job is conducted very frequently on a daily basis, the

employees would know their job better and would lead to very good performance

but on the other hand if the job is done once a year or very rarely, then the

employees themselves would be uncertain about what to do and would eventually

lead to average or below average results or outcomes.

Self perception

If a person’s perception about him/her is accurate that would lead to a positive

performance and has been found out to be the most critical factor in determining

performance.

The Experience of the Employee

The experience of the employee also plays a very important role in determining

their performance. If an employee is more experienced and has more know how

about the proceedings of the job, he would be able to reach higher performance

standards while on the other hand if an employee is doing a certain task which

requires a lot of expertise which he/she does not possess, it would make it difficult

for him to reach the performance benchmarks that has been set.

Culture of the Organization

The culture of the organization also affects the performance of the individuals

working in it. Some of the organizations have the concept of a very open culture

in which the structure is relatively flatter and no hierarchical levels from top to

bottom. This approach makes the employees more comfortable and their

performance is affected and influenced in a positive way. On the other hand in


32

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW highly beurucratic organizations very tall structures and lack of openness between

the employees lead to lack of flexibility and rigidness which has an adverse affect

on their performance.

Supervisor feedback and acknowledgements

The feedback that the employees receive from their employees also adds to their

positive performance and determines their performance. Organizations should

have informal sessions with the employees behind closed doors not in front of the

whole crowd about their performance and general work habits. This is a

determinant of their performance and leads to positive work ethics.

Psychographics

The working condition of the employees also is a determinant of their

performance. If not on the obvious conscious level, on the subconscious level, the

physical comforts that an employee has contributes a lot to his/her performance

otherwise ten people would have been stuffed inside one room. If we take the

example of Microsoft, it gives each and every employee a fully enclose 9’ x 12’

office with a door so that they have the solitude and the privacy to sit and think.

They were even given the leverage to decorate their offices according to their own

will and desire so that they have a feeling that they are in a place which is

according to them and have full comfort.

All the determinants and many others like the intelligence quotient, emotional

quotient, motivation, willingness to work and job satisfaction etc have a collective

influence on the overall performance of the employees and should be thoroughly

taken into account for the better working of the employee and the organization as

a whole.

2.8 APPRAISAL AS A MOTIVATING MECHANISM

Keeping in mind the growing attrition rates and the employee dissatisfaction

among the employees, the HR professionals are approaching and using the

performance appraisal as a fuel to motivate employees. The latest trend being

followed by the HR professionals is to use the performance appraisal and review


33

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW process as a motivating mechanism. Various surveys and studies have testified the

relationship between performance review, pay and motivation.

Other than the traditional goal of accessing the performance of the employees,

Performance appraisals and reviews can be used as a tool to reinforce the desired

behaviour and competent performance of the employees.

One of the most motivating factors for the employees, in the Performance

appraisal processes is to receive a fair an accurate assessment of their

performance. Inaccurate evaluation is one reason because of which most

employees dread going through performance appraisals. An employee always

expects his appraiser to recognize and appreciate his achievements, support him to

overcome the problems and failures.

The discrepancies and the inaccuracies in the performance review can demotivate

the employees, even if there has been an increase in the salary. Such inaccuracies

can kill the innovating and risk taking enthusiasm and spirit in the employees.

Similarly, inaccurate reviews with no hike in compensation can increase the

attrition rate in the organization, forcing the employees to look out for other

options.

An employee prefers an accurate performance review with no increase in the

salary over inaccurate performance review with an increase in salary.

Employees, who receive both accuracy and a pay increase during their

performance review, are likely to be the most motivated. Therefore, performance

appraisal (review and its consequence in the form of compensation adjustments)

has the potential of motivating employees and increasing their job satisfaction.

2.9 SURVEYS AND RESEARCHES

There are certain important surveys carried out which are related to performance

appraisals and motivation of employees. The statistical information gives a certain

direction about the topic.

Understanding Employee Motivation James R. Lindner Research and Extension Associate The Ohio State University


34

http://appraisals.naukrihub.com/

http://appraisals.naukrihub.com/

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Piketon Research and Extension Center Piketon, Ohio


35

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW 2.9-a Introduction to Motivation

At one time, employees were considered just another input into the production of

goods and services. What perhaps changed this way of thinking about employees

was research, referred to as the Hawthorne Studies, conducted by Elton Mayo

from 1924 to 1932 (Dickson, 1973). This study found employees are not

motivated solely by money and employee behavior is linked to their attitudes

(Dickson, 1973). The Hawthorne Studies began the human relations approach to

management, whereby the needs and motivation of employees become the

primary focus of managers (Bedeian, 1993).

2.9-b Motivation Theories

Understanding what motivated employees and how they were motivated was the

focus of many researchers following the publication of the Hawthorne Study

results (Terpstra, 1979). Five major approaches that have led to our understanding

of motivation are Maslow's need-hierarchy theory, Herzberg's two- factor theory,

Vroom's expectancy theory, Adams' equity theory, and Skinner's reinforcement

theory.

According to Maslow, employees have five levels of needs (Maslow, 1943):

physiological, safety, social, ego, and self- actualizing. Maslow argued that lower

level needs had to be satisfied before the next higher level need would motivate

employees. Herzberg's work categorized motivation into two factors: motivators

and hygienes (Herzberg, Mausner, & Snyderman, 1959). Motivator or intrinsic

factors, such as achievement and recognition, produce job satisfaction. Hygiene or

extrinsic factors, such as pay and job security, produce job dissatisfaction.

Vroom's theory is based on the belief that employee effort will lead to

performance and performance will lead to rewards (Vroom, 1964). Rewards may

be either positive or negative. The more positive the reward the more likely the

employee will be highly motivated. Conversely, the more negative the reward the

less likely the employee will be motivated.


36

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Adams' theory states that employees strive for equity between themselves and

other workers. Equity is achieved when the ratio of employee outcomes over

inputs is equal to other employee outcomes over inputs (Adams, 1965).

Skinner's theory simply states those employees' behaviors that lead to positive

outcomes will be repeated and behaviors that lead to negative outcomes will not

be repeated (Skinner, 1953). Managers should positively reinforce employee

behaviors that lead to positive outcomes. Managers should negatively reinforce

employee behavior that leads to negative outcomes.

2.9-c Motivation Defined

Many contemporary authors have also defined the concept of motivation.

Motivation has been defined as: the psychological process that gives behavior

purpose and direction (Kreitner, 1995); a predisposition to behave in a purposive

manner to achieve specific, unmet needs (Buford, Bedeian, & Lindner, 1995); an

internal drive to satisfy an unsatisfied need (Higgins, 1994); and the will to

achieve (Bedeian, 1993). For this paper, motivation is operationally defined as the

inner force that drives individuals to accomplish personal and organizational

goals.

2.9- d The Role of Motivation

Why do we need motivated employees? The answer is survival (Smith, 1994).

Motivated employees are needed in our rapidly changing workplaces. Motivated

employees help organizations survive. Motivated employees are more productive.

To be effective, managers need to understand what motivates employees within

the context of the roles they perform. Of all the functions a manager performs,

motivating employees is arguably the most complex. This is due, in part, to the

fact that what motivates employees changes constantly (Bowen & Radhakrishna,

1991). For example, research suggests that as employees' income increases,

money becomes less of a motivator (Kovach, 1987). Also, as employees get older,

interesting work becomes more of a motivator.

2.9-e Purpose


37

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW The purpose of this study was to describe the importance of certain factors in

motivating employees at the Piketon Research and Extension Center and

Enterprise Center. Specifically, the study sought to describe the ranked

importance of the following ten motivating factors: (a) job security, (b)

sympathetic help with personal problems, (c) personal loyalty to employees, (d)

interesting work, (e) good working conditions, (f) tactful discipline, (g) good

wages, (h) promotions and growth in the organization, (i) feeling of being in on

things, and (j) full appreciation of work done. A secondary purpose of the study

was to compare the results of this study with the study results from other

populations.

2.9-f Methodology

The research design for this study employed a descriptive survey method. The

target population of this study included employees at the Piketon Research and

Extension Center and Enterprise Center (centers). The sample size included all 25

employees of the target population. Twenty-three of the 25 employees participated

in the survey for a participation rate of 92%. The centers are in Piketon, Ohio.

The mission of the Enterprise Center is to facilitate individual and community

leader awareness and provide assistance in preparing and accessing economic

opportunities in southern Ohio. The Enterprise Center has three programs:

alternatives in agriculture, small business development, and women's business

development. The mission of the Piketon Research and Extension Center is to

conduct research and educational programs designed to enhance economic

development in southern Ohio. The Piketon Research and Extension Center has

five programs: aquaculture, community economic development, horticulture,

forestry, and soil and water resources.

From a review of literature, a survey questionnaire was developed to collect data

for the study (Bowen & Radhakrishna, 1991; Harpaz, 1990; Kovach, 1987). Data

was collected through use of a written questionnaire hand-delivered to

participants. Questionnaires were filled out by participants and returned to an

intra-departmental mailbox. The questionnaire asked participants to rank the

importance of ten factors that motivated them in doing their work: 1=most


38

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW important . . . 10=least important. Face and content validity for the instrument

were established using two administrative and professional employees at The

Ohio State University. The instrument was pilot tested with three similarly

situated employees within the university. As a result of the pilot test, minor

changes in word selection and instructions were made to the questionnaire.

2.9-g Results and Discussion

The ranked order of motivating factors were: (a) interesting work, (b) good wages,

(c) full appreciation of work done, (d) job security, (e) good working conditions,

(f) promotions and growth in the organization, (g) feeling of being in on things,

(h) personal loyalty to employees, (i) tactful discipline, and (j) sympathetic help

with personal problems.

A comparison of these results to Maslow's need-hierarchy theory provides some

interesting insight into employee motivation. The number one ranked motivator,

interesting work, is a self-actualizing factor. The number two ranked motivator,

good wages, is a physiological factor. The number three ranked motivator, full

appreciation of work done, is an esteem factor. The number four ranked

motivator, job security, is a safety factor. Therefore, according to Maslow (1943),

if managers wish to address the most important motivational factor of Centers'

employees, interesting work, physiological, safety, social, and esteem factors must

first be satisfied. If managers wished to address the second most important

motivational factor of centers' employees, good pay, increased pay would suffice.

Contrary to what Maslow's theory suggests, the range of motivational factors are

mixed in this study. Maslow's conclusions that lower level motivational factors

must be met before ascending to the next level were not confirmed by this study.

The following example compares the highest ranked motivational factor

(interesting work) to Vroom's expectancy theory. Assume that a Centers employee

just attended a staff meeting where he/she learned a major emphasis would be

placed on seeking additional external program funds. Additionally, employees

who are successful in securing funds will be given more opportunities to explore

their own research and extension interests (interesting work). Employees who do

not secure additional funds will be required to work on research and extension


39

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW programs identified by the director. The employee realizes that the more research

he/she does regarding funding sources and the more proposals he/she writes, the

greater the likelihood he/she will receive external funding.

Because the state legislature has not increased appropriations to the centers for the

next two years (funds for independent research and extension projects will be

scaled back), the employee sees a direct relationship between performance

(obtaining external funds) and rewards (independent research and Extension

projects). Further, the employee went to work for the centers, in part, because of

the opportunity to conduct independent research and extension projects. The

employee will be motivated if he/she is successful in obtaining external funds and

given the opportunity to conduct independent research and extension projects. On

the other hand, motivation will be diminished if the employee is successful in

obtaining external funds and the director denies the request to conduct

independent research and Extension projects.

