Performance Management in Retail Banking division

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Critical Analysis of Performance Management in Retail Banking Division of First City Monument Bank Plc. {With reference to the implementation of the Retail Automated KPI}


Performance management is a process which contributes to the effective management of individuals and teams in order to achieve high levels of organizational performance (Armstrong as stated in CIPD 2010). Central to performance management is the notion that it helps employee to understand and contribute to the organization's vision thereby enhancing the performance of individuals and organization (Williams (2002) as stated in Fletcher (2008) p.37). This paper assesses the Retail Automated Key Performance Indicator System (RAKPI), a performance management system introduced by First City Monument Bank (FCMB) Plc.

The paper begins by introducing the RAKPI and stating its objectives before proceeding to study elements of performance management systems such as alignment, knowledge sharing and continuous feedback. The link between performance management and other HR process will be explored. Some of the problems of the RAKPI; problems of bottom line emphasis and question of measuring individual against measuring teams will be examined and suggestions for improving the RAKPI are proposed.

The RAKPI is an online, real time Performance management system that shows each account-officer's their performance on a monthly basis, the key performance index in the RAKPI was developed by a cross functional team with members from the Retail Banking, Finance and IT departments to help improve the performance of Relationship managers. Some of the objectives of the RAKPI include driving desired behaviors and performance towards achieving organizational goals. It was designed to ensure consistent transparency and promptness in performance appraisal and eliminate ambiguity in performance management (Fajebe 2008).


One of the most fundamental purposes of performance management is to align individual and organizational objectives (Armstrong 2006). Major authors like Armstrong (2006) and Fletcher (2008) suggested a top down approach and a bottom up approach in ensuring alignment of PMS. The RAKPI has become a tool management which is used to cascade down strategic changes to the Account-officer's (top down approach) and these changes are made in consultation with the stakeholders of the retail division before implementation; ensuring we have a bottom up feedback. An example is the refocus of Account-officer's strategic goals from generating liabilities to managing bad loan portfolio and increased profitability. These changes were implemented by changing the key performance indicators and weightage on these parameters. The problem with alignment is that it is reactive and sometimes at the expense of employee well-being Fletcher (1992). It is can also be viewed as another form of "taylorism" (Winstanley & Stuart-Smith 1996) i.e. another creative way management exercises control over its work force whilst ignoring other aspects of job (UC Berkeley 2010). Despite these shortcomings the ability of PMS to connect people and strategy can produce extraordinary results and long term value for both individual and the organization (Gubman 1998).

Continuous Feedback:

According to William (2007) performance management should integrate appraisal of performance with two-way feedback, development and goal setting. Cannell (2010) calls performance management a continuous process, not a one-off event. The RAKPI ensures continuous feedback process by showing account-officer's performance on a monthly basis, it enables line managers and account-officer's to review performance frequently. Another approach currently being adopted in the bank is the use of Account officers Monthly Performance Review (AOMPR) sessions. Here each account-officer's performance is analyzed, with appropriate action plan agreed by both account-officer and their line managers. The problem of continuous feedback is that it is not free of personal bias and it is subject to line manager's views and perceptions (IRS 2001) which could be detrimental to the stated objectives of a PMS. Nevertheless the benefit of this type of review process includes improving employee performance, saving managers time and considerable angst (Williams 2007).

Knowledge Sharing:

The study by IRS (2000) showed that not only can a PMS encourage staff to share knowledge, it can also ensure they use what they learn and enhance their own knowledge. The RAKPI have helped increase knowledge sharing in the bank by providing relevant information on drivers of performance. Each AOMPR is now used as an opportunity for account-officers to share knowledge with their colleagues; some line managers extend this learning by creating training sessions on key performance drivers. These activities help improve organization learning within the bank. The bank can improve this process by embedding knowledge sharing directly into the RAKPI following the steps of Companies like IBM and BT Global (IRS 2000). However the problem with knowledge sharing is that it can be complex and difficult to implement systematically (Buchanan & Huczynski 2010).

