RESEARCH

REPORT

ON
Performance Appraisal

system in

Central Bank of India In varanasi

Submitted In Partial Fulfilment Of The Requirement For The Award Of

MASTER OF BUSINESS ADMINISTRATION From

KASHI INSTITUTE OF TECHONOLOGY VARANASI
Affiliated from GBTU
SESSION (2011-13)

In the Guidance of:-

Submitted by:-

Mrs.Nivedita Verma

Ragini Singh

Faculty of management

MBA (1142870038)

Specialization area:HR and Marketing

DECLARATION
I
Ragini Singh, a s t u d e n t o f M . B . A . 4 t h
s e m e s t e r, K a s h i
I n s ti t u t e o f Techn o lo g y,
Mirzamurad
varanasi.
Batch
2011-13
hereby declare that the research report titled
Performance Appraisal System in CENTRAL
BANK OF INDIA IN VARANASI is my own work
and effort .
The research report has been submitted to
Kashi Institute
o f T e c h n o l o g y , M i r z a m u r a d , varanasi for
the
fulfillment
of
the
requirement
of
University to obtain the degree of Master of
Business Administration in HR & marketing

Date:
RAGINI SINGH
Roll No

TABLE OF CONTENTS

1. Preface
2. Acknowledgement
3. Introduction
4. Company Profile(Central Bank of India)
5. Research Objectives.
6. Research Methodology
7. Human Resource approach
8. Introduction to performance appraisal system.
9. Data analysis and interpretation
10. Findings
11. Suggestion
12. Limitations
13.

Appendices (Questionnaire)

14. Bibliography

PREFACE

T h is s t u d y, s t r ive t o fin d o u t t h e imp l ic

a t i o n o f P e r f o r m a n c e Appraisal in Central
Bank of India. As now a day Banking sector is
one of the emerg ing sector s of India so, we
strive to find out w hat is the impor t ance of
HR in banking industr y in specific with
Performance Appraisal.
In this repor t we discuss the banking
industr y, HR over v iew, need of Performance
Appraisal in Central bank of India , techniques
and approaches of Perfor m ance Appraisal
per t aining to the banking industry and also try
to explore the importance of the performance
appraisal in bank to uplift the standard of
organization, individual and both as mutual
entity.

ACKNOWLEDGEMENT
Not a single gram can be breaking the whole vessel. This is a
common saying and it is correct. A project is not an outcome of a
single participation but it is a team work. So, I take this opportunity
to thank all those people who have helped me throughout my
project.

Exchange of ideas generates a new object to work in better

way. Whenever a person is helped & cooperated by others his
heart is bound to pay gratitude & obligation to them.
Acknowledgment is not merely formality but an expression
of deep sense of gratitude & cumulative appreciation. I firstly
want to thank to staff

of Central Bank of India for providing

me the opportunity for this reputed organization.

Thane who guided me directly or indirectly throughout my

research report .I am thankful to my faculty guide Prof. Mrs
Nivedita verma and HOD B.K singh for valuable inspiration and
guidance provided me throughout the course of this project.

At last I would like to extend my deep sense of gratitude to my

friends and college for their support in my project work.

Last, but not least, I would like to thank God, without whom none of
this would have ever happened
RAGINI SINGH

INTRODUCTION

As we know the banking sector is one of the fastest

growing sectors of our country, the study highlights

the perspective of HR in central bank of India. In this

study we strive to find out the need of Performance
Appraisal system in central bank, and try to understand
how the Performance Appraisal is done in this.
Performance

Appraisal

indicates

the

level

of desired performance level and actual performance and

the gap between these two. This gap should be bridged
through training, counseling and motivation etc .In every
organization,
employees

the
to

process

acquire

and

of

HRD

helps

development

the

technical,

managerial and behavioral knowledge, skill, and abilities,

belief and attitudes necessary exists to achieve goals; the
degree of success obtained by the individual employee in
achieving

individuals

goals

directly

determines the

organizational effectiveness. The assessment of the degree

of success of an individual employee is an important
part of HRM that leads to the Performance Appraisal.
Indian companies use Performance Appraisal for
training and development, providing feedback to the
employees
and
personal
research.T h e p u r p o s e o f P e r f o r m a n c e A p p r a i s
a l t o m a k e a d i s t i n c t i o n b e t w e e n performer and
non performer on the job.
The aim of the project is to focus on the
Perform ance Appraisal system undergone in
C e n t r a l B a n k o f I n d i a . This project aim to study the
need for Performance Appraisal; how it helps
the

employees of the Organization to improve their

abilities
so
as
to
meet b o t h t h e p e r s o n a l a n d o r g a n i z a t i o n a l p r e s e
n t a n d f u t u r e r e q u i r e m e n t s Whether the organization
is reaching its standards by Performance Appraisal resulting
in increase in quality and productivity of the employees
observed.

T h e s t u d y h i g h l i g h t e d t h e Performance Appraisal:
a) Techniques
b) Approach,
c) Forms
d) Managerial approach,
e) Employees feedback
,f) process and
other real aspect of

the Performance Appraisal that

provides the realistic view of the Performance Appraisal

process that is carried out by the bank in actual work
environment .
The study is conducted is a simple manner and
most

of

the

collected through various sources. This

d ata

is

study refers the Performance Appraisal technique as

an

effective

managerial

tool

to

enhance

the

efficiency and effectiveness to achieve the

o r g a n i z a t i o n a l a n d individual goals.
This

study

refers

to

the

role

of

Performance

Appraisal in a wide and in a systematic manner that

takes place in a sequential way and covers almost all
the

aspect

organization

of

the

under

appraisal
the

Performance Management .

from

universal

employees
approach

to

called

RESEARCH OBJECTIVES
To understand the concept of HR in special reference of
performance appraisal.
To study the Performance Appraisal systems in Central
Bank of India.
To assess the degree of awareness among employers
and employees on performance appraisal in Central
Bank of India.
To know the satisfactory level and comfortable level
between the employers and employees.
To assess whether the appraisal done without any bias
the employees.
To know and identify merits and demerits of
performance appraisal system in Central Bank of India.

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY
The word research is derived from the Latin word meaning

to know. It is a systematic and a replicable process, which

identifies and defines problems, within specified boundaries.
It employs well-designed method to collect the data and
analyses

the

results.

It

disseminates

the

findings

to

contribute to generalize able knowledge. The Objectives of

research presented below :
Systematic problem solving which identifies variables
and tests relationships between them,
Logical,

so

procedures

can

be

duplicated

or

understood by others
Empirical, so decisions are based on data collected
Reductive, so it investigates a small sample which
can be generalized to a larger population
Replicable, so others may test the findings by
repeating it.
Discovering new facts or verify and test old facts.

 Developing new scientific tools, concepts and

theories, this would facilitate to take decision

RESEARCH DESIGN
Research Design specifies the methods and procedures for
conducting a particular study. A Research Design is the
arrangement of conditions for collection and analysis of the
data in a manner that aims to combine relevance to the
research purpose with economy in procedure. Research
Design is broadly classified into three types as:

Exploratory Research Design

Descriptive Research Design
Hypothesis testing Research Design
On the basis of the objective of study, the studies which are
concerned

with

describing

the

characteristics

of

particular individual, or of a group of individual under study

comes under Descriptive Research Design.

SAMPLE DESIGN
It is needless to say that no investigator can study the entire

population and hence selects a few individuals belonging to

the population for the purpose of investigation.

A Sample Design is a definite plan for obtaining a sample

from a given population. It refers to the technique or the
procedure adopted in selecting items for the sample. The
main constituents of the sampling design are as below: 1.

Sampling Unit

2.

Sample Size

3. Sampling Procedure
4. Collection of Data

SAMPLING UNIT
A

sampling

framework

i.e.

developed

for

the

target

population will be sampled i.e. who is to be surveyed.

SAMPLE SIZE

1 . P o p u l a t i o n : T h e p o p u l ati o n for t h e p r e s e n t
s t u d y c o n s i s ts o f a l l t h e employees of Central Bank
of India working at Lanka, Varanasi Branch.

2. Sample size: The size of the sample for the present

study is confined to 50 employees belonging to
personnel. Administration, H.R. department of
Central Bank of India working at Lanka, Varanasi
Branch. The size is confined due to time and availability
3. Sample Technique: The sample for the present
study is selected using simple random technique.
METHODS OF DATA COLLECTION
(1)

PRIMARY DATA COLLECTION- P r i m a r y d a t a i s

collected of facts on the subject of the

s t u d y b y t h e researcher. It can be collected through
questionnaires.

QUESTIONNAIRES
A Questionnaire is by far the most common instrument in
collecting Primary Data. It consists of a set of Questions
presented to respondent for his or her answers.
(2)SECONDARY DATA COLLECTION
A Research usually starts with the investigation by
examining Secondary data to see whether the problem can
be partly or wholly solved without collecting costly Primary
Data. It can be collected through Internal Sources (Company
Profit and Loss Statement, Sales Figures, Sales Call

Reports, Prior Research Report, etc),and External

Sources(Government Publications, On Line Data Banks,
Commercial Services, etc).

