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Human Resources Management

Project Report

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Appraisal System at Dubai Islamic Bank
Pakistan Limited

 

 

 

 

 

 

 

 

Ahmed Fayyaz Ali –
1666103

Amnah Irfan –
1666104

Bushra Qaiser –
1666106

Sonia Karamat –
1666122

MBAE – III – C

 

INTRODUCTION:

Performance appraisal
is the method of evaluating employee performance and giving rewards on the
basis of results. It is done by setting certain performance targets. If the
employee achieves the respective target he/she is rewarded. The very purpose of performance appraisal is to know
the performance of an employee, subsequently to decide whether training is
needed for a particular employee or to give promotion to him/her with
additional pay hike. Performance appraisal is the tool for determining whether
an employee is to be promoted, demoted or sacked (removed) in case of a very
poor performance with no scope for improvement in sight.

The history of
performance appraisal goes back to the early 20th century.  It is natural to judge the performance of
your subordinates in a particular area. As a
distinct and formal management procedure used in the evaluation of work
performance, appraisal really dates from the time of the Second World War – not
more than 60 years ago. 

The
objectives of performance appraisal are to provide feedback, identify employee
training needs, provide a basis for decisions relating to salary increases,
promotions, disciplinary actions, bonuses, facilitate promotion decision, help
in making downsizing decision, improve performance through counseling, coaching
and development.

There
are various benefits of performance appraisal such as identification of
training and development needs. Once the needs have been identified we can
easily train the employees. Moreover, performance appraisal provides satisfaction
and motivation. Performance appraisal
provides employees with recognition for their work efforts. The power of social
recognition as an incentive has long been noted. In fact, there is evidence
that human beings will even prefer negative recognition in preference to no
recognition at all as nobody likes to be completely ignored. Performance
appraisal helps in recruitment and selection. Appraisal data can be used to monitor
the effectiveness of changes in recruitment strategies. By following the yearly
data related to new hires (and given sufficient numbers on which to base the
analysis) it is possible to assess whether the general quality of the workforce
is improving, staying steady, or declining.

There
are also a few drawbacks of performance appraisal. If the performance appraisal
is done right it will waste a lot of time and turn into a negative activity.
Performance appraisal also has the aspect of human
error. Appraisers might appraise incorrectly. It can create a stressful
environment for everyone involved.

A general performance appraisal process is as follows:

·        
Establishing the performance standards

·        
Communicating the performance expectations to
employees

·        
Measuring the actual performance

·        
Comparing the actual performance with
standard performance

·        
Discussing the appraisal with employees

·        
Taking the corrective actions

There are two types of appraisal methods, traditional and
modern. The traditional performance appraisal methods include rating scale
method, essay appraisal method, ranking method, paired comparison, critical
incident report, confidential report system, checklist method, graphic rating
scale and forced distribution method. The modern methods include assessment
centre, 360-degree appraisal, behaviorally anchored rating scales, customer feedback
method, human-resource accounting method and management by objective.

This report talks about the performance appraisal system at Dubai
Islamic Bank Pakistan Limited. Dubai Islamic Bank (DIB) is an Islamic bank in Dubai, established in 1975. It is the first
Islamic bank to have incorporated the principles of Islam in all its practices
and is the largest Islamic bank in the UAE.

Dubai Islamic Bank is
a public joint stock company, and its shares are listed on the Dubai Financial Market. The bank currently operates 90
branches 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 is
involved in local and international partnerships, having established Dubai Islamic Bank Pakistan Limited, a
wholly owned subsidiary which has a network of 200 branches across 62 major
cities in Pakistan. Dubai Islamic
Bank also has a representative office in Turkey, and has received a
preliminary banking license by the Central Bank of Jordan to operate as an
Islamic financial institution, through a new entity – Jordan Dubai Islamic
Bank.

 

EXECUTIVE SUMMARY:

Performance appraisal
at Dubai Islamic Bank Pakistan Limited is done using the graphic rating scale
method. This evaluation becomes the basis for salary increments, promotions,
trainings as well as warnings issued to the employees for an improper behavior
or in case of incompetence. This method has a great aspect of biasedness. The
appraiser can be based on different factors like race, religion, sex, age, etc.
The feedback can also affect the employee’s performance. Such that if good
rating is received the employee would get complacent and won’t look forward to
further improvement. Similarly, if bad rating is received, the employees won’t perform
well just out of anger and frustration.

Employees at the
Dubai Islamic Bank Pakistan Limited are communicated their set targets at the
beginning 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 own
performance. This is done through an appraisal form. The performance appraisal
forms are to be signed by both the employee and the line manager/direct
supervisor. All those employees who have completed at least 4 months of service
with Dubai Islamic Bank Pakistan Limited will be apprised according to the
bank’s policy.

At present, Dubai Islamic
Bank Pakistan Limited is facing some issues. There has been change in the top
level Human Resources management. This top level management has again conducted
the rating for last two years. Employees at the Dubai Islamic Bank Pakistan
Limited did not receive their appraisal reward for the previous two years due
to these changes. Not receiving rewards declined the morale and motivation of
the employees which has eventually led to declined productivity.

