Performance appraisal system of Mercantile bank limited: An evaluation

Abstract

Performance appraisal is very much essential for the HR managers to adopt administrative decisions regarding promotion, fringes, pay-offs, and merit pay increment of the employees. The article attempts to evaluate the existing performance appraisal system of Mercantile Bank Limited, one of the leading private commercial banks in Bangladesh. Efforts were made to reveal the problems and suggestions for the improvement of the performance appraisal system of the said bank. Both qualitative and quantitative techniques of gathering and interpreting data were applied. The key findings of the study suggest that there are some pragmatic gaps in the process of performance appraisal. The employees gave divided views on their satisfaction level about the performance appraisal procedure. The employees, in general, perceive the process of the appraisal system a tool of biased judgement for assessing their performances. The practical implication of the study is that it will facilitate the management of the bank to formulate time worthy performance appraisal policy so that the managers can conduct effective performance appraisal program ensuring satisfaction of the bank staffs. Introduction One of the key responsibilities of the modern managers is to undertake human resource decisions. The success and failure of the human resource managers depend on how effectively and efficiently they perform the human resource management functions. In the traditional approaches, the human resource department is responsible for setting and managing a performance appraisal system. Managers conduct performance appraisal as one of their administrative duties. It is arguably that performance appraisal is the most contentious and least popular activities performed by human resource managers (Brtton & Gold, 2003). Often, managers feel they do not know how to evaluate employee performance effectively, and employees feel they are excluded from the process and their contributions are not recognized (Noe, Hollenbeck, Gerhart, & Wright, 2004). Human resource managers measure the performance of employees by filling-out forms one or twice in a year and present the information to their employees, one by one. Appraisals include negative information (areas regarding improvement), so, the meetings for discussing performance appraisals tend to be uncomfortable for managers and employees, alike. Two evaluation systems exist side by side: the formal and the informal in many organizations. Managers often think about how well employees are doing; this is informal system. Political and interpersonal processes influence it, so those employees who are linked better than others have an edge. But managers cannot find out the real/actual performance of employees through this system because managers liking, or disliking are material here and employee's performances are immaterial. In contrast, a