COMPANY PROFILE

HISTORY OF CENTRAL BANK OF INDIA:

Central

Bank of India is one of the oldest commercial

banks of India, and reportedly is the first truly Indian

bank which was totally owned and established by
Indian without any foreign help.
Sir Sorabji Pockhanawala was the founder of the bank,
who had always dreamt of establishing a thoroughly
Indian bank, who was so happy and excited about the
project that he reportedly termed the Central Bank of India
as property of the nation and the countrys asset. The
first Chairman of the bank was Sir Pherozesha Mehta, a
yet another Indian enthusiast. In the year 1969 the bank
was nationalized by the Government of India.

Key Attributes

Central Bank of India claims to be the first bank to be

conferred with the National Award for Excellence in
Micro and Small Enterprises (MSE) Lending for the year
2007-08.

The bank entered a partnership with Kotak Mahindra

Assets Management Company in December 2008, under
which all the Kotak Mutual Fund products will be made
available through Central Bank of India branches.

Products and Services

Central Bank of India offers a host of banking services

to its customers including Regular Banking Services
such as Deposits and Loans, International Banking
Services, and other services including Centralcard
Electronic Cards, Debit Cards, No-Frills Savings Deposit
Account under the name Cent Bachat Khata, and
Finance options for domestic and international tours
under the name Cent Safar.

Presence in India

Central Bank of India has a strong presence in the

country with over 3000 branches and more than 250
extension counters nationwide as of April 2009. The
headquarters of the bank are located in Mumbai, the
financial capital of India, along with 16 other zonal
offices established in different cities of the nation,
including Agra, Ahmedabad, Bhopal, Chandigarh,
Chennai, Guwahati, Hyderabad, Kolkata, Lucknow,
Mumbai Metro Zonal Office, Muzaffarpur, Nagpur, New
Delhi, Patna, Pune and Raipur.

No Indian is competent to manage a bank" was the

Opinion expressed by Mr. H. P. Stringfellow, the
Manager of Bank of India in 1910, at the height
of the swadeshi movement. He was quite naturally taken
aback later that year when he was told that an assistant
accountant in his own bank, twenty eight year old Sorabji
Pochkhanawala, was planning to start a bank on his own.
Regarding this as a "huge joke" he called the young man
into his office and advised him to abandon what seemed
to him a "chimerical" scheme and to avoid taking any hasty
decisions for atleast 24 hours. Mr. Pochkhanawala's
response was
"Sir, I have made up my mind. I resign from the
Bank's service.
One day my bank will be bigger than yours."

Sorabji Pochkhanawala, though only twenty eight had

been a banker for twelve years. He was the first Indian to
be a certificated associate of the Institute of Bankers,
London. Though he had discharged, when required, the
duties of a Manager of a bank, he was not recognised as
one. Nor was he given employment as "Manager" when he
applied for that position at various banks such as the
Bombay Merchants Bank because of the "deeply entrenched
notion that 'native gentlemen' would be unable to conduct a
bank according to western principles and that natives will not
trust natives." "Banking by Indians for Indians" became his
driving obsession. He believed that unless all the
executive functions were entrusted entirely to Indians,
Indians would be discriminated against.
On leaving Bank of India, Mr. Pochkhanawala with the
support of a prominent cotton merchant, Mr. Kalianji
Varadhman Jetsey rented premises formerly occupied by
the Eastern Bank for Rs. 600 per month in the Gresham
Building. He purchased two chairs and tables and began
planning.

The Bank's first employee was Mr. Sorabji Vicaji as Chief

Cashier at Rs. 500 per month.
Mr. Pochkhanawala's immediate family was shocked at
His resigning from a secure job with 'prospects' and urged
him to take back his resignation Undeterred and with the support
of Mr. Jetsey, he approached many prominent
businessmen for their help to establish a bank.
Mr. Munchershaw F. Khan,
Mr. Kalianji Varadhman Jetsey,
Mr. Ardeshir Bomanji Dubash, Mr. Manekji Jethabhai
Varadhman, Mr. Moolji Haridas, Mr. Radhakison Lakmichand,
Mr. Motilal Kanji, Mr. Haji Dawood Haji Elias and Mr. Jamset ji

Hormusjee Chothia agreed to serve as directors.

Jetsey paid all the preliminary expenses.

Mr. Kalianji

The memorandum and articles of association were drawn

up
And the Bank was registered on December 21, 1911.

The birth of Central Bank of India is unique in Indian

banking history. While other Indian banks were established
by
Englishmen or wealthy businessmen and
managed
by
Europeans, this was the first bank established by Indians
and
Managed by Indians. Today nearly one hundred years later o
30 th September 2011, with 3839 branches, 59 extension
counters, 33 satellite offices, 1006 ATMs and a presence in
27 of
the 29 states in India and in 3 of the 7 union territories,
it is
among the largest banks in India. Apart from this
the Bank has
a joint venture In Zambia and is in the process of setting
up joint
venture banks in Mozambique and Bhutan and a
representative
office in
Kenya.

The run on Central Bank of India became more

concentrated when the news spread that the Specie Bank
was on the point of liquidation. It was widely known that

Central Bank of India held a large number of Specie

Bank shares which had an uncalled liability attached to
them. Deposits declined from Rs. 88 lakhs to Rs. 41 lakhs
in less than twelve days. To quell the run and instill
confidence Sir Pherozeshah Mehta handed over the title
deeds of his own personal properties to
raise money. Thi
induced other directors to offer s uch personal
resources
as they could.
Mr. Pochkhanawala sold his wife's
jewellery. The news spread that Central Bank of India's
directors were prepared to stake their own possessions in
the Bank's survival and future.
Another reason why Central Bank of India survived the
crisis was the soundness of the Bank's general policy o f
avoiding any business that even remotely resembled
speculation. The policy was of cautious conservatism
allied to sound business methods.
It was always
ensured
that
assets
were sufficiently liquid to meet sudden
demands.
Minutes of a meeting reported that to meet the
unexpected run on the Bank, the Manager had arranged
for Rs. 6,75,000 from the Bank of Bombay against
Municipal and Port Trust Bonds.

"The Manager was asked to prepare loan statements giving

full
details of all securities from which the auditors may be able
to
the necessary information as to the repayment of loans.

Manager was asked to inform the auditors that we have issued

notices to most of our customers calling upon them to pay off the
amounts due by them as early as possible in view of the many
demands of depositors owing to the financial crisis. With regard
to most of those who had deposited sufficient securities to cover
their debts we exercised our discretion to let them continue the
advance in view of the present financial situation and did not
think it right to exercise untimely pressure as the Bank was able
to meet its engagements."
There was competitive jealousy also and attempts were
made to humiliate the Bank. When the Bank opened a
branch in Calcutta (Kolkata), the Calcutta Clearing
Banks refused to admit the Bank as a member and even
levied a special charge on the collection of local cheques
drawn on the Central Bank of India lodged by their
clients.
The rapid increase of the Bank's business in
Calcutta (Kolkata) brought pressure on the exchange
Banks as they were forced to cash a flood of Central Bank
of India cheques across the counter.
This led the
secretary
of
the
Bank
of
Calcut
Sir Norcot Warren persuading
the Calcutta
banks to lift the ban. The Central Bank of
India became, thus, the first
bank under
Indian
Management to penetrate the barriers of the Banks'
Clearing House in Calcutta (Kolkata).
In 1918, 1922, 1924 and 1925 there were heavy
withdrawals due to rumours that the Bank had suffered
large, unsustainable losses.

The Bank staff worked round

the clock and all demands of depositors were met. At one
time Mr. Pochkhanawala himself sat at the counter
disbursing cash not leaving his seat for seventy two
hours. Notices were also issued in newspapers explaining
the strength of the Bank. In time, depositors realised they
were ill-informed and shamefacedly returned the monies
they had withdrawn. The Central Bank of India's Lahore
Agent commented tongue in cheek,

"A rather paradoxical

feature of our Indian banks is that while we are very slow to trust
we are very quick to distrust." The manner the Bank
managed these crises compelled Sir Basil Blackett,
Finance Member of the Viceroy's Privy Council, to say, "It
Was a great tribute to the strength and soundness of the
Institution that this well organized storm has been
checked in so
triumphant a manner.
"Sir William Meyer, the Finance
Minister said after the 1918 runs that he regarded
"the attempts
To discredit the institution with the contempt they deserved."
It is interesting to note that during those dark days,
Mr. Pochkhanawala used the press to clarify the Bank's
Position . In 1920, Central Bank of India was the first
bank to appoint a public relations person to publicise the
strength , resilience and growth of the Bank. This was also
because
Mr. Pochkhanawala believed that he must refute
promptly any charges made as he knew that if he did not
they would fester into increasingly uglier forms.

Directors
Directors of Central Bank of India & their address:

Shri . M.V.Tanksale
Chairman & Managing Director

Corporate Vision

To emerge as a strong, vibrant and pro-active Bank/Financial Super

Market and to positively contribute to the emerging needs of the
economy through consistent harmonization of human, financial and
technological resources and effective risk control systems.

