Performance Management Systems Of Muslim Commercial Banks Commerce Essay


It is one of the fact that organizations with excellence in performance can survive alone in the highly competitive global market conditions. An exceptional system can be maintained by a highly motivated Human Resource with the state of art equipment. A motivational force is enough to drive and inspire the employees to do wonders for the organization. Without active role of HR of the organization, it is impossible to compete in the present fast changing business world. So, human resource only create the distinction when properly trained, developed suitably motivated through intrinsic and extrinsic compensation rewards system.

This research study will be derived from performance management system with particular reference to applicability of the system to Pakistan banking industry. Main thing is that it focuses on activities of PMS like manpower planning, rewards & compensations, training & development, career planning . PMS is the powerful mechanism which helps in moving the organizational objectives down the hierarchy and further helps in its planning monitoring and evaluating its own performance.

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The first proposition behind conducting the research study of the Performance Management Systems (PMS) of the domestic banking industry is the significance of the Human Resource component of an organization.Every organization has some aims to achieve and in order to achieve these aims organization has to obtain and utilize various resources in such way that they can contribute towards these goals or aims. As resources are both human and non human such as physical, and these are very limited as well but human resource is main asset of any organization and must give special attention by organization in order to get desired results.

The second proposition is for human resource motivational force required to perform the given tasks and to confidently contribute towards achievement of organizational goals. For the achievement of goals there must be internal and external changes on environments. External environments includes social, political, economical and cultural changes , while internal environment includes existing structure, technology, needs and expectations of its people and changing of the labour force.

Scope of Study:

The scope of the research is to study the planning, monitoring and evaluation of the performance management in international organizations and then to compare these practices with the PMS being currently used in the Pakistani domestic banking industry. For this purpose one of the leading local banks that has been privatized in the past 15 years which is MCB .

The purpose of the performance management system at MCB is to provide a formal assessment programme to evaluate work performance and to promote communication and discussion of job performances of the employees. The intent of these discussions is to review current job performance and responsibilities, set goals and discuss future opportunities with reference to past performance at the bank.

To measure work performance.

To motivate and assist employees in improving their performance and achieving their personal or the professional career goals.

To identify employees with high potential for advancement.

To provide objective information for making decisions on salary increases, promotions, bonus and transfers.

To identify employees training and developmental needs.

To provide a path for career planning for each individual.

Research objectives:

The objectives of the conducting research on PMS of MCB are salient and appended below:

ï‚· To study the existing PMS of the Muslim Commercial Bank in Pakistan.

ï‚· To measure the work performance of employees and to identify their developmental and training needs for achieving organizational objectives.

ï‚· To find the strengths and weaknesses of both the proposed system and the one being practiced in domestic environment.

ï‚· In light of the findings of the comparative analysis, further suggest improvements in the proposed framework.

Research Questions:

ï‚· What and how Muslim commercial bank(MCB) is using PMS in order to achieve its goals?

ï‚· How MCB should do planning, monitoring and evaluation of performance management by following the PMS of leading Organizations?


ï‚· Who should be involved in the performance management activities and what should be measured?

ï‚· What standards should be used or set, and how?

ï‚· How is quality improvement efforts carried out and how is progress reported for use in decision making?


History and foundations of performance management:

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A strategy which links to every steps of the organization set in the framework of its human resource policies, style and communication systems. It is up to the context of an organization and can vary from other organization. Taylor's pioneering Time and Motion studies has traced roots of PMS in the early 20th century .As a diverse and formal management procedure used in the evaluation of work performance, PMS really dates from the time of the Second World War - not more than 60 years ago.

Since the early 1990s Chartered Institute of Personnel and Development (CIPD) have traced the evolution of performance management from a heavily bureaucratised procedure focused on objective-setting or merit rating to a more wide-reaching and inclusive process combined with other related practices such as talent management, career management, and development. If we see in the history, in late 1990s and early twenty first century heavily featured worked on employees and performance has done. It was identified along with training and work design as a key element in performance.

CIPD has pointed out lack understanding performance managements through its link to development, pay and most recently talent management to its place as a tool for line managers to direct skill and effort. CIPD also unconcealed the elements of PMS and showed the number of elements how can work together to create the PMS which was more appropriate for them.

What is Performance?

"You can't measure or manage the performance If you can't define" Armstrong and Baron (2002). There are different views on what performance is. It can be regarded as simply the record of outcomes achieved.

Brumbrach (1988) has given most comprehensive definition of performance i.e.

"Performance means both behaviours and results. Behaviours originate from the performer and transform performance from abstraction to action. Not just the implements 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".

Bernadin, Kane, Ross, Spina and Johnson (1995) argue that:

"As performance provides the strongest linkage to the strategic goals of the organization, customer satisfaction and economic contributions it should be defined as outcomes of work ".

What is Performance Management?

