Analytical approach to Performance Management and Quality Circles at Reserve Bank of India
SIP project report submitted in partial fulfillment of the requirements for the PGDM Programme
By Veethika Pande
Supervisors: 1. Company guide- Mr. Vishwa Mohan
2. Faculty Guide- Prof. V. Ekkirala
Institute of Management Technology, Nagpur2010-12
Acknowledgement
I would like to express my gratitude towards Dr. Amarendra Sahoo (Regional Director, RBI
Lucknow) who gave me the opportunity to work for Reserve Bank of India as a summer intern.
This project has provided me with valuable insights in the practical aspects of performance
management.
I take this opportunity to express my sincere gratitude to Mr. Vishwa Mohan (AGM, DAPM)
for his valuable inputs and guidance.
I would also like to thank Prof. V. Ekkirala for his guidance and help.
I hope that RBI and IMT Nagpur is benefited from the inferences, conclusions and
recommendations made by me in this report.
Veethika Pande
Roll No. 2010249
PGDM (HR)
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Table of Contents
Topic Page No.
Executive summary 4
Review of Literature 5
Reserve bank of India 9
Human Resource Development Department 12
Performance Management at RBI 14
Planning 15
Competency Mapping 16
Monitoring 21
Developing 21
Rating 24
Rewarding 25
Quality Circles 27
Objectives of study 31
Methodology followed 31
Performance Management: Observation and
Findings
32
Quality Circles: Observations and Findings 36
Performance Management: Recommendations 37
Quality Circles: Recommendations 40
Conclusion 42
Limitations 43
Future 43
Appendix 44
Bibliography 45
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Executive summary
The role of HR in the present scenario has undergone a sea change and its focus is on evolving
such functional strategies which enable successful implementation of the major corporate
strategies. In a way, HR and corporate strategies function in alignment. Today, HR works
towards facilitating and improving the performance of the employees by building a conducive
work environment and providing maximum opportunities to the employees for participating in
organizational planning and decision making process.
Performance management is the current buzzword and is the need in the current times of cut
throat competition and the organizational battle for leadership. Performance management is a
much broader and a complicated function of HR, as it encompasses activities such as joint goal
setting, continuous progress review and frequent communication, feedback and coaching for
improved performance, implementation of employee development programmes and rewarding
achievements. The process of performance management starts with the joining of a new
incumbent in a system and ends when an employee quits the organization. Performance
management can be regarded as a systematic process by which the overall performance of an
organization can be improved by improving the performance of individuals within a team
framework. It is a means for promoting superior performance by communicating expectations,
defining roles within a required competence framework and establishing achievable benchmarks.
Reserve bank of India is a central organization which “regulates the issue of Bank Notes and
keeps reserves with a view to securing monetary stability in India and operates the
currency and credit system of the country to its advantage”. It has also implemented a
performance management system. This report explores the many facets of performance
management and how it works as well as extends itself to encompass individuals, dyads and
teams. It focuses on how RBI can enhance performance through building competency,
commitment and support. It can be stated that a good performance management system has an
inherent motivational value since it facilitates learning and brings about role clarity—which
helps people focus on performance development. Thus, performance management raises levels
of trust creating better communication, and as a consequence a more transparent and productive
organization.
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Review of Literature
Given below are some of the concepts that have been used in the project:
Performance
Performance is a multi-dimensional construct, the measurement of which varies, depending on a
variety of factors. Performance means both behaviours and results. Behaviours emanate from the
performer and transform performance from abstraction to action. Not just the instruments for
results, behaviours are also outcomes in their own right-the product of mental and physical effort
applied to tasks-and can be judged apart from results.
This definition of performance leads to the conclusion that, when one is managing the
performance of teams and individuals, both inputs and outputs should be considered.
Performance is about how things are done as well as what is done. This is the so-called
‘mixed model’ (Hartle 1995) of performance management, which covers competency levels and
achievements as well as objective setting and review.
Factors affecting performance
Performance is affected by a number of factors, all of which should be taken into account. These
comprise:
Personal factors: the individual’s skill, competence, motivation and commitment
Leadership factors: the quality of encouragement, guidance and support provided by
managers and team leaders
Team factors: the quality of support provided by colleagues
System factors: the system of work and facilities provided by the organization
Contextual factors: internal and external environmental pressures and changes
Traditional approaches to performance appraisal attribute variations in performance to personal
factors, when they could be caused in part or entirely by situational or systems factors.
Therefore, performance reviews must consider not only what individuals have done but also the
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circumstances in which they have had to perform. And this analysis should extend to the
performance of the manager as the leader.
Performance Management
It is a strategy which relates to every activity of the organization set in the context of its human
resources policies, culture, style and communications systems. The nature of the strategy
depends on the organizational context and can vary from organization to organization. It is a
management methodology that captures the strategic vision of an organization by translating it
into a comprehensive hierarchy of quantifiable performance goals. These goals are tied to
specific metrics, or critical success factors. On a regular basis, the values of these metrics are
collected and reported to managers and employees. Over time, these metrics are used to measure
progress towards strategic goals and provide timely and relevant information for decision-
making.
When an organization met the following characteristics it was said to have a good performance
management system:
The organization communicates a vision of its objectives to all its employees.
It sets departmental and individual performance targets that are related to wider
objectives.
It conducts a formal review of progress towards these targets.
It uses the review process to identify training, development and reward outcomes
It evaluates the whole process in order to improve effectiveness.
The organization expresses performance targets in terms of measurable outputs,
accountabilities and training/learning targets.
They use formal appraisal procedures as ways of communicating performance
requirements that are set on a regular basis.
They link performance requirements to pay, especially for senior managers.