Corporate Mission

To transform the customer banking experience into a fruitful and

enjoyable one.

To leverage technology for efficient and effective delivery of all

banking services.

To have bouquet of product and services tailor-made to meet

customers aspirations.

The pan-India spread of branches across all the state of the country
will be utilized to further the socio economic objective of the
Government of India with emphasis on Financial Inclusion.

Interesting Fact behind establishment of Central Bank

of India

No Indian is competent to manage a bank" was the opinion

expressed by Mr. H. P. String fellow, the Manager of Bank of
India in 1910, at the height of the swa deshi movement. He
was quite naturally taken aback later that year when he was
told that an assistant accountant in his own bank, twenty
eight year old Sorabji Pochkh anawala, was planning to start
a bank on his own.

Regarding this as a "huge joke" he called the young man into

his office and advised him to abandon what seemed to him a
"chimerical" scheme and to avoid taking any hasty decisions
for atleast 24 hours. Mr. Pochkhanawala's response was,
"Sir, I have made up my mind. I resign from the Bank's
service. One day my bank will be bigger than yours." Sorabji
Pochkhanawala, though only twenty eight had been a banker
for twelve years. He was the first Indian to be a certificated
associate of the Institute of Bankers, London. Though he
had discharged, when required, the duties of a Manager of a
bank, he was not recognized as one. Nor was he given
employment as "Manager" when he applied for that position
at various banks such as the Bombay Merchants Bank
because of the "deeply entrenched notion that 'native
gentlemen' would be unable to conduct a bank according to
western principles and that natives will not trust natives."

"Banking by Indians for Indians" became hisdriving

obsession. He believed that unless all the executive
functions were entrusted entirely to Indians, Indians would
be discriminated against.

On leaving Bank of India, Mr. Pochkhanawala with the

support of a prominent cotton merchant, Mr. Kalianji
Varadhman Jetsey rented premises formerly occupied by
the Eastern Bank for Rs.600 per month in the Gresham
Building. He purchased two chairs and tables and began
planning.The Bank's first employee was Mr. Sorabji Vica ji as
Chief Cashier at Rs. 500 per month.Mr. Pochkhanawala's
immediate family was shocked at his resigning from a
secure job with 'prospects' and urged him to take back his
resignation. Undeterred and with support of Mr. Jetsey, he
approached many prominent businessmen for their help to
establish a bank.

Mr. Munchershaw F. Khan, Mr. Kalianji Varadhman Jetsey,Mr.

Ardeshir Bomanji Dubash, Mr. Manekji Jethabhai Varadhman,
Mr. Moolji Haridas, Mr. Radhakison Lakmichand, Mr. Moti lal
Kanji, Mr. Ha ji Dawood Ha ji Elias and Mr. Jamset ji
Hormsjee Chothia agreed to serve as directors. Mr. Kalianji
Jetsey paid all the preliminary expenses. The memorandum
and articles of association were drawn up and the Bank was
registered on December 21, 1911. The birth of Central Bank
of India is unique in Indian banking history. While other

Indian banks were established by Englishmen or wealthy

businessmen and managed by Europeans, this was the first
bank established by Indians and managed by Indians. Today
nearly one hundred years later on 30th September 2011,
with 3839 branches, 59 extension counters, 33 satellite
offices, 1006 ATMs and a presence in 27 of the 29 states in
India and in 3 of the 7 union territories, it is among the
largest banks in India. Apart from this the Bank has a joint
venture in Zambia and is in the process of setting up joint
venture banks in Mozambique and Bhutan and a
representative
office in Kenya.

Mr. Pochkhanawala realised that the success of the venture

would depend largely on the prestige of the Chairman. With
this in mind he sought and procured a meeting with Sir
Pherozeshah Mehta, a former President of the Bombay
Municipality, a former President of the Indian National
Congress and a patriot. Sir Mehta listened to Mr.
Pochkhanawala and then mentioned that he had refused the
Chairmanship of the Credit Bank of India as some of its
Articles of Association were unacceptable. Mr.
Pochkhanawala assured Sir Mehta that he would have those
articles that were unacceptable changed. Sir Mehta asked
for some time. After going through the articles Sir Mehta
said that he'd be agreeable to be Chairman if the article
reading in part "the business of the company shall be

carried on and managed by the Manager subject to the

control of the Board of Directors" was amended to place the
entire responsibility for management on t h e B o a r d o f
Directors. At the meeting of the Directors held on December
28, 1911 the relevant article was amended and a formal
invitation was sent to Sir Pherozeshah Mehta. Sir Mehta
accepted the invitation and the first meeting he chaired was
on January 12, 1912. The fact that a man of Sir Mehta's
eminence had consented to become Chairman helped the
Bank's acceptance among the public immeasurably.

On March 15, 1912 the share list was closed and the Bank's
capital of Rs. 20 lakhs was fully subscribed. An old directory
of that time states, "This banking institution was
commenced at Bombay in December 1911 with an
authorized capital of Rs.50,00,000 divided into 1,00,000
shares of Rs.50 each while its subscribed capital amounted
to Rs.20,00,000 one half of which was paid up. The Bank
very quickly secured the confidence of the public owing to
the sound financial position of its directors and the
business-like manner in which its officials conducted its
affairs."

The Bank began operations with Mr. Sorabji Pochkhanawala

as Manager at a salary of Rs.800 per month, Mr. S. Vicaji as
Chief Cashier and Mr. A. S. Balsekar, a former colleague

from Bank of India, as Chief Accountant. It is interesting to

note that for the first ten years, Mr. Pochkhanawala
managed the Bank as Manager and not as a Director. It was
only on February 24, 1920 that he was elevated as Managing
Director. Several of his erstwhile colleagues from the Bank
of India such as Mr. Tha koredas Parekh and Mr. Puthran
joined Mr. Pochkanawala's new enterprise keen to be in an
institution managed by Indians.

The Bank began its operations in Gresham Building. On the

opening day a large number of merchants visited the Bank.
By the end of the first week the Bank had over seventy
current Sir Pherozeshah Mehta accounts aggregating
Rupees one and a half lakhs. Mr. Pochkhanawala's intent
was to build a bank in which enterprise and expertise would
have full scope and fair regard. He said, "The Central Bank is
not merely a profit making shop but an organization that has
amission to fulfill - part of which is to train a corps of
efficient bankers in the interest of the country's economic
development."He believed, "Safety first should be the prime
consideration for a sound banking institution. Therefore
even at the beginning there were policies laid down such as
the one by Board in 1912 that " the limit of advances against
securities where property is the only substantial security
should not exceed 50 per cent of the total paid up capital of
the Bank from time to time."

These were prophetic words because soon afterwards in

1913 there was a crisis and several established banks such
as Indian Specie Bank, the Bengal National Bank, the
Bombay Merchants Bank and the Standard Bank of Bombay
collapsed. This was mainly because there was a tremendous
amount of competition as several banks were competing for
a limited amount of deposits resulting in very high rates of
interest on deposits and massive speculation.
Liquidity in most banks was slow and many were Under
capitalised and conducted their business in violation of the
elementary principles of banking. Laws were inadequate to
check the misdeeds of those running banks.
There was no central bank to regulate the conduct of
banking. Central Bank of India had its trial by fire. In 1913 a
run fuelled by panic occurred. All available cash and
arrangements with bankers were soon exhausted. Offers of
reliable securities and hundies against loans were rejected
by the banks.

The run on Central Bank of India became

more concentrated when the news spread that the Specie

Bank was on the point of liquidation. It was widely known
that Central Bank of India held a large number of Specie
Bank shares which had an uncalled liability attached to
them. Deposits declined from Rs. 88 lakhs to Rs. 41 lakhs
in less than twelve days. To quell the run and instill
confidence Sir Pherozeshah Mehta handed over the title
deeds of his own personal properties to raise money. This

induced other directors to offer such personal resources as

they could. Mr. Pochkhanawala sold his wife's jewellery. The
news spread that Central Bank of India's directors were
prepared to stake their own possessions in the Bank's
survival and future. This turned the tide.
Another reason why Central Bank of India survived the crisis
was the soundness of the Bank's general policy of avoiding
any business that even remotely resembled speculation. The
policy

was

of

cautious

conservatism

allied

to

sound

business methods. It was always ensured that assets were

sufficiently liquid to meet any sudden demands. Minutes of a
meeting reported that to meet the unexpected run on the
Bank, the Manager had arranged for Rs. 6,75,000 from the
Bank of Bombay against Municipal and Port Trust Bonds.
There was competitive jealousy also and attempts were
made to humiliate the Bank. When the Bank opened a
branch in Calcutta (Kolkata), the Calcutta Clearing Banks
refused to admit the Bank as a member and even levied a
special charge on the collection of local cheques drawn on
the Central Bank of India lodged by their clients. The rapid
increase of

the Bank's business in Calcutta (Kolkata)

brought pressure on the exchange banks as they were

forced to cash a flood of Central Bank of India cheques
across the counter. This led the secretary of the Bank of
Calcutta, Sir Norcot Warren persuading the Calcutta banks
to lift the ban. The Central Bank of India became, thus, the

