EVALUATING THE PERFORMANCE OF MANAGERS OF YAZD COMMERCIAL BANK BY 360 DEGREE FEEDBACK METHOD

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1 EVALUATING THE PERFORMANCE OF MANAGERS OF YAZD COMMERCIAL BANK BY 360 DEGREE FEEDBACK METHOD Hadi KhademAstaneh Department of public administration, Yazd science and research branch, Islamic Azad university, Yazd. Iran. Department of public administration, Yazd branch. Islamic Azad university, Yazd. Iran. Dr Hosein Eslami (corresponding author) Department of public administration, Yazd branch. Islamic Azad university, Yazd. Iran. Dr Seyed Yahya Abtahi Department of economic, Yazd branch. Islamic Azad university, Yazd. Iran. Abstract Considering the importance and the necessity of a theoretical and practical research on evaluating the managers performance on one hand, and the constructive role of banking industry in the development of the country on the other hand, this study evaluates the performance of bank management employing the360-degree feedback system. Despite numerous studies conducted to evaluate the performance of organizations and managers, no one employed the 360-degree feedbackfor banking industry which provides a comprehensiveevaluation. The objective of this study is to evaluate the managers performance using360-degree feedback from the perspectiveof senior managers, subordinates, customers and the individual. Here, according to the research subject and objectives, the study is a correlational descriptive - analytic one. The data is collected over a close-ended questionnaire. The results indicate a significant difference between results obtained through "self-assessment", "senior-managers evaluation ", "customers evaluation" and "subordinates evaluation" for managers of Tejarat Bank in Iran. Keywords: Performance evaluation, Tejarat Bank, 360 degree feedback. Introduction The banking industry is of the world's major industries. Todays, in advanced countries banks act as professional consultants specialized in growing the corporates financial resources as well as information collection and exchange of customers. In all countries, banks are considered as one of economic driving forces. Success or un-successof banksis not imaginable separate from managers performance. The bank can be successful which benefits from proper management, a variety of tools and features and takes advantage of the potentials(abasgholipour, 2010).Robbins (1998) believedthat the performance is what individuals do in an organization as well ashow they affect the performance of the organization. In other words, performance means to accomplish dutiesassigned to human resources by the organization (Cascio, 2010). Organization existence COPY RIGHT 2015 Institute of Interdisciplinary Business Research 68

2 philosophy depends on human life. The human beings blow spirit in organizations body, move it and manage it. Managers are also considered as valuable source for organizations making the organizational decisions, providing solutions, and making efficiency and effectiveness possible (Gholami et al., 2011). They clearly understandthe interpersonal relationships and organizational goals and try to meet the needs of the employees and the clients (Sharifi and Agassi, 2010).Todays, the dramatic development in managementknowledge makes the evaluation system inevitable, so that the lack of the evaluation system in all aspects of the organization, especially for managers and employees,is considered as symptom of a dysfunctional organization (Asgharzadeh et al., 2011). Amodern method for performance evaluation is 360-degree feedback in which to evaluate the performance,managers, subordinates, customers and the person are involved in the evaluation process (Atwater and Burt, 2005). In this method, unlike traditional assessment methods whereevaluation was conducted from top to bottom,it isdone by seniormanagers, colleagues, subordinates, customers and the person (RabbaniMehr&Dalvi, 2011). Therefore, considering the importance of theoretical and practical research and the necessity of evaluating the managers performance on one hand and the constructive role of banking industry in the development of the country on the other hand, the main objective of this study is to evaluate the performance of bank management through 360-degree feedback. Despite numerous studies conducted to evaluate the performance of organizations and managers, no one employed the 360-degree feedbackfor banking industry which provides a comprehensiveevaluation.in order to address this scientific gap in Iran, this study seeks to evaluate the performance of management in thebanking industryemploying the 360-degree feedback system. In a study conducted by Nasiriet al. (2007), titled Employing Analytic Hierarchy Process (AHP) to Rank andevaluate the Performance of Corporate Personnel using 360-degree Feedback, it was concluded that 360-degree feedbackcan improve the organization's evaluation criteria and alleviate the problems in staff evaluation. Besides, another study conducted by Roshandel&Jonoubi (2009) to investigate the factors affecting the performance of the managers in public libraries in Tehran showed that the there is a significant relationship between customeroriented attitude, the job attachment, in-service training, and the performance of managers in libraries. The results obtained by Gholami et al. (2012) in a study on the relationship between organizationalintelligence and the management performance indicate that there is no significant relationship between the overall organizational intelligence and components and the management performance. However, the results of stepwise regression show that the component application of knowledge plays a significant role on the performance of human resources managementand is able to predict the performance of managers. The importance of research Managers are valuable resources of an organization. To select and evaluate them, the organization must be careful and seeks to select the best ones for such a position. It is also necessary to periodically evaluate the performance of management.while having an efficient and effective evaluation system to identify the talents and potential is inevitable, there is unfortunately no formal system to systematically evaluate the performance of managers. Subjective, immediate and non-formal assessments have driven managers to activities complying withsuch evaluators (Shafizadeh, 2006). Researchesdonebased on articles and theses reflect the fact that 360-degree feedback is a suitable and accuratemethodto evaluate the performance of COPY RIGHT 2015 Institute of Interdisciplinary Business Research 69