The following example compares the third highest ranked motivational factor (full

appreciation of work done) to Adams's equity theory. If an employee at the

centers feels that there is a lack of appreciation for work done, as being too low

relative to another employee, an inequity may exist and the employee will be dis-

motivated. Further, if all the employees at the centers feel that there is a lack of

appreciation for work done, inequity may exist. Adams (1965) stated employees

will attempt to restore equity through various means, some of which may be

counter- productive to organizational goals and objectives. For instance,

employees who feel their work is not being appreciated may work less or

undervalue the work of other employees.

This final example compares the two highest motivational factors to Herzberg's

two-factor theory. The highest ranked motivator, interesting work, is a motivator

factor. The second ranked motivator, good wages is a hygiene factor. Herzberg,

Mausner, & Snyderman (1959) stated that to the degree that motivators are

present in a job, motivation will occur. The absence of motivators does not lead to

dissatisfaction. Further, they stated that to the degree that hygienes are absent

from a job, dissatisfaction will occur. When present, hygienes prevent


40

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW dissatisfaction, but do not lead to satisfaction. In our example, the lack of

interesting work (motivator) for the centers' employees would not lead to

dissatisfaction. Paying centers' employees lower wages (hygiene) than what they

believe to be fair may lead to job dissatisfaction. Conversely, employees will be

motivated when they are doing interesting work and but will not necessarily be

motivated by higher pay.

The discussion above, about the ranked importance of motivational factors as

related to motivational theory, is only part of the picture. The other part is how

these rankings compare with related research. A study of industrial employees,

conducted by Kovach (1987), yielded the following ranked order of motivational

factors: (a) interesting work, (b) full appreciation of work done, and (c) feeling of

being in on things. Another study of employees, conducted by Harpaz (1990),

yielded the following ranked order of motivational factors: (a) interesting work,

(b) good wages, and (c) job security.

In this study and the two cited above, interesting work ranked as the most

important motivational factor. Pay was not ranked as one of the most important

motivational factors by Kovach (1987), but was ranked second in this research

and by Harpaz (1990). Full appreciation of work done was not ranked as one of

the most important motivational factors by Harpaz (1990), but was ranked second

in this research and by Kovach (1987). The discrepancies in these research

findings supports the idea that what motivates employees differs given the context

in which the employee works. What is clear, however, is that employees rank

interesting work as the most important motivational factor.

2.9-h Implications for Centers and Extension

The ranked importance of motivational factors of employees at the centers

provides useful information for the centers' director and employees. Knowing how

to use this information in motivating centers' employees is complex. The strategy

for motivating centers' employees depends on which motivation theories are used

as a reference point. If Hertzberg's theory is followed, management should begin

by focusing on pay and job security (hygiene factors) before focusing on

interesting work and full appreciation of work done (motivator factors). If Adams'


41

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW equity theory is followed, management should begin by focusing on areas where

there may be perceived inequities (pay and full appreciation of work done) before

focusing on interesting work and job security. If Vroom's theory is followed,

management should begin by focusing on rewarding (pay and interesting work)

employee effort in achieving organizational goals and objectives.

Regardless of which theory is followed, interesting work and employee pay

appear to be important links to higher motivation of centers' employees. Options

such as job enlargement, job enrichment, promotions, internal and external

stipends, monetary, and non-monetary compensation should be considered. Job

enlargement can be used (by managers) to make work more interesting (for

employees) by increasing the number and variety of activities performed. Job

enrichment can used to make work more interesting and increase pay by adding

higher level responsibilities to a job and providing monetary compensation (raise

or stipend) to employees for accepting this responsibility. These are just two

examples of an infinite number of methods to increase motivation of employees at

the centers. The key to motivating centers' employees is to know what motivates

them and designing a motivation program based on those needs.

The results presented in this paper also have implications for the entire

Cooperative Extension Sysyem. The effectiveness of Extension is dependent upon

the motivation of its employees (Chesney, 1992; Buford, 1990; Smith, 1990).

Knowing what motivates employees and incorporating this knowledge into the

reward system will help Extension identify, recruit, employ, train, and retain a

productive workforce. Motivating Extension employees requires both managers

and employees working together (Buford, 1993). Extension employees must be

willing to let managers know what motivates them, and managers must be willing

to design reward systems that motivate employees. Survey results, like those

presented here, are useful in helping Extension managers determine what

motivates employees (Bowen & Radhakrishna, 1991). If properly designed reward

systems are not implemented, however, employees will not be motivated.


42

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW 2.10 APPLICATION OF EMPLOYEE MOTIVATION

THEORY TO THE WORKPLACE

Job satisfaction - is there a trend?

This is the title of a study carried out by the US Department of Labor among 1500

workers, who were asked to rate the job factors, from a list of 23, which they

considered important starting from the most important factor.

Their findings (Sanzotta (1977)) are contained in the table below.


43

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW Job Satisfaction findings

White collar workers Blue collar workers

A. Interesting Work A. Good pay

B. opportunities for development B. Enough help and resources

C. Good information C. Job security

D. Enough Authority D. Enough information

E. Enough help and resources E. Interesting Work

F. Friendly, helpful coworkers F. Friendly, helpful coworkers

G. See results of own efforts G. Clearly defined responsibilities

H. Competent supervision H. See results of own efforts

It is interesting that out of the 23 job factors listed for the survey, yet with the

exception of two items (white-collar workers' choice (B) and blue-collar workers'

choice (C)) groups selected the same top ten factors, although with different

rankings. It is significant that good pay was considered as the most important

factor by the blue-collar workers, but it ranked as the least important for white-

collar workers.

2.10-a Individualize motivation policies

It is well known that individual behavior is intensely personal and unique, yet

companies seek to use the same policies to motivate everyone. This is mainly for

convenience and ease compared to catering for individual oddities (Lindstone

(1978)). 'Tailoring' the policy to the needs of each individual is difficult but is far

more effective and can pay handsome dividends. Fairness, decisiveness, giving

praise and constructive criticism can be more effective than money in the matter

of motivation.

Leadership is considered synonymous (Tack (1979)) with motivation, and the best

form of leadership is designated as SAL, situation adaptable leadership. In this

style of leadership, one is never surprised or shocked, leadership must begin with

the chief executive and it is more a matter of adaptation than of imparting


44

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW knowledge. Ultimately, it is the leadership quality which leads to the success of a

company through team building and motivating its people.

2.10-b 'The one-minute manager'

A contemporary bestseller (Blanchard & Johnson (1983)) aimed at managers who

seek to make star performers of their subordinates. To start with, the manager sets

a goal, e.g. one page read in one minute, and it is seen to be achieved by 'one

minute' of praising or reprimand as the case may be. But to be effective, these

must be given (a) promptly, (b) in specific terms, and the behavior, rather than the

person, should be praised or reprimanded.

The concept is basic and it makes sense, although the book seeks to 'dramatize' it.

'One minute' praising is seen to be the motivating force. Everyone is considered a

winner, though some people are disguised as losers, and the manager is extolled

not to be fooled by such appearances.

2.10-c 'Lessons from America's Best-run Companies'

Another bestseller, In Search of Excellence (Peters & Waterman (1982)). Several

criteria, including analysis of annual reports and in-depth interviews, were used to

pick 14 'model excellent companies' out of an initial sample of 62 companies. As

expected, most of the action in high-performing companies revolved around its

people, their success being ascribed to:

productivity through people;

extraordinary performance from ordinary employees;

treating people decently.

Personnel function and in particular leadership were considered the most critical

components. If the leaders in an organization can create and sustain an

environment in which all employees are motivated, the overall performance is

bound to be good. The three essentials for creating such an environment are:

fairness;

job security; and

involvement.

Of all the resources available, the human resource is clearly the most significant,

but also the most difficult to manage. Excellence can only be achieved through


45

http://www.accel-team.com/team_building/index.html

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW excellent performance of every person, rather than by the high-pitched

performance of a few individuals. And motivation is, undoubtedly, the crux.

2.10-d Conclusion

There is no simple answer to the question of how to motivate people. Can money

motivate? Yes, but money alone is not enough, though it does help. We have

discussed some of the pertinent theories bearing on human motivation and this is

balanced by some of the practical factors which can lead to excellence. Human

resource remains the focal point and leadership the critical component, and

motivation has to be 'tailored' to each individual.

2.11 PERFORMANCE APPRAISAL ANGUISH

There is probably no workplace process that troubles both supervisors and

subordinates more than giving and receiving periodic performance appraisals.

Those responsible for giving performance appraisals often lack the necessary

training to administer effective and constructive appraisals, hate to be put in the

position of judge, jury, and executioner, and often find excuses to delay the

delivery of "bad" news. Those on the receiving end of the appraisal process often

become defensive and question the validity and fairness of the process.

For example, a recent work life survey of 2,600 working people by Mercer

Human Resource Consulting revealed that only 33 percent of survey respondents

had been given a performance appraisal in the past year and only 29 percent felt

they had been rewarded for good performance. The survey also found that 42

percent of survey respondents reported being given regular feedback on their

performance, 29 percent reported that poor performers were properly managed,

and only 26 percent said they worked for managers who coached them on how to

improve their performance.

These skeptics are not alone! Dr. W. Edwards Deming, the late American quality

guru credited with being responsible for the "miracle" of Japan following World

War II and a vocal critic of performance appraisals, once wrote, "In practice,

annual ratings are a disease, annihilating long-term planning, demobilizing

teamwork, nourishing rivalry and politics, leaving people bitter, crushed, bruised,


46

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW battered, desolate, despondent, unfit for work for weeks after receipt of rating,

unable to comprehend why they are inferior..." Asked what could possibly replace

performance appraisals, Dr. Deming said, "leadership!"

Despite the fact that those responsible for giving performance appraisals, and

those of the receiving end of performance appraisals, suspect that the process is

flawed, juries hearing wrongful discharge suits aren't so sure! According to

Columbia Southern University's Certified Employment Law Specialist (CELS)

study guide, "Jury studies have found that the most significant factor in a juror's

determination of an employee's performance is past performance evaluations."

Without being armed with documents that attest to the appropriateness of a

contested employment action, defending that action before a jury of the plaintiff's

peers is difficult or impossible.

As a result of legal and functional concerns, corporate America continues to be

wedded to the idea that periodic performance appraisals are a necessary part of the

employee evaluation process that determines retention, compensation, and career

advancement. So, if we're stuck with the process, evaluators, as well as those

being evaluated, should take every opportunity to ensure that the process

accomplishes what it's supposed to accomplish. But before continuing, here's a

true story of a performance appraisal process failure.

At a company I was doing some work for, a senior budget manager, who reported

to the company's chief executive officer, informed me that he was disappointed

because a salary increase popped up in his paycheck without the benefit of a

performance appraisal. I was also disappointed because I had helped the company

develop and implement what the human resources vice president and I thought

was an ironclad performance appraisal process that guaranteed constructive, fair,

accurate, and timely appraisals combined with employee feedback opportunities.

Unfortunately, the company's most senior executive had seemingly sidestepped

the procedure.

We solved the problem by telling the CEO that a "routine" audit of the

performance appraisal process revealed his sin of omission and politely reminded

him that he should probably be the one most committed to the newly established


47

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW performance appraisal procedure. Embarrassed by our "discovery," the CEO

quickly gave the manager a favorable performance appraisal justifying the salary

increase, indicated performance areas that could use some improvement, gave the

manager a couple of suggestions on ways to advance his career, and asked for

some thoughtful feedback on the appraisal.

Nevertheless, the budget manager later told me privately that he thought the entire

process was an abject failure and that it would be sometime before he took

anything coming out of the company's human resources department at face value.

