Performance Management: Caiib Paper 1 (Module C), Unit 5

Performance Management: Caiib Paper 1 (Module C), Unit 5

Dear Bankers,
We all know that CAIIB exams are conducted by the Indian Institute of Banking and Finance (IIBF).  CAIIB is said to be one of the difficult courses to be cleared for the bankers. But we assure you that with the help of our “CAIIB study material”, you will definitely clear the CAIIB exam.
CAIIB exams are conducted twice in a year. Candidates should have completed JAIIB before appearing for CAIIB Exam. Here, we will provide detailed notes of every unit of the CAIIB Exam on the latest pattern of IIBF.
So, here we are providing “Unit 5: Performance Management of “Module C: HRM in Banks” from “Paper 1: Advanced Bank Management (ABM)”.

The Article is Caiib Unit 5: Performance Management

  • Heyel defines performance appraisal as ‘a process of evaluating the performance and qualifications of the employees in terms of requirements of the job for which they  are employed, for the purposes of administration including placement, selection for promotions, providing financial rewards and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally.’

Appraisal Systems

  • Performance appraisal is an organizational necessity. Various appraisal systems have evolved over a period of time. These systems vary from simple to complex, from vague to objective, from unstructured to structured and from confidential to open.
  • An organization has the option to device its own system or can adopt, with certain modifications, some other’s system. What system one should choose will depend on whether it fulfills the objectives the organization wants the system to serve.
Objectives of Performance Appraisal System
Uses of Performance Appraisal
  • It rates all the employees in a unified manner by using the same rating scales and thus making them comparable on a common footing.
  • It provides information which could be critical while deciding on promotion, pay increases, transfers, training, etc.
  • It provides information about the areas of weaknesses of the employee to enable initiation of corrective steps.
  • It improves the quality of supervision as the supervisor becomes a keen observer.
  • The system, if implemented with openness and trust, ensures better interpersonal relations between the employee and his supervisor.
Performance Appraisal Process

There are following steps in the evaluation process:

  • The process begins with the organization setting the ‘performance standards‘ in advance. These standards should be clear, realistic and measurable. It is advisable to involve the line managers in the exercise as they understand  the  nuances  and  nitty- gritty of the job.
  • The performance standards then are required to be communicated to the employees.
  • The next stage is to measure the performance. It can be done through the data available with the department, personal observations, and feedback from the appraises.
  • Performance level of the employee is then compared with the benchmark or standard already established. Deviations are discussed and the reasons for deviations are noted.
  • The outcome is discussed with the employee, emphasising the strong points and counselling him on the weak points.
  • The last step is to initiate corrective measures and act on the positive performance by deciding on various incentives like increments, promotions, training needed, etc.
Performance Appraisal Methods

Traditional Methods

  • Free Form Essay Method
  • Straight Ranking Method
  • Comparison Method
  • Grading Method
  • Graphic or Linear Rating Scales
  • Forced Choice Description Method
  • Forced Distribution Method
  • Group Appraisal Method

Modern Methods

  • Assessment Centre Workshops
  • Management by Objectives
  • Human Asset Accounting Method
  • Behaviourally Anchored Rating Scales
  • 360 Degree Appraisal Method

Performance Appraisal versus Confidential Report

  • In a large number of organizations the annual performance appraisal exercise is carried out as a confidential activity. In fact, the form in which the performance of the employee is evaluated and reported is called confidential report.
Advantage and Disadvantage of performance appraisal system


  • It reveals a concern for performance and creates an atmosphere of openness and trust in the organization.
  • Gives feedback to the employee and ensures that corrective steps are taken in time.
  • It raises the general motivation level of the employees if implemented properly.


Giving Feedback

  • Giving a feedback without hurting a person’s feelings is an art.  The points covered above in respect of appraisal interview are also relevant for giving feedback  to the employee. To give feedback, it is necessary to arrange the meeting in a congenial environment. After carefully listening to the employee, the appraiser should take command of the situation and give an honest feedback to the employee with an objective to help his development. The following points are crucial for giving feedback:
  • The feedback should be objective and should help employee in reaching appropriate level of performance in future.
  • The feedback should be suggestive in nature rather than Judgemental and  should focus on the training and developmental needs of the employee.
  • The superior should adopt a problem-solving approach and  not  fault-finding  approach. The trust of the employee will be reinforced if a sincere attempt is made in giving feedback with an intention to help him.
  • The superior should never lose sight that his aim is to improve the performance of the appraisee and not to criticize him.
Do’s and Don’ts

Based on what has been discussed above, the DO’s and DON’Ts of  the  appraisal interview and giving of feedback can be easily summarized:

  • allow the employee to do the maximum talking,
  • encourage him to describe his success and failure,
  • create an atmosphere where he will open up.
  • praise him for his achievements.
  • tell him honestly what you think where he could have done well,
  • ask him what kind of help he expects from you.
  • extend to him all that you can do for him.


  • arrange a meeting when you are unable to devote time undisturbed.
  • allow any kind of disturbance once the meeting starts,
  • adopt judgmental role,
  • criticize him for his failures.


  • The prime purpose of counselling is to communicate to employee the feedback of the performance and expectations and, help the employee to understand the areas of concern with the sole objective of improvement of his performance. If the feedback system is effective, the employee not performing up to the mark gets to know clearly where he stands against the set benchmarks.

The following could be considered as counselling skills:

  • It is essential to follow the stages mentioned earlier in respect of appraisal interview and feedback session. It helps in creating conducive atmosphere. The appraiser should realize that it is a common human tendency to react negatively to the feedback process, and particularly to the counselling process.
  • The process should start by communicating the purpose of the counselling.
  • The appraiser should be specific and descriptive when he is evaluating the performance.
  • Appraiser should avoid commenting on the person and centre his discussion on the issues related to performance.
  • His intention should be to assist the employee to overcome his problems. With this prime objective, even when he is criticizing the behaviour (and not  the  person)  he  should do it carefully. Criticizing without crippling should be the motto.
  • He should listen to the employee and try to help him.
  • He should offer workable solutions and act where the appraises can initiate improvement.
  • Appraiser should not have any prejudice about the employee and try to evaluate the employee’s version objectively.
  • Successful counselling is effective listening.

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