Performance management is a process for ensuring employees are focusing their work efforts in ways that contribute to achieving the company's mission. It consists of three parts: (a) setting beliefs and opportunities for employee performance, (b) maintaining a conversation between supervisor and employee to keep performance on track, and (c) measuring actual performance comparative to performance expectations.

What is Performance Management System?

An effective performance management system consists of:

1. A process for communicating employee performance expectations, conducting annual performance appraisals and maintaining on-going performance conversation.

2. A process for addressing employee performance that falls below expectations.

3. A practise for encouraging and facilitating employee development.

4. It is a training for managing performance and administering the system; and

5. A way for resolving performance pay disputes.

6. A process of doing strategic and financial planning and deliver key processes by b allocating fair resources.

7. To achieve best value check financial performance and responsibility.

Purpose of Performance Management System:

Performance Management System (PMS) is an extremely valuable technique in the hands of the Human Resource department, which can help to drive performance. It can play an essential role in cascading the organizational goals down the hierarchy, if handled appropriately this tool can give desire multiple results directing the organization on the path of can also help in achieving competitive advantages when organization has clear corporate strategies.

The main purpose of the Performance Management System is to ensure that;

1. The work performed by employees achieves the goals of the organization.

2. All employees of the organization have a clear understanding of the quality and quantity of work expected from them.

3. All employees receive current information about how effectively they are performing relative to expectations.

4. Based on employee performance Awards and salary increases are distributed accordingly.

5. For employee development opportunities are identified; and

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6. Addressed the employee performance that does not meet expectations.

Performance Measure Criteria:

Every organization has its own criteria to measure the employee performance through job analysis and design. To evaluate performance management systems, there are three main measure criteria these are; strategic congruence, validity and reliability, which are discussed below:

1. Strategic Congruence.

Strategic congruence is the degree to which the performance management provokes job performance that is congruent with the organization's strategy, goals, and culture. PMS of customer Service Company should assess how well its employees are serving the company's customers and it also requires the need for PMS to provide guidance so that employees can give excellence performance to the organization's success. So, this requires the system to be flexible enough to adapt to changes in the company's strategic posture.

2. Validity.

The extent to which the PMS assesses all the relevant and only the relevant aspects of performance is called Validity (often called content validity). For a valid performance measure, it must not be contaminated or deficient - which means that only those areas should be assessed that are only concerned with the employee's job. A Contaminated measure means to evaluate irrelevant aspects of performance or aspects that are not related to job. A performance system should search for irrelevant aspects to minimize contamination. A Deficient measure means which does not measure all aspects of performance.

3. Reliability.

Reliability means stability and consistency of the performance measure. "Interrater reliability" means the consistency and stability among the individuals who evaluate the employee's performance. If two individuals give the same evaluations of a person's job performance then performance measure will have Interrater reliability. Another type of reliability measure is the "test-retest reliability" that refers to the reliability over time. A measure that results in drastically various ratings depending upon the time, at which the measures are taken, lacks test-retest reliability.

As Performance indicators are measured at different levels. It is important that managers and staff should clear about the links between all different levels. Figure 1 shows the links between different types of performance measures, and the levels at which they are used.

Figure 1 :The hierarchy of performance management

Figure 2: The plan-do-review-revise cycle of performance management

The performance management cycle takes place over different timescales at many different levels. On annual or three yearly cycles' major strategic reviews and revision may happen, although the cycle of review and revision may occur every month or quarter at a more detailed level. While at the level of staff support and supervision, managers may set tasks, observe performance and give helpful feedback from day to day.


Research Philosophy and Approaches:

A research philosophy is a belief about the way in which data about a phenomenon

Should be gathered, analysed and used. The term epistemology means what is known to be true as, opposed to doxology which means what is believed to be true encompasses the various philosophies of research approach. The purpose of science, then, is the process of transforming things believed into things known: doxa to episteme.

Two major research philosophies have been identified in the Western tradition of science, namely positivist which means sometimes called scientific and interpretivist which means also known as antipositivist (Galliers, 1991).

In my research I will use Interpretivists philosophy because only through the subjective interpretation of and Intervention in reality can that reality be fully understood. The study of phenomena in their natural environment is key to the interpretivist philosophy, together with the acknowledgement that scientists cannot avoid affecting those phenomena they study. They admit that there may be many interpretations of reality, but maintain that these interpretations are in themselves a part of the scientific knowledge they are pursuing. Interpretivism has a tradition that is no less glorious than that of positivism, nor is it shorter.

My over-riding concern is that the research I undertake should be both relevant to my research question and objectives. Overall I believe that an interpretivist philosophy is required for this purpose, i.e. the understanding of how both Banks (MCB & ABL) adopt and adapt to the use of Performance Management Systems. This research involves an element of PMS insofar as it was not previously followed by the organizations. This thus requires important part in the implementation process. Furthermore, in order to measure how organisations can improve their performance with the support of PMS, I make recommendations for use of the International PMS after analysing existing PMS. To do all these things without being involved would be impossible. However, recognising the lack of objectivity sometimes associated with interpretivist research methods, I adopt a positivist, quantitative approach to the development of my key research instrument.