The biggest problem with periodic, especially annual, performance appraisals may

be that the results often come as a surprise to the individual subjected to the

performance appraisal. Consciously or unconsciously, managers and supervisors

often hold back constructive criticism and/or compliments during the performance

period and suddenly reveal the bad news, good news, or combination thereof,

during an annual performance appraisal session. Confused, those being evaluated

often leave the session thinking, "Wow! I didn't know I was doing that badly!" or

"Wow! I didn't know he/she appreciated my work so much!" In both cases, the

process failed the evaluator, the individual being evaluated, and the organization

for which they both work.

In the perfect performance appraisal world, working people know from day to day

how the people to whom they report view their performance. During each

performance cycle, evaluators continually offer guidance, constructive criticism,

and support to those they are responsible for supervising. As a result, the annual

performance appraisal session is simply a review and confirmation of prior

performance issues and an opportunity for both sides to discuss and establish

future performance goals. So, when leaving the session, the individual being

appraised knows where he/she has been, where he/she is now, and what is

expected of him/her in the future.

Unfortunately, most people responsible for evaluating performance lack the

training necessary to complete the process successfully and subordinates continue

to dread the prospect of coming face to face with their real or imagined

shortcomings. And, like most of those put in the position of both judge and jury,


48

Chapter – 2 Chapter – 2 LITERATURE LITERATURE REVIEW REVIEW performance evaluators are often too lenient, too strict, or influenced by individual

biases. Other errors committed by performance evaluators include recency error

(giving greater weight to recent events rather than performance during the entire

performance period), central tendency (appraising all subordinates within a

narrow range), halo/horn effect (rating individuals on one activity rather than

overall performance), and contrast error (rating individuals based on how their

performance compares to other employees rather than how it compares to

organizational performance standards).

Regardless of performance evaluator reluctance or incompetence, those being

evaluated should shoulder some of the responsibility for making the process a

success. If supervisory feedback is not forthcoming during the performance cycle,

individuals should periodically inquire on how their performance is measuring up

against established standards and what they should do to meet or exceed those

standards. In addition, individuals subject to the performance appraisal process

should document all the good/great and bad/lousy things they did during the

performance cycle and attach that list to a letter or memo that says something like:

“Dear Boss: In preparation for our upcoming performance discussion, I looked

back at my performance over the past year and came up with a list of the areas

that I believe I met or exceeded expectations. I also came up with a list of the

areas I feel need improvement. I value you contributions and look forward to the

opportunity to discuss your opinion of my overall performance and the steps I

need to take to improve future performance”.

This type of communication does three things. First, it puts the boss on notice that

the subordinate is expecting a performance appraisal in the near future. Second, it

reminds him/her of the positive contributions made during the performance cycle.

Third, it contains an admission that the person being evaluated doesn't consider

himself/herself perfect and is always on the lookout for ways to improve his/her

performance. Three good things that will eliminate much of the performance

appraisal anguish facing both sides of the performance appraisal equation.


49

Chapter – 3 Chapter – 3 REVIEW OFREVIEW OF CASES CASES

CHAPTER – 3

REVIEW OF CASES

BANK’S PROFILE

Out of the many banks that have been analyzed, three have been studied in-depth.

The profile of the banks that are analyzed in this thesis, are given below:

3.1 BANK ALFALAH LIMITED

It is one of the upcoming and new banks that is considered to be gathering its

customers as well as its employees. Among the new banks, Bank Alfalah Limited

is well known and its’ practices are contemporary as well.

Since the inception of Bank Alfalah Limited, it has moved rapidly in expanding its

branch network and deposit base, along with making profitable advances and

increasing the range of products and services.

Historical Overview

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited

company under the Companies Ordinance 1984. Its banking operations

commenced from November 1st, 1997. The bank is engaged in commercial

banking and related services. The Bank is currently operating through 195

branches in 74 cities.

Strengthened with the banking of the Abu Dhabi Group and driven by the

strategic goals set out by its board of management, the Bank has invested in

revolutionary technology to have an extensive range of products and services.

This facilitates the commitment of the bank to a culture of innovation and seeks

out synergies with clients and service providers to ensure uninterrupted services to

its customers. During the past five years, Bank Alfalah Limited has emerged as

one of the foremost financial institution in the region endeavoring to meet the

needs of the customers.


46

Chapter – 3 Chapter – 3 REVIEW OFREVIEW OF CASES CASES Vision

To be the premier organization operating locally & internationality that provides

the complete range of financial services to all segments under one roof.

Mission

To develop & deliver the most innovative products, manage customer experience,

deliver quality services that contributes to brand strength, establishes a

competitive advantage and enhances profitability, thus providing value to the

stakeholders of the bank.

Training & Development Centers

The manner through which it handles its Human Resource practices is up to date

and aligned. The trainings that it gives to its employees and the development

centers are worthwhile.

From the beginning, Bank Alfalah Limited has been focused on providing skills

and tools to their officers at all levels enabling them to assume key functions and

management positions within the Bank.

Bank Alfalah Limited’s Training & Developing Centers (TDCs) at Karachi and

Lahore, are better equipped to train the influx of both newly acquired as well as

existing human resource. On its part, State Bank of Pakistan has time and again

emphasized the need for all banks to ensure the availability of high quality

training courses to their employees.

Last year, Bank Alfalah’s TDC broke its previous records by offering 80 plus

short courses to Bank Alfalah’s employees in areas such as operations, trade

finance, and credits. Today, BAL’s total staff strength is over 3,500, spread in

thirteen areas, six product divisions / departments and a number of Head Office

Divisions.

To cater for training needs of this large population, TDCs have made elaborate

plans to offer around 120 short courses on a variety of subjects. The key focus

areas covered by these courses are operations, trade, finance, and credit.

Additionally, a number of courses are being be offered to enhance professional


47

Chapter – 3 Chapter – 3 REVIEW OFREVIEW OF CASES CASES skills in marketing, selling, and customer service. TDCs have also planned to offer

a number of courses in areas of leadership and management skills development.

Management Development

The key challenges in senior-level assignments relate to satisfying the

expectations of a number of diverse stakeholders. In order to help senior

colleagues meet these challenges, Training and Development Centers occasionally

invites seasoned trainers and consultants from abroad and from within Pakistan to

offer training in leadership and management skills. All the Senior Executives

including the CEO, Executives incharge, Area Managers, Chief Managers, and

Branch Managers, attend the workshops.

3.2 HABIB BANK LIMITEDHabib Bank Limited is one of the oldest banks of Pakistan. Throughout the

decades, HBL has held the mantle of a dynamic leader, by adding value to the

lives of its customers.

It was HBL that introduced products such as Credit Cards, ATMs, Traveler

cheques etc to the Pakistani market.

HBL has more than 1,425 branches all over Pakistan and presence in 26 countries

across five continents. With a revamped customer oriented philosophy, they are

pursuing new avenues of leadership through innovation, as they gear up to face

the challenges of the new banks.

Historical Overview

HBL established operations in Pakistan in 1947 and moved its head office to

Karachi. Their first international branch was established in Colombo, Sri Lanka in

1951 and Habib Bank Plaza was built in 1972 to commemorate the bank’s 25th

Anniversary. International operations were expanded to include the USA,

Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands.

On June 13, 2002 Pakistan's Privatization Commission announced that the

Government of Pakistan had formally granted the Aga Khan Fund for Economic

Development (AKFED) rights to 51% of the shareholding in HBL, against an


48

Chapter – 3 Chapter – 3 REVIEW OFREVIEW OF CASES CASES investment of PKR. On February 26, 2004, management control was handed over

to AKFED. The Board of Directors was reconstituted to have four AKFED

nominees, including the Chairman and the President/CEO and three Government

of Pakistan nominees.

Vision

To enable people to advance with confidence and success.

Mission

To make our customers prosper, our staff excel and create value for shareholders.

Values

HBL is firmly grounded with a corporate philosophy that incorporates five solid

values which each individual associated with the bank abides by.

Humility

They encourage a culture of mutual respect and treat both the team members and

customers with humility and care.

Integrity

Integrity means a synergic approach towards abiding their core values. United

with the force of shared values and integrity, they form a network of a well-

integrated team.

Meritocracy

At every level, from selection to advancement, they have designed a consistent

system of human resource practices, based on objective criteria throughout all the

layers of the organization. They are, therefore, able to achieve a specific level of

performance at every layer of the organization.

Team Work

Their team strives to become a cohesive and unified force, to offer the customer, a

level of service beyond their expectations. This force is derived from participative

and collective endeavors, a common set of goals and a spirit to share the glory and

the strength to face failures together.


49

Chapter – 3 Chapter – 3 REVIEW OFREVIEW OF CASES CASES Culture of Innovation

They aim to be proactively responsive to new ideas, and to respect and reward the

agents, leaders and creators of change.

3.3 ALLIED BANK LIMITEDAllied Bank Limited was established in Lahore in 1942 before independence,

Allied Bank Limited is one of the largest banks in Pakistan with more than 700

branches located in over 300 cities and towns. The Bank has the largest data

communication network with all its branches offering real-time online banking.

The Bank offers a full range of retail, commercial and corporate banking services

with a focus on service delivery through technology.

Historical Overview

Allied Bank Limited is the first Muslim bank, to have been established on the

territory that became Pakistan.

Established in December 1942 as the Australasia Bank at Lahore with a paid-up

share capital of Rs. 0.12 million under the Chairmanship of Khawaja Bashir Bux,

the Bank had attracted deposits, equivalent to Rs. 0.431 million in its first

eighteen months of business and was growing rapidly after that. The Allied Bank's

story is one of dedication, commitment to professionalism, adaptation to changing

environmental challenges resulting into all round growth and stability.

Vision

To become a dynamic and efficient bank providing integrated solutions in order to

be the first choice bank for the customers.

Mission

To provide value-added services to our customers

To provide high-tech innovative solutions to meet customers requirements

To create sustainable value through growth, efficiency and diversity for all

stakeholders

To provide a challenging work environment and reward dedicated team

members according to their abilities and performance


50

Chapter – 3 Chapter – 3 REVIEW OFREVIEW OF CASES CASES To play a proactive role in contributing towards the society


51

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS

CHAPTER – 4

FINDINGS & ANALYSIS

The process of collecting data was carried out by conducting mostly employees

survey through questionnaires (Annex # 1) and interviews, mainly in the three

banks.

Three banks were analyzed and studied for this purpose in detail while some other

banks were also studied. The three banks are Bank Alfalah Limited, Habib Bank

Limited and Allied Bank Limited.

The major findings are concluded and analyzed below. It gives an idea about the

condition of the banks and the level of employee’s satisfaction in different banks.

It shows the difference between different banks in Pakistan and their problems

related to the performance appraisal system and how it is effecting the motivation

of employees.

4.1 BANK ALFALAH LIMITED

Recent studies regarding motivational patterns in their influence and employee

efficiency have shown a light degree of positive correlation. Low efficiency

coupled with high frustration among bank employees reflects in adequacy of

motivational force and paucity of financial incentives and reward system for high

performance as a result their attitude towards work and behavior with colleagues

has a negative effect in job performance and service standard. The management of

Bank Alfalah Limited uses deficient measures for the motivation and evaluation

of the performance of their workers. The performance methods are:

Performance Report

This is one of the procedures used by the management to know about the

performance of the individual. At Bank Alfalah Limited different aspects are

counted to make the performance report. For example, language, dress,

attendance, behavior with customers, behavior with colleagues, behavior among

boss and sub-ordinates, attainment of targets of deposits etc which has been


51

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS extracted from the appraisal form of Bank Alfalah Limited. Marks are assigned to

each aspect to get aggregate measurement of performance in shape of a numerical

value.