Two simple propositions provide the foundation upon which performance management is built:
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When people know and understand what is expected of them, and have taken part in
forming these expectations, they will use their best endeavours to meet them.
The capacity to meet expectations depends on the levels of capability that can be
achieved by the individuals and team, the level of support they are given by management,
and the processes, systems and resources made available to them by the organization.
These propositions imply that the basic aims of performance management are to share
understanding about what is to be achieved, to develop the capacity of people and the
organization to achieve it, and to provide the support and guidance individuals and teams need to
improve their performance.
The aim of implementing performance management is to:
Help achieve sustainable improvements in organizational performance
Act as a lever for change in developing a more performance oriented culture
Increase the motivation and commitment of employees
Enable individuals to develop their abilities, increase their job satisfaction and achieve
their full potential to their own benefit and that of the organization as a whole
Enhance the development of team cohesion and performance
Develop constructive and open relationships between individuals and their managers in a
process of continuing dialogue which is linked to the work actually being done
throughout the year
Provide opportunities for individuals to express their aspirations and expectations about
their work
To integrate individual or team objectives with those of the organization- often described
as a cascading process, which implies that it is entirely top-down.
Performance Management Model
There is no one right way of doing performance management. It must be tailored to the
circumstances and needs of the organization, and it must be operated flexibly in accordance with
the needs of the individuals affected by it. It is possible to set out a typical sequence of processes
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that in one form or another are found in most performance management arrangements in all
organizations.
Performance management is a process not an event. It operates as a continuous cycle as shown.
Figure 1
So finally it can be said that performance management is basically an umbrella term that
includes performance planning, performance review and performance appraisal. Major work
plans and appraisals are generally made annually. Performance review occurs whenever a
manager and an employee confirm, adjust or correct their understanding of work performance
during routine work contacts.
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Reserve Bank of India- Company Profile
Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of
RBI Act, 1934. The central office of reserve bank was initially established in Calcutta but was
permanently moved to Mumbai in 1937. The central office is where the governor sits and where
policies are formulated. Though originally privately owned, since nationalization in 1949, the
reserve bank is fully owned by the government of India.
Preamble: The preamble of the Reserve Bank of India describes the basic functions of the
Reserve Bank as: "…to regulate the issue of bank notes and keeping of reserves with a view to
securing monetary stability in India and generally to operate the currency and credit system of
the country to its advantage."
The RBI's affairs are governed by the central board of directors. The board is appointed by the
government of India in keeping with the Reserve Bank of India Act. the board is
appointed/nominated for a period of four years. The constitution of the Board is as follows:
Official directors
Full-time
Includes the governor and not more than four deputy governors
Non-official directors
Nominated by government
Includes ten directors from various fields and one government official
Others: four directors-one each from four local fields
The functions of RBI include:
General superintendence and direction of the bank affairs
Functional supervision
The reserve bank of India performs this function under the guidance of the Board for Financial
Supervision (BFS). The Board was constituted in November 1994 as a committee of Central
Board of Directors of the Reserve Bank of India.
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Primary objective of the BFS is to undertake consolidated supervision of the financial
sector comprising commercial banks, financial institutions and non-banking finance
companies.
The board is constituted by co-opting four directors from the Central Board as members
for a term of two years and is chaired by the Governor. The Deputy Governors of the
Reserve Bank are ex-officio members. One Deputy Governor, usually, the Deputy
Governor in charge of the banking regulation and supervision is nominated as the vice-
chairman of the board.
The Board is required to meet normally once every month. It considers inspection reports
and other supervisory issues placed before it by the supervisory departments. BFS
through the Audit Sub-Committee also aims at upgrading the quality of the statutory
audit and internal audit functions in banks and financial institutions. The audit sub-
committee includes Deputy Governor of the Central Board as members. The BFS
oversees the functioning of the Department of Banking Supervision (DBS), Department
of Non-Banking Supervision (DNBS) and Financial Institutions Division (FID) and gives
directions on the regulatory and supervisory issues. The Audit Sub-committee of BFS has
reviewed the current system of concurrent audit, norms of empanelment and appointment
of statutory auditors, the quality and coverage of statutory audit reports, and the
important issue of greater transparency and disclosure in the published accounts of
supervised institutions. Some of the initiatives taken by the BFS include:
Restructuring of the system of the bank inspections
Introduction of off-site surveillance
Strengthening of the role of the statutory auditors and
Strengthening of the internal defense of supervised institutions
The current focus is on:
Supervision of financial institutions
Consolidated accounting
Legal issues in bank frauds
Divergence in assessment of non-performing assets and
Supervisory rating model for banks
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The function of RBI include the formulation, implementation and monitoring of the monetary
policy. The objective of the monetary authority is to maintain price stability and ensure adequate
flow of credit to productive sectors.
1. Regulator and supervisor of the financial system: RBI prescribes board parameter of banking
parameters within which the country's banking and financial system functions. The main
objective behind this function of RBI is to maintain public confidence in the system, project
depositor's interest and provide cost effective banking services to the public.
2. Manager of foreign exchange: RBI manages the foreign exchange under the Foreign Exchange
Management Act, 1999. The objective of this function is to facilitate external trade and payment
and promote orderly maintenance development and maintenance of foreign exchange market in
India.
3. Issuer of currency: RBI issues and exchanges and destroys currency and coins not fit for
circulation. The objective behind this is to give the public adequate quantity of supplies of
currency notes and coins and in good quality.
4. Development role: reserve bank performs a wide range of promotional functions to support
national objectives.
5. Banker to the government: it performs merchant banking function for the central and the state
government; also acts as their banker.
6. Banker to the banks: maintains banking accounts of all scheduled banks.
The Human Resource Development Department (Reserve Bank of India)
The Vision of the Human Resources Development Department (HRDD) of Reserve Bank of
India is essentially to facilitate the Bank to carry out central banking activities, i.e.
