Performance Appraisal System of HDFC Bank.: Chapter No. 05

A Study of Performance Appraisal Practices as a Tool to Improve Employee
Efficiencies in Private Sector Banks – A Case Study Of HDFC Banks.

2016
Chapter No. 05:

Performance Appraisal System of HDFC
bank.
Introduction.
Competency Mapping.
Training and Development.
Training Strategies Used in HDFC Banks.
Attrition.
Innovative Recruitment and Selection Practices of
HDFC Bank.
Innovative Training and Development Practices of
HDFC Bank.
Innovative Performance Management Practices of
HDFC Bank.
Innovative Compensation Management Practices of
HDFC Bank.
Innovative Career Development Practices.
Innovative Employee Motivation Practices.
Innovative Employee Security Practices.
Recruitment Process at HDFC Bank Ltd.
Employee benefits.
References.
Chapter No. 05: Performance appraisal system of HDFC bank. Page 154
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Introduction:
Indian banking has entered the new era of technology
enabled and customer centric banking. The HRD managers as well
as the employees, especially in the higher cadre, need to update
their knowledge and skills constantly, and consciously. Technology
is changing the world at a frightening speed. Therefore, the on-
going process of training and learning should not only be based on
sound and proven theories and concepts, but also laced with
practical aspects and implementation. Overall, the HRD enables
the employees to make a long-term commitment to all the
managerial values narrated above and to build a good employer-
employee relationship. To become world-class banks, it is therefore
clear that HDFC have to embrace and enthusiastically implement
world-class HRD practices. With India emerging as a dominant
knowledge power, it is only in the fitness of things that Indian
Banks too should accord high value to human capital and take
momentous steps forward to reach world class HR capital
adequacy.
The employees always assess the management values, work

culture, work practices and credibility of the organization.1 The
Indian companies do have difficulties in getting the businesses and
retain it for a long time. There are always ups and downs in the
business. When there is no focus and in the absence of business
plans, non-availability of the campaigns makes people to quickly
move out of the organization. In the recent decades the Indian
industry has changed its outlook. The employment scene has
changed its appearance. The factors like skill sets, job satisfaction
drive the employment and not just the money. The employer hence
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faces the heat of continuous employee turnover. Continuous efforts

are made by organizations to control the employee turnover rate as
it directly affects the performance of the organization as many key
people leave the organisations for various reasons at crucial points.
This turnover is normally known as attrition.
With global economy the world has become a global village.

As a consequence firms have become more aware of the need for
having competent employees and developing distinguished
competencies for every organization. Every well managed firm
should have well defined roles and a list of competencies required
for performing each role effectively. They prefer to build a core
competency that will see them through crisis, if any. The choice is
to develop the people because human resource is seen to be the
most valuable resource any organization has.2 Organizations of the
future will have to rely more on their competent employees than
any other resource. It is a major factor that determines the success
of an organization. Competencies are the inner tools for motivating
employees, directing systems and processes and guiding business
towards common goals that allow the organizations to increase
their value. Competencies provide a common language and method
that can integrate all the major HR functions and services like
Recruitment, Training, Performance Management, Remuneration,
Performance Appraisal, Career and Succession Planning and
Integrated Human Resource Management System.
Competency Mapping:
Competencies are components of a job which are reflected in
behaviour that is observable in a workplace. The common elements
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most frequently mentioned are knowledge, skills, abilities,

aptitudes, personal suitability behaviour and impact on
performance at work. Competence’ means a skill and the standard
of performance reached while competency refers to the behaviour
by which it is achieved. The plural of each word, therefore gives
two different meanings. Competences and competencies are not
the same. Competences refer to the range of skills which are
satisfactorily performed, while Competencies refer to the
behaviour adopted in competent performance. Competencies are
the characteristics of a manager.3
Competency mapping is the process of identifying key

competencies for a particular position in an organization. Once this
process is complete, the map becomes an input for several other
HR processes such as job-evaluation; recruitment; training and
development; performance management; and succession planning.
For competency mapping to be productive, the organization has to
be clear about its business goals in the short as well as long-term
and the capability-building imperatives for achieving these
business goals.4 The process starts from as macro an endeavour as
understanding the vision and mission of the organization and how
that translates into specific, time-bound business goals. It then
goes on to delineating the organization structure clearly, and
identifying the various levels and positions, as well as the reporting
relationships obtaining within that. For each position / level, the
mapping exercise should outline the roles and responsibilities of
the position; short-term goals to the extent that they are qualified;
skill sets required for the job; and soft skill sets required for the job
plus interaction with other units / personnel. Though there are
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well-accepted guidelines and assessment tools such as

psychometric tests, the assessor’s skill will play an important role
in deciding when a gap calls for training and when it calls for
redeployment competency mapping comes in very useful in the
situations like candidate appraisal for recruitment; employee
potential appraisal for promotion; training needs identification;
performance diagnostics; and self-development initiatives.
Competencies are the inner tools for motivating employees,

