Human Resources ManagementProject ReportAppraisal System at Dubai Islamic BankPakistan Limited Ahmed Fayyaz Ali -1666103Amnah Irfan -1666104Bushra Qaiser -1666106Sonia Karamat –1666122MBAE – III – C INTRODUCTION:Performance appraisalis the method of evaluating employee performance and giving rewards on thebasis of results. It is done by setting certain performance targets. If theemployee achieves the respective target he/she is rewarded. The very purpose of performance appraisal is to knowthe performance of an employee, subsequently to decide whether training isneeded for a particular employee or to give promotion to him/her withadditional pay hike. Performance appraisal is the tool for determining whetheran employee is to be promoted, demoted or sacked (removed) in case of a verypoor performance with no scope for improvement in sight.The history ofperformance appraisal goes back to the early 20th century.
It is natural to judge the performance ofyour subordinates in a particular area. As adistinct and formal management procedure used in the evaluation of workperformance, appraisal really dates from the time of the Second World War – notmore than 60 years ago. Theobjectives of performance appraisal are to provide feedback, identify employeetraining needs, provide a basis for decisions relating to salary increases,promotions, disciplinary actions, bonuses, facilitate promotion decision, helpin making downsizing decision, improve performance through counseling, coachingand development.
Thereare various benefits of performance appraisal such as identification oftraining and development needs. Once the needs have been identified we caneasily train the employees. Moreover, performance appraisal provides satisfactionand motivation. Performance appraisalprovides employees with recognition for their work efforts. The power of socialrecognition as an incentive has long been noted. In fact, there is evidencethat human beings will even prefer negative recognition in preference to norecognition at all as nobody likes to be completely ignored. Performanceappraisal helps in recruitment and selection. Appraisal data can be used to monitorthe effectiveness of changes in recruitment strategies.
By following the yearlydata related to new hires (and given sufficient numbers on which to base theanalysis) it is possible to assess whether the general quality of the workforceis improving, staying steady, or declining.Thereare also a few drawbacks of performance appraisal. If the performance appraisalis done right it will waste a lot of time and turn into a negative activity.Performance appraisal also has the aspect of humanerror. Appraisers might appraise incorrectly.
It can create a stressfulenvironment for everyone involved.A general performance appraisal process is as follows:· Establishing the performance standards· Communicating the performance expectations toemployees· Measuring the actual performance · Comparing the actual performance withstandard performance · Discussing the appraisal with employees· Taking the corrective actionsThere are two types of appraisal methods, traditional andmodern. The traditional performance appraisal methods include rating scalemethod, essay appraisal method, ranking method, paired comparison, criticalincident report, confidential report system, checklist method, graphic ratingscale and forced distribution method. The modern methods include assessmentcentre, 360-degree appraisal, behaviorally anchored rating scales, customer feedbackmethod, human-resource accounting method and management by objective.This report talks about the performance appraisal system at DubaiIslamic Bank Pakistan Limited. Dubai Islamic Bank (DIB) is an Islamic bank in Dubai, established in 1975. It is the firstIslamic bank to have incorporated the principles of Islam in all its practicesand is the largest Islamic bank in the UAE. Dubai Islamic Bank isa public joint stock company, and its shares are listed on the Dubai Financial Market.
The bank currently operates 90branches in the UAE. Adnan Chilwan serves as the bank’s president and chief executive,while Mohammed Al Shaibani is chairman of the board of directors.Dubai Islamic Bank isinvolved in local and international partnerships, having established Dubai Islamic Bank Pakistan Limited, awholly owned subsidiary which has a network of 200 branches across 62 majorcities in Pakistan.
Dubai IslamicBank also has a representative office in Turkey, and has received apreliminary banking license by the Central Bank of Jordan to operate as anIslamic financial institution, through a new entity – Jordan Dubai IslamicBank. EXECUTIVE SUMMARY:Performance appraisalat Dubai Islamic Bank Pakistan Limited is done using the graphic rating scalemethod. This evaluation becomes the basis for salary increments, promotions,trainings as well as warnings issued to the employees for an improper behavioror in case of incompetence. This method has a great aspect of biasedness. Theappraiser can be based on different factors like race, religion, sex, age, etc.The feedback can also affect the employee’s performance. Such that if goodrating is received the employee would get complacent and won’t look forward tofurther improvement. Similarly, if bad rating is received, the employees won’t performwell just out of anger and frustration.
Employees at theDubai Islamic Bank Pakistan Limited are communicated their set targets at thebeginning of the year and are appraised according to those the at year end.They are also asked to perform self-appraisal, in which they appraise their ownperformance. This is done through an appraisal form. The performance appraisalforms are to be signed by both the employee and the line manager/directsupervisor. All those employees who have completed at least 4 months of servicewith Dubai Islamic Bank Pakistan Limited will be apprised according to thebank’s policy.