Inspection

Inspection teams are often sent to the branches. These inspections come from

other branches as well as from head office. The members of these teams are often

contacting the customers of the bank to know about the inconvenience by bank

personnel and their services. This is a kind of internal audit.

Audit Report

This report is prepared by auditors, who are sent from the head office for auditing.

This audit emphasize on business transaction, managerial functions and operative

functions. This audit report indicate and point out the mistakes made by workers

in routine work. All the work done by workers is signed by the worker and his

officer, incharge; therefore it is easy to catch that person by whom the mistake is

made.

4.1a Performance appraisal approaches at Bank Alfalah Limited

At Bank Alfalah Limited, two kinds of approaches are used regarding the

performance appraisal system which is explained below:

a. Traditional Approach

The traditional approach is primarily concerned with the overall organization and

its past performance. At Bank Alfalah Limited, the overall performance is reviews

at the branch level. Each branch is liable to show its performance in a positive

direction according to set goals.

b. Development Approach

This approach views the employees as individuals and has been forward looking

through the use of goal setting. All the employees in each of the branches are

given a performa. Every employee working in the bank is assigned targets.

Usually their targets are in the form of amount. The performances of all the

branches are reviewed at the end of December.


52

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS 4.1b Performance Appraisal Process

The performance appraisal process at Bank Alfalah Limited consists of four

interrelated steps:

i. Establish a common understanding between the manager and the employee

regarding work expectations, mainly the work to be accomplished and how

this work is to be evaluated.

ii. Establish ongoing assessment of performance and the progress against

work expectation.

iii. Formal documentation of the performance through the completion of a

performance and development appraisal form appropriate to the job

family.

iv. The formal performance and development appraisal discussion, based on

the completed appraisal form and ending in the construction of a

development plan.

4.1c Present Performance Appraisal Form

The present performance appraisal form at Bank Alfalah Limited is very detailed

and has nine sections in all each one catering to a different aspect of the

employees performance.

Section A of the appraisal form has details regarding the personal data of the

employee like name, employee number, level of employment and salary etc.

Section B of the appraisal form requires the details of the job responsibilities of

the employee.

Section C of the appraisal form has details about the goal specification and

achievements of the employee. It includes aspects like budget reviews, reviews of

branch expenses, survey of locations of new branches, promotional activities,

advertisements and trainings etc. at the end of this section the total score is

calculated as a cumulative total of all the aspects of this specific section.

Section D of the appraisal form gauges and measures the personal attributes of the

employee. It includes aspects like dress, grooming, integrity, honesty, initiative,


53

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS learning ability, productivity, interpersonal communication, team spirit and

customer service attitude etc. The employee rates himself or herself on a rate from

1 to 5. 1 stands for fair and 5 stands for outstanding.

Section E measures the overall performance of the employee and sums out all the

points achieved in the previous sections.

Section F highlights training needs of the employee and caters for the succession

planning in the bank. It also tries to find out what are the training needs of the

employee from the view point of the appraiser and the appraisee both.

Section G has an area where the appraisee can give his or her comments about the

whole appraisal process whereas Section H has the comments of the appraiser.

Lastly Section I requires the human resource division to give its comments

regarding the whole appraisal process.

4.1d Findings of the Survey

The survey was conducted in the main branch of Bank Alfalah Limited in

Peshawar. According to the interviews with the different employees of the bank

and the data that was collected by the questionnaires, it was found that the

performance appraisal process is carried out at the bank once a year. Twenty five

questionnaires were distributed in the bank and the results of this survey are as

represented below:

Survey Results

Sample SizeSample size: 25

No. Of senior employees: 4 / 25 = 16 %

No. Of younger employees: 21 /25 = 84 %

Job Satisfaction

88% of the employees are satisfied with their job

4% of the employees are NOT satisfied with their job

8% have moderate feelings about job satisfaction


54

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS Motivation of employees due to the performance appraisal system

64% of the employees are motivated due to the performance appraisal system

28% of the employees are NOT motivated due to the performance appraisal

system

11 % had no feelings whatsoever regarding the performance appraisal process.

How long have they been in the bank and when was their last promotion?

Sample size Time spend in the bank

Time since last promotion

1 1 year and 8 months 0 promotion2 1 month 0 promotion3 2 years 1 year ago4 3 years 2 years ago5 1 ½ year 2 months ago6 6 years 2 years ago7 1 year and 2 months 0 promotion8 4 years 2 years ago9 1 year and 2 months 2 months ago10 3 years 1 year ago11 11 months 0 promotion12 2 years 7 months ago13 3 months 0 promotion14 1 year 1 month ago15 5 years 3 month ago16 1 years and 8 months 6 months ago17 4 ½ years 1 year ago18 5 years 8 months ago19 4 years 1 year ago20 3 years 3 months ago21 2 years 10 months ago22 2 years 11 months ago23 6 months 0 promotion24 2 months 0 promotion25 I ½ year 1 month ago


55


Major Problem Areas

Problem area Percentages

Little attention is paid to the process once the forms have been filled

72%

Appraisal process seen as unfair by the employees 32%

Inflated appraisal ratings making the process ineffective 36%

4.2 HABIB BANK LIMITED PAKISTAN

The performance appraisal process at Habib Bank Limited has evolved through a

lot of stages and the detail of its evolution is given as follows:

4.2a Evolution of PMS4.2a-1 Pre-1997 Scenario

Being a government organization, around 45% of the country’s economy was

supported by HBL. Till 1997, before the arrival of Mr. Shaukat Tareen, the PMS

of HBL was in a very depressing situation. The PMS was highly subjective, non-

quantitative, biased and had no relationship to the job description of an employee.

The Appraisal system was based on annual ACR’s (Annual Confidential report)

which was popularly called among the employees Annual Confidential Revenge.

Few of the characteristics of the pre-1997 appraisal form are:

4.2a-2 Appraisal Form

It was a behavior based appraisal form

The form was highly subjective and had no link to the job of a person.

No objectives and standards were given due to which the performance of

any person could not be quantified.

There was no system of constant supervision over the employee and no

regular feedback was given to him/her about the performance.


56

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS The performance of a person was usually looked at, at the end of the year

and so there was “Recency Error.”

The supervisor had full autonomy over the employee’s rating so there was a

high tendency of biasness. Due to the biasness, there was a culture of

having strong relationships with superiors. People were judged not on the

basis of their capability or performance but on the basis of their relationship

with the supervisor.

Although there were columns for measuring the strengths and weaknesses

and for suggestion of developmental needs. The development of employees

was still not directed and was practically non-existent.

The appraisal was linked to the compensation in a way that annual salary

increases were based on the final rating of the employee.

4.2a-3 Post-1997 Scenario

During the mid 90’s, economic conditions of Pakistan became highly instable and

the Banking system was almost completely eroded. The decision making was

highly politicized especially in a government owned organization like HBL, top

management’s existence was primarily attributed to the presence of the

government. Once the government changed, the top management of HBL had to

be replaced as well.

It was at this time that the then government brought in Mr. Shaukat Tareen as the

new CEO of the bank. He was for the first time given full authority over the hiring

and firing of the HBL employees. He had responsibility with authority. On 8 th Oct

1997.

Mr. Shaukat Tareen took charge and fired thousands of employees immediately.

Top management of HBL was completely revamped and there was a massive

downsizing through voluntary schemes like golden handshakes etc. Shaukat

Tareen was a dynamic leader and believed in quality of work. He also believed

that proper compensation of employees is necessary to get the best out of them.

He believed that “For peanuts, you get Monkeys”. He increased the remuneration

of employees by 100%. He also instituted the concept of Pay-for Performance.


57

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS It was at this time that the formal appraisal system was designed and

implemented. The PMS designed for HBL tried to remove the discrepancies of the

previous system. The characteristics of the new appraisal form were:

4.2a-4 Appraisal form 1997

This was a quarterly appraisal system

The ranking was done on a scale of four which was:

A……………..Excellent ….. ……………50% above target

B……………..Very good………………..20% above target

C……………..Good…………………….All targets met

D……………..Below average…………..Targets not met

The objectives were set at the beginning of the year. These objectives

cascaded down form the headquarters.

The employee was given regular feedback on the performance.

The new appraisal form was both behavior and result-based.

The form’s measurement part had two parts:

ABO (Appraisal by Objectives)

ABA (Appraisal by Abilities)

ABA was given 30 % weight age and included several attributes like punctuality,

dress code, Interpersonal communication, Customer-service, leadership qualities

etc.

ABO was given 70% weight age. ABO included several job related objectives

which were set by the supervisor at the start of the year. The broader objectives

came from the head office which were narrowed down and specified to the

individual’s level.

The final rating was then given by combining the weight ages of both the

parts. The next part was final rating and for this purpose, a forced ranking


58


system was implemented in the company. According to this system, 10% of

the employees had to be in category A, like wise 20% in B, 60% in C, and

10% in D.

At the end of the year, the appraisal was discussed with the employees and

their feedback and reservations were taken. After the employee has given

feedback, the final rating of the employee is given.

4.2a-5 Present Performance Appraisal FormThe present performance appraisal form at Habib Bank Limited has five sections

in all. The performance appraisal form is highly subjective with no statistical

figures and numbers whatsoever.

Section 1 of the appraisal form requires the general information about the

employee like the name, place of posting and designation etc.

Section 2 of the appraisal form requires the appraiser to give an overall weighted

score to the employee from 1 to 3 (3 being the higher end).

Section 3 has a blank area which requires details about the development plans of

the employee.

Section 4 has a blank area requiring the comments of the employees and also

whether the employee agrees or not with the appraisal that he/she got.

Section 5 is a separate section which has been named as the performance

evaluation form. It has a specific number of key performance indicators like

leadership skills, compliance and adherence to rules and regulations, quality of

service and workforce development etc. basically the whole performance

evaluation form is subdivided in 3 parts which are business results, the viewpoint

of the customer and the employee respectively.

Lastly at the end of Section 5, the overall sum of all the aspects in the form have

been totaled to get a final score.

4.2b Findings of the survey


59

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS For the purpose of finding the effect of performance appraisal system on the

motivation of employees, interviews were carried out in seven branches of Habib

Bank in Islamabad form around 31 people. From the interviews with the

employees at the bank and the data that was collected by the questionnaires it has

been found that the performance appraisal process is carried out twice a year at

Habib Bank Limited. The results of this survey are as represented below:

Survey ResultsSample SizeSample size: 31

No. Of senior employees: 26 / 31= 84 %

No. Of younger employees: 5 / 31 = 16 %

Job Satisfaction

25.80 % of the senior employees are satisfied with their job

54.83 % of the senior employees are NOT satisfied with their job

19.35 % of the senior employees have moderate feelings of satisfaction

Motivation of employees due to the performance appraisal system

13 % of the employees are motivated due to the performance appraisal system

77.41 % of the employees are NOT motivated due to the performance appraisal

system

9.6% of the employees have no feelings about the performance appraisal process




1 2 years 0 promotion


3 1 year 0 promotion

4 3 years 3 months ago

5 10 years 3 years ago


7 5 years 1 year ago


60





















27 1.5 years 5 months ago

28 6 months 0 promotion




Major Problem Areas


Little Importance given to the process once the forms have been filled

96.77%

Lack of post evaluation sessions with the appraisee 83.87%

Inflated appraisal ratings making the process ineffective 88%

Process seen as unfair by the employees 80.64%


61


Ineffective linkage of the performance appraisal process with the promotion of the employees

76%

Force used to fill out the forms 48.38%

Lack of communication of change 41%

Awareness of the person who carries out the appraisal 29%


62


4.3 ALLIED BANK LIMITED

4.3a Present Performance Appraisal Form

The present performance appraisal form at Allied Bank Limited has 5 sections in

all each one catering to a different aspect of the performance of the employee.