 

BACKGROUND
OF THE TOPIC:

 

The graphic rating scale
method is a behavioral method and it is very popular in performance
evaluations. It basically states the traits an employee should possess and the
rater has to give a rating for each trait. The purpose of this method is to
identify the different types of performers and place them into categories. And
then this evaluation becomes the basis for salary increments, promotions,
trainings as well as warnings. Although the rating method of performance
evaluation is economical and easily applicable for different types of jobs, it
has some shortcomings. One of the major concerns regarding this method is
biasedness. The raters (appraisers) who are rating the employees (appraises)
can give either a favorable or an unfavorable rating owing to their personal perception
of the person. Now this perception in the mind of the appraiser can be based on
different factors like race, religion, caste, sex, age, etc.  In the same way the employees who are
receiving the ratings may interpret it in a completely different manner. The
employees can believe to have received an average rating which can also be the
cause 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/her
perceived outstanding quality of work. 
And in a similar way, an employee who has received an average rating
will not focus on the positive feedback he has received but rather his anger
towards the rating. Another drawback of this method which leads to biasedness
on part of the rater (appraiser) is what is known as the “Halo Effect”. The
halo effect is when the rater bases his entire rating on a characteristic strength
of the employee, like punctuality. However, if a person is punctual, it doesn’t
necessarily mean that he is giving optimal performance. It can also be that an
employee who isn’t punctual is giving optimal performance. The rating method
has proved to be the best when you need to identify the best employees and the
worst employees. Appraisers find it easy to put employees either in the best or
the worst category. But when it comes to those employees who fall in the
middle, it becomes difficult to evaluate especially when they have different
strengths and weaknesses. Another default error raters make is when they judge
the employees on the basis of recent conduct. 
Therefore, when the appraisal process is close, the employees usually
tend to improve their conduct and the appraisers tend to judge the recent
misdemeanors more harshly, ignoring past performance.  The number of people who are raters in an
organization varies and with it varies the different ratings. Some may be
lenient and some may be too harsh which can result in inaccurate evaluation of
overall employees.

 

ANALYSIS:

The policy
regarding performance management at Dubai
Islamic Bank Pakistan Limited includes setting individual employee
objectives which reflect organizational objectives. These objectives are in writing
and are communicated to the employees at the beginning of the year. As the
objective setting exercise takes place at the start of the year, they are used
to discuss and agree the measurement criteria for assessment. Human Resources
Department supports and monitors the entire objective setting process. The
employee is given a clear picture regarding the level of performance expected
which can be reviewed during the half-yearly assessment. The half-yearly
assessment is a periodical review of performance which is conducted and
feedback is given to the employee. The employees are also given a
self-appraisal form in which they have to evaluate their own performance for
the given period. Then these forms along with periodical reviews are combined on
an annual basis and the results are documented in a standardized form. The people
conducting these evaluations are either the line manager or the direct
supervisor. They also have to provide individual rating for overall performance
of the employee. And they have to provide feedback on an ongoing basis to the
employee as well as conduct a formal feedback session before the end of year
appraisal. The performance appraisal forms are to be signed by both the
employee and the line manager/direct supervisor. All these forms and the rating
are submitted to HR department for further evaluation and analysis. They keep a
record of the same in their database. The policy also warrants objective
assessment of individual performance of employees as well as identification of
training and development needs of employees.

The question that
arises is “Who is eligible?”

So, all those employees
who have completed 4 months of service with the Bank will be appraised
according to the bank’s policy.

However, the issue
facing the Dubai Islamic Bank Pakistan
Limited employees as per feedback received from the employees is that
after two years of conducting appraisals using the rating scale method
increments were not given. This led to an overall decrease in employee morale
and productivity. One of the main reasons increments were delayed was due to
the fact that there were changes in the top level Human Resource management.
The new Human Resource manager required the ratings of two years to be
conducted again, further delaying increments. And the reason the previous Human
Resource manager had not given any increments is in some way linked to the top
management of the organization as this was observed in all branches of Dubai Islamic Bank and not just one
particular branch. The fact that no increments were given seems to be quite
unexplainable due to the following facts: Dubai Islamic Bank has had more than 100% growth in profits in the
last three years as Dubai Islamic Bank
joined the exclusive USD 1 billion profit club in the country. And its entity
ratings 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 no
increments were given. There seems to be no point in conducting appraisals if
the 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 key
motivator for any employee.

This negligence of the
top management regarding compensation can lead to an increase in employee
turnover. Dubai Islamic Bank is in danger of losing out on talented and
experienced employees if they continue with their current appraisal and
compensation pattern.

RECOMMENDATION:

As mentioned above, in a graphic scale rating
appraisal method, the employees can be appraised unfairly and badly, because
the appraiser (direct supervisor) who is conducting the appraisal and rating
the employees can give an unfavorable rating due to discrimination, jealousy or
any other reason.

As observed in the organization after thorough
scrutiny, the employee who was working hard and performing his duties properly
was rated unfairly, since his boss (direct supervisor) feared that his
subordinates could take over his position, he was afraid of losing his
position, so he rated that employee unfairly. This is the biggest disadvantage
of graphic rating method that the employer can be biased, depending on the
relationship his employee has maintained with him. As a result of this,
employees can be discriminated against at work. This discriminated rating decreases
the morale of the employees which leads to decline in his//her productivity.