first bank under Indian management to penetrate the

barriers of the Banks' Clearing House in Calcutta (Kolkata).
In 1918, 1922, 1924 and 1925 there were heavy withdrawals
due

to

rumours

that

the

Bank

had

sufferedlarge,

unsustainable losses. The Bank staff worked round the

clock and all demands of depositors were met. At one time
Mr. Pochkhanawala himself sat at the counter disbursing
cash - not leaving his seat for seventy two hours. Notices
were also issued in newspapers explaining the strength of
the Bank. In time, depositors realised they were ill-informed
and shamefacedly returned the monies they had withdrawn.
The Central Bank of India's Lahore Agent commented
tongue in cheek, "A rather paradoxical feature of our Indian
banks is that while we are very slow to trust we are very
quick to distrust." The manner the Bank managed these
crises compelled Sir Basil Blackett, Finance Member of the
Viceroy's Privy Council, to say, "It was a great tribute to the
strength and soundness of the institution that this well
organized storm has been checked in so triumphant a
manner. "Sir William Meyer, the Finance Minister said after
the 1918 runs that he regarded "the attempts to discredit
the institution with the contempt they deserved."
It is interesting to note that during those dark days, Mr.
Pochkhanawala used the press to clarify the Bank's position.
In 1920, Central Bank of India was the first bank to appoint
a

public

relations

person

to

publicise

the

strength,

resilience and growth of the Bank. This was also because

Mr. Pochkhanawala believed that he must refute promptly
any charges made as he knew that if he did not they would
fester into increasingly uglier forms.
The Bank began its operations in Gresham Building in the
Fort area of Mumbai. As business expanded its main Mumbai
branch moved to Alice Building in Hornby Road (presently Dr.
Dadabhai Naoroji Road) on February 15, 1915 and then to
the Taj Building on the same road in March 1921. In 1923,
after the merger of Tata Industrial Bank, the Bank shifted to
the

magnificent

premises

designed

by

George

Wittet

occupied by that Bank on Esplanade Road (presently

Mahatma Gandhi Marg). The Bank's first branch was opened
in Mandvi, Mumbai in May 1, 1912. Other branches were
opened in key centres such as Zaveri Bazaar, Share Bazaar,
Abdul

Rehman

Street,

Sandhurst

Road,

Kalbadevi

and

Bhuleshwar.
The Bank's first branch outside of Mumbai was opened in
Karachi in August 1913. In Kolkata the Bank began its
operations in 1916. The Chairman, A. J. Billimoria, at the
time of opening the branch said, "It seemed to the directors
that the increasing economic contiguity between the two
great provinces of the Empire, namely Bengal and Bombay,
may be accelerated by banking facilities especially suited to
Indian requirements which are of so much importance to the
preservation and development of economic solidarity among

the different parts of a country." Later branches were

opened in Bara Bazaar, New Market, Sham Bazaar and
Bhawanipore.
After this in June 1918, the Bank expanded into the Punjab
by opening a branch in Lahore. Mr. Nandlal Puri, Chief
Manager and Secretary

of

Punjab National Bank was

employed as the Chief Agent for the Punjab. Between 1932

and 1934 the Bank opened mandi branches in the Punjab.
These were unique. These branches were opened in villages
at the time crops were harvested. Agriculturists could store
their produce and were given advances till prices were
established. The branches were then closed and reopened in
time for the next harvest. The Bank was the first to open
these specialised branches.
The Bank's acceptance was further cemented by the fact
that it was placed on the approved list of banks entitled to
receive Municipal deposits in Bombay Presidency. The Bank
in 1921 became the first Indian managed bank to be
approved by the Government for the deposit of the funds of
Municipalities, Port
Trusts, Universities and other public bodies. This was
recognition

that

the

Bank

was

stable.

Two

incidents

occurred in 1923 that strengthened and further established

Central Bank of India. The first involved the Union Bank of
India which had been established in 1919 by wealthy Indian
traders.

Due to a downturn in the economy, bad debts and heavy

expenditure incurred on the purchase of office premises, the
Union Bank of India was in dire straits. Central Bank of India
approached Union Bank of India with an offer to manage the
Bank as Managing Agent. Mr. Pochkhanawala was appointed
the Managing Director of Union Bank of India. Other Central
Bankers such as Sir Feroze Sethna (Chairman of Central
Bank

of India.) were also invited onto the Board of Union

Bank of India. Central Bank of India restructured Union

Bank of India, reduced the uncalled capital, recovered a
large

portion

of

its

bad

debts

and

streamlined

its

management. This was the first time one bank had taken
over the management of another.

The other was the merger of Tata Industrial Bank with the
Central Bank of India - the first merger in Indian banking
history. The Tata Industrial Bank had been established in
December 1917 with an authorised capital of Rs. 12 crores
and was managed by Europeans.
The Bank suffered exchange losses and was badly affected
by the failure of the Alliance Bank of Simla. Its investments
began to depreciate rapidly. There was a rapid decline in its
deposits from Rs. 6 crores at the end of March 1923 to a
little over Rs. 2 crores at the end of August that year. Even

though Central Bank of India's paid up capital was Rs. 75

lakhs at the time vis-a-vis Tata industrial Bank's paid up
capital of Rs. 2.27 crores, Mr. Sorabji Pochkhanawala
proposed a scheme of amalgamation by which one share of
Central Bank of India was exchanged for two shares of Tata
Industrial Bank..

Apart from being the first merger in Indian banking history,

this was the first reverse merger in Indian corporate history.
As a result of the merger, the Central Bank of India became
the largest joint stock bank in India both in terms of capital
structure and resources. The merger with Tata Industrial
Bank added twelve more branches, three of which were
already at places where the Central Bank of India was
represented. Those branches which were not profitable
were closed including Tata Industrial Bank's branch in
London. Management of branches was also revamped by
replacing the European managers with Indians.

In 1923, Central Bank of India became the first bank to

underwrite industrial floatations. Till then all banks were
purely focused on accepting deposits and lending against
security.

These included:
1923 - 6 percent debentures of Bombay Steam
Navigation Company
1926 - 8 percent debentures of Tata Hydro
1932 - 6 percent debentures of Andhra
1935 - Swadeshi Mills' preference shares

In 1936, the Central Exchange Bank of India Ltd. was

established in London as a subsidiary. This entity was to
handle the foreign exchange business of Indian exporters
and importers. However, on account of

the war, this

subsidiary was closed in1943. Until 1923, the Bank had only
19 branches. This grew gradually to 23 by 1929 and 29 by
1932. However, there was a spurt and in 1933, 34 branches
were opened. This grew 88 branches by 1937 when there
were more branches opened and by 1943, the Bank had 217
branches.

Several major Indian states such as Cochin, Hyderabad and

Nawanagar invited the Bank to open branches. In Cochin,
the Bank helped in the development of Cochin harbour and
acted as bankers for the State. In Hyderabad there were
eight branches. These branches even cooperated with the

Nizam's Government and subscribed Rs. 1.3 crores when

that Government floated a 4 crore rupee loan.

The Bank worked with the Nizam's Government to replace

British Government rupees with Osmani Shahi rupees. The
Bank

had

Jamsaheb

monopoly

based

on

in

the

Nawanagar
confidence

granted
he

had

by

the

on

Mr.

Pochkhanawala and the Central Bank of India. It was the

first bank to successfully float public loans issued by the
State

Governments

of

Travancore

and

Bhopal.

Pre-

independence the Central Bank of India was invited by

several other leading Indian States such as Kashmir to
provide banking facilities in their areas and assist in their
economic development.
In 1934, Sorabji Pochkhanawala was knighted in recognition
and in appreciation of the services rendered by him to the
nation and to indigenous banking in particular. It was a
confirmation of his being a trailblazer in the development of
banking in India. Considering the prejudice that he had to
face when he, literally singlehandedly, set up Central Bank
of

India,

this

was

breakthrough

for

the

Swadeshi

movement in banking.
His being knighted was remarkable as it was the first time
that a banker European or Indian other than the head of
Imperial Bank of India had been knighted. In order to ensure

the branches were properly managed and appropriate

decisions were made, there were local advisory boards the
members

being

businessmen

and

highly
local

respected
leaders.

and

These

experienced
boards

were

permitted to sanction advances within certain limits. In

addition there were Branches Inspection Teams comprising
of qualified auditors who visited branches and reported to
head office.

Silver Jubilee
In 1936 the Bank celebrated its Silver Jubilee. The Bank was
clearly the largest Bank in the country and its reputation
was unassailable. Its directors were eminent businessmen
and respected public figures.
The Bank completed 25 years of service to the nation in
1936 and its Silver Jubilee was celebrated all over the
country. At that period its paid-up capital and reserves stood
at Rs. 2.5 crores. Deposits amounted to over Rs. 31 crores
and the Bank has as many as 84 branches. On the occasion
of the Jubilee tributes came pouring in from official and nonofficial quarters praising the Bank's competence, its strict
adherence to the canons of financial rectitude and the
judicial blending in its policies of

the two seemingly

opposed forces of conservatism and progressiveness.