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(i) To create an enabling environment to enhance the efficiency of the organization
(ii) To draw out from our staff the very best by a system of proper placements, incentives, &
(iii) To create an atmosphere of trust, a certain security of expectations and a feeling that the
organization cares about the well being and personal aspirations of the staff. This would help
align personal aspirations with professional goals and help enhance efficiency.
The Mission of HRDD is to create a facilitating environment to enhance the efficiency of the
Bank; to empower the staff so as to draw out the latent potential; and to catalyze conditions for a
more wholesome quality of life on the work as well as personal front. Its functions include:
a) To evolve HR policies on
Recruitment
Performance and Potential Appraisal
Placement
Promotion and Career Progression
Out of Turn Promotion/ Increment to Sports Person
Industrial Relations
Deputation / Secondment
Compensation Policy
Retirement and Voluntary Vacation
Motivation
Training Establishments
Mobility (Transfer/Rotation)
Remuneration and Reward Mechanism
Staff Welfare
Communication
Organisational Development
Training and Skills Upgradation (Policy and Implementation, both)
Medical
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b) Other aspects
Interface with other institutions, government, central banks, etc. on HRD issues
To maintain up to date database on human resources in the Bank and undertake analytical
studies and ongoing research on different manpower related issues
To make ongoing review of the appraisal system in order to make it an effective tool for
HRD policy management
To install and implement an effective counseling system
To design career and succession plans
To review and revitalize the training functions
Summer Placement
Formulate and administer the Staff Suggestion Scheme
Publication of House Journal, Without Reserve
Performance management at RBI
As I stated earlier there is no one right way of doing performance management. It must be
tailored to the circumstances and needs of the organization, and it must be operated flexibly in
accordance with the needs of the individuals affected by it. It is possible to set out a typical
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sequence of processes that in one form or another are found in most performance management
arrangements in all organizations. Though some aspects of performance management have been
implemented in the organization, other areas still need some developing.
Employee performance management includes:
planning work and setting expectations,
continually monitoring performance,
developing the capacity to perform,
periodically rating performance in asummary fashion, and
rewarding good performance.
Figure 2
Every aspect of performance management system has been explained below and how it is being
implemented at Reserve Bank of India.
Performance Planning
In an effective organization, work is planned out in advance. Planning means setting
performance expectations and goals for groups and individuals to channel their efforts toward
achieving organizational objectives. Getting employees involved in the planning process will
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help them understand the goals of the organization, what needs to be done, why it needs to be
done, and how well it should be done.
The regulatory requirements for planning employees' performance include establishing the
elements and standards of their performance appraisal plans. Performance elements and
standards should be measurable, understandable, verifiable, equitable, and achievable. Through
critical elements, employees are held accountable as individuals for work assignments or
responsibilities. Employee performance plans should be flexible so that they can be adjusted for
changing program objectives and work requirements. When used effectively, these plans can be
beneficial working documents that are discussed often, and not merely paperwork that is filed in
a drawer and seen only when ratings of record are required.
The term performance planning is a complete approach to managing people and performance
involving setting performance aims and expectations for the organization, departments and
individuals employees.
Performance planning involves developing performance standards for job, creating goals, and
conducting interim reviews throughout the year.
To begin with, organizational goals provide the starting point of the performance management
process. The aim is to ensure that each of the activities in the sequence is aligned to those goals
and contributes to their achievement. As far as the RBI is concerned as the preamble of RBI
describes the basic functions of the Reserve Bank is:
"...to regulate the issue of Bank Notes and keeping of reserves with a view to securing
monetary stability in India and generally to operate the currency and credit system of the
country to its advantage."
Departmental goals flow directly from the corporate goals but some iteration may take place so
that departmental views about what can be achieved are taken to account before the business
goals are finalized.
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And last but not the least as far as the individual goals are concerned they directly flow from the
departmental goals and methods like competency mapping are used in goal setting of individuals
in the organization. Reserve Bank of India, Lucknow is concerned with only individual goal
setting.
Competency mapping is a concept that has still not been explored by the Bank. It can be a useful
addition to the present performance management structure. The process has been explained
below.
Competency mapping
Competence is a standardized requirement for an individual to properly perform a specific job.
It encompasses a combination of knowledge, skills and behavior utilized to improve
performance. More generally, competence is the state or quality of being adequately or well
qualified, having the ability to perform a specific role.
Competency Mapping is a process of identifying key competencies for an organization and/or a
job and incorporating those competencies throughout the various processes (i.e. job evaluation,
training, recruitment) of the organization. Over the past 10 years, human resource and
organizational development professionals have generated a lot of interest in the notion of
competencies as a key element and measure of human performance. Competencies are becoming
a frequently-used and written-about vehicle for organizational applications. Competencies
include the collection of success factors necessary for achieving important results in a specific
job or work role in a particular organization. Success factors are combinations of knowledge,
skills, and attributes (more historically called "KSA's") that are described in terms of specific
behaviors, and are demonstrated by superior performers in those jobs or work roles. Attributes
include: personal characteristics, traits, motives, values or ways of thinking that impact an
individual's behavior.
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Figure 3
Competency mapping is a process through which one assesses and determines one's strengths as
an individual worker and in some cases, as part of an organization. It generally examines two
areas: emotional intelligence or emotional quotient (EQ), and strengths of the individual in areas
like team structure, leadership, and decision-making. Large organizations frequently employ
some form of competency mapping to understand how to most effectively employ the
competencies of strengths of workers. They may also use competency mapping to analyze the
combination of strengths in different workers to produce the most effective teams and the highest
quality work.