Section 1 of the appraisal form requires the general information related to the

employee like the name, designation, year of employment etc. After that the same

section has a detailed part of the employee’s competence assessment. This section

requires the appraiser or the reviewer to give marks between 0 to 100 against the

different assessment areas that are mentioned here like punctuality, attitude and

behavior, communication skills, interpersonal skills, general appearance, job

commitment, job knowledge, work efficiency and initiative etc. one appraiser and

three reviewers mark the appraise against all these assessment areas from 0 to 100.

Section 2 of the appraisal form requires details about the special assignments

other than the routine work. One part of this section requires the details of the

special assignment and then the other part requires the weightage given to each

assignment in the form of percentages.

Section 3 of the appraisal form requires details of the growth potential of the

employee. It has a blank area which requires the identification of particular

performance expectations, knowledge of other banking areas or the skills upon

which the employee should focus in order to reinforce his/her success and

contribution to the bank.

Section 4 requires details regarding the different requirements of the employee

with respect to future trainings and development. Finally the last section requires a

blank area where recommendations are given on the basis of which increment,

bonus or promotion is given to the employee.

4.3b Findings of the Survey

For this purpose, interviews were carried out in seven branches of Allied Bank

Limited in Islamabad from around 20 people. From the interviews that were

carried out with the employees at the bank and the data that was collected by the

questionnaires, it was found that the performance appraisal process is carried out


63

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS once a year and in some cases it can even be carried out twice a year as well for

reasons like promotions etc. The results of sthis survey are as represented below:

Survey Results

Sample Size

Sample size: 20

No. Of senior employees: 16 / 20= 80 %

No. Of younger employees: 4 / 20 = 20 %

Job Satisfaction

50 % of the senior employees are satisfied with their job

30 % of the senior employees are NOT satisfied with their job

20 % of the senior employees have moderate feelings of satisfaction

Motivation of employees due to the performance appraisal system

30 % of the employees are motivated due to the performance appraisal system

65 % of the employees are NOT motivated due to the performance appraisal

system

5% of the employees have neutral feelings about the performance appraisal

system









6 1 year and 10 months 10 months ago


8 1 year 0 promotion



64



11 3 years 3 months ago










Major Problem Areas


Ineffective linkage of the performance appraisal process with the promotion of the employees

93%

Little Importance given to the process once the forms have been filled

80%

Process seen as unfair by the employees 75%

4.4 BANK ALFALAH’S ANALYSIS

The results that were concluded from the bank’s survey were relatively positive as

compared to the survey results from Habib Bank and Allied Bank Limited. The

percentage of employees who were satisfied with their jobs (88%) was the highest

at Bank Alfalah Limited. The reason being that most of the employees get a

chance to learn and are given authority to do whatever they want to do as long as

it is working for the benefit of the bank.

As far as the motivation of the employees due to the performance appraisal system

is concerned, only 28% of the employees are not motivated due to the

performance appraisal system. Most of the reasons are because of the very nature

of the performance appraisal process. Some of the employees who do not get good

appraisals are year end think that the ratings are inflated or the process is unfair.


65

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS This problem basically arises due to the less frequently conducted discussion

sessions with the employees.

Major Issues

The major issues concluded from the survey are as follows:

The problem of the appraisal ratings being inflated which makes the

process ineffective was marked positively by 36% of the employees. This

again is related to the first point which is the low frequency of post

evaluation discussions with the appraisees. Employees do not get a clear

picture of why they were evaluated good or bad and so they cannot work on

its improvement. In such a case when a certain employee gets a bad

appraisal and another employee gets a good appraisal, the one who gets a

bad one would say that the ratings are inflated or that the appraiser wasn’t

good enough to carry out the appraisal.

Appraisal process seen as unfair by the employees is one of the major

issues experienced at Bank Alfalah Limited. 32% of the employees voted in

the favor of this problem. Although it is an accepted fact the basic nature of

the performance appraisal system is very biased and most of the people

would see it as unfair because all the aspects of the performance of the

employee cannot be quantified in an absolute way.

Thirdly 72% of the employees said that little attention is paid to the

process once the forms have been filled. This is again a very serious

problem if we analyze it in depth. As mentioned previously, performance

appraisal process is a continuous process which should be carried

throughout the year. But at Bank Alfalah Limited it is carried once a year

and so people forget the performance of the employees all year round.

All the problems revolve around one single point and that is to communicate the

whole process with the results to the employees on a regular basis so that they are

well aware of the way and how they are evaluated.


66

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS Positive Aspects of the Bank

Some of the positive aspects of the bank’s appraisal process are discussed below:

The most positive aspect of Bank Alfalah Limited which was not found in

any of the other banks is that discussions are carried on with the employees

at the beginning of the year. Objectives are set between the manage and the

employee at the very beginning and at the year end the employee’s

performance is evaluated on the basis of the same objectives that were set

before. This gives a clear direction to the employee from the very first day

and should be adopted at the other banks as well.

Awareness of job description is a very important part of the performance

appraisal process. 96% of the employees said that they are clearly aware of

their job description and the job content that the have to perform. Job

description is very important for the effective working of the appraisal

process because if an employee is not aware of what work he has to do or

what targets he has to meet, then it is impossible for him to know how his

performance is going to be evaluated.

Awareness of person who carries out appraisal is yet another important

aspect which was positively rated by 100% of the employees at Bank

Alfalah Limited. Every employee from the very first day is aware of the

person who is going to carry out his appraisal whether he or she be the boss

of the appraisee, the subordinate or the peer etc. this is helpful for the

employee because he/she can directly go to his/her appraiser in case the

evaluation is not good or very good so as to find out the reasons. Apart

from that the appraisee can also get a fair idea about how the appraiser is

going to evaluate him/her.

Use of force to fill forms is a very serious problem which is not

experienced by the employees at Bank Alfalah Limited. In some of the

banks the authorities have to force the employees to fill out the forms.

There is a positive correlation of the appraisal form with the promotions

of the employees at Bank Alfalah Limited which again is a very positive


67


aspect. As can be seen in the table of the previous section, promotions are

more frequent at Bank Alfalah Limited than any of the other banks and has

a positive effect on the motivation of the employees.

4.4a Analysis of the appraisal form

If we analyze the appraisal form of Bank Alfalah Limited, we can see that it is

somewhat better than the appraisal forms of the other two banks the reason being

that it is comparatively less subjective. If we look at Section A of the form we can

see that it requires the name of the employee as well. One thing which is negative

about this is that names should not be mentioned in the appraisal form. This gives

a reason to the employee to be reluctant in giving the honest feedback regarding

his or her performance. On the other hand if instead of the name only the

designation of the employee is mentioned, the employee would feel much more

comfortable in filling out the form.

Section B of the form requires the employee to mention his or her job

responsibilities in detail. This is a very positive aspect of the form which is not

present in any of the other banks. The reason why this is a positive thing is

because, it shows the understanding of the employee about his/her job. Otherwise

in most of the banks the employee is not even sure what he/she has to do in the

particular position that he/she is holding in the organization.

Section C of the form has details about the goal specifications and achievements

which are given by the employee himself. This is a very positive aspect because it

gives a chance to the employee to rate his or her performance himself and then it

can be discussed with the appraiser whether it is right or not.

Section D requires details about the personal attributes of the employee on a scale

of 1 to 5. The different aspects are rated with a complete understanding of what 1

means and what 5 means which is mentioned at the top of this section. In most of

the forms only numbers are mentioned with no details of what the numbers

actually stand for which is not the case here.

In Section E the overall score of the employee based on the previous sections is

specified very beautifully because there is no single number for a certain score


68

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS infact there is a range e.g. outstanding performance is a range from a score of 85

and above and so on.

Section F requires the details about the training and development needs. One

problem in this section is that the makes of the form should have included the

reasons as to why a certain form of training is required by a certain employee.

This would have given a clear picture to the employee as well as to where he/she

is lacking. Another very positive aspect of Section F is the mentioning of the

contingency planning which is not a part of any of the forms at any other bank.

Finally at the end of the form detailed comments by the appraiser, appraise and

the HR division is mentioned which again is a very positive thing.

4.4b Correlational analysisAnother part of the analysis is the correlational analysis of the different aspects of

the appraisal form and the motivation of employees due to the performance

appraisal forms. Some of the figures in this regard are as follows:

Factors of theMotivation of employees due to the performance appraisal

form

Factors of the appraisal form Motivation of employees due to the performance appraisal form

1. Objectivity in questions 0.997975

2. Awareness of the appraiser 0.987541

3. Frequency of promotions 0.877713

If we analyze the figures above we can see that the greater the objectivity in the

questionnaire the higher is the correlation which is approximately equal to one.

The positive correlation shows that as the objectivity in the questionnaire

increases so does the motivation of the employees due to the performance

appraisal form.

Secondly if we look at the aspect of awareness of the appraiser, again the

correlation is positive and at the very high end. This shows that as the awareness


69

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS of the appraiser increases in the mind of the employees, they eventually get more

motivated in doing their jobs.

Thirdly the correlation between frequency of promotions at Bank Alfalah Limited

and the motivation of employees due to the performance appraisal form is

0.877713. this figure is high as well but lower that the other two banks. The

reason for this is that at Bank Alfalah Limited, the employees thought that other

aspects like job content, environment and communication etc also plays a very

major role in the motivation of employees rather than the frequency of

promotions.

4.5 HABIB BANK’S ANALYSIS

The results that were concluded from the bank’s survey were relatively negative

as compared to the survey results from Bank Alfalah and Allied Bank Limited.

The percentage of employees who were satisfied with their jobs (26%) was the

lowest at Habib Bank Limited. The reason being that majority of the employees at

Habib Bank are senior employees. As the trend is shifting towards the selection

fresh graduates with a new perspective to the issues in the banking industry, their

importance is going down. Most of the banks specially what was seen at Habib

Bank, are making efforts to hire new and fresh employees paying them higher

than the existing senior employees at the bank. Thus the problem of pay

compression comes into play which causes the most damage to the senior

employees who on the average have been working for the bank for the past 10 to

20 years.

Apart from that some of the other reasons which cause the employees to be

dissatisfied according to the survey include, no future prospects, boring work

environment, work load and also the monotonous less challenging work.


is concerned, about 78% of the employees are not motivated due to the

performance appraisal system which is a very high percentage. There are a


70

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS number of reasons for that including the subjective nature of the appraisal form

which will be analyzed in detail in the next part.

Apart from that the lack of discussions with the appraisee after the evaluation,

inflated appraisal ratings, ineffective linkage of the performance appraisal with the

promotion of the employees causes a lot of problems in motivating the employees.

If we analyze the promotions are more frequently visible in case of the younger

employees of the bank in comparison to the senior employees. Further on the use

of force to fill out the appraisal forms and the lack of communication of change to

the employees are major issues as well.

Major Issues

One of the major problems was the lack of importance given to the

appraisal process once the forms have been filled. This was ranked

positively by 97% of the employees at the bank. The reason why this is a

very major issue and that effects the motivation of the employees because

appraisal should be an ongoing process and should take place very

frequently. For example if an employee did something good or bad at the

beginning of the year, most of the times it happens that the behavior is

forgotten by the appraiser at the end of the year when the actual evaluation

takes place. This causes dissatisfaction and demotivation on the part of the

employee.

Another problem which was observed at Habib Bank similar to what was

observed at Bank Alfalah Limited is the lack of post evaluation sessions

with the appraisee. From the survey 84% of the employees said that no

sessions are conducted and about 17% of the employees reported that some

sort of a session is conducted between the appraiser and the appraisee but

most of them were not very satisfied with the sessions and considered it just

a formality. From these percentages it is obvious that even the employees at

different levels are not sure about the post evaluation sessions because of

the inconsistencies in their replies.