A year after Sir Sorabji's death, Sir Feroze Sethna who had
been Chairman from 1921 onwards died. He was succeeded
by Sir Homi Mody who continued as Chairman from 1938 to
1966 but with two breaks in 1941 and from 1949 to 1951.
During this time Mr. Haridas Madhavdas and Mr. Dinshaw
Romer respectively were Chairmen.
The Bank was extremely employee focused and was keen to
encourage them. Sir Pochkhanawala believed that the Bank
would grow only if its employees were competent and well
trained. To enable the staff to acquire a sound knowledge of
banking and economic theory, the Bank established, in 1922,
a well-equipped library containing hundreds of books and
journals. This was an initiative to create a sense of career
among staff members. In addition, the Bank organised
regular training courses for staff. This was usually after
banking hours from 8 pm to 9 pm.
Every member of the staff was encouraged to join. Books
were provided free and the staff was advised to appear for
the examination of the British Institute of Bankers (the
Indian Institute of Bankers was not in existence then).
Almost

every

month

seminars

were

held

on

banking,

finance, currency and exchange under the guidance of

eminent

financial

merchants.

and

currency

experts

and

bullion

Following practice followed in Europe the Bank started in

1922 an in-house magazine - The Centralite for employees
to keep abreast of banking and what was happening in
Central Bank of India.
Sir Sorabji, apart from establishing and nurturing the first
"Indian" bank, was the first to single-handedly set down
standards and train a force of Indian bankers who compared
favorably with the best of the non-Indian bankers of that
time. This was amply proved when Central Bank of India
took over two banks in difficulty and on the verge of being
closed down that were managed by Europeans - Union Bank
of India and Tata Industrial Bank - and replaced the
European managers with Indian managers, restructured the
banks

and

made

them

profitable.

He

thus

disproved

effectively the widely held belief at the time that Indians

could not manage banks.

Human Resources Management Approa

c h (H.R M Approach)

Human

resource

maximize

the

management's

return

on

objective

i nves t m e n t

is

from

to
the

o r g a n i z ati o n ' s h u m a n c a p i t a l a n d mi n i m i ze financial

risk. It is the responsibility of human resource managers in
a corporate context to conduct these activities in an
effective, legal, fair, and consistent manner
.
The

Human

Resources

(HR)

function

provides

significant support and advice to line management.

The attraction, preservation and development of high
caliber people are a source of competitive advantage
for our business, and are the responsibility of HR, HR
can

be

well

understood

as

model

mangagement.

of

personnel
That

fo c u s e s o n t h e i n d i v i d u a l r a th e r t h a n t a k i n g a c o l l e
c t i ve a p p r o a ch.
Responsibility for human resource management is often
devolved

to

l i n e m a n a g e m e n t . I t i s cha r a c t e r i z ed b y a n e m p h a s
i s o n s t r a t e g i c integration,

employee

commitment,

workforce flexibility, and quality of goods and services.

Human resource is an increasingly prominent field that is
taking shape throughout industries and workplaces world
wide. With a rapid increase a boom, in fact of
professionals, generalists and specialists in the area of

human relations, there has also been a major rise in

the amount of knowledge and innovation pertaining to
the

most

streamlining

efficient
work

and

productive

force

methods

management

One of the major aspects of HR

of

policy.

maintenance

involves employee recruitment, training and development as

a function of human capital management.
Making sure that employees abilities are corr e
c t l y a n d o p t i m a l l y nurt ured is essential to seeing
a wo r t h w h i l e r e t u r n o n i nves t m e n t c o m e f r o m t h e i
r c o n t r i b u t i o n t o t h e c o m p a n y, o n c e t h e i r t r a i n i
ngp e r i o d i s over.
Along with employee training, human resour
ces

departments also delve into the area of applicant

tracking. How to find t h e b e s t t a l e n t av a i l a b l e o n t h e

g l o b a l l a b o r m a r k et p l a c e i s o f t e n a problem that the
human resources department will strive to tackle.
HRM functions as the link between the organization
and the employees. A company should first become
aware of the needs of its employees, and at a later stage,
understand and evaluate these needs in order to make
its employees perceive their job as a part of their
personal life, and not as a routine obligation.
The

HRM activities

in modern organizations are

typically performed in communication with the General

Management in an effort to provide a variety of views

when a decision must be taken.
In that way, decision m a k i n g i s n o t s u b j e c t t o t h e
individual
Manager,

perceptions

but

it

of

becomes

the
the

HR

or

outcome

the
of

General
strategic

consensus.

The main objectives of HRM are:

To retain low employee turnover rate by inspiring
people to work for the company.
To attract new employees.

To contribute to the employees development.

H u m a n Res o u r c e s M a n a g e m e n t t r a i n s a n d m o t i v a t e
s the employees by
communicating ethical policies and

socially

responsible behavior to them. In doing so, it plays a

significant role in clarifying the organization's problems
and providing solutions, while making employees working
more efficiently.

On the other hand, challenges do not cease for

the

HRM.

dynamic,

Modern

organizations can survive in the

competitive environment

of t o d a y

only

if

they

capitalize

on

the

full

potential

of

each

e m p l oyee . Unfortunately, many companies have not

understood the importance o f t h e h u m a n c a p i t a l i n
successful

o p e r a ti o n s .

The

recruitment

and

s e l e c t i o n o f t h e b e s t e m p l oyee s i s a ver y d i f f i c u l t
o b l i g ati o n .
Even c o m p a n i e s
ten

places

to

that
work

are
at,

voted

in

often

the

top-

endure long

periods of hard work to realize that human element is

all

an

organization

challenges
and it is

arise

should

even

now

certain that new

care
for

about.

New

the organization,

challenges will never cease

to emerge.
Therefore, the use of
techniques

is

proper
really

Human

Resources

powerful

way

for

organizations to overcome these challenges, and to

improve not only their quantitative
their organizational culture, and

goals
their

but also
qualitative,

cognitive aspects.

INTRODUCTION
SYSTEM

TO PERFORMANCE

APPRAISAL

Performance Appraisal has been around of hundreds of

years,

as

it

is

only

h u m a n n at u r e t o eva l u ate fel l ow c o l l e a g u e s . E f f ec t

i ve

appraisal system

openness,

fairness;

should

recognize

address

clarity,

productivity

through

reward; & be cognizant to appraisal leadership qualities.

Performance appraisal is a systematic evaluation of present
potential capabilities
of personnel and employees by their superiors, superiors
superior or a professional
from outside.
It is a process of estimating or judging the value, excellent
qualities or Performance and Potential Appraisal status of a
person or thing. It is a process of collecting, analysing, and
evaluating data relative to job behaviour and results of
individuals. The appraisal system is organised on the
principle of goals and management by objectives.
Management

decisions

on

performance

utilise

several

integrated inputs: goals and

plans, job evaluation, performance evaluation, and individual
history. It connotes
a two-dimensional concept - at one end of the continuum
lies the goals set by the
authority, and at the other end, the performance achieved by
the individual or any

given group.
Performance appraisal can be either formal or informal.
Usage of former systems
schedule regular sessions in which to discuss an employees
performance.
Informal

appraisals

are

unplanned,

often

just

chance

statements made in passing

about an employees performance. Most organisations use a
formal appraisal
system.
Some organisations use more than one appraisal system for
different types of employees or for different appraisal
purposes. Organisations need to measure
employee performance to determine whether acceptable
standards of performance
are being maintained.

The six primary criteria on which the value of performance

may be assessed are:
Quality,
Quantity,

Timelineness,

Cost effectiveness,

Need for supervision, and interpersonal impact.

If appraisals indicate that employees are not performing at

acceptable levels, steps can be taken to simplify jobs, train,
and motivate workers, or dismiss them, depending upon the
reasons for poor performance.

The results of appraisal are normally used to:

(1) estimate the overall effectiveness of employees in
performing their jobs,
(2) identify strengths and weaknesses in job knowledge and
skills,
(3)determine whether a subordinates responsibilities can
be expanded,
(4) identify future training and development needs,
(5) review progress toward goals and objectives,
(6) determine readiness for promotion, and
(7) motivate and guide growth and development.

NEED FOR PERFORMANCE APPRAISAL:

To

effect

promotion

based on

competence

and

performance.
To

assess

the training

&development

needs

of

the employees.
To bri dge the ga p between the exis ting perf
o r m a n c e & d e s i r e d performance.
To help each employee to understand his own strengths
&weakness.
They

can

be

mechanism

of

increasing

communication between the employee &his.

Supervising officer so that each employee gets to know
the difficulties of his subordinates and attempt to solve
them.

 It

provides

promotion,

legally
transfer,

defensible
and

reasons

reward

and

for

making

discharge

decisions.
They can be instruments to provide an opportunity for
employees
for s e l f r e f l e c t i o n a n d g o a l s e t t i n g s o t h at i n d i v
idually plan

and

monitored

development

takes

place.