The steps involved in competency mapping with an end result of job evaluation include the
following:
1) Conduct a job analysis by asking incumbents to complete a position information
questionnaire (PIQ). This can be provided for incumbents to complete, or one-on-one
interviews can be conducted using the PIQ as a guide. The primary goal is to gather from
incumbents what they feel are the key behaviors necessary to perform their respective
jobs.
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2) Using the results of the job analysis, develop a competency based job description. A
sample of a competency based job description generated from the PIQ may be analyzed.
This can be developed after carefully analyzing the input from the represented group of
incumbents and converting it to standard competencies.
3) With a competency based job description, competencies can be mapped throughout the
human resources processes. The competencies of the respective job description become
the factors for assessment on the performance evaluation. Using competencies will help
perform more objective evaluations based on displayed or not displayed behaviors.
4) Taking the competency mapping one step further, the results of the evaluation can be
used to identify in what competencies individuals need additional development or
training. This will help in focusing the training needs on the goals of the position and
company and help employees develop toward the ultimate success of the organization.
Behavioral event interview
A behavioral interview is a structured interview that is used to collect information about past
behavior. Because past performance is a predictor of future behavior, a behavioral interview
attempts to uncover your past performance by asking open-ended questions. Each question helps
the interviewer learn about your past performance in a key skill area that is critical to success in
the position for which you are interviewing. The interview will be conducted face-to-face
whenever possible.
Using the STAR Technique
In a behavioral interview, the interviewer will ask questions about your past experiences. A
useful way to prepare for this style of questioning is to use the STAR technique. The STAR
technique is a way to frame the answers to each question in an organized manner that will give
the interviewer the most information about your past experience. As you prepare to answer each
question, consider organizing your response by answering each of the following components of
the STAR technique:
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What was the S ituation in which you were involved?
What was the Task you needed to accomplish?
What Action(s) did you take?
What Results did you achieve?
Repertory grid
The repertory grid is a technique for identifying the ways that a person construes his or her
experience. It provides information from which inferences about personality can be made, but it
is not a personality test in the conventional sense.
Critical incident technique
The CIT is a method for getting a subjective report while minimising interference from
stereotypical reactions or received opinions. The user is asked to focus on one or more critical
incidents which they experienced personally in the field of activity being analysed. A critical
incident is defined as one which had an important effect on the final outcome. Critical incidents
can only be recognised retrospectively.
Competency assessment involves the measurement of an individual's competencies. Measures
include cognitive ability tests, biodata instruments, structured interviews, job knowledge tests,
diagnostic and promotion tests, and measures of customer service, and social skills. With the
advent of increased agency responsibility for staffing decisions, valid personnel selection
assessments are more critical than ever.
Benefits
Individuals get a broader perspective of how they are perceived by others than previously
possible.
Increased awareness of and relevance of competencies.
Increased awareness by senior management that they too have development needs.
More reliable feedback to senior managers about their performance.
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Gaining acceptance of the principle of multiple stakeholders as a measure of
performance.
Encouraging more open feedback — new insights.
Reinforcing the desired competencies of the business.
Provided a clearer picture to senior management of individual's real worth (although
there tended to be some 'halo' effect syndromes).
Clarified to employees critical performance aspects.
Opens up feedback and gives people a more rounded view of performance than they had
previously.
Identifying key development areas for the individual, a department and the organization
as a whole.
Identifying strengths that can be used to the best advantage of the business.
A rounded view of the individual's/ team's/ organization's performance and what the
strengths and weaknesses are.
Raised the self-awareness of people managers of how they personally impact upon others
— positively and negatively.
Supporting a climate of continuous improvement.
Starting to improve the climate/ morale, as measured through the survey.
Focused agenda for development. Forced line managers to discuss development issues.
Perception of feedback as more valid and objective, leading to acceptance of results and
actions required.
Gaps are identified in one's self-perception versus the perception of the manager, peer or
direct reports.
Customizing the questions to one's organizational competencies.
Competency mapping would not only acts as a useful tool for the organisation but would also aid
an individual's competency. But there are some drawbacks too.
The organisations do the ultimate mistake of realising the map as the desired end result.
The map is nothing but a colossal waste of time and money without proper analysis.
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The mission must be to sustain a knowledge flow that is more profitable to the
organisation.
Incorrect assessments of results lead to flawed decisions and cause a big damage to the
concern.
Performance Monitoring
In an effective organization, assignments and projects are monitored continually. Monitoring
well means consistently measuring performance and providing ongoing feedback to employees
and work groups on their progress toward reaching their goals.
Regulatory requirements for monitoring performance include conducting progress reviews with
employees where their performance is compared against their elements and standards. Ongoing
monitoring provides the opportunity to check how well employees are meeting predetermined
standards and to make changes to unrealistic or problematic standards. And by monitoring
continually, unacceptable performance can be identified at any time during the appraisal period
and assistance provided to address such performance rather than wait until the end of the period
when summary rating levels are assigned.
Performance Development
In an effective organization, employee developmental needs are evaluated and addressed.
Developing in this instance means increasing the capacity to perform through training, giving
assignments that introduce new skills or higher levels of responsibility, improving work
processes, or other methods. Providing employees with training and developmental opportunities
encourages good performance, strengthens job-related skills and competencies, and helps
employees keep up with changes in the workplace, such as the introduction of new technology.
Carrying out the processes of performance management provides an excellent opportunity to
identify developmental needs. During planning and monitoring of work, deficiencies in
performance become evident and can be addressed. Areas for improving good performance also
stand out, and action can be taken to help successful employees improve even further.
