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STUDY OF EFFECTIVENESS OF PERFORMANCE APPRAISAL SYSTEM IN BANKING

SECTOR WITH SPECIAL REFERENCE TO STATE BANK OF INDIA

Article · November 2023

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INFOKARA RESEARCH ISSN NO: 1021-9056

STUDY OF EFFECTIVENESS OF PERFORMANCE

APPRAISAL SYSTEM IN BANKING SECTOR
WITH SPECIAL REFERENCE TO STATE BANK
OF INDIA
DR. PREETI RANI
ASSOCIATE PROFESSOR
DEPARTMENT OF COMMERCE
GOVERNMENT P.G. COLLEGE
KOTDWARA
ANSHIKA BANSAL
RESEARCH SCHOLAR
H.N.B GARHWAL UNIVERSITY
SRINAGAR (GARHWAL) UTTRAKHAND

Abstract

Today's competitive environment, demands best performance of their employees continuously in

order to compete the market place, effectively, this objective was attempted to achieve though
employee performance appraisal which was more concerned with telling employees where they
lacked in their performance. Performance appraisal system encourages employees to perform
well. Performance appraisal system provides useful information regarding area where
employees are needed to improve. Performance appraisal system checks employee’s capability
with the main motive to facilitate productivity. Once the employee has been selected trained and
motivated, he is then appraised for his performance. An effective performance appraisal system
has a significant impact on employees’ organizational effectiveness.The performance of an
employee is influenced with various factors. Here the researcher tries to find out the
effectiveness of the performance appraisal system in State Bank of India. It is a descriptive type
of research, simple random sampling was adopted, and self-prepared, structured questionnaire
with the five point scale was used to collect the primary data. The finding is the socio
demographic factors and the overall performance of the employee has the influence.The results
of the study were analyzed statistically by correlation and regression using SPSS software. The
finding is the performance appraisal is linked with the employee performance outcomes in State
bank of India. The major finding of the study is that performance appraisal outcomes are
accurate and significant towards employee performance.

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KEYWORDS: Performance Appraisal, Employees Performance, State Bank of India

Introduction
It is very important to evaluate the performance of the employees periodically to find out their
level of efficiency. Some standard methods are devised to make the employees understand how
far they are from the expected standards so that their performance can be improved. Performance
Appraisal must be seen as an intrinsic part of a Manager's responsibility and not an unwelcome
and time-consuming addition to them. It is about improving performance and ultimate
effectiveness. From the organisation point of view, performance appraisal is very important to
improve the quality of workforce. Employees who lag behind in certain key performance areas
must be assisted to analyse and improve their performance levels. Thus, the processes of
performance appraisal helps to evaluate and improve the performance of the employees so that
the can give their best to achieve the goals of the organisation as well as better carrier
satisfaction. Performance appraisal is one of the key appraisal methods is defined as a result-
based evaluative program .The study shows that performance appraisal is a programme that
analysis the way in which the objectives are to be achieved is develop. The employee is then
allowed to implement the developed action plan.

About the SBI

The State Bank of India (SBI) is an Indian multinational, public sector banking and financial
services statutory body. It is a government corporation statutory body headquartered in Mumbai,
Maharashtra. SBI is ranked as 216th in the Fortune Global 500 list of the world's biggest
corporations of 2018.
Total assets: 36.80914 trillion (US$530 billion) (2019)
Number of employees: 257,252 (March 2019)
Number of locations: 22,010
Owner: Government of India (61.23%)

Review of literature
Shivaji, (1996) in his study pointed out that main objectives of human resource planning is
identified future needs and supplies of man power and taking action in advance in the field of
training, performance appraisal, promotion, retirements, recruitments etc.

According to Satinder Gill & Madhavi Mehta (1999) in their article “Managing
performance through excellence” stated that success or failure of an organization depends on
critical aspect such as leadership, organization culture, strategy, performance appraisal and
human resource development. From the survey, it was observed that leadership and performance
appraisal was considered most influencing factor in contributing the excellent performance of an
organization whereas organization culture helps to determine the performance and productivity
of the organization. The research concluded that effective human resource planning, practices

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INFOKARA RESEARCH ISSN NO: 1021-9056

and development improved the performance of organization through human resource planning,
training & development, performance appraisal, career planning, feedback and counseling

T. R. Manoharan (2002) has written, in this article authors have discussed that they have
noticed that in many organizations appraisal systems are: (a) not relevant to organizational
objectives, (b) subject to personal bias, and (c) are often influenced more heavily by personality
than by performance. To eliminate these negative things there is a attempt with a computer based
tool called Data Envelopment Analysis (DEA) which is used in the working place to evaluate the
performance of employees. Sample size is 23 employees.