They can assist in a variety of personnel decisions by

generating data about each employee periodically.

Develop inter personal relationship.

To help in salary increment.

To prevent grievance & in-disciplinary activities.

Provide information about the performance ranks.

CHARACTERISTICS OF GOOD APPRAISAL

SYSTEM:
Increase motivation to perform effectively.
Increase staff self-esteem.

 Gain new insights into staff and supervisor.

Better clarity &define job
function &responsibility.
Develop valuable communication among
appraisal participants.
Encourage increase self understanding among
staff as well as insight into the kind of
development activities that are of value.
Distribute rewards on a fair & credible basis.
Clarify organizational goals so they can be more
readily accepted.
Improve institutional/departmenta
l m a n p o w e r p l a n n i n g , t e s t validation,&
development of training programs.

EVALUATION TECHNIQUES:
The six steps in performing evaluations
1. Establish performance standards for each
position and criteria for evaluation:

In setting

objectives to be followed by the employee to be

evaluated, the following Principles are to be met
(SMART objectives).
Specific.
Measurable.
Achievable (occasionally agreed
b e t w e e n t h e l i n e m a n a g e r &emplo
yee.
Result orientate in a company.

 Times framed (with a set date

for competition).

2.ESTABLISH
POLICIES

ON

RATE, WHO

PERFORMANCE
WHEN

SHOULD

TO

E VALUATI O N

RATE ,OFTEN

RATE

&

WHEN

TO

TO

RATE:

When to rate:
Usually, all employee are rated on/ near the same
date in a Company.
How often rate:

In many companies there is one evaluation in a year.

However, more &more organization shifts to
evaluation: this is convenient especially in fast
moving organization, because a more frequent of the
objectives is possible.
Who should rate:

These are several possibilities, such as

Rating by a committee of several superiors.
Rating by the employees peers (co-workers).
Rating by the employees subordinates.
Self
evaluation, but the most evaluation i
s the a ppra isal by the superior.
Sometimes a combination of these
possibilities is also used.

METHODS OF PERFORMANCE APPRAISAL:

There are two types:
Traditional methods and
Modern methods.

TRADITIONAL METHODS:
Individual evaluation methods:
Individual evaluation methods are those techniques
when the standards of performance are defined
individually, without references to other person(s).

GRAPHIC RATING SCALE:

Is the oldest & still most used method of evaluation. In t his
case r a t e r i s p r e s e n t e d w i t h A s e t o f t r a i t s &
is asked to rate the
employee on each them. There are certain a
d v a n t a g e s i n u s i n g methods.

Advantages:
1. It is easy to understand, use & permits a statistical
tabulation of scores
2. The scores indicate the worth of every individual.
3. its the most common evaluation tools in use today.

Disadvantage:
1. Its arbitrary & rating is generally subjective.
2. It assumes that each characteristic is equally
important for all jobs

3.The
ments

person
is

who

freed

is

making

from

the

judg

d i r e c t quantitative

terms in marketing his decision of merit on any quality

4.The
gment

person
can

whom

makes

is

as

making

the

jud

f i n e discrimination of

merit as he chooses.

For c e d c h o i c e :
Is technique when rater must choose from a
s e t o f descriptive statement about an
e m p l o y e e . T h e m e t h o d w a s d e v e l o p e d t o substitute
graphic rating scales, as graphic rating scales permits to
evaluate all the employees high.

Essay evaluation:
In wh ich the rater is asked to describe the
strong & week aspects of the employees
behavior by a super v isor
Usually, this method is used in
combination with other methods.
Advantages:

Explanation will give specific information about

the employee and can revel more about the
supervisor.
Disadvantages:
1. Contains subjective evaluation.
2. Raters bias is easily introduced.

Critical incident method:

Tec h n i q u e i s a m e t h o d a c c o r d i n g t o w h i c h
t h e r a t e r m a i n t a i n s a l o g o f behavioral
incidents that represent either effective for each
employee being rated on the basis of this method is
the principle at there are certain significant set in
each employees behavior and performance which
makes all the difference between success and
failure on all jobs

Feedback is provided about the incidence

during performance review session. The
advantage of this method is that the results are
less subjective, but this method needs more time to

use than the other techniques. This method has

significant limitations too. Negative incidents are
generally more noticeable than positive ones, the
recording of the incident is the chore of the
supervisors &may be put off &easily forgotten the
feedback may be too much at one time &appear as
a punishment etc.

Checklists &weighted checklists:

A check list is a set of objectives of descriptive
statements.

If

the

rather believers

that

the

employee possesses a trait listed, the rater checks

the item. if
rating

not, the rater leaves it blank. A

score

number of

from the

checklist

equals

the

checks. The method was further

developed by giving weights(from excellent to

poor) to several objectives.
Ranking methods:
The

case

when

the

superior

is

asked

subordinates based on some overall criterion.

to

rank

the

Advantages:
Easy to use
The relative position of each man is tested in terms of
his numerical ranks.

Paired Comparison Method:

Its

used

in

subordinates

case

where
to

there

are

be

several
ranked.

Eache m p l o y e e i s p a i r e d w i t h e v e r y p e r s o n t o
b e c o m p a r e d w i t h . T h e r a t e r chooses

as

the

better performing subordinate. The number of times

that a person is chooses as the better employee is
tallied, & results are indexed based on this number.

Advantages :
It results are tabulated and a rank is assigned to each
individual to he/she show stands in relation to others.
Disadvantages:
When number of group is large, number o
f
j u d g m e n t s b e c o m e s excessively large.
Forced distribution method:
Its the method similar to grading on a curve. This
rater is asked to rate the employees in some fixed

distribution of categories, such as 10% in low, 20%in low

average, 40% in average, 20%in above average,10%in high.
Advantages:
Attempts to correct raters tendency to give consistency
high or low ratings.
Rater cannot introduce bias or halo effect.
Overall objectively of the increases
MODERN METHODS
1. Behaviorally anchored rating scales (BARS):
This method was developed by smith & Kendall. The
BARS approach relies on the use of critical incidents
to serve as anchor statements on a scale. A BARS
rating form usually contains 6 to 10 specifically defined
performance
dimensions,
each
with
5 to
6 critical
incident anchors (both
p o s i t i v e & negative). Employee prefer the using of
this method instead of others, as it seems that they
become more committed, less tense & more satisfied than
incase using other methods.
Behavioral Observ ation Scales, developed by:
Latham &Associates: Like BARS, the BOS
use the
critical incident
technique to
identify a series of behaviors that cover the
domain of the job. The major difference is that
the rater should give under BOS how often the rate

has been observed engaged in the specific behaviors

identified in BOS.

Assessment center:

In this individual from departments are brought to

spend two or three days working on an individual or
group observers rank performance of each and every
participant in order of merit. Since assessment center are
basically
meant for evaluating the potential of candid
a t e s t o b e c o n s i d e r e d f o r promotion, training
or development, they
o f f e r a n e x c e l l e n t m e a n s f o r conducting evaluation
processes in an objective way all assesses get equal
opportunity to show their talent and capabilities and
accrue promotion based on merits. Equal
opportunity to show their talents and capabilitie
s a n d s e c u r e p r o m o t i o n based on merit.

Human Resource Accounting:

Human resource accounting deals with the cost
o f a n d c o n t r i b u t i o n o f human

resources

to

the

organization cost of

the employees includes costs of

manpower

recruitment,

planning,

placement, training
etc.

employee

employee

induction,

& development, ages and benefits

contribution

service,

selection,

which

can

is

the

be

money

measured

value of
by

labor

productivity or value added by human resources.

Which evaluation technique to be used?
An exact answer cannot be given.
The major problem is not with the
techniques but how they are used & by whom?
The responsibility of the rater & the
seriousness of the rater

are much more

critical then which method to choose. .

Have Raters Evaluated Employees Per

formance

M a n a g e m e n t b y Objectives (MBO):
MBO is more than just an evaluation program &
process it is viewed as a philosophy of managerial
practices a method by which managers plan,
organize, control, communicate and debate. By
setting
objective through participation or by assign
m e n t f r o m a s u p e r i o r , t h e subordinate is provided
with a course to follow & a target to shoot for,
while performing the job.

B e n e fi t s o f M B O :
An MBO system provides the following benefits to the
organizations:
1). It establishes linkage between the performance of
the individual & the organizations hence both more in the
achievements of the same objective.
2) It becomes easy to implement because those who carry
out the plans also participate in setting up these plans
3) The communication chain between & among employees &
or units are clearly established facilitating information
sharing.
4) It identifies performance deficiencies.

Discuss the evaluation with the employee:

The supervisor should hold an elevation interview with

each subordinate in order to discuss his or her
appraisal & to set objectives for the upcoming
evaluation period. Experts advise that the employee
development & salary action discussions shouldnt
occur in the same interv iew. There are three
generally used approaches to these interview
situations;
Tell & sell,
Tell &
Listen
hich

Problem solving the using of w

Depends mainly
employee.