directing systems and processes and guiding business towards
common goals that allow the organizations to increase their value.5
Competencies provide a common language and method that can
integrate all the major HR functions and services like Recruitment,
Training, Performance Management, Remuneration, Performance
Appraisal, Career and Succession Planning and Integrated Human
Resource Management System. The competency framework serves
as the bedrock for all the HR applications. As a result of
competency mapping, all the HR processes like talent induction,
management development, appraisal and training yield much
better results.
The employees of HDFC Bank have specific skill, ability and

knowledge etc. to perform their job efficiently and efficiently. They
possess decision making, power, and relationship building
capacity, sound knowledge of the products etc. which help the bank
for the progress in present and future mangers. Some of the
employees have got success due to some critical incidence during
their job. They faced challenges and accept changes but in a
resistant manner so there should be well structured training
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schedule for employees and bank’s development. Each of the

specified roles should know their responsibilities and roles to
enhance the credibility and profitability of the bank. Similarly, it
has been proved that the competency mapping plays a vital role for
the development of the employees as well as bank.
Training and Development:

Training and Development is an attempt to improve current
or future employee performance by increasing an employee’s
ability to perform through learning, usually by changing the
employee’s attitude or increasing his or her skills and knowledge.
Since the beginning of the twentieth century and especially after
World War II, training programs have become widespread among
organizations, involving more and more employees and also
expanding in content.6 In India the banking industry becoming
more competitive than ever, private and public sector banks are
competing with each other to perform well. The executives of the
bank are now in the position to modify their traditional human
resources practice in to innovative human resources practices in
order to meet the challenges from other competitive banks.
The purpose of training need assessment is to add value to an

organization. Hence, evaluation measures the progress in
achieving this goal by purposefully improving training programs
and measuring their worth. The training programs are established
by the needs assessment of training. A thorough needs assessment
leads to effective and efficient training, which increases the
likelihood that evaluation will demonstrate successful value added
outcomes. In today’s complex and fast changing organizational
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environment, developing human resources is of paramount

importance and training has now become one of the important
segments of Human Resource Development (HRD) process.7 That
is why the efficiency of any organization depends directly on how
well its employees are trained. Training motivates employees to
work efficiently and it is widely accepted as a problem solving tool.
The Human Resource Development department has to play a more
proactive role in shaping the employees to fight out the challenges.
The banks not only have to make plans and policies and
devise strategies, the actual functionaries have to show willingness,
competence and effectiveness in executing the said policies and
strategies. Both training and development are necessary for any
organization. So it is evident that training and development forms
an integral part of human resources development process and
should be in unison. In banks, HRD departments have the
advantages of not being excessively burdened with day–to–day
problems of running the banks or ensuring profitability of
individual transactions. They are in positions to take strategic and
long term view of the competitive advantage of the human
resources as well as identify areas of professional weaknesses to
rectify well before any damage takes place in the organization.
Training is the act of increasing knowledge and skill of an
employee for doing a particular job. Training is the organized
procedure by which people learn knowledge and or skills for a
definite purpose.
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Training Strategies Used in HDFC Banks:

Training program should be repeated at regular intervals for
individuals to provide reinforcement of learning. At present the
following types of programs is designed and conducted by the
training centres.
1. Standard program on repetitive basis.
2. Role orientation courses in functional areas.
3. Special courses and seminars.
4. Sales training for supervisory and field personnel.
The first category should be attended by all employees at

predetermined intervals. A course will also be given to all officers
when they move from one level of job to another. When an officer
is appointed as Branch, Divisional or Zonal Managers for the first
time, he would be assigned to a program to help him understand
the demands of his new role. This will also apply to persons who
are appointed as Heads of a Department in Branch office. The
second and third category of courses will be arranged regularly for
officers as they enter into that function at the Divisional, Zonal of
Central office level in case they have not attended a program in
that function earlier. No officer should hold a post in functional
area for more than six months unless he has attended a program in
that function. The third categories of courses are special program
depending on the specific requirements of the particular level or
the group. The fourth categories of courses are meant for field
staff-development officers and agents. Training at HDFC is based
on up-gradation of competencies and skills. It is an integral part of
their business strategy. Almost all employees have undergone
training to enhance their technical skills or the softer behavioural
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skills to be able to deliver the service standards that the company

has set for itself. Besides the mandatory training that financial
consultants have to undergo prior to being licensed, they have
developed and implemented various training modules covering
various aspects including product knowledge, selling skills,
objection handling skills and so on. New training initiatives
includes Lead Management, rural housing and cross selling of
financial products. Training programs on ‘Personal Effectiveness’,
‘Leadership excellence’ and ‘Art of Living’ are delivered by guest
Lecturers.
Training is necessity in the changing environment, planned