Diane Shaffer (2009) has written in his article writer has discussed that motivation and
performance appraisal are interrelated. Motivation is dependent on performance management.
Employees who are motivated and happy with their jobs want to stay connected with the
company for a long time. Many organizations have not implemented correct performance
appraisal system to evaluate the performance of employees. Author has discussed here that they
should implement a successful appraisal method/system and also give reward to employees who
perform good in the organization. Through this practice employee become motivated towards
their jobs and improve their performance and performance of organization as a whole will also
improve.

H.C. Shiva Prasad (2010) in this research paper authors have done work to check the
performance of Indian software professionals (SPs) Data were collected from 441 software and
senior software engineers from eight Indian software firms. The team leaders assessed the
performance of software and senior software engineers on 16 items. The exploratory and
confirmatory factor analyses of scores on 16 items of the instrument suggest six dimensions of
performance. They are work-efficiency, personal resourcefulness, inter- and intra-personal
sensitivity, productivity orientation, timeliness, and business intelligence. The dimensions have
reliability and high convergent validity. SPs having more years of experience, higher need for
achievement, and higher need for social power are high performers. Human resource managers
can evaluate the performance of SPs holistically on six dimensions for training, reward
administration, job rotation.

Statement of the Problem

The problem of this research is to identify the effectiveness of performance appraisal system in
banking sector, further how performance appraisal system enhancing the job skills and qualities,
fixing of salary, and increment.

Hypothesis
There is an association between overall performance appraisal system and the employee’s
performance.

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Scope of the Study

This study has scope as it covers a wide range of the effectiveness of the performance appraisal
system. The main aim of the study is to find out the effectiveness of performance appraisal
conducted at State Bank of India. This study helps to know the level of importance of appraisal
system. It considers both the job performance as well as the personal qualities of an employee.

Type of Research
The study has been conducted to analyses that how effective is performance appraisal in Banking
Sector. For this reason, quantitative analysis has been used to describe the research problem. In
this respect, quantitative analysis and data collection tools are used to describe quantitative
analysis between performance appraisal and employee performance. The quantitative research
has provided empirical investigation about research purpose regarding effectiveness of
performance appraisal and performance of employees in State Bank of India.

Type of Data
In this study, primary and secondary data have been used for investigating effectiveness of
performance appraisal within Banking Sector. The secondary data was used to know what prior
researchers have theorized about performance appraisal and employee performance. This data
provided theoretical investigation of research problem. On the other hand, primary data was used
to get empirical investigation about effectiveness of performance appraisal and its influence on
employee performance in State Bank of India

Data Collection Method

For collecting primary data, close ended questionnaire was used. This questionnaire was
composed in two sections. The first section of questionnaire elaborated the demographical
information about respondents whereas the second section highlighted critical factors of
performance appraisal in State Bank of India. On a scale of 1-5, effectiveness of performance
appraisal was measured in this paper.

Limitations
Employee Opinion: Employee feedback may not be 100% reliable and accurate. Sometimes,
they may keep back information that may be detrimental to the image of the organization. Also
some employees may fear their superiors and refrain from furnishing any negative data.
Language Barrier: Since most of the lower cadre employees working in the organization are not
well-versed in English, hence questions were discussed in local language with such persons and
data was collected.
Time Factor: Since the time was limited, not all employees could be included in the survey. A
sample of 200 employees was selected for the purpose of conducting the survey and collecting
relevant data. All in all, the employees were very co-operative and helpful. In spite of their busy
schedules they took time out to fill the questionnaires and provide me with additional inputs and
information.

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Research Area
The study covered the employees of State Bank of India district Pauri Garhwal. The area
why did we select, this was one of the most important questions. This area was very much near
about me so we had no problem in a stay and collecting the data.

Period of the Study

The period of the study was between Aprils to September 2019. It is purely an empirical
and the descriptive form of study. The researcher has formulated the questionnaire based on the
objective of this study. The questionnaire was properly tested its reliability and validity with the
level of 0.8790.

Data Analysis and Interpretation

The data were analyses in two ways, a simple percentage and statistical analysis were carried out.
Analysis based on Socio-demographic factor of the employees.

Table 1: Source Primary data

Demographic Profile of Respondent n=200

Frequency Percent Cumulative Percent
Gender Male 103 51.5 51.5
Female 97 48.5 100.0
Age Upto 30 Yrs 69 34.5 34.5
31- 40 Yrs 78 39.0 73.5
41-50 Yrs 32 16.0 89.5
51 Yrs and 21 10.5 100.0
Above
Income Upto 4 Lacs 46 23.0 23.0
4 - 6 Lacs 79 39.5 62.5
6 - 8 Lacs 52 26.0 88.5
Above 8 Lacs 23 11.5 100.0
Total 200 100.0
Qualification Up to 12 6.0 2.7
Intermediate
Graduate 109 54.5 60.5
Post 51 25.5 86.0
Graduate
Professional 28 14.0 100.0
Total 200 100.0
Source: Field Survey

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DEMOGRAPHIC PROFILE

Gender Male
51
103 Gender Female
109 Age Upto 30 Yrs
12 97 Age 31- 40 Yrs
Age 41-50 Yrs
Age 51 Yrs and Above