The
performance
include:

o n t h e experience level of the

evaluation

discussions should

a )Revie w of over a ll pr o g r e s s .
b)Discussions of problems encountered
c)Agreement

about

improvement possibilities.

potential

performance

d)Discussion on how current performance

i s i n l i n e w i t h l o n g t e r m career goals
e) Specific action plans for the coming year.
Make decisions & file the evaluation:
Currently being a decision maker, the evaluator needs to
be a really qualified person.

Key Components of Performance Appraisals:

The components of performance appraisal are;
Identification of key performance area
s ( K P A ) & t a r g e t s e t t i n g through
periodic
discussions between each employee & their bosses.

Identification of qualities required for the present

& future jobs.

Self appraisals by appraise.

 Performance analysis to identify factors that have

facilitated & factors that have hindered performance.

Identification of training needs.

Action planning & goal setting for future.

Final assessment by the supervising of

f i c e r f o r a d m i n i s t r a t i v e purposes.

Key
performance
areas,
self
appraisal,
performance
analysis,
performancea n a l y s i s , p e r f o r m a n c e r a t i
ng & uncounseling are the most imp
o r t a n t components of a development oriented
performance appraisal system.

Key performance areas:

KPA may be defined as the important or critical
categories of function to
be p e r f o r m e d b y a r o l e i n c u m b e n t , o v
er a given

period of time. These

categories of functions should be so defined

that the performance of any employee can be
assessed meaningfully
, for any given period of time.
Identifying KPAs and setting quantifiable targets where
ever possible is only one way of planning once
performance. KPAs are broad categories of function
to be performed by any employee in relation to his
job. Normally, KPAs can be obtain from job
descriptions maintained by most organizations are
very broad & sketchy. Even if they are supply to new
incumbents of any job, they may not be be able to
get a complete picture. .
Hence its desirable to have Periodic ex
ercise in

i d e n t i f y i n g performance areas for

each person in relation to his role.

Self Appraisal:
Self appraisal has an important role to play in employee
development. The individual is not likely to learn & develop
himself he is interested in his own learning & development
and makes conscious efforts to develop. Such effort would
include

identifying

possible

direction

of

growth,

experiencing growth through action, review & reflection to

consciously monitor the growth.S e l f a p p r a i s a l i s n o t

meant to be ritualistic form filling exercise. It

is

significant

initial

step

for

performance

development.

Self appraisal should start at end of the performance

period just before p e r f o r m a n c e r e v i e w decision
take place. Self-appraisal should start with
the appraise taking up his KPAs & objective for the
period that was over & reflecting about his
achievements.

Performance counseling
Performance counseling can be defined as the help provided
by a manager to his subordinates in analyzing their
performance

and

other

job

behaviors

in

order

to

increase their job effectiveness. It focuses on the

analysis

of

the p e r f o r m a n c e o n t h e j o b a n d i d e n t i f i c a t i o n o f
t r a i n i n g n e e d f o r f u r t h e r improvement. It focuses on
the entire performance during a particular period rather
than on specific problem. Counseling is a dyadic
process.

Its

based

on

the

relation

between

two

persons, a manager who is providing help or who is

counseling & an employee to whom such help is given
or who is a counselee.

Objective of counseling:
Counseling aims at development of the counselee. It
involves the following:
Encouraging
him
improvement.
Helping him
weakness.

to

set

goals

for the

understand

himself,

his

Helping him to develop

further improvement.

various

action

future

strengths

plans

&

for

Helping him to realize his potential as a manager.

Helping him
weaknesses.

understand

himself,

his

strengths

&

Helping him to review in a non threatening way,

in order tohelp him in his problem, in achieving various
objectives.

 The system of CR has two principal objectives & the

reportingofficer has a very clear perspective of these
objectives.
To assess truly the perform ance of the s
u b o r d i n a t e s i n h i s present
job
providing
guidance & counseling to him to improve his
performance.
To assess his potential & to prepare him through
appropriate
feedback
guidance
for
higher responsibilities

Success of the reporting system depen

d s o n t h e f o l l o w i n g principles:
Absolute objectivity of the assessor.
Two way communication between the reporter &
the reporting officer
A true and objective assessment of the
r e l a t e d p e r f o r m a n c e & fitness to take up higher
responsibilities.
Subsequent follow up action.

 Should be aimed at improving the performance of the

employees .The superior officer has to give subordinate
a clear understanding of the task to be performed &
the subordinates required to the best of his capacity to
the quantitative & qualitative achievements of the given
tasks making optimum use of the resources available.
Also, both the superior & his subordinate are aware of
the ultimate goal of their organization, which can be
achieved only through joint effort by both of them.

Factors influencing performance of an employee:

Intelligence.

Integrity and dependability.

Clarity of objectives.

Contribution to team work.

Public relation.

 Data management.

Attitude.

Initiative and original thinking.

Creativity and accuracy.

Quality of work and quality of output.

Knowledge of job.

Acceptance of responsibility.

Development of subordinates.

Risk-Taking.

Delegating.

AVANTAGES OF PERFORMANCE APPRAISAL:

Performance appraisal system can be put to several

uses converting the entire spectrum of human resource
function in the organization. The uses which performance
appraisal serves are:
To take decision on termination.
Diagnosing individual and organizational problem.

To identify individuals with high potential.

Systematic efforts to tone up performance r
esults,
c o r r e c t i v e actions and appropriate feedback.

Input for an array of professional decision

s u c h a s p l a c e m e n t , promotion, transfer, and
reward.

Potential problems while conducting performance

appraisal:
Opposition to evaluation:
M o s t

e m p l o y e e s

a r e

w a r y

o f

perfo

rmance evaluation. The most common fear is that

of rater subjectivity.

System design & operating problemIf the criteria of evaluation are poor, the technique used
cumbersome, or the system is more f r o m t h a n
substance, the design is blamed & the
e v a l u a t i o n i s worth nothing.
Rater problem- The rater problem such as:
Problem with standard of
ev a l u a ti o n - Which arises due to the
perceptual difference in the meaning
of the words use to evaluate
employees?
T h e H a l o E f f e c t - It occurs when the
rater

assigns

severald i m e n s i o n s
med

based

general

on

an

of

perfor

overall,

impression of the rate.

Time or event error:

Raters

forget

more about past behavior than behavior.

 Personal Bias Error:

The tendency to rate the prefe
rred

employees

higher

&

those not

preferred lower.
E m p l oy e e s p r o b l e m w i t h p e r f o r m a
n c e ev a l u a t i o n The m o s t c o m m o n p r o b l e m i s t h a t
employees

may

feel

that

the

e v a l u a t i o n s a r e u n f a i r. I n o r d e r t o a v o i d t h i s p e r
ception, it
should

be

presented

how

difficult

is

the
evaluation
uation

of

employees. The self eval

can be good method in

achieving this

aim.
Central tendency error- The tendency of the raters
to assignaverage ratings for all the dimensions
The following questions can provide an assessment of
performance appraisal system:
1. What purposes does the organisation want its
performance appraisal system to
serve?

2. Do the appraisal forms really get the information to serve

the purposes?

3. Are the appraisal forms designed to minimize errors and

ensure consistency?

4. Do the processes of the appraisal serve the purpose of

effective
communication between the appraiser and the appraisee?

5. Are supervisors rewarded for correctly evaluating and

developing their
employees?

6. Are the evaluation and developmental components

separated?

7. Are superiors relatively free from task interference in

doing performance
appraisal?
8. Are the appraisals being implemented correctly?

The following questions serve as guidelines for

assessing the end-product of performance appraisal:
1. Did the appraisal session motivate the subordinate?
2. Did the appraisal build a better relationship between the
supervisor and the
Subordinate?
3. Did the subordinate come out with a clear idea of where
he or she stands?
4. Did the superior arrive at a fairer assessment of the
subordinate?
5. Did the superior learn something new about the
subordinate?
6. Did the subordinate learn something new about the
superior and pressures he or
she faces?
7. Does the subordinate have a clear idea of what corrective
actions to be taken

Q.1. Are you aware about the organization performance

appraisal system?
a) YES

Option
YES
NO
Total

b) NO

No. of respondent
50
0
50

Percentage
100
0
100

Interpretation From the above it is evident that 100% of

the
employees feel that performance appraisal is quit essential
for any organization

Q. 2. Does appraisal system of your organization

facilities

career growth & learning?

a) YES

Option
YES
NO
Total

b) NO

No. of Respondent
42
8
50

Percentage
84
16
100

Interpretation:
From the above data it shows that 84% of employees feel
that organization facilitate growth & learning due to
Performance appraisal, where as 16% of employees feel
that organization do not provides growth & learning
of employees.