and systematic training should be made compulsory in HDFC
banks. It brings changes in behaviour, attitude at any age and helps
in increasing the organizational performance. The organization
should encourage more facilities during training and also off the
job training, because it is one kind of encouragement to improve
the interest towards the training and development program. By
providing training, employers support the skill development of
their employees. If the training is good then the employees will
contribute their maximum for the achievement of the
organizational objectives.
The result of the present study shown that the training

practices in the HDFC are average and there is lot of scope for
improvement. Researcher found that the training and effectiveness
programs have a positive impact on the performance of both male
and female employees but the results shows that it has a greater
impact on the performance of male employees group. This can be
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due to the reason that mostly female employees bear additional

responsibilities towards their families. The researchers found that
HDFC bank have their own training institute. However, there is a
lack of needs assessment before training. HDFC should take
necessary steps in such a way that employees should feel training is
essential to enhance the productivity and customer satisfaction to
meet the present challenges in India. The overall opinion about the
training conducted by the HDFC among the employees is very good
and effective, it is very much helpful to improve the individual
career and the organization growth too and they are satisfied with
the training process and method of teaching.
Attrition:
Attrition is the rate of shrinkage in size or a gradual, natural
reduction in membership or personnel as through retirement,
resignation or death. Working environment is the most important
cause of attrition. Today’s Gen-Next employees expect a
professional approach and an international style working
environment. They expect a friendly and learning environment.8
Employees look for freedom, good treatment from the superiors,
good encouragement, friendly approach from one and all, and good
motivation. No doubt the jobs today bring lots of pressure and
stress is high. The employees often switch jobs if there is too much
pressure on performance or any work related pressure. It is quite
common that employees are moved from one process to another.
They take time to get adjusted with the new processes while few
employees find it difficult to adjust and consequently leave.
Monotony sets in very quickly and this is one of the main reasons
for attrition. Job hopping is very common among youngsters who
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look at jobs as being temporary. Another commonly looked option

is to move to such other process where there is little or no pressure
of sales and meeting service level agreements. The employees move
out if there are strained relations with the superiors or with the
subordinates or any slightest, discontent.
Innovative Recruitment and Selection Practices of HDFC

Bank:
This factor includes all those innovative HR practices which
aim at attracting maximum number of highly talented applicants
and selecting the best to achieve competitiveness. The nine
innovative HRM practices identified under this head have been
explained below:
1. Well Defined R&S: One of the major innovative HRM

practices under this head is that there is a well-defined
‘Recruitment and Selection’ (R&S) policy in the banks. Earlier,
only a few banks had a pattern of recruiting people through
employee referrals. But now a day, a pre-defined policy of
hiring people is available in most of the banks.
2. Selection of Professionals: HDFC Banks have also started

selecting professionally qualified personnel, e.g. MBAs, CAs,
Agricultural officers etc. for different posts. Earlier, only
HDFC banks were employing such professionals for their
various departments. Moreover, need for giving special
training for such employees has also been reduced to a certain
level.
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3. Selection According to Service Attitude: Banks are

giving due weightage to the service attitude and competence in
the selection procedure these days. This policy is being
adopted by the HR department of the HDFC banks keeping in
mind the fact that employees with positive service attitude will
work more efficiently and increase the business ultimately.
4. Holding on Policy: One of the major problems that the

bank employees were facing in earlier times was that if they
left the organisation due to any work pressure or other reason,
then they were not stopped or hold on by any employer. But
now, even the regional or circle managers of the banks use a
‘Retention’ policy for the employees so that they may not leave
the bank quickly.
5. Availability of Bank Communities on Social

Networking Sites: Availability of bank communities on
social networking sites is found to be another innovation in the
recruitment process. Popularity of the social networking sites
has forced all the sectors to have this facility enabling the
members of the community to seek the necessary information
and to be in touch with each other.
6. Checking the Profile of Candidates on these Sites:

These days, most of the banks, especially private sector, have
started using social networking sites for the purpose of
recruitments. With the help of these communities, the HR
department checks the candidate’s profile on social
networking sites to decide the candidature for the job.
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7. Written Examination for R&S: There is a policy of

written examination in HDFC banks for selection of each level
of employees. Earlier the employees were required to appear
in the written examinations only at the entrance level. But
now, the provisions have been changed and they have to take
written tests for the higher levels and internal recruitment
also. Moreover, now a day, HDFC banks have also started
conducting written examination for checking the exact
competence and psychology of the candidates.
8. Result Oriented Policy of R&S: In the present scenario,

the HR department of banks has also started formulating a
result oriented recruitment and selection policy for their
banks. This policy helps them to keep only those employees
who are increasing the bank’s profit and fire out or demote the
other ones. Even the public sector banks also don’t give
promotions to those whose past records in terms or branch
business are very poor.
9. Formal Induction of New Candidates: There is a formal

induction orientation and familiarization process so as to help
new recruits understand the organisation. This also makes the
starters to be comfortable with the work environment of the
organisation. It also argued that without excellent induction,
the execution of organizational strategy may vacillate.
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Innovative Training and Development Practices of HDFC