69 Income Upto 4 Lacs

Income 4 - 6 Lacs
200
Income 6 - 8 Lacs
78 Income Above 8 Lacs
Income Total
32
Qualification Up to Intermediate

23 52 46 Qualification Graduate
79 21
Qualification Post Graduate

From the table No.1 it is revealed that the socio demographic factors of the employees. In this
study, statistical analysis methods were used to get empirical evidence about impact of
performance appraisal on employee performance. The descriptive results of the study about
gender of respondents revealed that 51.5% respondents were males whereas 48.5% were females.
During the sample selection, no priority was made between male or female respondent. As far as
the age of respondents is concerned, it was found that 34.5% respondents were upto 30 years, 39%
respondents were between 31-40years, 16% were between 41-50 years, 10.5% were 51 years and
above. When it comes to education level of respondents, the results revealed that 6% were
intermediates, 54.5% graduates, 25.5% were post-graduates and14% respondent had professional
degree.

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Analysis on Performance Appraisal system

This section presents employees response regarding effectiveness of performance appraisal

system in four key areas. Respondents were asked to indicate the extent to which they agreed to
statements relating to effectiveness of performance appraisal system on a five-point likert scale
(1 = strongly disagree – 5 = strongly agree).

Descriptive results
For analyzing the effectiveness of performance appraisal system, the data has been analyzed
descriptively. The descriptive results of study have been elaborated as below:

Table 2: Source Primary data

Variable N Mean Std. Deviation Std. Error of

Mean
Performance appraisal 200 3.1636 1.15904 .05781
satisfaction
Employee Performance 200 3.2090 1.18462 .05908
Fairness about Appraisal 200 3.1820 1.14391 .05705
Appraisal Accuracy 200 3.1294 1.15853 .05778

Correlations between Effectiveness of Performance Appraisal System &

Employees Performance
Table 3: Source Primary data

Performance Appraisal Employees Performance

Pearson Correlation 1 .720**
Performance Appraisal Sig. (2-tailed) .000

N 200 200
Pearson Correlation .720* 1
Employees
Sig. (2-tailed) .000
performance
N 200 200
Source: Field Survey
**. Correlation is significant at the 0.01 level (2-tailed).

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Distribution of Employees According to their Perception Regarding Effectiveness of

Performance Appraisal System
Table 4: Source Primary data

S.
Attributes SDA DA NAND A SA
No.
Performance appraisal 31 46 18 91 14
A1 satisfaction
(15.5) (23) (9) (45.5) (7)
Employee Performance 22 37 25 95 21
A2
(11) (18.5) (12.5) (47.5) (10.5)
Fairness about Appraisal 32 41 17 75 35
A3
(16) (20.5) (8.5) (37.5) (17.5)
Appraisal Accuracy 13 43 38 82 24
A4
(6.5) (21.5) (19) (41) (12)

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Hypothesis Testing Results

There is an association between overall performance appraisal system and the employee’s
performance.

Table 5: Source Primary data

SN Hypothesis B Value t- Value P Value Conclusion

H1 PA--- > EP .391 7.261 .000 Hypothesis Accepted

Findings

 From, out of the total respondents regarding the satisfaction of appraisal system, the
maximum of 45.5 per cent of them were satisfied and 23 per cent of them dissatisfied.
15.5 per cent of them were highly dissatisfied and 7 per cent of them were highly
satisfied. Only 9 per cent of them have shown their neutral position.
 47.50% of the sample respondents were satisfied with their performance.
 55% respondents said that a performance appraisal system is fair.
 41 % of the sample respondents have opined that appraisal accuracy is satisfactory.

Conclusion
The study was based on the evaluation of effectiveness of performance appraisal in banking
sector. The study was conducted through survey analysis conducted with the employees of State
bank of India. On the basis of statistical analysis, it has been concluded that performance
appraisal is linked with the employee performance outcomes in State bank of India. In addition
to this, the results also reflect that all study variables are significantly related with employee’s
performance. The results of the study provide sound understanding about that employees have
fair perception about performance appraisal. This also reveals that respondents think that
performance appraisal outcomes are accurate and significant towards employee performance.

Reference
 Gupta, C. B. (2003), “Human Resource Management”,Himalaya Publication, New Delhi.
 Satinder Gill & Madhavi Mehta (1999) in their article entitled “Managing performance
through excellence”, Paradigm, Vol.3, No.1, January-June 1999, pp.7-18.
 http://www.exinfm.com/pdffiles/pm.pdf
 http://www.sciencedirect.com/science/article/pii/S1044500500901306
 http://en.wikipedia.org/wiki/Performance_management
 http://www.managementstudyguide.com/performance-management.html
 Aswathappa, K., Human Resource and Personnel Management Text and Cases, Tata Mc-
Graw Hill Publishing, NewDelhi, 2007, PP 225-227.

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