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Training is an integral part of the developing process. In RBI there is a well defined procedure
for sending any employee for training. The two training establishments of the Reserve
Bank, viz., the Reserve Bank Staff College (RBSC), Chennai and the College of Agricultural
Banking (CAB), Pune cater to the training needs of the officers of the Reserve Bank and the
banking industry. The four Zonal Training Centres (ZTCs) focus on training of Class III and IV
staff of the Reserve Bank.
The RBSC was established to impart training to the Reserve Bank’s own officers in junior and
middle management cadres and specialised development of officers in the senior management
cadre. It continues to contribute to the skill-upgradation of officers across all cadres of the Bank.
It has been consistently modernising the techniques for imparting training as well as revamping
the course content in response to the evolving challenges for the central banks and the changing
needs for training.
College of Agricultural Banking (CAB), Pune was originally set up with a focus on training the
senior and middle level officers of rural and co-operative credit sectors, has, in recent years,
diversified and expanded the training coverage into areas relating to non-banking financial
companies, human resource management and information technology.
The Reserve Bank deputes its officers to various external training institutes, conferences,
seminars and workshops with a view to upgrading their skills and providing exposure to
international perspective on topical issues. During the year 718 officers were deputed by the
Bank to participate in training programmes, seminars and conferences organised by external
management/banking institutions in India. The areas of training included human resources
management, risk management, security, labour laws and micro finance. The Reserve Bank also
deputed many officers to attend training courses, seminars, conferences and workshops
conducted by banking and financial institutions and multilateral institutions in more than 30
countries. The areas of training covered, inter alia, banking supervision, derivatives, risk
management, financial programming and policies, central bank accounting, monetary policy and
operations, finance for agriculture, rural development and macroeconomic management, human
resources (HR), debt, reserve management, extensible business reporting language (XBLR),
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payment systems, women empowerment, deposit insurance, financial markets, microfinance and
IT audit.
Number of Officers Trained in External Training Institutions in India and Abroad
Year No of officers trained in India
No of officers trained abroad
1 2 3
2001-02 355 137
2002-03 452 208
2003-04 433 242
2004-05 521 171
2005-06 625 273
2006-07 871 352
2007-08 895 520
2008-09 718 426
Table 1
The Zonal Training Centers of the Reserve Bank organised training programmes on functional
areas of the Bank, information technology and behavioural areas for Class III and IV employees
of the Reserve Bank. Apart from conducting regular programmes at their premises, ZTCs also
conduct off-site programmes on personnel effectiveness, functions and working of the Reserve
Bank for Class III staff and developmental programme for Class IV staff. In addition to the
regular training initiatives, ZTC Belapur (Mumbai) and ZTC, Kolkata had introduced Integrated
Officers Development Programmes (IODP) during 2007-08. Observing the success of these
programmes at ZTCs, a total of 17 such programmes were conducted during 2008-09 at ZTC
Belapur and ZTC Kolkata. The Reserve Bank has a Summer Placement Scheme, which provides
an opportunity to domestic and foreign students to expose themselves to the working
environment in a central bank and apply their knowledge to various operational issues while
pursuing their internship.
The training is carried out either at the RBSC, CAB or ZTCs in India. The faculty is selected
through a well defined procedure by the RBSC. The process of training delivery is clear-cut. As
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soon as the employees return from the training feedback is taken about the training and they have to
submit this feedback form within 15 days of return.
Performance Rating
From time to time, organizations find it useful to summarize employee performance. This can be
helpful for looking at and comparing performance over time or among various employees.
Organizations need to know who their best performers are.
Within the context of formal performance appraisal requirements, rating means evaluating
employee or group performance against the elements and standards in an employee's
performance plan and assigning a summary rating of record. The rating of record is assigned
according to procedures included in the organization's appraisal program. It is based on work
performed during an entire appraisal period. The rating of record has a bearing on various other
personnel actions, such as granting within-grade pay increases and determining additional
retention service credit in a reduction in force. The promotion of any employee depends on the
rating. Earlier the performance appraisal system was followed. Recently it followed the 360
degree feedback system for a little while on an experimental basis.
Figure 4
In human resources or industrial/organizational psychology, 360-degree feedback, also known
as 'multi-rater feedback', 'multisource feedback', or 'multisource assessment', is employee
development feedback that comes from all around the employee. "360" refers to the 360 degrees
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in a circle. The feedback would come from subordinates, peers, and managers in the
organizational hierarchy, as well as self-assessment, and in some cases external sources such as
customers and suppliers or other interested stakeholders. It may be contrasted with upward
feedback, where managers are given feedback by their direct reports, or a traditional
performance appraisal, where the employees are most often reviewed only by their manager.
The results from 360-degree feedback are often used by the person receiving the feedback to
plan their training and development. The results are also used by some organizations for making
promotional or pay decisions, which is sometimes called "360-degree review."
The process was not very successful so a new system was incorporated which is called the self
appraisal system. In this system the employee is assessed not only by his peers but he is also
asked to self appraise himself. Self appraisal is an important part of the Performance appraisal
process where the employee himself gives the feedback or his views and points regarding his
performance. Usually this is done with the help of a self appraisal form where the employee rates
himself on various parameters, tells about his training needs, if any, talks about his
accomplishments, strengths, weakness, problems faced, etc.
Performance Rewarding
In an effective organization, rewards are used well. Rewarding means recognizing employees,
individually and as members of groups, for their performance and acknowledging their
contributions to the agency's mission. A basic principle of effective management is that all
behavior is controlled by its consequences. Those consequences can and should be both formal
and informal and both positive and negative.
Good performance is recognized without waiting for nominations for formal awards to be
solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions
that reward good performance — like saying "Thank you" — don't require a specific regulatory
authority. Nonetheless, awards regulations provide a broad range of forms that more formal
rewards can take, such as cash, time off, and many nonmonetary items. The regulations also
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cover a variety of contributions that can be rewarded, from suggestions to group
accomplishments.