3 employees, especially managers (Asgharzadeh et al., 2011). Therefore, we are going through this important subjectemploying the 360-degree feedback. Research hypothesis The main hypothesis: There is a significant difference between results obtained from "self-assessment", "seniormanagerevaluation", "customer evaluation" and "subordinatesevaluation" for Tejarat Bank. Sub-hypotheses: 1. There is a significant difference between results obtained from "self-assessment" and "senior-manager evaluation"for Tejarat Bank. 2. There is a significant difference between results obtained from "self-assessment" and "subordinates evaluation" for Tejarat Bank. 3. There is a significant difference between results obtained from "self-assessment" and "customer evaluation" for Tejarat Bank. 4. There is a significant difference between results obtained from "subordinates evaluation" and "customer evaluation" for Tejarat Bank. 5. There is a significant difference between results obtained from "seniormanagerevaluation" and "customer evaluation" for Tejarat Bank. 6. There is a significant difference between results obtained from "senior-manager evaluation"and "subordinates evaluation" for Tejarat Bank. Research methodology Here, according to the research subject and objectives, the study was a correlational descriptive - analytic one. Descriptive research involves collecting data to test hypotheses or studying the answer of questions about the current state of the subject. Variables were investigated in a conceptual model.the evaluation process and variables measurementwas as follows: COPY RIGHT 2015 Institute of Interdisciplinary Business Research 70

4 Self-assessment variable: in this study,managers in Tejarat Bank at branches in Yazd Province evaluatedtheir own performance. Senior manager variable: the managers who were directly considered as the superior of the target person evaluated him. Customer variable: sectors or partners exchanging information and other services with each other were considered as a customer. Subordinates variable: a groupsupervised by the target managerevaluated his performance. The research method was the analytical survey. Using a questionnaire, the performance of managers in Tejarat bank was evaluated as a survey considering four groups includingthe senior managers, customers,subordinatesand the target person. The validity of the questionnaire can be confirmed considering the relevance of the content with the theoretical basis and the verification of a number of scholars and experts in the field of human resources. Cronbach's alpha coefficient can also approve thereliability of the questionnaire. After analyzing the 20answered questionnairesfrom the total 27 considered questionnaires, the Cronbach's alpha coefficient was calculated 0.812indicating the appropriate reliability of the questionnaire. To collectdata, the field and libraryresearches employed. For library research, books, professional management journals, academic theses and reputable websites were referred. For field research, the primary toolfor evaluation was the questionnaire prepared according to the research components. The data collection tool included a close-endedquestionnaire. The population, sampling method and sample size Here, the population included all managers in Tejarat Bank at Yazd Province. To determine the sample size using the Cochran formula,the stratified random sampling were employed proportional to the strata size. Data analysis methods and tools This study employed the descriptive and inferential statistics to fulfill the research objectives. Using SPSSprogram,the descriptive statistics were employed to display the values of central indices and dispersion of variables. The inferential statistics such as the T-student test, correlation coefficient, and path analysis were employed to verify the research hypotheses employingspss and LISREL programs. Data analysis A: Descriptive statistics The descriptive statistics describes the population and aims at calculating the populationparameters. Descriptive statistics of the variables are shown in Table 1. COPY RIGHT 2015 Institute of Interdisciplinary Business Research 71

5 Table 1. Descriptive statistics of the studied groups The group Frequency Average SD Self-assessment Subordinates Superior Partners Customers As obvious,the frequency for self-assessment, subordinate, superior, partners, andcustomersamples are 28, 121, 5, 21, and 100, respectively. Figure 1.Frequencyof studied groups The above graph shows the frequency of each evaluator groups in 360-degree feedback system. COPY RIGHT 2015 Institute of Interdisciplinary Business Research 72

6 Table 2: Descriptive statistics about gender Seniors Gender Frequency Female 1 Male 27 Total 28 Valid Percent Cumulative Percent Table 3: Descriptive statistics about education Seniors education Frequency Diploma 12 Associates Degree 2 Bachelor s Degree 13 Master s Degree 1 Total 28 Valid Percent Cumulative Percent Figure 2: Frequency ofevaluated groupsin terms of education Table 4: Descriptive statistics about seniors field of study Seniors field of Frequency Valid Percent study Managerial Non-managerial Total Cumulative Percent B. Inferential statistics The statistics that can generalize the results of the sample analysis to the population is called inferential statistics. In other words, statistics are obtained through sampling, then generalized to the population parameters using hypothesis testing. Hypothesis are tested as follows: COPY RIGHT 2015 Institute of Interdisciplinary Business Research 73