Husserl (1946) stated that the phenomenological paradigm argues that the world and the reality are not objective and exterior, but they are socially constructed and given meaning by people (Burrel and Morgan, 1979:240-255).

The research issue, evaluation of the impact of PMS, could be tackled with a positivist or phenomenological paradigm. The inherent problem to this approach is that results provide very little insight to manager and practitioners, i.e. to help them identify and understand the impact of PMS and positive factors to improve business performance. In understanding and evaluating the impact of PMS, it is important to go to the fundamental point 'phenomenon's root' where impact is created and understand how it is created. This means that it is important to understand its context (internal and external factors). For these reasons, this research demands sensitivity and in-depth understanding from different fields around business, strategy, operations and even more from customers.

3.2 Research Strategy:

PMS is having great effect of the performance of the organization and helps to improve it as well. It is a continuous, strategic and integrative approach that has many steps; each step is important and adds value to the entire PMS.All the big organizations are benefitting from PMS because each and every step is interlinked with each other in the continuous process.

This research involves an effort to describe relationship of PMS that exist in reality, in the bank and with the analysis of different variables observer-researcher can get greater detail in reality than is typically possible in experimental and survey research. As researcher is observer so, I will use more descriptive and explanatory strategy to do more focus on "How?" and "why?" MCB Bank is using its PMS. And also by doing;

The Research will rely on theoretical background research, designing and implementation of bank observations in Pakistan including interviews and dialogue with relevant people (top level- bottom level management) for gaining first-hand knowledge about the PMS doing direct and indirect observation of activities and phenomena and their environment.

The information and data will be analysed, compared with international experiences and presented in the form of a research dissertation highlighting some issues involved in PMS of MCB Pakistan and suggest, where required, recommendations and guidelines.


Assistance for this research will be taken by using both quantitative and qualitative approaches. Secondary data collection technique includes use of different textbooks, journals, case studies, research publications and Internet. While my main focus would be on qualitative data collection such as by conducting interviews and discussions with concerned officials of the banks during visits to MCB in Pakistan is Primary Data Collection technique and these both techniques aimed at extracting all possible information about the PMS being implemented in MCB. And interviews from managers and employees will help in observing actual behavior of them towards their goals and objectives of organization. Establish rapport with respondent and good understanding of respondent's view. With this I can also have close observation and involvement of staff. By conducting structured and unstructured interviews from the staff of the bank.

Documentation, such as written, printed or electronic information about the

Company and its operations; also newspaper cuttings;

Records and charts about previous use of PMS relevant to the research.

Of these, the second, i.e. survey of participant attitudes through a

Questionnaire is the method that has required most developmental effort.

Ethical issues

Many different universities, professional associations and government agencies have adopted specific codes, rules, and policies relating to research ethics. East Carolina University (ECU) has a variety of policies relating to research.

It is very essential to have ethical rules in research since it promoted the aims of research. It also provides values that are essential to collaborative work like faith, responsibility, shared respect and equality. The research can also be accountable to the public and it also helps to build public support for the research. These ethics also promote a variety of other important moral and social values which includes animal welfare, social responsibility, human rights, health and safety and compliance with the law.


In my research I will follow all the ethical rules in order to provide honest, truth, knowledge, results, methods, procedures in order to avoid occurrence of errors in my research and will not make falsify, or misrepresent data and also will not deceive colleagues, granting organizations, or the public.


In order to follow the ethical codes I will protect trustworthy communications, such as papers or grants submitted for book or journals, personnel records, business work or secrets, and any records of Bank (MCB).

Respect for Intellectual Property

By conducting research I will not honour copyrights, charters, patents and other forms of intellectual and knowledgeable property. I will not misuse published data, methods, or results without permission. And I will follow ethical codes and will give proper acknowledgement for all assistances to research and will never copy and imitate.

Data Access:

I will access data by following different kinds of resources. My main focus would be on my research objectives, questions and research design process. I will visit to Pakistan for getting primary data collection and will also arrange appointments and meetings with managers and employees of the both banks in Pakistan regarding my research. I will also use secondary data from journals, books, by visiting both banks and their official websites, also by browsing university website Athens, and different articles. Beside this, for collecting secondary data I will read International standards for PMS, So that I can compare those with my research easily.

Resource Implications:

This research consists of both primary and secondary information. I will pursue the Content Analysis technique that is usually know as previous literature review which has been follow in the study of this research topic. Apart from this, cost factor will also be major issue because my dissertation research will require making a personal visit to Pakistan.

Gantt Chart

Timetable of the key activities



















Follow up meetings &

obtaining information

Obtaining Historical




Deriving a


Developing the


Editing & Preparing

Final Draft

Final Report


Regular contact with the supervisor would be maintained in order to receive feedback and continue the activities in the right direction throughout the period of the action applied for research project.