In our opinion Dubai Islamic Bank Pakistan Limited can
use the 360 degree performance appraisal method as in this method, chances of
employee discriminations are less, because by using this method, employees of Dubai
Islamic Bank Pakistan Limited will be appraised by managers,
sub-ordinates, co-workers and one of the most important things is that workers
will be rated by the bank’s customers as well. Because banks are the
institutions that provide financial services to customers, so employees of the
bank have to coordinate with customers on a daily basis, they have to maintain
and build the good relationships with the customers. Customer’s feedback
regarding the services and employees treatment is the most important thing in
the organization which provides services to people and generates major profits
from its customer.

In addition to this, the top level officers, Such as
Area Managers and Group Heads should conduct the weekly meetings with junior
staff to motivate them by giving a good feedback or constructive criticism
regarding their performance and give them recommendations to improve the
performance, by conducting such meetings, top management which relies on direct
supervisor’s appraisal will get to know the actual performance of the
employees. And the direct supervisor or line manager will think a lot while
rating the employees that top management such as Area Mangers and Group Heads
are aware of the junior staff’s performance, so there are less chances of being
biased towards the employees.

Since the employees are appraised by all the people
around them in the organization, and feedback will be coming from all the areas
in which employees are interacting, they can improve appraisee’s performance, because if
many people are giving a feedback regarding the performance, they will surely
highlight the areas in which the appraisees are lacking. One of the most
important things is that in 360 degree appraisal method, the appraisers are not
disclosed to employees, so they can give their feedback without any fear.

No matter what appraisal method is used by the Dubai
Islamic Bank Pakistan Limited management, their appraisal method and
system should motivate the employees and give them a surety that the appraisers
will rate them without any discrimination and biasness, so that the employees
can perform well and remain motivated. It will ultimately help the organization
in generating high profits. As banks are service providing institutions, they
have to be dependent on the employees, so if employees of the Dubai
Islamic Bank Pakistan Limited are satisfied and motivated, they will
work hard in the hope of being appraised without any discrimination, resulting
in high profits for the organization.

In short, the growth of the organization takes place
if the hard-working people are putting their efforts into generating the
continued profits. These employees will perform their best to help the
organization grow and prosper.

CONCLUSION:

Although the top level management of Dubai
Islamic Bank Pakistan Limited is working on developing a better
performance appraisal system, one of best things they do is conducting mystery
shopping on a monthly basis. It is the process in which an unknown person who
is also the employee of Dubai Islamic Bank Pakistan Limited is sent
to all the branches for the purpose of checking how updated employees are
regarding the products and services of the bank. That person approaches all the
branches and acts as if he/she is a customer and wants to avail the services of
the bank, so what that person does is take information about any product from
any employee in the branch, that’s how he/she gets to know if the employees who
are working in the branches are treating customers properly or not and if they
are updated regarding the bank’s products or not. After checking all the
things, the mystery shopper rates the branch and its employees. We believe this
is one of the good parts of appraisal system conducted by the top level
management, because if the direct supervisor is appraising some specific
employees unfairly and sending and unfair rating to the HR department, the
employees are assessed by the mystery shopper as well who is an entirely
unbiased third person. This is also considered while performing the final
rating of the employees.

Despite the fact that management is playing a vital
role in the betterment of organization and its employees, the employees of Dubai
Islamic Bank Pakistan Limited are still having issues regarding the
performance appraisal system. As the employees have not been given increments
since the last two years, some of the employees are very disappointed and
thinking about leaving the organization, but they are still hoping that top
level management will take this matter into account, since the rating of last
two years is sent to the Human Resources department last week. In addition to
this, for the first time, the profit of Dubai Islamic Bank Pakistan Limited has
crossed 1 billion this year, which was 724 million last year, and it has
increased from 724 million to 1,122 billion this year, the growth in the
profits is 57% this year, so there are bright chances that the increments will
be given to employees after this rating conducted by the top level management.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCES:

1.     
10 Secrets to an Effective Performance Review, Elizabeth Hall, July 2, 2012, Business
Management Daily.

2.      5 Steps to a Performance Evaluation
System, Judy Capko, March 10, 2003, American Academy of
Family Physicians.

3.      What Are the Disadvantages of Using
a Graphic Rating Scale When Evaluating Performance?
Dale Bye, April 15,2017, Houston Chronicle.

4.      How to Ditch Performance Ratings
and Still Evaluate Employees Fairly and Accurately,
Steven Hunt, October 20, 2015, https://www.tlnt.com.

5.      3 Ways Companies are Changing the
Dreaded Performance Review, Stephanie Taylor Christensen, October
2, 2015, https://www.fastcompany.com,.

6.      History & origin of Performance
Appraisal, George Elton Mayo, http://www.whatishumanresource.com.

7.      Performance Appraisal: Objectives,
Methods, and other Details, Smriti Chand, http://www.yourarticlelibrary.com.

 

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