Thirdly 88% of the senior employees thought that the appraisal ratings

are inflated making the process ineffective. This is again due to the fact that


71


majority of the employees at Habib Bank are senior employees who believe

that the younger employees get more favorable appraisals than they do.

Fourthly about 81% of the senior employees think that the process is

unfair again due to the same reason that is mentioned above.

The problem of ineffective linkage of the performance appraisal process

with the promotion of the employees was ranked positively by 76% of the

senior employees. By analyzing the frequency of promotions, it is obvious

that the younger employees receive promotions more frequently than the

senior employees. That is why juniors think that the performance appraisal

system is effectively linked with the promotion of the employees contrary

to what the senior employees think. The main issue is that the development

and career progression is still not linked to the PMS in an effective

manner. There is an absence of promotion policy and people fail to see a

clear gun sight ahead of them. This has brought about a lot of frustration

and confusion for the employees.

One alarming problem that was found from the survey at Habib Bank is

that the HR department actually has to force employees in some cases to

fill out the forms. About 48% of the employees think that force is used

which infact should be 100% no force. This is because of the fact that

filling out forms lies at the very basic level of the appraisal process

Among all the three banks which were taken up for the research of this

thesis, Habib Bank is the only bank which had a change in the appraisal

process in the past 5 years but the problem that they had in this case was

the lack of communication of change. 41% of the employees are not aware

of the reasons why and how the change took place which is a very negative

thing. Some of the reasons by the employees are privatization,

transparency, change to motivate employees which according to them is not

working at all and lastly the change in strategic direction. The real reason

however is the privatization of the bank which was known only by 10% of

the people who knew about the change.


72

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS Lastly the awareness of the person who carries out the appraisal again

lies at the very basic level of the appraisal process. Every employees should

be aware of the his/her appraiser on the very first day. It helps the employee

know where he is lagging or leading and how he/she can improve his/her

performance. At Habib Bank 29% of the employees are not aware of the

person who carries out their appraisal.

All the above mentioned problems regarding the lack of motivation of the

employees due to the performance appraisal system revolves around two main

reasons. One is the lack of communication between the employees and the

authorities and the employees and the second is the disparity between the attitude

and the treatment with the senior and the junior employees.

Positive Aspects of the Bank

Some of the positive aspects of the bank concerned with the performance

appraisal system are discussed below:

Awareness of job description makes the foundation of a good appraisal

system and 93.54% of the employees favored this aspect. Only if an

employee is aware of his/her job description can he/she know what he/she

is being rated against and how he/she can work towards the improvement

of their performance.

Another very positive aspect of Habib Bank which was not found in any of

the other banks was the change in the appraisal process in the past 5 years.

This shows that work is being done in this regard to improve the process

and efforts are also being made.

Thirdly appraisals are being done at Habib Bank twice a year which is a

positive aspect as compared to the once a year appraisals are Bank Alfalah

Limited.

4.5a Analysis of the appraisal form

If we analyze the appraisal form of Habib Bank Limited, we can see that it is

highly subjective and has a number of very basic and major flaws the details of

which are mentioned below. If we look at Section 1 of the form we can see that it


73

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS requires the name of the employee. One thing which is negative about this is that

names should not be mentioned in the appraisal form. This gives a reason to the

employee to be reluctant in giving the honest feedback regarding his or her

performance. On the other hand if instead of the name only the designation of the

employee is mentioned, the employee would feel much more comfortable in

filling out the form.

Section 2 of the form requires the overall weighted performance score of the

employee. Here it is mentioned that 3 is the score which is at the higher end and

specific reasons should be given if an employee is rated more than 3. Now the

problem that arises here is that there are no aspects mentioned on which the

employee can be rated. There is a great deal of ambiguity in knowing what aspects

the employee should be rated against in order to get a score of 3 or higher.

Section 3 requires details about the development plans of the employee which is a

very positive aspect but it also has the same problem as was seen in the case of

Bank Alfalah Limited which is that no reasons are given as to why certain training

is required by a certain employee. If this had been mentioned, the employee would

have had a much clear picture as to where he/she is lacking and what is required in

order to improve.

Section 4 requires the comments of the employee in a blank area. This is a very

vague thing which cannot be quantified at all. Instead it would have been wiser if

a session was conducted with the employee after the filling of the form in order to

know his/her views regarding the whole appraisal process. At the end of this

section there is a question whether the employee agrees with the appraisal or not.

It should have been accompanied by another part of the same section which

required reasons why the employee did not agree with the appraisal that he/she

was given.

Section 5 of the form has a concept which is very different and very good only if

BARS had been use instead of the rating from 1 to 5. The aspect of this section

requires a lot of detail which could have been understood in a much better way

with the help of BARS. The concept is right and very different but the

implementation is flawed.


74

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS 4.5b Correlational Analysis

Another part of the analysis is the correlational analysis of the different aspects of

the appraisal form and the motivation of employees due to the performance

appraisal forms. Some of the figures in this regard are as follows:


75







questionnaire the higher is the correlation which is somewhat closer to one. The

positive correlation shows that as the objectivity in the questionnaire increases so

does the motivation of the employees due to the performance appraisal form.


correlation is positive but not at the very high end as compared to the correlation

in case of Bank Alfalah Limited. This shows that as the awareness of the appraiser

increases in the mind of the employees, they eventually get more motivated in

doing their jobs.

Thirdly the correlation between frequency of promotions at Habib Bank Limited


0.919799. This figure is higher than the correlation in case of Bank Alfalah. The

reason for this is because the employees at Habib Bank Limited are not promoted

at a very frequent rate. That is why they feel that the motivation of the employees

is dependent on the frequency of their promotions.

4.6 ALLIED BANK’S ANALYSIS

The results that are concluded from the bank’s survey are somewhere in between

the results of Habib Bank and Bank Alfalah Limited. The percentage of

employees who were satisfied with their jobs (50%) was lower than the 88% job

satisfaction at Bank Alfalah Limited but less than the 26% job satisfaction at

Habib Bank Limited. The reason being that again like Habib Bank, Allied Bank

too comprises of a lot of employees who are senior with an average experience of

about 15 to 20 years. The same problems of insecurities on the part of the senior


76

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS employees with pay compression causes the percentage of job dissatisfaction to go

up the ladder.


is concerned, 65% of the employees are not motivated due to the performance

appraisal system. There are a number of reasons for that including the subjective

nature of the appraisal form which will be analyzed in detail in the next part.

Apart from that the ineffective linkage of the performance appraisal with the

promotion of the employees is also a negative aspect which can be seen in table of

the previous section. Also the lack of importance given to the appraisal process

throughout the year and the process being seen as unfair adds to the problems.

Some of the points which make the level of motivation due to the performance

appraisals at Allied Bank Limited higher than Habib Bank is because some sort of

post evaluation discussions are carried out between the appraiser and the

appraisee. Although some of the employees say that the discussions are not very

fruitful and they do not cause any improvement, but still an effort is being made

and has some benefit for the employees and the bank as a whole.

Major Issues

Some of the major issues concerned with the performance appraisal process at

Allied Bank Limited are discussed as follows:

The same problem of the ineffective linkage of the performance appraisal

process with the promotion of the employees is experienced by the

employees at Allied Bank as well. 93% of the senior employees reported in

the survey that the younger employees are given promotions more

frequently as compared to the senior employees which can be seen from

table in the previous section as well. The main issue again is that the

development and career progression is still not linked to the PMS in an

effective manner. There is an absence of promotion policy and people fail

to see what is expected of them to go up the ladder. This has brought about

a lot of frustration and confusion for the employees.


77

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS Secondly the same problem which has been observed both at Bank Alfalah

Limited and Habib Bank Limited is the lack of importance given to the

appraisal process once the forms have been filled. 80% of the employees

think that most of their good work that they have done at the initial part of

the year is gone into waste just because of the fact that appraisals are

carried out not very frequently. Although the appraisals at Allied Bank

Limited are more frequent than the other two banks but still the frequency

should be increased even more to reap the benefits.

Another problem is that the appraisals are normally carried out once a

year and in rare cases they might be even carried out twice a year.

Lastly because of the very nature of the performance appraisal process and

the problem of the senior and the junior employees, 75% of the senior

employees think that the process is unfair and the ranking for the junior

employees is different from that of thee senior employees.

Most of the problems in case of Allied bank Limited are because of the disparity

as senior and junior employees at the bank.

Positive Aspects of the Bank

Some of the positive aspects of the bank concerned with the performance

appraisal are as follows:

Again the same aspect of awareness of the job description by the majority

of the employees is another very positive point. The reason being that job

descriptions make the foundation of the appraisal process because the

appraisal form cannot be designed until and unless the job descriptions are

known. In case of Allied Bank 95% of the employees are clearly aware of

their job descriptions.

Secondly 90% of the employees at Allied Bank Limited are aware of the

person who carries out their appraisal. This is a very positive thing and

lies at the base of a good appraisal system because until and unless an

employee knows who is evaluating their performance, he cannot know how

he/she can take steps to improve it even further.


78

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS Discussions are carried out between the employee and the appraiser after

the evaluation. Some of the employees think that it is just a formality with

no benefits to the employee whatsoever, but on the contrary some of the

employees think that in depth discussions are carried out with their

appraiser. May be it varies from appraiser to appraiser. But at least some

sort of effort is made in this direction.

No force is used to make the employees fill out the forms. The employees

are well aware of the fact that the appraisals are carried out for their own

benefit and so they fill them out at their own will.

4.6a Analysis of the Appraisal Form

If we analyze the appraisal form of Allied Bank Limited, we can see that it is a

combination of objective and subjective questions. It is less subjective than the

form of Habib Bank Limited and more subjective than that of Alfalah Bank

Limited. If we look at Section 1 of the form we can see that it requires the name

of the employee. One thing which is negative about this is that names should not

be mentioned in the appraisal form. This gives a reason to the employee to be

reluctant in giving the honest feedback regarding his or her performance. On the

other hand if instead of the name only the designation of the employee is

mentioned, the employee would feel much more comfortable in filling out the

form. One positive thing about the general information in this form is the

mentioning of the highest academic qualification of the employee which is a very

important aspect not mentioned in the forms of any other bank.

Another part of Section 1 requires the rating of the different assessment areas on a

scale of 0 to 100 which is a very broad range and makes the rating useless and

vague. Also in such a broad range it becomes very difficult to mention what each

aspect means. Instead the BARS should have been used here in order to make this

part more effective.

Section 2 has the details about the special assignments which are again rated on a

percentage which makes it very broad and vague. Here the quantity or the

frequency should have mentioned like monthly, yearly or quarterly basis.


79

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS Section 3 specifies the growth potential of the employee. Here the occurrence of

the recency effect is very evident and there is a probability that the recency effect

would occur more frequently in this case. The reason for this is because the

appraisals are carried on a yearly basis and no one would remember what positive

or negative behavior the employee had at the beginning of the year.

Section 4 has the same problem as with the previous forms, that is the reasons

should have been mentioned as to why the employee requires a certain training.

4.6b Correlational analysis

Another part of the analysis is the correlational analysis of the different

aspects of the appraisal form and the motivation of employees due to the

performance appraisal forms. Some of the figures in this regard are as

follows:






questionnaire the higher is the correlation which is somewhat closer to one. The

positive correlation shows that as the objectivity in the questionnaire increases so

does the motivation of the employees due to the performance appraisal form.


correlation is positive but not at the very high end as compared to the correlation

in case of Bank Alfalah Limited. This shows that as the awareness of the appraiser

increases in the mind of the employees, they eventually get more motivated in

doing their jobs.