Q.3. Periodicity
be on:
a) Quarterly basis
basis

Option
Quarterly
Half-yearly
Annual
Total

of

performance

appraisal

b) Half-yearly basis

No. of respondent
8
12
30
50

Percentage
16
24
60
100

should

c) Annual

Interpretation:
From the above data it is evident that 60%o
f the employees feel that performance appra
isal should be done on annual basis & 24% o
f t h e employees feel should be in done on half yearlbasis
16% of the employees feel should be done in quarterly basis.
Q.4. The present performance appraisal of your organization
distinguishes the performers & non performers?
a) Strongly agree

Option
Strongly agree
Agree
Disagree
Strongly disagree
Total

b) Agree

c) Disagree

No. of respondent
5
37
8
0
50

d) Strongly disagree

Percentage
10
74
16
0
100

Interpretation:
From the above data it is evident that 74% of the employees
agree that performance appraisal system of the organization
distinguishes performs &n o n p e r f o r m e r s , w h e r e a s 1 0
s t r o n g l y a g r e e a n d 1 6 % d i s a g r e e d o e s n t distinguishes
performers & non-performers.
Q.5. T h e p e r i o d i c a l p e r f o r m a n c e a p p r a i s a l o f e m p l o y e e s
i s r e q u i r e d f o r maintaining efficiency of individual or organization?
a) YES
Option
Yes
No
Total

b) No
No. of Respondent
48
2
50

Percentage
96
4
100

Interpretation:
From the above it shows that 96% of the employees
f e e l t h a t p e r i o d i c performance appraisal of the employee is required
for maintaining efficiency of individual and organization and above 4% of
the employees feel that it is not required to maintained.

Q.6. .Performance appraisal should be based upon:

a) Seniority
b) Performance
c) Recommendations & Trade Union influence d) Both a & b
Option
Seniority
Performance
Recommendation &
trade union influence

No. of respondent
2
27
3

Percentage
4
54
9

Both a & b
Total

18
50

36
100

Interpretation:
From the above data it shows that 54% of the
e m p l o y e e s f e e l t h a t performance appraisal in railways is
based upon performance 36% feel that it based on both performance and
recommendation 7 trade union.

Q.7. T h e a p p r a i s a l s y s t e m i s h e l p i n g e a c h e m p l o y e e t o
d i s c o v e r h i s / h e r potential & make their short comings?
a) Agree
b) Disagree
c) Strongly Disagree
Option
Agree
Disagree
Strongly Agree

c) Strongly Agree

No. of respondent
38
6
5

Percentage
76
12
10

Strongly Disagree
Total

1
50

2
100

Interpretation:
From the above data it shows that 76% of the employees
feel that appraisal system discovers potential and make their short
comings and 12% employees feel that it does not discover potential.

Q . 8 . How often did you speak, or discuss about your performance with
your superiors?
a) Frequently
Option
Frequently
Sometimes
Rarely

b) Sometimes

c) Rarely

No. of respondent
16
19
9

d) Never
Percentage
32
38
18

Never
Total

6
50

12
100

Interpretation:
From the above data its evident that 38% of the employees
said that they sometimes and 32% frequently speak with their
superiors about performance.

Q.9. Has your performance increased as a result of performance

appraisal system.?
a) To a large extent b) Moderate extent c) Less extent d) Not at all
Option
To a large extent
Moderate extent
Less extent
Not at all
Total

No. of respondent
16
32
1
1
50

Percentage
32
64
2
2
100

Interpretation:
From the above data its evident that 64% of the employees are
feel that to moderate extent and 32% to large extent think that
performance increased as a result of performance appraisal system.

Q.10. Which type of performance appraisal system do you think is appropriate for
your organization?
a) Traditional method b) Modern method
d) If any other.(specify)
Option
Traditional
Modern
No idea
Total

No. of respondent
15
20
15
50

c) No idea
Percentage
30
40
30
100

Interpretation:
From this, it is found that 30% of the employees feel that traditional method of
performance appraisal is better whereas 40% of them feel modern methods have its
own advantage and 30% among them have no idea about this that which method
will be best suited.

FINDINGS

FINDINGS
It has been found that most of the employee
s t h i n k t h a t t h e performance appraisal is essential and they
think it is used as a tool to improve performance, to determine
organization needs, and to basis for pay increase, promotions, and
transfer.
The appraisal system facilitates growth &
employees and it is used to distinguish performers.

learning

of

 The existing appraisal system helps the management to

identify p o t e n t i a l i t y o f e m p l o y e e s a s w e l l a s u s e f u l
f o r m a i n t a i n i n g efficiency of the individual & organization.
According to some employees,
they do not know which basis their
performance is appraised and most of the employees feel that it
help them discover their potential and enables to know their
shortcoming.
Organization provides training & development
p r o g r a m s t o overcome the short comings identified in performance
appraisal.
The employees that their promotions match their contributions and n e w
performance appraisal technique should be adopted in
t h e organization and the short comings are informed to them.
The performance appraisal supports to experiment with new ideas as basis
for promotion.

CONCLUSION

CONCLUSION
The performance appraisal system should facilitate
career growth &learning of employees.
The short coming of employees should be informed to
them after performance appraisal.
Promotion should be based on performance rather than
seniority or any other factors.

 Performance appraisal should be appraised by granting

awards/ merit certificate.
New performance appraisal techniques such as 360
degree performance appraisal system should be used.
The performance appraisal should not be assessed by
biased mind and personal grudge.
Feedback should not be given to the employees more
frequently.
On what basis performance appraisal should be
informed to the employees.
The extent of communication with the top &
middle level management.
The feedback to performance appraisal shouldnt only
be given to those employees who are rated below
average but also to all the employees as is would
motivate the employees to perform even better.

SUGGESTIONS

SUGGESTIONS
T h o u g h i t i s t h e b a s i c r u l e o f t h e r e p o r t w ri t i n g
t h at s u g g e s t i o n a n d recommendation should not be
given until its asked for but to keeping in the
mind the academic nature of the report we
w o u l d l i k e t o recommend the followings:

 Management and employees should see Performance

Appraisal as a positive tools to determine the
organizational efficiency and effectiveness.
Banks should use a well communicative method of
Performance Appraisal to avoid ant resistance from
the employees.
T h e o u t c o m e o f t h e Per fo r m a n c e A p p r a i s a l
s h o u l d b e shared with the concerned employees and
corrective action should be taken in the light of the
outcome.
Performance Appraisal should be treated as an
integral part of the organizational development not
just the formality.
If the external agency is hired for Performance
Appraisal it will be appreciated to remove the
possibility of biasness.
Perfor m ance Appraisal should be done on
b o t h b a s i s qualitative and quantitative.
There should be a cost and benefit study of
Performance Appraisal process.

LIMITATION

LIMITATION
The study is limited to CENTRAL
INDIA, Lanka,Varanasi branch.

BANK

OF

Study is limited to selected group from

t h e m a i n s t r e a m o f t h e organization.

 Sampling is convenient sampling.

Sample size is limited to 50 respondents.
Problems with confidential information.
The responses would have also been affected by the
amount of work and working conditions.
Study includes both collections of data from
p r i m a r y a s w e l l a s secondary sources.
There is a high chance of sampling error.

LEARNINGS

Punctuality and hard work is key to success.

Positive attitude and strong confidence needed..
How to behave in corporate world and follow the rule
and regulation formed by company is important to
sustain
Be honest and committed towards work and well
disciplined is required to get success.

BIBLIOGRAPHY

BIBLIOGRAPHY

BOOKS :
Kothari C.R. Research Methodology, Second edition,
Wishwa Publication, 2002
Kings Stephens- Applied Business Statistics
2 nd Edition.
Human Resource Management,VSP Rao,
IInd edition.

MAGAZINES:
Business word
Business standard

INTERNET:
www.centralbankofindia.co.in
www.citehr.com
www.managementstudyguide.com

QUESTIONNAIRE

NAME

________________________________

AGE

:_________

Gender:

____________________

Designation

_________________________

Q.1. Are you aware about the organization Performance

Appraisal?
a) Yes

Q.2.D o e s

Appraisal

b) No

System

of

your

o r g a n i z a t i o n f a c i l i t i e s c a r e e r Growth & Learning

of employees?
a) Yes

b) No

Q.3 Periodicity of Performance Appraisal should be on:

a) Quarterly
c) Annual basis

b)Half-yearly basis

Q.4. The

present

organization

Performance Appraisal

distinguishes

the

of

your

performer

&

non performers?
a) Strongly agree

b) Agree

c) Disagree

d) Strongly disagree

Q.5.The Periodical Performance Appraisal of employee

is

required

for maintaining

efficiency

of

individual

& organization?
a) Yes

b) No

Q.6. Performance Appraisal should be based upon:

a) Seniority
b) Performance
c) Recommendation & Trade Union influence
d) Both a & b
Q.7.The

Performance

Appraisal

of

your organization

assesses Individual Behavior, Discipline, integration,

Communication Skill, Leadership Qualities & Growth?
a) Agree
c) Strongly Agree

b) Disagree
d) Strongly Disagree

Q.8. How often do you speak or discuss about your

Performance with your superior?
a) Frequently
c) Rarely

b) Sometimes
d) Never

Q.9. Has your perfor m ance incre as ed as a re sul t of

perfor m ance a ppr a isal system.?
a) To a large extent
c) Less extent

b) Moderate extent
d) Not at all

Q.10. Which type of performance appraisal system do you think

is appropriate for your organization?
a) Traditional method
c) No idea

b) Modern method
d) If any other.(specify)