At present, Dubai IslamicBank Pakistan Limited is facing some issues. There has been change in the toplevel Human Resources management. This top level management has again conductedthe rating for last two years. Employees at the Dubai Islamic Bank PakistanLimited did not receive their appraisal reward for the previous two years dueto these changes. Not receiving rewards declined the morale and motivation ofthe employees which has eventually led to declined productivity. BACKGROUNDOF THE TOPIC: The graphic rating scalemethod is a behavioral method and it is very popular in performanceevaluations. It basically states the traits an employee should possess and therater has to give a rating for each trait. The purpose of this method is toidentify the different types of performers and place them into categories.
Andthen this evaluation becomes the basis for salary increments, promotions,trainings as well as warnings. Although the rating method of performanceevaluation is economical and easily applicable for different types of jobs, ithas some shortcomings. One of the major concerns regarding this method isbiasedness. The raters (appraisers) who are rating the employees (appraises)can give either a favorable or an unfavorable rating owing to their personal perceptionof the person. Now this perception in the mind of the appraiser can be based ondifferent factors like race, religion, caste, sex, age, etc.
In the same way the employees who arereceiving the ratings may interpret it in a completely different manner. Theemployees can believe to have received an average rating which can also be thecause of a feedback block. Such that if an employee has received a good rating,he/she will not focus on suggestions for further improvement, but rather his/herperceived outstanding quality of work. And in a similar way, an employee who has received an average ratingwill not focus on the positive feedback he has received but rather his angertowards the rating. Another drawback of this method which leads to biasednesson part of the rater (appraiser) is what is known as the “Halo Effect”. Thehalo effect is when the rater bases his entire rating on a characteristic strengthof the employee, like punctuality.
However, if a person is punctual, it doesn’tnecessarily mean that he is giving optimal performance. It can also be that anemployee who isn’t punctual is giving optimal performance. The rating methodhas proved to be the best when you need to identify the best employees and theworst employees.
Appraisers find it easy to put employees either in the best orthe worst category. But when it comes to those employees who fall in themiddle, it becomes difficult to evaluate especially when they have differentstrengths and weaknesses. Another default error raters make is when they judgethe employees on the basis of recent conduct. Therefore, when the appraisal process is close, the employees usuallytend to improve their conduct and the appraisers tend to judge the recentmisdemeanors more harshly, ignoring past performance.
The number of people who are raters in anorganization varies and with it varies the different ratings. Some may belenient and some may be too harsh which can result in inaccurate evaluation ofoverall employees. ANALYSIS:The policyregarding performance management at DubaiIslamic Bank Pakistan Limited includes setting individual employeeobjectives which reflect organizational objectives. These objectives are in writingand are communicated to the employees at the beginning of the year. As theobjective setting exercise takes place at the start of the year, they are usedto discuss and agree the measurement criteria for assessment. Human ResourcesDepartment supports and monitors the entire objective setting process.
Theemployee is given a clear picture regarding the level of performance expectedwhich can be reviewed during the half-yearly assessment. The half-yearlyassessment is a periodical review of performance which is conducted andfeedback is given to the employee. The employees are also given aself-appraisal form in which they have to evaluate their own performance forthe given period. Then these forms along with periodical reviews are combined onan annual basis and the results are documented in a standardized form. The peopleconducting these evaluations are either the line manager or the directsupervisor.
They also have to provide individual rating for overall performanceof the employee. And they have to provide feedback on an ongoing basis to theemployee as well as conduct a formal feedback session before the end of yearappraisal. The performance appraisal forms are to be signed by both theemployee and the line manager/direct supervisor. All these forms and the ratingare submitted to HR department for further evaluation and analysis. They keep arecord of the same in their database.
The policy also warrants objectiveassessment of individual performance of employees as well as identification oftraining and development needs of employees.The question thatarises is “Who is eligible?”So, all those employeeswho have completed 4 months of service with the Bank will be appraisedaccording to the bank’s policy.However, the issuefacing the Dubai Islamic Bank PakistanLimited employees as per feedback received from the employees is thatafter two years of conducting appraisals using the rating scale methodincrements were not given. This led to an overall decrease in employee moraleand productivity. One of the main reasons increments were delayed was due tothe fact that there were changes in the top level Human Resource management.The new Human Resource manager required the ratings of two years to beconducted again, further delaying increments. And the reason the previous HumanResource manager had not given any increments is in some way linked to the topmanagement of the organization as this was observed in all branches of Dubai Islamic Bank and not just oneparticular branch.
The fact that no increments were given seems to be quiteunexplainable due to the following facts: Dubai Islamic Bank has had more than 100% growth in profits in thelast three years as Dubai Islamic Bankjoined the exclusive USD 1 billion profit club in the country. And its entityratings have been upgraded by JCR-VIS Credit Rating Company Limited from’A+/A-1′ (Single A Plus/A-One) to ‘AA-/A-1’ (Double A Minus/A-One). Therefore,it seems quite strange that even after the appraisal process was conducted noincrements were given. There seems to be no point in conducting appraisals ifthe evaluations are not leading to a positive outcome, like pay increments.Because at the end of the day, it all comes down to money as it is a keymotivator for any employee.