Above explained was the Performance Management model which has been correlated with the
processes followed at Reserve bank of India.
The concept of quality circles was implemented at Reserve Bank of India, Lucknow recently.
This concept has been explained in detail below.
Quality Circles
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Quality Circles are (informal) groups of employees who voluntarily meet together on a regular
basis to identify, define, analyze and solve work related problems.
Usually the members of a particular team (quality circle) should be from the same work area or
who do similar work so that the problems they select will be familiar to all of them. In addition,
interdepartmental or cross functional quality circles may also be formed.
An ideal size of quality circle is seven to eight members. But the number of members in a quality
circles can vary.
Figure 5
Objectives of Quality Circles
The objective of forming a quality circle is to:
Promote job involvement
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Create problem solving capability
Improve communication
Promote leadership qualities
Promote personal development
Develop a greater awareness for cleanliness
Develop greater awareness for safety
Improve morale through closer identity of employee objectives with organization's
objectives
Reduce errors.
Enhance quality
Inspire more effective team work
Build an attitude of problem prevention
Promote cost reduction
Develop harmonious manager, supervisor and worker relationship
Improve productivity
Reduce downtime of machines and equipment
Increase employee motivation
A Quality Circle has an appropriate organisational structure for its effective and efficient
performance. It varies from industry to industry, organisation to organisation. But it is useful to
have a basic framework as a model. The structure of a Quality Circle consists of the following
elements.
i. A steering committee: This is at the top of the structure. It is headed by a senior
executive and includes representatives from the top management personnel and
human resources development people. It establishes policy, plans and directs the
program and meets usually once in a month.
ii. Co-ordinator: He may be a Personnel or Administrative officer who co-ordinates
and supervises the work of the facilitators and administers the programme.
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iii. Facilitator: He may be a senior supervisory officer. He co-ordiates the works of
several quality circles through the Circle leaders.
iv. Circle leader: Leaders may be from lowest level workers or Supervisors. A Circle
leader organises and conducts Circle activities.
v. Circle members : They may be staff workers. Without circle members the
porgramme cannot exist. They are the lifeblood of quality circles. They should
attend all meetings as far as possible, offer suggestions and ideas, participate
actively in group process, take training seriously with a receptive attitude.The
roles of Steering Committee, Co-0rdinator, Facilitator, Circle leader and Circle
members are well defined.
The Meetings are important part of quality circle's working. They are attended by all the
members of the quality circle. Meetings take place once a week or once in a fortnight. Each
meeting lasts for approximately one hour, though variations are possible. Apart from the
frequency of the meetings, what is important is the regularity of the meetings.
Identifying a theme or a problem to work on.
Getting training as required to enable members to analyze problems.
Analyzing problem(s).
Preparing recommendations for implementing solution(s).
Follow up of implementation of suggestions.
Prepare for a presentation to the management.
This helps in problem solving and smooth handling of operations at the Quality Circle meetings.
Advantages of Quality Circles
They help in self development.
Quality circles promote leadership qualities among participants.
They give recognition, achievement satisfaction.
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They promote group/team working.
Serve as cementing force between management/non-management groups.
Promote continuous improvement in products and services.
Bring about a change in environment of more productivity, better quality, reduced costs,
safety and corresponding rewards.
Objectives of the study
Reserve Bank of India is a central organization which handles the monetary policy of the
country. Large numbers of employees are recruited, monitored, promoted and rewarded every
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year. Thus to easily perform this task a performance management system has been implemented.
The objectives of this study were:
To understand the structure of performance management system at Reserve Bank of India
To provide valuable insight into the drawbacks of the system by using primary as well as
secondary data
To give recommendations as to how it can be improved
To throw some light on how Quality Circles was implemented at RBI, Lucknow. The
reasons for their failure and how their process can be improved.
Methodology followed
As part of my Summer Internship I was made to handle two projects namely:
Study of analytical approach to Performance management at Reserve Bank of India.
To find the reasons of failure of Quality Circles at Reserve bank of India, Lucknow.
In order to accomplish the above tasks there was a need to collect primary as well secondary data
related to the HR functions of the organization. The work methodology that I followed was:
I did the primary data collection by conducting frequent interviews with employees
working at all levels of hierarchy within the organization. The inputs that I received from
them provided me with a deeper insight into the work process, the problems faced, etc. of
the performance management system.
The secondary data collection was done by reading the master circulars of each of the
activities like recruitment, training and development, performance appraisal and
compensation management which fell under the gamut of the HR domain.
Secondary data collection helped me to conceptually understand the nitty gritties of each
of the above mentioned activities.
The observation and the analysis resulting from the above collected data is as elaborated below:
Performance Management: Observations and findings
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As we have already seen that the performance management system is an umbrella term for five
sub heads namely, planning, monitoring, developing, rating and rewarding. Based on the above
gathered data the activity wise interpretations is as explained below:
Performance Planning
The RBI does not have a defined competency mapping system in which it specifies the
job profile or role descriptions or the role competency profiles for candidates coming for
recruitment.
There is no manpower planning as a process incorporated here. The same number of
people (or sometimes more) are recruited every year. There is no concept of annual
planning for recruitment.
There is no recruitment of people with specialized skill. Everyone knows everything. Job
rotation happens a lot. This is done to have employees who know everything about
working in each department of the bank.
Also, during induction program the performance in each rotation are not considered in
year-end appraisal as part of the process. For performance appraisal of new joinees,
feedback from all rotations is not collated.
Performance Monitoring
As a knowledge driven public institution, the Reserve Bank assigns significant
importance to the management of human resources.
It constantly strives to enhance the professional skills of the staff through appropriate
training as well as providing scope for learning in every important area relevant to central
banking for the staff at all levels.