7 The hypotheses of this study The main hypothesis: There is a significant difference between results obtained from "self-assessment", "senior-manager evaluation", "customer evaluation" and "subordinatesevaluation" for Tejarat Bank. According to hypothesis 1 and since ANOVA test was employed tocompare the average for population (i.e. the impact of anindependent grouped variableon a related quantitative variable),table 5, known as ANOVA table,represents the results of the comparing the three populationsincluding the sum of mean square of treatments, the degree of freedom, the mean square of the treatments, the F statistics and SIG. As shown in table 5, the SIG is less than 5% indicating a significant difference between the averagesof population; thus, the main hypothesis is approved. Figure 5. ANOVA test results. Sum of Squares Degree of Freedom Mean Squares F SIG Intergroup Intragroup Total Sub-hypotheses: 1. There is a significant difference between results obtained from "self-assessment" and "senior-manager evaluation"for Tejarat Bank. Since the variable managers competency evaluation in the strata level was measured over two levels, independent samples T-test was employed to investigate this hypothesis. This test is used when a researcher intends to testa quantitative variable(managers competency evaluation) in two completely independent strata (the target manager and senior managers). Table 6. T-values Number Mean SD SD mean Degree of Freedom T-value Significance Level Self-assessment Senior managers COPY RIGHT 2015 Institute of Interdisciplinary Business Research 74

8 Due to the significant level of independent t-test (0.904) which is greater than theassumed error in the research (0.05), there is no significant difference between variables. Therefore, H0 is not rejected then the first sub-hypothesis is not accepted. 2. There is a significant difference between results obtained from "self-assessment" and "subordinates evaluation" for Tejarat Bank. Since the variable managers competency evaluation in the strata level was measured over two levels, independent samples T-test was employed to investigate this hypothesis. This test is used when a researcher intends to test a quantitative variable (managers competency evaluation) in two completely independent strata (self-assessment and subordinates evaluation). Table 7. T-values Number Mean SD SD mean Degree of Freedom T-value Significance Level Self-assessment Subordinates Due to the significant level of independent t-test (0.013) which is smaller than theassumed error in the research (0.05), there is a significant difference between variables. Therefore, H0 is rejected then the2 nd sub-hypothesis is accepted. 3. There is a significant difference between results obtained from "self-assessment" and "customers evaluation" for Tejarat Bank. Since the variable managers competency evaluation in the strata level was measured over two levels, independent samples T-test was employed to investigate this hypothesis. This test is used when a researcher intends to test a quantitative variable (managers competency evaluation) in two completely independent strata (self-assessment and customers evaluation). Table 8. T-values Number Mean SD SD mean Degree of Freedom T-value Significance Level Self-assessment Customers Due to the significant level of independent t-test (0.000) which is smaller than theassumed error in the research (0.05), there is a significant difference between variables. Therefore, H0 is rejected then the3 rd sub-hypothesis is accepted. COPY RIGHT 2015 Institute of Interdisciplinary Business Research 75

9 4. There is a significant difference between results obtained from "subordinates evaluation" and "customers evaluation" for Tejarat Bank. Since the variable managers competency evaluation in the strata level was measured over two levels, independent samples T-test was employed to investigate this hypothesis. This test is used when a researcher intends to test a quantitative variable (managers competency evaluation) in two completely independent strata (subordinates and customers evaluation). Table 9.T-values. Number Mean SD SD mean Degree of Freedom T-value Significance Level Subordinates Customers Due to the significant level of independent t-test (0.000) which is smaller than theassumed error in the research (0.05), there is a significant difference between variables. Therefore, H0 is rejected then the4 th sub-hypothesis is accepted. 5. There is a significant difference between results obtained from "senior-manager evaluation" and "customer evaluation" for Tejarat Bank. Since the variable managers competency evaluation in the strata level was measured over two levels, independent samples T-test was employed to investigate this hypothesis. This test is used when a researcher intends to test a quantitative variable (managers competency evaluation) in two completely independent strata (senior-managers and customers evaluation). Table 10. T-values Number Mean SD SD mean Degree of Freedom T-value Significance Level Senior managers Customers Due to the significant level of independent t-test (0.000) which is smaller than theassumed error in the research (0.05), there is a significant difference between variables. Therefore, H0 is rejected then the5 th sub-hypothesis is accepted. COPY RIGHT 2015 Institute of Interdisciplinary Business Research 76