Bank:
This factor incorporates all such practices that generate
tangible outcome and intangible results in terms of enhanced self-
esteem, high morale, and satisfaction of employees due to
acquisition of additional knowledge, skills, and abilities. Executive
development practices have also been considered under this
variable. Following are the seven innovative Training and
Development practices found in the present study:
1. Test of Trainees: Use of written examination for selecting

employees for training is one of the major innovations by the
banks. This helps the employees to be free from any kind of
biasness. HDFC Bank are organising such tests for higher level
employees’ training too.
2. Job Rotation: There is also a provision of job rotation for

giving the employees proper exposure of different
departments. With job rotation, an employee is given an
opportunity to perform different jobs, which enriches his
skills, experience and ability to perform different jobs. In
HDFC Bank, all employees are involved in the Job Rotation
Schedule. In HDFC Bank, the staffs get rotated in every 6
months and the officers get rotated every 3 years.
3. Customised Training: Special and separate/customised

training programs have also been designed for different levels
of employees in the banks. HDFC bank is practising this
practice for more than one and a half decades. Other banks are
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also following this innovative HR practice. However, the

implementation level might be low in their cases.
4. Continuous Training Need Assessment: In some of the

banks, continuous training need assessment of employees by
the HR department is also practised. With the help of
continuous training need assessment, only those employees,
who are actually in the need of the training, are sent for the
training.
5. Regular Training: One of the major problems, which were

earlier found in the banking sector, was that the training
intervals were very high. Even the employees were trained
only once in a decade or even in the entire job life. But now,
innovations in HRM have called for the need for regular
training for the bank employees too.
6. Encouragement to Apply Training Learning:

Employees are also being encouraged to apply the techniques
learnt in their training program. They are given a chance to
apply the information acquired by them during the training
practically so that they may not forget it ever.
7. Arrangement of Special Projects: To make the learning

effective, some banks have the practice of selecting the staff for
special project teams meant for bank’s effectiveness. Private
sector banks like HDFC bank are sending their employees for
special projects training so that they can acquire some
specialised skills and knowledge.
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Innovative Performance Management Practices of HDFC

Bank:
Performance is defined as the record of outcomes produced
on a specified job function or activity during a specified time
period. Appraising is a general process of facilitating interpersonal
relationship between employees and managers through
performance related discussions. This category of HR practices
includes the new practices related to goal achievement in an
efficient manner, their appraisals and job assessments.9 HRM
practices related to Performance Management were found which
are:
1. Formation of Performance Matrix: The very common

innovative HR practice of performance management has been
that the performance matrix or some other competency
mapping models being used for employee’s performance
reviews. HDFC banks under the study are following this
innovation in the performance management practices for a
long time. This has enhanced the performance as well as the
morale of their employees.
2. Goal Review Based Appraisal: The respondents under

the study also disclosed that goal reviews and competency
review systems, the two common methods, are being used for
appraising the performance of employees. This helps to match
the performance of the employees with the earlier set goals of
the individuals and organisations.
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3. Appraisal on Fair Objective Data: The objectives and

fair data helps the employers to appraise the employees
without any biasness and good performers are benefitted from
this.
4. 360 Degree Performance Appraisal: Another innovation

is that they are reviewing the performance from multiple
sources e.g. superiors, juniors, peers etc., i.e., 360 degree
performance review system, which was not prevalent earlier, is
being implemented in HDFC banks.
5. Option to Challenge the Appraisal: These days, the

employees of HDFC banks have the power to challenge their
appraisal done by the HR department or by their superiors, if
they disagree on some issue. But for this, they need to
represent to the higher levels with solid proofs and logics.
6. Full Awareness of the Performance Appraisal Policy:

Moreover, there is a complete awareness of the Performance
Appraisal policy of HR department among all the staff
members so that they are well aware of what they have done
and what they should not have done.
Innovative Compensation Management Practices of

HDFC Bank:
Compensation is all forms of financial returns and tangible
services and benefits employees receive as part of an employment
relationship. An effective set of choices about compensation
systems plays a major role in determining firm performance.10
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Explanation given below is related to the four innovations under

this head found during the present study.
1. Announcing Special Incentive to the Talented

Employees: Special incentives are given to talented
employees to encourage better performance. Using incentive
compensation to stimulate better performance and to provide
promotion opportunities through an internal labour market
increases satisfaction and self-actualization.
2. Special Increments on Regular Basis: One major

innovative practice of compensation has been identified that is
there has been a provision of special increments for better
performance of the employees. This gives the employees an
enough salary growth. It is also found that salary growth had a
pronounced effect on turnover.
3. Special Festival Advance: The HR department has also

started one new scheme of providing special festival advances
to the bank employees on either discounted rates or without
any interest so that they can fulfil their family requirements on
the festivals without bearing any special burden. The HR
personnel of these banks are of the view that, due to provision
of this scheme, the employees are demanding fewer leaves in
the festive season.
4. Customised Perks: In last couple of years, the perks have

also been customised to the individual needs. This practice is
gaining popularity in other Indian organisations too. HDFC
Bank is also using this innovative HR practice.
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Innovative Career Development Practices:

Those innovative HRM practices which include both
organizational actions and individual efforts aimed at setting
career goals, formulating and implementing strategies and
monitoring the results are categorised under this head. These help
the employees to groom themselves and manage their careers. It is
identified career development itself as an ideal innovative HRM
practice.11 Following are the five Career Development related
innovations:
1. Availability of Educational Opportunities at

Workplace: Education related opportunities are being
provided at the work place for the career enhancement of the
bank employees. This has increased their dedication towards
work in their present organisations. HDFC bank is also
providing opportunities to their employees to get enrolled to
professional courses so as to enhance their skills as well as
degrees. This boosts up their morale for work.
2. Easy Approval to the Job Applications: This study

identified that one latest innovation in the career development
of employees is that the applications sent for the career
opportunities outside the bank are being approved by the HR
department and regional managers quickly, which were either
verbally denied by the top management or delayed for
approval. But now a day, these applications are easily
approved so that employees can think of their career
development.
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3. Preference to Seniority in Promotions: Seniority is

given proper weightage in the promotion decisions in banking
sector. Even transfers on promotions are also affected by the
seniority. HDFC bank has a promotion provision to give
favourable and closest transfer to the employees who are
senior among others in the promotion process.
4. Promoting on the Basis of Merit: Banks are also

organising written tests and interviews for the promotion
process so that merit can be one of the criteria for promotions.
A well-planned career development system along with internal
advancement opportunities based on merit, results in high
motivation among employees, which has an impact on firm
performance.
5. Providing Faster Promotions: Fast track promotion

process is also one common innovative practice identified in
the study. Earlier the employees had to wait for years to get
promotions. But these days, they get faster promotions, even
in two to three years. This helps the employees to develop their
career in their own bank and they don’t even think of leaving
the bank for getting better opportunity outside in other banks
or organisations.
Innovative Employee Motivation Practices:

The effectiveness of skilled employees will be limited if they
are not motivated to perform their jobs. This factor of HR practices
includes all those innovations relating to motivation of the
employees through new ways.12 In the present investigation, eleven
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innovative motivation practices have been identified. Accordingly,

the employees can be motivated in the new ways:
1. Using Music at Work Place: Use of music at workplace,

to improve the performance, is one major innovation found
in the study. HDFC has introduced the concept of playing
light music in its branches so that a calm and soothing
environment can be provided to the employees as well as to
the customers.
2. Providing Day Care Centres: There is an arrangement

of day care centres in most of the surveyed banks for the
children of employees, so that they have no difficulty in
maintaining work life balance. In these day care centres, they
can drop their children while they are at work. This won’t
even divert their minds towards their family while working.
Young mothers remain satisfied when their little ones are not
far away from them.
3. Work Autonomy: In the last few years, greater work

autonomy is also being provided to the bank employees. This
helps them to work according to their best possible capability
without any interference and they try to give their best. This
is a kind of brain storming exercise through which the
employers can get best out of the minds of their employees.
4. Making Available ESOPs: Availability of Employee Stock

Option Plans is a practice which has been innovated in the
banking sector for a last few years so that the employees feel
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that they are also the owners of the banks. This feeling makes
the employees more loyal to their organisation.
5. Providing Loans at Discounted Rates: Availability of

loans and advances at discounted rates to all the employees
is also another common innovative HRM practice leading to
motivation of the employees. They can get loans on simple
interest for getting vehicles, constructing house or even
educating their wards. This helps the employees financially
and motivates them to increase their efficiency.
6. Giving an Option of Flexible Working Hours: Some

of the banks are also providing flexible working hours to
enhance the productivity of employees. Banking hours are
generally common everywhere, but a few banks have started
giving an option of flexible working hours in two different
shifts so that the employees can work according to their
comfort. HDFC bank is an example.
7. Approving Leave Applications Easily: These days,

there is an easy availability of leave on demand in case of
urgency which was the common HR issue among the bank
employees. However, this practice prevails in a few banks
only. Keeping in mind the benefits of this innovative practice,
other banks have also started this practice for motivating and
retaining their employees in their organisations.
8. Organizing Stress Management Programs:

Arrangement of stress management programmes, art of
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living classes, yoga sessions etc. are distinct innovations

which have not been there in the banking system earlier.
These practices are the best boosters and relaxers for the
bank employees who are mostly under work pressure.
9. Encouraging Team Building Attitude: By encouraging

team building attitude in the employees, the HR department
of banks has started a new practice of motivating them. They
work in teams and learn new skills. This increases their
confidence and hence they feel more motivated.
10. Giving Best Employee Awards: Announcement of best

employee awards was a common practice in the private
sector banks, but these days, the public sector banks have
also started the same practice to motivate their employees. A
few banks have recently introduced the practice of writing
the best employee’s name on the display board in the
regional centres or even in the branches of their banks.
Better-motivated employees lead to higher individual
achievement and improved organizational performance.
11. Arranging Family Get-togethers: Family get-togethers

have become so common in the banking sector that the
employees working there feel closer to each other. These
informal family get-togethers help them to be relaxed for
some time. Even, a few of the respondents were of the view
point that with the help of this innovation, they can live their
social lives easily among their own colleagues.
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Innovative Employee Security Practices:

The practices which make the employee feel highly secured in
his present job are the best suited for this category. These practices
when implemented through new ways may help an employee to
feel most satisfied in his job. A total of seven Innovative Employee
Security practices found in the present study were:
1. Provision of Sabbatical Leaves: One innovative practice

adopted by the HR department of the banks is that there is a
provision of ‘sabbatical leaves’ (part time leave from
organisation with 50% or less salary in case of crisis) for
employees. This helps in reducing the employee turnover rate
in the banks. Infosys started giving sabbatical leaves to its
employees in India so that they may get job security. This was
followed by HDFC bank.
2. Sufficient Retirement Benefits: Providing proper

retirement benefits is another HR innovation revealed by the
employees under the study. Unlike earlier days, now the
employees get enough gratuities, pension and other retirement
benefits which can secure their rest of the life after leaving the
job.
3. Option of Voluntary Retirement: Another innovation

explored under this study was that for last few years, VRS has
also become common in banking sector. Now, the employees
of the HDFC banks can also enjoy the benefits of this scheme if
they need earlier retirements from their work. This doesn’t
interrupt their other retirement benefits.
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4. Insurance of Dependents Banks: also give the facility of

dependent’s insurance which gives a sense of security in the
minds of employees for their family too. This motivates them
by satisfying their social as well as security needs.
5. Job Security: Earlier the bank employees were even asked to

leave the bank in case of any default being made by the
employees. But now, their genuine grounds are taken into
notice and they are ensured for the job security. This gives
surety to an employee that he would be the last one to be asked
to leave the organisation if any financial problem arises.
6. Full Support from the Regional or Central Office: The

HR department as well as the controlling office is supporting
the employees on the genuine grounds. This full support from
the top level enhances the feeling of security and motivation
among the employees and they work harder. The emotional
support from supervisors and self-esteem mitigated the impact
of stressors on stress reactions, job satisfaction, commitment
to the organization and intention to quit.
7. Proper Grievances Procedures: There is a provision of

written as well as operational grievances procedures. The
existence of the formal mechanism of dispute resolution
reduces employees’ fear of being unfairly treated and increases
their perception of equitable treatment resulting in a more
dedicated workforce and better performance.
2016
Recruitment Process at HDFC Bank Ltd.:

HDFC Bank is a young and dynamic bank, with a youthful
and enthusiastic team determined to accomplish the vision of
becoming a world-class Indian bank. The business philosophy is
based on four core values - Customer Focus, Operational
Excellence, Product Leadership and People. The bank believes that
the ultimate identity and success of bank will reside in the
exceptional quality of people and their extraordinary efforts. For
this reason, the bank is committed to hiring, developing,
motivating and retaining the best people in the industry.13
The bank’s mission is to be a ‘World Class Indian Bank’,

benchmarking against international standards and best practices
in terms of product offerings, technology, service levels, risk
management and audit and compliance. The objective is to build
sound customer franchises across distinct businesses so as to be a
preferred provider of banking services for target retail and
wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. The bank is
committed to do this while ensuring the highest levels of ethical
standards, professional integrity, corporate governance and
regulatory compliance. The business strategy emphasizes -
Increase market share in India’s expanding banking and financial
services industry by following a disciplined growth strategy
focusing on quality and not on quantity and delivering high
quality customer service. Leverage our technology platform and
open scalable systems to deliver more products to more customers
and to control operating costs.
2016
Recruitment and Selection Process:

Recruiting and selecting the right people is paramount to the
success of the Bank and its ability to retain a workforce of the
highest quality. This recruitment and selection policy sets out the
procedure to ensure that the best people are recruited on merit and
that are the recruitment process is free from bias and
discrimination.14 Following are the guiding principles for
recruitment and on-boarding process of HDFC bank.
1. Attracting and recruiting the right people is one of the most

important activities of the organization and is the
responsibility to be owned by each and every employee of the
organization.
2. Merit will be the single most important factor in selection
process.
3. They will ensure a diversity, both gender and ethnicity by
targeted candidate sourcing with the help of recruitment
vendors and the referral program.
4. While skills and profile matching play an important role,
they will hire people who are team players and have the right
attitude most relevant to the culture of the organization.
Attitude is as important as aptitude.
5. They believe in becoming a company of giants and emphasis
is in hiring people who can grow bigger and better than they
presently are.
6. They believe in providing their employee with fulfilling
career paths. Towards this, they will post vacancies internally
as a preferred option while evaluating external candidates.
2016
7. They believe that each candidate interviewed irrespective of