Thirdly the correlation between frequency of promotions at Habib Bank Limited


0.924211. This figure is higher than the correlation in case of Bank Alfalah. The

reason for this is because the employees at Allied Bank Limited like Habib Bank


80

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS Limited are not promoted at a very frequent rate. That is why they feel that the

motivation of the employees is dependent on the frequency of their promotions.


81


4.7 HYPOTHESIS

From the above findings of the research we can now prove by statistics and

figures whether the hypothesis were proved right or wrong in the case of the three

banks.

1. Higher objectivity in questions lead to higher job satisfaction

The level of job satisfaction was the highest at Bank Alfalah Limited (88%). If we

look at the performance appraisal form of the bank we can see that majority of the

questions in the form are very clear and objective. If an aspect of the performance

has to measure at a level which is excellent, there is clear indication of what

excellent means and what kind of performances does it encompass. While on the

other hand the level of job satisfaction was lowest at Habib Bank Limited (26%).

Now if we look at the performance appraisal form of Habib Bank Limited it has

almost no objective questions whatsoever. The form is very subjective in which

most of the responses are to be given in the form of paragraphs written by the

respondents. It makes it very difficult to quantify all the responses and employees

do not know how they really performed. The same is true for Allied Bank Limited

as well.

With a larger number of objective questions in the form, the employees are clearly

aware of why they are being rated as excellent or bad and so it leads to a higher

job satisfaction. There are different aspects of job satisfaction as well but in this

case the aspects which were specifically questioned from the employees included

learning from the job, communication with the peers, subordinates and

superiors, the level of satisfaction with the whole appraisal process, work

environment and job content etc.

Results from the survey and responses from the questionnaire strongly support

this argument because all the aspects of a satisfied employee mentioned above are

catered to by the objectivity in the appraisal form.

2. Awareness of the appraiser lead to higher motivation

The awareness of the appraiser is a very fundamental part of the whole

performance appraisal process and it should be made a regular part of the


82

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS induction process. This is important because until and unless an employee is

aware of who is going to evaluate his or her performance, he/she would not know

who to refer to in case of any kind of problem with the appraisal and evaluation.

Apart from that knowledge of the appraiser gives a direction to the employee for

better performance on the job.

At Bank Alfalah Limited 100% of the employees are aware of their appraiser

which is a very positive aspect and lays a firm basis to the whole performance

appraisal process and also leads to higher motivation of the employees. If we

analyze among all the three banks, Bank Alfalah has the highest level of job

satisfaction and also it is the only bank in which 100% of the employees are aware

of their appraisers.

Looking at the findings of Habib Bank Limited, we can see that 29% of the

employees are not aware of the person who appraises them. And in case of Allied

Bank Limited the percentage is 10%. The lack of awareness in case of Habib

Bank Limited is slightly more than that of Allied Bank and consequently the level

of job satisfaction at Allied Bank is also slightly more than that of Habib Bank

Limited.


this argument because in the banks having a higher percentage of awareness of the

appraiser has a higher percentage of satisfied and motivated employees and vice

versa.

3. More time spent at a bank leads to higher motivation

If we analyze and look at the findings of the three banks we can see that the longer

span of time that the employee spends with the bank does not necessarily lead to

higher motivation of the employees. The level of motivation of employees is

highest at Bank Alfalah Limited (64%), but majority of the employees are

relatively new and the average number of years that an employee has spent at

Bank Alfalah is about 6 to 7 years.

Looking at the older banks like Habib Bank Limited and Allied Bank Limited, we

can see that the average number of years that an employee has spent at these


83

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS banks is about 20 to 25 years. But the level of satisfaction and motivation of

employees is lower (13% and 30% respectively) than that of Bank Alfalah

Limited.

Results from the survey and responses from the questionnaire does not support

this argument because in the banks having a higher percentage of motivated

employees, the span of time spent is lower while in the banks having a lower

percentage of motivated employees the span of years spent by the employees is

higher.

4. Frequent promotions lead to higher motivation of employees

If we analyze the relationship of the promotions and the motivation of employees

we can see that the promotions are more frequent at Bank Alfalah than any of the

other two banks. The average number of years after which an employee is

promoted is about 1 year. While on the other hand if we look at Habib Bank

Limited and Allied Bank Limited, the average number of years after which an

employee is promoted varies for the older and the relatively younger employees.

As majority of the employees in these older banks are the older employees, they

are not getting the promotions as frequently as the newly hired ones.


this argument because the frequency of promotions is highest at Bank Alfalah

Limited and so is the level of motivation in the employees followed by Allied

Bank Limited and Habib Bank Limited respectively.

5. Perception of unfairness of the appraisal forms lead to dissatisfaction of the employees

If we analyze the performance appraisal process has some aspect of unfairness in

its very nature. The reason being that no matter how hard one tries to make it

completely quantifiable, some aspects of it remain subjective. But efforts can be

made to make the process less subjective so as to satisfy the needs and wants of

the employees.

Looking at the figures from Bank Alfalah Limited, we can see that only 32% of

the participants think that the process is unfair while on the other hand the


84

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS percentages in the case of Habib Bank Limited and Allied Bank Limited are 80%

and 75% respectively. In the very same way the level of satisfied employees is

highest at Bank Alfalah Limited followed by Allied Bank and Habib Bank.


this argument because in the bank where the perception of unfairness of the

appraisal forms is highest has the highest number of dissatisfied employees and

vice versa.

4.8 OVERALL COMPARISON

The three banks were analyzed in detail and a major difference was seen between

the new and the older banks. If they are to be ranked in a descending order, on the

basis of how satisfied their employees are and how the performance appraisal

process affects the motivation of employees, the findings show that:

1. Bank Alfalah Limited

2. Allied Bank Limited

3. Habib Bank Limited

The satisfaction level of the employees in Bank Alfalah Limited was outstanding

as compared to the employees in the Habib Bank and Allied Bank Limited. Also

the level of motivation of the employees due to the performance appraisal process

is highest at Bank Alfalah Limited. The basic reason for which is the learning

environment at the bank and the fact that majority of the employees are relatively

younger and at the same level which is not the case at HBL and ABL.

The condition at HBL and ABL is unsatisfactory mainly because of the reason

that the workforce in those two banks is divided into the senior and the junior

employees who think that the appraisal system does not treat them at an equal

level.

One other reason why Bank Alfalah Limited is better than the other two banks is

because, the basic aspects of the appraisal process are fulfilled. No force is used

like in case of HBL and everything is communicated to the employees which was

lacking in the case of HBL which changed its performance appraisal system, but


85

Chapter – 4 Chapter – 4 FINDINGS AND FINDINGS AND ANALYSIS ANALYSIS the reason why the change took place was not known by majority of the

employees.


86

Chapter – 5 Chapter – 5 PROPOSAL PROPOSAL

CHAPTER – 5

PROPOSAL

5.1 MAKING PERFORMANCE MANAGEMENT A MOTIVATION TOOL

This training shows managers and supervisors how to make appraisals and

coaching work as an effective part of the performance management process to

motivate employees and improve performance. This onsite performance

management seminar is customized to work effectively with your performance

management and appraisal system.

5.2 MAKE PERFORMANCE APPRAISALS FAIR AND MEANINGFUL

Most managers and supervisors are uncomfortable conducting performance

appraisal discussions. Only a few, feel confident in their ability to accurately

assess the performance of their employees. This course helps managers

effectively deal with the most common–and most difficult–challenges in using the

performance appraisal system. Knowing how to give honest performance

feedback and use the appraisal system as a communication and motivational

performance management tool will improve employee performance.

5.3 KEEP APPRAISALS LEGALUsing the techniques developed in this program, managers will enhance their

coaching skills and practice methods to effectively document and support any

rating. They learn how to avoid evaluation mistakes that can lead to feeling of

unfairness, arguments, decreased morale, and even lawsuits. This program shows

managers how to deliver even the most difficult performance reviews and

appraisals effectively.

5.4 SAVE TIME WITH EFFECTIVE PERFORMANCE MANAGEMENT PROCESSES

This training reveals the best practices to reduce the time spent in preparing

meaningful and productive employee appraisals.


83


5.5 KEEP PERFORMANCE MANAGEMENT FUTURE FOCUSED

Performance management is an ongoing process, but it begins with employee

involvement in setting specific expectations and measurable goals. Coaching

through the performance period helps employees achieve success and document

performance–good and bad. The process also provides data to streamline the

process of writing the appraisal and sets the stage for a positive appraisal session

with no surprises.

In this session, managers and supervisors learn how to make the performance

management process an ongoing process of helping employees build to higher

levels of performance.

Who should attend?

Executives, managers, and supervisors who need to know how to use employee

performance evaluations as a positive tool in developing better job performance

and employee morale.

Training Benefits

Establish the fundamentals for an effective performance management

process

Increase the confidence and comfort level of managers and supervisors

Increase employee performance through coaching and goal setting

Increase morale through better feedback

Avoid potential adverse legal action due to subjective ratings

Generate better performance expectations and standards

Avoid arguments and bad feelings over appraisal ratings

Sidestep the most common evaluation pitfalls and problems

Build and maintain the credibility of the evaluation process


84


Overview of Concepts and Deliverables Provided

Understand the real value of the performance discussions – both formal and

informal

Learn to use performance discussions to stimulate better communication

Determine how to make the appraisal form work for you, not against you

Know how to streamline the assessment process to save time and improve

performance

Attain the skills to use ongoing performance management communication

as a motivator

Learn the steps for effective coaching

Know how to initiate and follow through with performance discussions

when performance is below expectations

Learn the rules for positive and negative feedback meaningful

How to set better goals and expectations to motivate higher performance

Know how to make the performance setting and discussion more positive

and productive

How to best prepare for the performance discussion

Avoid overly-subjective performance appraisal ratings

Make performance discussions more interactive

How to handle evaluations that become emotional

How to handle defensiveness and challenges to performance ratings

Determine what to do to motivate the employee on the “no-reason-to-

change-plateau”

How to handle the person who says, “Why should I improve when I’m

doing just fine now?”

Keys to develop and maintain the validity of the performance management

process.


85

Chapter – 6 Chapter – 6 RECOMMENDATIONS AND RECOMMENDATIONS AND CONCLUSION CONCLUSION

CHAPTER – 6

RECOMMENDATIONS & CONCLUSION

After the detailed literature review, research and findings by the interviews and

the data collected from all the three banks, following are some of the

recommendations which have been given in order to eliminate of reduce the

problems faced by the banks to some extent. Although the recommendations

provided here may not be able to make the performance appraisal system perfect,

neither can they be implemented in a day or two. But the effort here is to give the

banks awareness about the problems and some steps to improve them which if

appeals to them can be implemented slowly and gradually over a period of time.

6.1 RECOMMENDATIONS FOR BANK ALFALAH LIMITED

Some of the recommendations for Bank Alfalah Limited are as follows:

The most important thing that should be adopted by Bank Alfalah Limited

in order to have a positive correlation between the performance appraisal

system and the motivation of employees is to have post evaluation sessions

more frequently with the appraisers. This gives a chance to the employee to

know where he is leading or lagging in order to improve his/her

performance on the whole. Although at the moment Bank Alfalah Limited

carries out detailed sessions with the employees at year end but informal

sessions should be conducted (if possible) on a monthly basis.

Another aspect is that the appraisal process seen as unfair by the employees

which can be eliminated by the communication of the employees with the

HR and other authorities so that they know why and how the appraisals

take place. In that way, the transparency of the process would give them a

clear direction and they would not be in a situation to complain about the

unfair or inflated evaluations.