Other HR Processes:

Different points of view exist on the extent of HR involvement in performance management whilst MSG (2009) claim that performance management should be a predominantly HR process, authors like Olotu (2010) argue that it is a line manager's process. This difference in perception affects the level of involvement of either party in the PMS process. The RAKPI was designed by a business unit, so the participation of the line-managers was high. However the PMS wasn't effective because line-managers lacked the skill required to manage the performance management process. This problem persisted until HR was fully integrated into the PMS process.

The RAKPI has significantly impacted other HR processes in the bank. Firstly it has helped recruitment by ensuring that recruiters know the profile of people that fits the role. Secondly it has made appraisal easy by providing information online real time. Thirdly the RAKPI generates the information required to decide on pay increases or bonuses related to performance (Armstrong 2005). Also the RAKPI was the tool used in deciding who to lay off: the criteria was Account-officer's performing below 30% in their score during the 2009 yearly review.

Bottom-Line vs. Human Element:

The RAKPI measures performance by using financial indicator and standards. It also rewards based on financial performance. This means that Account-officers can evaluate how much their job contributes to the organization (UC Berkeley 2009). This gives account-officers the positive feeling of achievement and they enjoy the rewards of such performance. However this approach neglects the role and contribution of the employee (Guest as stated in Prowse and Prowse (2010)), a view is supported by Fletcher and William (1992). The problem with excess emphasis on bottom-line at the expense of the account-officers is that it can lead to demotivation among the account-officers because they see themselves as tools for making money. This in-turn leads to poor performance which defeats the purpose of the PMS. Holloway et al. (As stated in Waal 2002) argues that successful implementation of performance measurement depends majorly on understanding and accommodating the human element.

Individual vs. Team:

The PMS is designed to 'release' the potential of individuals and harness this energy and commitments to the goal of the organizations (Bevan & Thompson, 1992). A potential problem in adopting the PMS is that there is a risk of encouraging individual achievement at the expense of team effort and cohesion (Fletcher 2008). The current structure of each branch is that Account-officers are broken down into teams, each account having a main account-officer and a backup account-officer. The incentive for a backup account-officer to manage another account-officer's accounts effectively is lacking because it comes at the expense of managing his or her accounts since he is not rewarded for managing it. This leads to significant performance drop for the branch especially when a key account-officer is on leave. There is need to reflect the priorities of the unit and not just focus on the individual (Fletcher & Richard, 1992).

Improving the RAKPI

The role of line managers is critical to the success of any PMS and performance management is about the manager's attitude and stance (Williams 2007). In order to improve the RAKPI, there is a need for collaboration between Line Managers and HR in the continuous improvement of the RAKPI by the creation a cross-functional PMS team. Formal training of managers in performance management skills, how to give proper feedback and creating a trustworthy environment that aids knowledge sharing is important to the success of the RAKPI. A way of balancing the problems of individual and team performance is to have a certain percentage weightage of performance on teamwork and also the use of 360áµ’ degree feedback for performance appraisal. Management should conduct periodical review on their perception of the RAKPI and what motivates staffs. This could act as a guide for management in designing the key performance indicators.


The primary function of a PMS is to align the individual performance to organization's performance. Other advantages of a PMS are that it helps provide information continuous feedback and how it enhances knowledge sharing. However the effectiveness of PMS is hampered by its excessive emphasis on bottom-line above the employee's wellbeing and the fact that it focuses on individuals as against teams. Some of the suggested ways of handling these problems include the increase partnership between Line managers and HR, formal training of line managers and the use of 360áµ’ feedback in performance appraisal. These measures will create the critical balance of aligning individual goals to organizational goals and also ensuring that employees are satisfied.

References Minor errors in formatting - check guidance in the manual

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Armstrong, M., Baron, A. (2005). Managing Performance: Performance Management In Action, London: Chartered Institute of Personnel and Development.

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Buchanan, D., Huczynski, A. (2010). Organizational Behavior. Harlow: Financial Times Prentice Hall.

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