Performance appraisal system of Mercantile bank limited: An evaluation

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. Corresponding author: Sheikh Abdur Rahim Email addresses for the corresponding author: rahim2008@daffodilvarsity.edu.bd First submission received: 13th February 2018 Revised submission received: 1st August 2018 Accepted: 29th May 2019 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 Journal of Business and Retail Management Research (JBRMR), Vol. 13 Issue 4 July 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 304 formal performance evaluation is a system set up by organization to evaluate employees’ performance regularly and systematically. Most of the organizations follow formal evaluation system because they think that performance appraisal is the essential matter for the organizational success. Managers should maintain the visibility in the performance evaluation program because it may accelerate the authenticity of the program. Statement of the problem The banking sector of Bangladesh is one of the fastest growing and high-tech developed business sectors. The number of banks in Bangladesh is gradually increasing. In addition to bank, the number of financial institutions is also increasing day-by-day. Among the banks and financial institutions in Bangladesh, the Mercantile Bank Ltd. is a very growth-oriented bank. The authority of the bank has been trying to expand business activities within and outside the country through opening newer branches and wings. As a result, they need to hire sufficient skilled and efficient human resources to fill in the vacant positions of the bank frequently. After selection of the employees, the HR department of the bank is responsible to evaluate their performance fairly through the raters/evaluators for taking decision relating to salary, promotion, transfer, fringes, payoffs, merit pay, training and development, etc. of the employees. Previously, many researchers conducted their studies on performance appraisal processes, strategies, systems, management, practices in Bangladesh and abroad (e.g. DeNisi & Murphy, 2017; Sattar, Khaliq, & Butt, 2018; Cintron & Flaniken, 2017; Jahan, 2016; Abdullah & Farhana, 2012; Haque, 2012; Idowu, 2017; Iqbal, Akbar & Budhwar, 2015; Moyal and Iyengar , 2016; Vashistha & Devdutt, 2018; Gachengo & Wekesa, 2017, Mishra, 2013; and Jisun & Akter, 2016 ). But these studies did not highlight the performance appraisal system of Mercantile Bank Limited. That is why, the researchers were selected the topic “Performance Appraisal System of Mercantile Bank Limited: An Evaluation” to carry out the present study. In the current study, an attempt has been taken to find out and evaluate the existing performance appraisal systems of Mercantile Bank Ltd. Objectives of the study General Objective: The overall objective of the study is to evaluate the existing performance appraisal systems of Mercantile Bank Limited. Specific Objectives: The specific objectives of the study are as follows: a) To explore the employees’ opinion about the existing performance appraisal systems of Mercantile Bank Limited b) To identify the problems of existing performance appraisal systems of the bank c) To recommend befitting measures to overcome the problems of existing performance appraisal systems of the bank Methodology of the study i) Research Design: The researchers applied both the qualitative and quantitative approaches to carry out the study. For qualitative approach, data were collected through face-to-face interview and content analysis of the performance appraisal. For gathering quantitative data, structured questionnaires were used to survey the views, statements, and opinions of the sample population. ii) Sampling Technique: The researchers applied purposive sampling technique to select the respondents in this study for collecting data/information. The reason behind is this that the purposive sampling technique provides the freedom to the researcher to choose the items/ numbers in accordance with her/his own convenience. There is no requirement to prior planning for selecting items/ numbers in this case. iii) Sample Size: The sample size of the study was 100 respondents consisting of 10 managers, 20 executive officers, 40 probationary officers and 30 junior officers. iv) Sample Distribution: The sample distribution of the study is shown in the following Table 1: Journal of Business and Retail Management Research (JBRMR), Vol. 13 Issue 4 July 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 305 Table 1: Sample Distribution SL No. Category of Employees Number