Although at Bank Alfalah Limited most of the basic requirements regarding

the performance appraisal system are fulfilled, but the motivation of the


86


employees can reach sky high ranking only if they try and carry out the

process more frequently. Currently the appraisals are being done once a

year. If that is increased to a less formal session between the subordinate

and the supervisor on a monthly basis, it would come up with benefits for

the employer and would effect the motivation of the employee as well. The

reason being that both the supervisor and the employee would know

ultimately what is being done right or wrong.

6.2 RECOMMENDATIONS FOR HABIB BANK LIMITED

Some of the recommendations for Habib Bank Limited are as follows:

Customized and SMART objectives at individual and branch level in

accordance to that branch’s location and business environment. These

should further be aligned with the corporate strategy of the organization.

(Standardization for HBL not possible)

Pre and post Appraisal interviews should be included in the system in

order to increase the engagement level of employees and to motivate them.

According to the previous performance appraisal system of 1997, the

employee was given regular feedback on his/her performance but now it

has just become a formality and should be revived back.

Previously performance appraisals were carried out on a quarterly basis but

now they are carried out twice a year. The frequency of the appraisals

should be increased so that the employers and the employees can know in a

much better way how they are performing.

The objectives of the performance appraisal should be decided between the

appraiser and the appraisee at the beginning of the year like was done

previously in the PMS of 1997. At Mobilink the objectives of the

employees job are decided by the employee him or herself at the very

beginning of the year. They are then agreed upon with the supervisor. In

this way the employee is well aware of what he/she has to do and at year

end he/she is evaluated against those very objectives.


87

Chapter – 6 Chapter – 6 RECOMMENDATIONS AND RECOMMENDATIONS AND CONCLUSION CONCLUSION In the orientation and the induction process the employee should be made

aware of the appraiser or the person who would carry his/her appraisal so

that proper direction is given from the very first day.

Constant communication of why the appraisal system is carried on, how it

benefits the employee and also the communication of why a certain

employee is rated good or bad with specific reasons is essential. If this is

done the HR would not face the problem of actually forcing the employees

to fill out the appraisals.

Communication of change in the appraisal system is also very essential.

Basic salary increments should uniformly be given to all the employee at a

particular level and only bonuses (both monetary and non-monetary)

should be linked with the appraisal form. This would eliminate the problem

of pay compression which comes with the presence of senior and junior

employees at the bank.

At present mainly vertical promotion is the basic problem for HBL to focus

upon and to a limited extent also upon cross functional horizontal

movement as many employees have been serving for quite a long period of

time at the same post in the same branch. Therefore, if not promoted

vertically, at least there should be job rotations to cater to their

developmental needs.


88

Chapter – 6 Chapter – 6 RECOMMENDATIONS AND RECOMMENDATIONS AND CONCLUSION CONCLUSION Figure –8: Three Dimensional Model of an Organization


Function

Rank

Marketing

Etc.Production

Sales

89

Chapter – 6 Chapter – 6 RECOMMENDATIONS AND RECOMMENDATIONS AND CONCLUSION CONCLUSION Promotion Architecture

Promotion Policy comprises of a number of interrelated and interdependent

components, such as follows:

Levels

The number of levels up the ladder and career path for each employee at every

level should be specifically and clearly stated. In case of HBL, each individual

should know exactly up till which level he can advance in his career and within

which time period.

Requirements

The essentials for advancement into the next level in hierarchy should be made

clear to the employees from the very starting. These requirements may include,

minimum job tenure of four years on a particular post (which shall vary at

different levels), minimal qualifications, experience, etc, which may differ from

one level to another.

Accelerated Promotion for High Potential Employees

High potential employees should have the benefit of accelerated promotion policy

and following are the conditions:

Accelerated promotion shall be for all grades.

There should be a minimum of two years (which shall vary according to

different posts) of service to be considered for accelerated promotion.

Last two appraisals of the eligible employee should have the minimum

overall rating of “commendable”.

Cases will be brought forward before the promotion committee for

consideration. The final verdict shall however lie with the senior authority.

Evaluation Criteria

Once the requirements have been specified to the individual he/she should also

know the relevant weightage of each requirement for a specific post. These

weightages can also differ from post to post and a sample is given below:


90


The promotion criterion has four basic components with relative weightages

given to them as under:

Component Marks ____________

1. Annual appraisal report 30%

2. Experience 20%

3. Qualifications 20%

4. Interview’s 30%

100%

The marks given to the employee would be on the basis of the final rating. e.g. if

an employee scores A in final rating he may get full 30 marks out of the 100

marks of the promotion criteria. Similarly for B, 24 marks out of the 30 would be

given. Minimum requirement for consideration of a person for promotion would

be 60% marks out of the 100 marks for promotion.

The details of the components have been given as under:

1. Annual Appraisal Report

The appraisal reports of last three years would be specified by the appraiser shall

be considered for the promotion.

2. Experience

A percentage of 20% is given to the experience of the candidate.

3. Qualifications

Percentage of 20 % would be given to the qualifications.

4 Interviews

Structured interviews would be organized in order to evaluate the appraisees.

5. Validation of Promotional Decision

Unlike the present system where the fate of an employee lies in the hands of his

supervisor a proper promotion committee should be assembled for better


91

Chapter – 6 Chapter – 6 RECOMMENDATIONS AND RECOMMENDATIONS AND CONCLUSION CONCLUSION validation of the promotion decision. This way personal bias would also be

finished. Composition of the committee would be according to the post.


92

Chapter – 6 Chapter – 6 RECOMMENDATIONS AND RECOMMENDATIONS AND CONCLUSION CONCLUSION Procedure to be adopted by the Promotion Committee-

Promotion committee will interview the candidate considering the result of

the promotion evaluation according to the criteria mentioned above.

Should the promotion committee approve the case for accelerated

promotion it will then be sent to the competent authority for the final

approval. In case there is no vacant position, the committee can further

recommend the creation of post to accommodate the talented officer.

If the promotion committee turns down the case with consensus, the officer

concerned will have no right to appeal in the matter as stated above.

6.3 RECOMMENDATIONS FOR ALLIED BANK LIMITED

Some of the recommendations for Allied Bank Limited are as follows:

The biggest problem which is similar in both Habib Bank Limited and

Allied Bank Limited is the ineffective linkage of the performance appraisal

process with the promotion of the employees. The high rate of

demotivation among the majority of the employees at the bank (senior

employees) is due to the fact that the promotions are more frequent in case

of the younger employees as compared to the senior employees. This can

be eliminated by following the same promotion policy which is mentioned

in the recommendations for HBL as well.

Secondly the problem of less frequent appraisals which was found in all the

three banks can be catered to by ideally making the appraisals a part of

the daily or the weekly schedule of the employee. Forms should be

replaced by diaries filled by the employees on a daily basis. No formal

process is necessary because it is these formalities which lead to the

process taken as a burden and not being done properly. Along with it the

formal appraisals should be carried out like they are being done at the

moment once or twice a year.


93

Chapter – 6 Chapter – 6 RECOMMENDATIONS AND RECOMMENDATIONS AND CONCLUSION CONCLUSION Communication and detailed post evaluation interviews especially with the

senior employees should be undertaken so that they do not think the

process as unfair or inflated.

The problem of pay compression should also be taken into consideration

and should be catered for slowly and gradually. Initially the senior

employees should be taken into confidence and should be given more

authority so that they don’t feel left out and the bank does not lose their

valued experienced employees. Obviously the change to juniors is

necessary but the shift should be slow and gradual.

6.4 CONCLUSION

From the in depth study and analysis of the data from the banking sector of

Pakistan it can be concluded that banking industry can be divided into the older

banks like Habib Bank Limited and Allied Bank Limited and the relatively newer

banks like Bank Alfalah Limited and NIB Bank etc.

The difference between the two types regarding the effects of motivation on the

performance appraisal system is that the newer banks have a much developed HR

system which is in accordance with the needs of the new day. One other

advantage that the new banks have is that the employees are young and can be

easily molded to perform what the HR wants them to do which is very difficult in

case of the senior employees who are very rigid and are not easily adaptable.

If the banking sector of Pakistan realize the problems that they are having related

to the performance appraisal process which is adversely affecting the motivation

of employees, and if they follow the detailed recommendation given above they

can have a much motivated workforce which can flourish the business of the bank

and add to the economy of the nation as a whole.


94

REFERENCES AND BIBLIOGRAPHY REFERENCES AND BIBLIOGRAPHY

REFERENCES

8 Basics About Employee Motivation (Including Steps You Can Take)

Written by Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Adapted from the Field Guide to Leadership and Supervision.

Poor Performance Reward and Recognition by Chris Herrmann

Why Your Employees Are Losing Motivation by David Sirota, Louis A.

Mischkind, and Michael Irwin Meltzer

How Management Demotivates (Reprinted with permission from "Stop

Demotivating Your Employees!" Harvard Management Update, Vol. 11,

No. 1, January 2006.) by David Sirota, Louis A. Mischkind, and Michael

Irwin Meltzer

10 Ten Tips for Creating a Terrific Employee Appraisal System by Dick

Grote

“Business Studies” by Karen Borrington & Peter Stimpson, 2nd Edition

Strategic Human Resource Management: Corporate Rhetoric and Human

Reality by Lynda Gratton, Veronica Hope Hailey, Philip Stiles, Catherine

Truss.

“Human Resource Management” by Raymond A. Noe, John R.

Hollenbeck, Berry Gerhart & Patrick M. Wright, 4th edition

“Management” by Robbins &Coulter, 7th Edition

“Human Resource Management” by Schuler & Jackson, 6th Edition

Promotion and Optimal Retirement by Steven Stern

Concepts In Strategic Management And Business Policy by Thomas L.

Wheelen & David Hunger 9th edition

Abolishing performance appraisals by Tom Coens and Mary Jenkins

Article in the May-June 1997 issue of Corporate University Review


94

http://www.jstor.org/search/BasicResults?Search=Search&Query=aa:%22Steven%20Stern%22&hp=25&si=1&wc=on

http://www.jstor.org/view/0734306x/di009515/00p0213q/0?currentResult=0734306x%2Bdi009515%2B00p0213q%2B0%2CFFFF01&searchUrl=http%3A%2F%2Fwww.jstor.org%2Fsearch%2FBasicResults%3Fhp%3D25%26si%3D1%26gw%3Djtx%26jtxsi%3D1%26jcpsi%3D1%26artsi%3D1%26Query%3Deffect%2Bof%2Bcompensation%2Bon%2Bretention%2Bof%2Bemployees%26wc%3Don

http://www.questia.com/PM.qst?a=o&d=37428579

http://www.questia.com/PM.qst?a=o&d=37428579

http://www.authenticityconsulting.com/pubs/Mgmnt/MS_pubs.htm#_blank

http://www.authenticityconsulting.com/#_blank

REFERENCES AND BIBLIOGRAPHY REFERENCES AND BIBLIOGRAPHY

UCSF Supervisory Certification Program including "Setting Performance

Expectations", and "Coaching for Performance"

http://www.businesslink.gov.uk

http://www.allbusiness.com/human-resources/careers-job-training/537087-

1.html

http://findarticles.com/p/articles/mi_qa5292

www.businessballs.com

wiki.answers.com

www.streetdirectory.com

www.chrmglobal.com

www.joe.org

employeemotivationonline.com


95

http://www.joe.org/

http://www.chrmglobal.com/

http://www.streetdirectory.com/

http://www.businessballs.com/

http://www.businesslink.gov.uk/

Documents

CHAPTER – 1 - Internship reportsinternshipreports.yolasite.com/resources/Research Report... · Web viewWithout being armed with documents that attest to the appropriateness of a