The two-way interactions through various collaborative efforts with different external
institutions and agencies, both within the country and outside, provide opportunities for
acquiring relevant feedback and gaining important insights from the experience and
practices of others.
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The interactions of the Reserve Bank with the public through its various education as
well as customer service delivery mechanisms aim at greater information dissemination
about the Reserve Bank’s role and functions in the economy.
Various modes of communication have also been effectively utilised to improve the flow
of information, with better clarity. The improvements in internal functioning of the
various departments have been ensured through appropriate checks and balances and
internal auditing policy.
The transfer and placements of employees within one branch of the organization or
among all the branches of the organization is done by monitoring the employees
continuously.
At RBI transfers help broad basing employee skill sets and creating generalists. Due to these
transfers a fresh perspective is gained.
Job rotation is carried out wherein the employees get transferred to not only preferred but also
non preferred departments, thus ensuring equitable distribution of resources. But as mentioned
in the performance planning section there is a shortage of specialized skill because of the job
rotation.
The job rotation is not done according to the employee’s preference and the duration of stay at a
particular department is not the same for all. Policies implementation causes many personal
difficulties for employees.
Performance Development
A process for nomination of employees who should go for the training is missing.
There is no clearly defined process for training needs assessment.
Specifics schemes such as Grant of Sabbatical and Grant of Leave are there for pursuing
higher studies.
There is lesser focus on individual specific behavioral training due to lack of documented
technical and behavioral competencies.
Also there is no method to gauge the on-the-job effectiveness of the training that was
imparted on the employee.
As far as summer interns are concerned there are no pre-placement offers.
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There is an absence of a formal system to ensure optimal post course deployment of
employees going for higher education.
The applicant pool for faculties imparting training needs to be expanded.
Performance Rating
At RBI the promotions happen on the basis of seniority as well as based on merit.
A compulsory ratios of new recruits is to be considered for promotion opportunities.
The interview board has members from RBSC, ensuring certain level of impartiality.
The communication of promotion criteria and available opportunities is clear and
consistent to all employees.
There is an over-dependence on promotion for rewarding employee performance as well
as potential.
Due to combined seniority group, promotions can be given in any department of the
bank, which might not result in the level of competence desired for that grade in the
different department.
The PAR forms for all grades and classes are given in the Appendix.
Earlier there used to be a cooling period, only on completion of which would anyone be
allowed to sit for the interview again. But this process has been discontinued. There is no
formal system for succession planning. There is an overdependence on interviews in
promotion decision.
The training needs are captured according to the employee as well as comments are
seeked on training needs from reporting officers.
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There are defined generic competencies for each grade with a defined rating scale. The
self appraisal system is a two way process.
Revealing the final PAR rating is a positive initiative to improve the transparency in the
system.
There is a provision for compulsory counseling in the event of any negative feedback
ensuring objectivity transparency in the process.
One drawback of this system is that:
There is no goal-setting of individuals at the beginning of the year. Hence there is an
absence of objective performance standards and expectation setting conversation and
appraisal discussions and feedback sessions between appraiser and appraise.
Performance Rewarding
RBI does not have a significant reward system where employees are appreciated for their
contribution from time to time for all branches of the bank. Instead it has a national individual
award to which is awarded to a maximum of five individuals. There is a group award too. The
winners receive citation, a gold coin, and their names are printed in the RBI journal. The winners
are felicitated on Republic Day at the Central Office. The selection of the deserving candidates is
done by 3-4 CGMs at central Office headed by the ED. A self nomination can also be done.
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Quality Circles: Observation and Findings
In RBI, Lucknow the concept of quality circles was implemented recently for identifying the
problems faced by various departments in the bank. But it failed to generate the outcome that
was desired. There were many reasons for its failure. After interviewing a few employees who
were part of the Quality Circle at the bank the following reasons emerged.
Lack of interest or incompetence of leaders/facilitator
Apathy, fear and misunderstanding among middle level executives
Delay or non-implementation of Circle recommendations
Irregularity of Quality Circle activities
Non-application of simple techniques for problem solving
Lack of or non-participation by some members in the Circle activities
Circles running out of problems
Antagonism of non-members towards Quality Circle operations
Inadequate visibility of management support
Complexity of problems taken up
Non-maintenance of Quality Circle records
Too much facilitation or too little
Language difficulty in communication
Communication gap between Circles and departmental head
Change of management
Confusing Quality Circle for another technique
Resistance from trade unions
There was lack of faith in and support to Quality Circle activities among management
personnel
One of the most prominent problems that was faced was that the department representatives did
not understand that quality circle was not a forum for grievances or a forum for putting up
demands.
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Performance Management: Recommendations
After having a two month internship experience at Reserve Bank of India and taking into
consideration the primary as well as secondary data I inferred the following recommendations
which can be incorporated to improve the performance management system:
Performance Planning
The performance planning system at RBI can be improved by incorporating competency
mapping as a process at the bank. But for that we need to understand what competency
mapping actually is. The model has been explained under the head “Introduction to
models and concepts”.
Manpower planning needs to be done at the beginning of every year.
As there is a lack of specialized skill among Reserve Bank employees, competency
mapping can help solve this problem by specifying the skill sets required by the Bank in
the employee during recruitment.
Thus, we can see that incorporating competency mapping in the RBI performance management
system would help the bank in having a good workforce thus improving the work environment in
the organization (which in this case is the Reserve Bank of India). Apart from this, the process
will focus on number of employees, required skill sets, competencies and distribution of talents
within the functional areas of the bank thus improving performance planning.
Performance Monitoring
Reserve Bank of India should incorporate some measures to improve its transfer policy like there
should be a balance between optimal talent distribution across departments and enabling
employee career progression.