whether she/he is selected should become a friend of the
organization. They treat all the candidates with the utmost
respect. They will be open and fair in communication with
them; this way they also enhance the brand image of the
organization.
8. They will continuously assess, identify and cultivate strategic
talent pools including those at the universities, management
schools, and community forums to address their long term
needs.
9. All recruitment activities shall be undertaken based on the
hiring plan as approved by the Business Head, HR Head and
the CEO. For each approved position, a hiring requisition will
be required prior to initiation of any recruitment activity. If
the hiring was not included in the planned budget, it will also
require approval from the CEO based on a recommendation
from the Head HR and the CFO.
10. Recruitment expense will be allocated to the concerned
business unit, and expenditure should be budgeted and pre-
approved by the business unit head and the HR Head.
11. The hiring manager along with the Human Resource
Department would decide the channel / source to use based
on the nature of the recruitment.
The following sources of recruitment may be considered:
Internal Sources:
 Whenever any vacancy arises, the possibility of fulfilling the
requirement internally via reassignment and relocation, re-
2016
allocation of the responsibilities or internal promotion will be

explored by the hiring function along with the HR
Department.
 Internal job postings to explore internal candidates.
 Employee Referrals – HDFC will encourage employees to refer
suitable candidates for open positions.
Other external sources include:

 Recruitment agencies.
 External job postings.
 College / campus requirement.
 Requirement advertisements.
Application Processing:
HDFC will process all applications promptly and inform the
applicant or source regarding the status of the application. HDFC
will respond to all solicited applications within 5 working days of
receiving the application.
Interview Process:
 All candidates are required to undergo a face to face interview
with the interview panel before selection.
 Interviews may be conducted at a place at mutually convenient
locations and time in an effort to maintain confidentiality of
the hiring effort.
 One on one meeting shall be preferred as the interview format,
however depending on the constraints panel interviews /
telephone / video conference screening could be used.
2016
 For recruitment at junior levels, job fairs, universities etc.,

where large volume of candidates, HDFC will use recruitment
tests for purpose of short listing. The candidate may be tested
on the basic aptitude, analytical skills or other skills required
for the job of the candidates.
 The interview process will focus on the evaluating the
candidates suitability in terms of the job description and fit
within the organization.
 Each interviewer will complete the interview feedback form
and submit it to HR. HR will compile the results from a
various interviews and provide these to the line manager for
the final decision.
Recruitment is essential to effective Human Resources

Management. It is the heart of the whole HR systems in the
organization. The effectiveness of many other HR activities, such
as selection and training depends largely on the quality of new
employees attracted through the recruitment the recruitment
process. Policies should always be reviewed as these are affected by
the changing environment.15 Management should get specific
training on the process of recruitment to increase their awareness
on the dangers of wrong placements. Effective recruitment is
important in achieving high organizational performance and
minimizing labor turnover. As of now HDFC Bank Ltd. has a team
of effective human resource which is efficiently managing the
organization at its best. Though the recruitment process adopted
by the organization needs to be improved, challenges are ahead for
the HR Department to recruit people after the effect of recession.
2016
Employee benefits:
1. Gratuity: The HDFC bank provides for gratuity to all
employees. The benefit is in the form of lump sum payments
to vested employees on resignation, retirement, or death while
in employment or on termination of employment of an
amount equivalent to 15 days’ basic salary payable for each
completed year of service. Vesting occurs upon completion of
five years of service. The Company makes annual
contributions to fund administered by trustees and managed
by insurance company for amounts notified by the said
insurance company. The defined benefit plan are valued by an
independent external actuary as at the balance sheet date
using the projected unit credit method to determine the
present value of defined benefit obligation and the related
service costs. Under this method, the determination is based
on actuarial calculations, which include assumptions about
demographics, early retirement, salary increases and interest
rates. Actuarial gain or loss is recognized in the statement of
profit and loss.
2. Provident fund: All employees are entitled to receive

benefits under the Provident Fund Act, 1952. The Company
contributes an amount, on a monthly basis, at a determined
rate (currently 12% of employee’s basic salary) to the Pension
Scheme administered by the Regional Provident Fund
Commissioner and the Company has no liability for future
provident fund benefits other than its annual contribution.
Since it is a defined contribution plan, the contributions are
2016
accounted for on an accrual basis and recognized in the

statement of profit and loss.
3. Compensated absences: The Company does not have a

policy of encashment of unveiled leaves for its employees.
Employees are permitted to carry forward leaves subject to a
prescribed maximum day. The Company provides for
compensated absences in accordance with AS 15 (revised
2005) Employee Benefits issued by Institute of Chartered
Accountants of India (ICAI). The provision is based on an
independent external actuarial valuation at the balance sheet
date.
An efficient human resource practices of a bank is very

important in the way of retaining compete employees, to improve
their efficiency, to minimize human resource expenses, increasing
profit of the bank and so on. Human resource practices relevant to
recruitment, training, fixation and revision of salary, performance
appraisal, promotion and transfer are very important aspects.
Efficiency of employees will improve only when they are satisfied
with human resource practices followed in their organization.
References:
1. Munrer T. J., Raju N.S. and Collins W.C. (1998) - Peer and
Subordinates Performance Appraisal Measurement
Equivalence - Journal of Applied Psychology.
2. Ashwathappa K. (1997) - Human Resource and Personnel
Management - Tata McGraw hills, New Delhi.
2016
3. Agrawal K. P. (2009) - Education and Training System for