10 6. There is a significant difference between results obtained from "senior-manager evaluation"and "subordinates evaluation" for Tejarat Bank. Since the variable managers competency evaluation in the strata level was measured over two levels, independent samples T-test was employed to investigate this hypothesis. This test is used when a researcher intends to test a quantitative variable (managers competency evaluation) in two completely independent strata (senior-managers and subordinates evaluation). Table 11.T-values. Number Mean SD SD mean Degree of Freedom T-value Significance Level Senior managers Subordinates Due to the significant level of independent t-test (0.279) which is greater than theassumed error in the research (0.05), there is no significant difference between variables. Therefore, H0 is not rejected then the6 th sub-hypothesis is not accepted. Discussion and Conclusion In Iran, a basic problem is lack of performance evaluation system in organizations causing problems for employees, management and the organization. The main benefit of 360 degree feedback process for organizations is considering employees, managers and in some cases subordinatesin the evaluation process. This allows organizations totake advantages of an effective performance evaluation system and. Having the right evaluation of performance, organizations are able to plan a suitable track for employees progress. People should voluntarilyparticipate in feedback programs. Forced participation may be threatening thus jeopardizing the effectiveness of the system. 360-degree feedback system, because of providing a rich feedback provided by subordinates, is a useful tool in leadership development programs. Organizations should have the potential to create areas for development and take advantages of feedbacksin development andtraining. It is essential that for organizations to have practical plans toeliminate weaknesses. In organizations with effective 360 degree feedback system,the process may be repeated after receiving the initial reports on feedbacks. However, this process is completely new in many organizations and aims atcreatingparticipation opportunities for employee through the 360-degree feedback process. Accordingly, to allow the organizations make use of an effective multi-source feedback and optimallytake advantages of the feedbacks, some points must be accurately considered: COPY RIGHT 2015 Institute of Interdisciplinary Business Research 77

11 1. Before investing in a particular tool or process, you should learn how to use it. As a comprehensive process, the multi-source (or 360-degree) feedback requires a knowledgeon all aspects. A system has strengths and weaknesses which must be recognizedto be effectivelyapplied. 2. Support for 360-degree feedback reputation: why people should give each other performance feedback? This gives people the opportunity to objective information about their performance. But what is the benefit for providing feedback? The answer is that when people work together they can support each other or cause problems to each other. Feedback is an opportunity to make positive changes in the working behavior of people. 3. Skilled facilitators must be used: multiple-sources feedback is more than a tool. It is a process by which a number of events should be facilitated. In this context, meetings held before the evaluation arethe easiest way for facilitation. Training and decision-making sessionsmay be held by managers familiar with the subject. Meetings held after the evaluation are potentially challenging and include admission and interpretation of feedbacks, supplementary feedback,developmentplanning, and performanceguidance. Managers responsible for this,should have required skills.although the 360-degree feedback sessions are unique, they do not always need a consultant. Some organizations have employees who are experienced in 360-degree feedback, have group-behavior management skills; and their ability to manage multiple-sources of feedback sessions is trusted. There is no need to such sessions for the second or third feedback. The person who is subject to the feedback maygain the necessary knowledge on what he should do. 4. Following-up the development programs:using multiple-source feedback for only selfawareness will cause problems. 360-degree feedback system has the potential to identify skill areas. On the other hand, developing and training tools is not able to provide solutions to problems. If anorganization does not intend toplan for development or to provide development resources, people will finally come to the conclusion that the process does not benefit. Not following-up development programswill end the process without providing development and improvementtools. The organization should have plansto support development activities based on the 360-degree feedback data; otherwise, the experience gained in this area may be lost and the future processesmay not besupported. 5. Development feedback should beseparated from reward decisions and personnel programs. A few number of organizations have successfully experienced the performance management. If past-performance feedback is related to rewarding programs or other decisions concerning the human resources, individuals will less likely believe that feedback will be used for development purposes.when people think that the process will put their job at risk, they will havedifficultiesproviding the correct feedback. They may try to protect the job security of friends or try to put the job security ofwhom they cannot expel at risk. It is a mistaketo expect such an evaluation to help determining development prioritiesfairly and truly. Tobe an entirely new approach, the 360-degree feedback process should not be associated with awarding and humanresource-relateddecisions. This is necessary because if people believe that the data provided in the feedback would influence salaries and jobs,they willhardly provide objective responses.such a feedback process may be nothing more than a simply performance evaluation. COPY RIGHT 2015 Institute of Interdisciplinary Business Research 78

12 6. The 360-degree feedback process must have the support of senior management in the organization and encourage other managers to do so. COPY RIGHT 2015 Institute of Interdisciplinary Business Research 79

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