After all the new joinees undergo the two year induction program, they can be assessed for their
potential to ensure person job fit at the initial stages of the career. This will ensure specialized
skill in the department.
After the completion of three years the employee could be assessed with other employees to get
first choice of posting at the time of promotion or internal job posting.
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There should be an optimal geographic talent distribution through clearly defined 'must-have'
experiences for career progression.
Apart from transfer and placements monitoring is also done for performance appraisal and
reward allocation.
Performance Development
Even though the training need analysis is decentralized to the Regional Offices, it should
be constantly monitored by HRDD for improvements.
The bank needs to also implement robust mechanism to evaluate learning and
development effectiveness through various levels of training evaluation.
There is need for centralized database to ensure adequate training coverage for all
employees and maintaining individual training history.
Pre placement offer system for summer interns should be incorporated.
The process of evaluating on the job effectiveness of the trainee should be introduced.
Feedback to be sought from the supervisor post 3 months of having undergone the
training, this will enable the bank to estimate a return on its training expenditure in terms
of improved employee performance and productivity.
Performance Rating
The system can be improved by using competency mapping. Training can be given to the
managers to educate them on understanding competencies.
Potential and performance assessment should have higher weightage in the promotion
decision and should be supported by interviews with senior leadership. The performance
and potential results of employees should be collated to arrive at promotion decisions. To
lower the undue dependence on promotions as means of recognition other means of
recognizing employees need to be implemented.
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Performance standards need to be defined for each role job descriptions with specific role
responsibilities, performance parameters with weightage and role specific competencies
and their level needs to be defined.
Capability building in managers need to be done on goal setting, action planning and
giving performance feedback.
Tracking mechanism for each of the identified KRAs at individual levels need to be
institutionalized.
Talent segmentation should be done post appraisal and targeted action planning should be
done for each segment.
Performance Rewarding
The reward system at RBI needs to be improved.
The employees should receive appreciation for their endeavours one way or the other.
This can be done by appreciating the employees for their performances.
An employee felicitation programme should be organized annually to motivate the
Quality Circles: Recommendations
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The quality circle process at RBI Lucknow can be improved by taking into consideration the
following:
The members of the circle must be made to understand that:
Quality Circles do not tackle just quality problems.
It is not a substitute or replacement for task forces, product committees, joint plant
councils or works committees, quality assurance department, suggestion schemes.
They do not change the existing organizational structure or the chain of command.
Quality Circles are not a forum for grievances or a spring board for demands.
They are not a means for the management to unload all their problems.
This would help in conducting organized meetings and more problems can be tackled in this
way. The member should be made to follow the following code of conduct.
The members should attend all meetings and be on time.
They should listen to and show respect for the views of other members.
They should make others feel a part of the group.
The members should criticize ideas, not persons.
They should help other members to participate more fully.
Be open to and encourage the ideas of others.
Every member is responsible for the team’s progress.
Maintain a friendly attitude.
The members Strive for enthusiasm.
The only stupid question is the one that is not asked.
The members Look for merit in the ideas of others.
Pay attention- avoid disruptive behavior.
Avoid actions that delay progress.
Carry out assignments on schedule.
Give credit to those whom it is due.
Do not suppress ideas- do express.
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Objectives and causes first, solutions next.
Give praise and honest appreciation when due.
Ideas generated by the group should not be used as individual suggestions to suggestion
scheme.
Conclusion
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RBI is the apex body which takes decisions involving the different monetary policies, issuing of
bank notes etc and thereby handling all the major finance related decisions of the country. As
part of my SIP, I was fortunate enough to study the Human Resources Department of the
organization. The study was mainly related to the Performance Management System of RBI.
From the study conducted, I found that though some of the areas of the system were well in place
and doing a commendable job, however, there were certain loopholes associated with the
manpower planning domain. Since, there is no advance estimate of the number of people to be
recruited, each year the same number gets recruited and thus, this leads to a wastage of lot of
resources within the organization. Hence, a lot of improvisation needs to be done in the
respective field. Also, the implementation of the Quality Circle at RBI, Lucknow wasn’t upto
the mark and above mentioned measures to be taken to ensure the proper functioning of the
same.
Limitations
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While undergoing my I encountered the following limitations:
The entire analysis was limited only to the RBI branch at Lucknow. Since, I had no
access to any information from other branches, I could not come to a conclusion at the
information at a strategic level across the branches. Since, the findings and
recommendations may be different for other branches.
Being a temporary member of the RBI family, I could interact with only a handful of
senior managers and other employees from the Department of Administration and
Personnel Administration. This again limited the scope of my study of understanding the
roles and responsibilities of other managers in the hierarchy.
As per the company rules and policies, all the rules and documents are upgraded only in
the month of July. Since, the tenure of my SIP ended before that, I did not get a chance of
accessing the upgraded information at the organization.
Future
In effective organizations, managers and employees have been practicing good performance
management naturally all their lives, executing each key component process well. Goals are set
and work is planned routinely. Progress toward those goals is measured and employees get
feedback. High standards are set, but care is also taken to develop the skills needed to reach
them. Formal and informal rewards are used to recognize the behavior and results that
accomplish the mission. All five component processes working together and supporting each
other achieve natural, effective performance management.
To ensure improvement in the system there should be frequent communication between
employees. Teams should be identified for each process and area and given accountability for
action planning in their respective areas. This implementation plan should not be treated as only
HR agenda. This requires business as well as HR functional involvement.
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Appendix
Bibliography
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Performance management- Michael Armstrong and Angela Baron
Human Resource Management- K Aswathappa
www.timesascent.com
www.wikipedia.com
www.opm.gov
www.rbi.org.in
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