Banks: A Rejoinder - The Journal, Prajnan.
4. Rainaye R. (2004) - Training Effectiveness in Public Sector
and Private Sector Commercial Banks -A Micro-Level
Comparative Study - Management & Change Journal.
5. Neale Frances (2002) - Handbook of Performance
Management, Jaico publishing House, New Delhi.
6. Kolekar B.D. (2005) - Human Resource Development -
Northern Book Centre, New Delhi.
7. Sangwan D. S. (2009) - Human Resource Management in
Banks - National Publishing House, New Delhi.
8. Jyothi P. and Venkatesh D.N. (2006) - Human Resource
Management - Oxford University Press, Mumbai.
9. Pande Sharon and Basak Swapalekha (2012) - Human
Resource Management - Pearson Publication, New Delhi.
10. Shah (2004)) - Human Resource Management in Banking
Industry - South Asian Publisher, New Delhi.
11. Harjeet Kour and Kamlesh Gakhar (2015) - Human
Resource Management Innovations in Indian Banks: A
Study From HR Managers’ Perspective -
http://www.serialsjournals.com, Vol. 13, No. 3, (2015)
12. Harjeet Kour and Kamlesh Gakhar (2015) - Human
Resource Management Innovations In Indian Banks: A
Study From HR Managers’ Perspective -
http://www.serialsjournals.com, Vol. 13, No. 3, (2015).
13. http://www.managementparadise.com
14. Pathak Neetu (2008) - Corporate Training Programme- An
Effective Instrument for Organization - The Indian Journal
of Commerce, Vol.61, No.3.
2016
15. Levin, H.Z. (1986) - Performance appraisal at work -

Personnel, Vol. 63, No. 6, pp. 63-71.

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A Study of Performance Appraisal Practices as a Tool to Improve Employee

Efficiencies in Private Sector Banks – A Case Study Of HDFC Banks.

Chapter No. 05:

The employees always assess the management values, work

faces the heat of continuous employee turnover. Continuous efforts

With global economy the world has become a global village.

most frequently mentioned are knowledge, skills, abilities,

Competency mapping is the process of identifying key

well-accepted guidelines and assessment tools such as

Competencies are the inner tools for motivating employees,

The employees of HDFC Bank have specific skill, ability and

schedule for employees and bank’s development. Each of the

Training and Development:

The purpose of training need assessment is to add value to an

environment, developing human resources is of paramount

Training Strategies Used in HDFC Banks:

The first category should be attended by all employees at

skills to be able to deliver the service standards that the company

Training is necessity in the changing environment, planned

The result of the present study shown that the training

due to the reason that mostly female employees bear additional

look at jobs as being temporary. Another commonly looked option

Innovative Recruitment and Selection Practices of HDFC

1. Well Defined R&S: One of the major innovative HRM

2. Selection of Professionals: HDFC Banks have also started

3. Selection According to Service Attitude: Banks are

4. Holding on Policy: One of the major problems that the

5. Availability of Bank Communities on Social

6. Checking the Profile of Candidates on these Sites:

7. Written Examination for R&S: There is a policy of

8. Result Oriented Policy of R&S: In the present scenario,

9. Formal Induction of New Candidates: There is a formal

Innovative Training and Development Practices of HDFC

1. Test of Trainees: Use of written examination for selecting

2. Job Rotation: There is also a provision of job rotation for

3. Customised Training: Special and separate/customised

also following this innovative HR practice. However, the

4. Continuous Training Need Assessment: In some of the

5. Regular Training: One of the major problems, which were

6. Encouragement to Apply Training Learning:

7. Arrangement of Special Projects: To make the learning

Innovative Performance Management Practices of HDFC

1. Formation of Performance Matrix: The very common

2. Goal Review Based Appraisal: The respondents under

3. Appraisal on Fair Objective Data: The objectives and

4. 360 Degree Performance Appraisal: Another innovation

5. Option to Challenge the Appraisal: These days, the

6. Full Awareness of the Performance Appraisal Policy:

Innovative Compensation Management Practices of

Explanation given below is related to the four innovations under

1. Announcing Special Incentive to the Talented

2. Special Increments on Regular Basis: One major

3. Special Festival Advance: The HR department has also

4. Customised Perks: In last couple of years, the perks have

Innovative Career Development Practices:

1. Availability of Educational Opportunities at

2. Easy Approval to the Job Applications: This study

3. Preference to Seniority in Promotions: Seniority is