This negligence of thetop management regarding compensation can lead to an increase in employeeturnover. Dubai Islamic Bank is in danger of losing out on talented andexperienced employees if they continue with their current appraisal andcompensation pattern. RECOMMENDATION:As mentioned above, in a graphic scale ratingappraisal method, the employees can be appraised unfairly and badly, becausethe appraiser (direct supervisor) who is conducting the appraisal and ratingthe employees can give an unfavorable rating due to discrimination, jealousy orany other reason.As observed in the organization after thoroughscrutiny, the employee who was working hard and performing his duties properlywas rated unfairly, since his boss (direct supervisor) feared that hissubordinates could take over his position, he was afraid of losing hisposition, so he rated that employee unfairly.
This is the biggest disadvantageof graphic rating method that the employer can be biased, depending on therelationship his employee has maintained with him. As a result of this,employees can be discriminated against at work. This discriminated rating decreasesthe morale of the employees which leads to decline in his//her productivity. In our opinion Dubai Islamic Bank Pakistan Limited canuse the 360 degree performance appraisal method as in this method, chances ofemployee discriminations are less, because by using this method, employees of DubaiIslamic Bank Pakistan Limited will be appraised by managers,sub-ordinates, co-workers and one of the most important things is that workerswill be rated by the bank’s customers as well. Because banks are theinstitutions that provide financial services to customers, so employees of thebank have to coordinate with customers on a daily basis, they have to maintainand build the good relationships with the customers. Customer’s feedbackregarding the services and employees treatment is the most important thing inthe organization which provides services to people and generates major profitsfrom its customer.In addition to this, the top level officers, Such asArea Managers and Group Heads should conduct the weekly meetings with juniorstaff to motivate them by giving a good feedback or constructive criticismregarding their performance and give them recommendations to improve theperformance, by conducting such meetings, top management which relies on directsupervisor’s appraisal will get to know the actual performance of theemployees. And the direct supervisor or line manager will think a lot whilerating the employees that top management such as Area Mangers and Group Headsare aware of the junior staff’s performance, so there are less chances of beingbiased towards the employees.
Since the employees are appraised by all the peoplearound them in the organization, and feedback will be coming from all the areasin which employees are interacting, they can improve appraisee’s performance, because ifmany people are giving a feedback regarding the performance, they will surelyhighlight the areas in which the appraisees are lacking. One of the mostimportant things is that in 360 degree appraisal method, the appraisers are notdisclosed to employees, so they can give their feedback without any fear.No matter what appraisal method is used by the DubaiIslamic Bank Pakistan Limited management, their appraisal method andsystem should motivate the employees and give them a surety that the appraiserswill rate them without any discrimination and biasness, so that the employeescan perform well and remain motivated. It will ultimately help the organizationin generating high profits. As banks are service providing institutions, theyhave to be dependent on the employees, so if employees of the DubaiIslamic Bank Pakistan Limited are satisfied and motivated, they willwork hard in the hope of being appraised without any discrimination, resultingin high profits for the organization.
In short, the growth of the organization takes placeif the hard-working people are putting their efforts into generating thecontinued profits. These employees will perform their best to help theorganization grow and prosper. CONCLUSION:Although the top level management of DubaiIslamic Bank Pakistan Limited is working on developing a betterperformance appraisal system, one of best things they do is conducting mysteryshopping on a monthly basis. It is the process in which an unknown person whois also the employee of Dubai Islamic Bank Pakistan Limited is sentto all the branches for the purpose of checking how updated employees areregarding the products and services of the bank. That person approaches all thebranches and acts as if he/she is a customer and wants to avail the services ofthe bank, so what that person does is take information about any product fromany employee in the branch, that’s how he/she gets to know if the employees whoare working in the branches are treating customers properly or not and if theyare updated regarding the bank’s products or not.
After checking all thethings, the mystery shopper rates the branch and its employees. We believe thisis one of the good parts of appraisal system conducted by the top levelmanagement, because if the direct supervisor is appraising some specificemployees unfairly and sending and unfair rating to the HR department, theemployees are assessed by the mystery shopper as well who is an entirelyunbiased third person. This is also considered while performing the finalrating of the employees.Despite the fact that management is playing a vitalrole in the betterment of organization and its employees, the employees of DubaiIslamic Bank Pakistan Limited are still having issues regarding theperformance appraisal system. As the employees have not been given incrementssince the last two years, some of the employees are very disappointed andthinking about leaving the organization, but they are still hoping that toplevel management will take this matter into account, since the rating of lasttwo years is sent to the Human Resources department last week. In addition tothis, for the first time, the profit of Dubai Islamic Bank Pakistan Limited hascrossed 1 billion this year, which was 724 million last year, and it hasincreased from 724 million to 1,122 billion this year, the growth in theprofits is 57% this year, so there are bright chances that the increments willbe given to employees after this rating conducted by the top level management. REFERENCES:1.
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