ETHM: 4011 - PRINCIPLES & PRACTICE BANKING

Course Instructor: Dr. Md. Shariful Alam Khandakar, Associate Professor

Department of Tourism & Hospitality Management
Faculty of Business Studies
University of Dhaka

Assignment, Fall 2019

Knowledge Management and Employee Performance in Banking Sector

Submitted by: Explorer

Raufun Yasir Md. Mustak Ahmed
ID: 71620057 ID: 71825011
Shabrina Sultana Nadia Delwar Dulal
ID: 71825023 ID: 71826039
Rezuanul Islam Shaikat
ID: 71825049

Date of Submission: December 21, 2019

Table of Contents
Executive Summary ...................................................................................................................ii

1. Introduction ........................................................................................................................ 1

2. Present State of Banking Sector in Bangladesh.................................................................. 2

3. Knowledge Management .................................................................................................... 6

4. Knowledge Management in Banking Sector ...................................................................... 8

4.1. Knowledge Infrastructure Capability .......................................................................... 8

4.2. IT Support / Technology ............................................................................................. 8

4.3. Organizational Culture ................................................................................................ 9

4.4. Organizational Structure ........................................................................................... 10

4.5. Top Management Support ......................................................................................... 10

5. Employee Performance in Banking Sector ....................................................................... 10

5.1. Institutional Commitment& Motivation and Employee Performance ...................... 11

5.2. Employee Relation and Employee Performance ....................................................... 11

5.3. Compensation and Employee Performance .............................................................. 11

5.4. Physical Work Environment and Employee Performance ........................................ 11

5.5. Training & Development and Employee Performance ............................................. 11

5.6. Promotion and Employee Performance..................................................................... 12

5.7. Job Satisfaction and Employee Performance ............................................................ 12

6. Bangladesh Bank Planning Employee Performance in Banking Sector .......................... 12

6.1. Performance Planning for the Job ............................................................................. 12

6.2. Performance ERB (Event, Behavior & Result) ......................................................... 13

6.3. HYR (Half-Yearly Review) ...................................................................................... 13

6.4. APF (Annual Appraisal Form) .................................................................................. 13

6.5. ACR (Annual Confidential report) ............................................................................ 13

7. Conclusion ........................................................................................................................ 14

References ................................................................................................................................ 16

Page i of 19
 Executive Summary
Due to increase in the branch network the competition has increased. Now having competitive
workforce is vital for the success. This topic is very important in all types of organizations
especially in developing countries. Knowledge Management is the process that deals with
obtaining, processing, storing, disseminating and applying of information and knowledge
within an organization to support and enhance its business performance and employee
satisfaction. Financial institutions are realizing knowledge as a crucial resource in organization
and should be managed judiciously. Despite the claims for positive relation between
Knowledge Management process and employee satisfaction in banking sector. Therefore, the
main objective of this study was to measure the effect of knowledge management practices on
employee satisfaction of banking sector in Bangladesh. This study provides empirical evidence
of the relationship between Knowledge Management and financial and market performance in
Bangladesh financial sector and helps organizations understand different dimensions of
knowledge management. The current study provides valuable information to the planners,
policy makers and practitioner of banking and financial sector for accelerating performance
level by adopting knowledge management practices. It also provides evidence of the
importance of effective knowledge management; hence, managers and practitioners should
consider programs to accelerate the three components knowledge management practices, i.e.,
knowledge obtaining, knowledge organizing and knowledge applying since a firm that does it
effectively would be more competitive and successful. In conclusion, this study shows that
knowledge management as a practice and behavior could be the most influential strategy in
banking and financial sector of Bangladesh in near future. Further studies may focus on other
sectors, e.g. tourism, education, manufacturing and so on in different geographical, cultural
and economic settings. Therefore, given the importance of knowledge-based societies, we
expect that a stream of research will emerge which will provide further confirmation of the
results obtained in this study and identify other antecedents and consequences of effective
Knowledge Management in every sector of Bangladeshi organizations. Finally, the relationship
between degrees of Knowledge Management implementation and corresponding increment in
employee satisfaction and overall performance of an organization could be discovered by
future researchers.

Page ii of 19
 1. Introduction
With the flow of time, knowledge has become the most prioritized economic resource. It is
considered as the dominant and perhaps even the only source of economic advantage. In
contemporary economics, knowledge includes knowing about people, money, leverage,
learning, flexibility, power and competitive advantage. To sustain a business, knowledge plays
the most important role because it is the must to organize and utilize other factors like, capital,
labor and land. It is more than justified that true believe and essential for action, performance
and adoption, knowledge provides the ability to respond to novel situation. Most organizations
realized that knowledge is a source of competitive advantage and a primary factor in
knowledge- based economy. In other words, it is to deal astutely with knowledge, which has
been stressed. Knowledge transfer should be considered as a transfer of tacit or explicit
knowledge in interaction between individuals. On the other hand, explicit knowledge is
cognitive that can be expressed in formal speech and exchanged in the form of data. Knowledge
transfer linked knowledge to human interaction that is embedded in organizational. Knowledge
transfer enablers include Technology, culture, leadership, and measurement. Knowledge
transfer process involves two actions: transmission of knowledge to potential recipient and
knowledge absorption by that recipient that could eventually lead to changes in behavior or the
development of new knowledge. Four knowledge processes in a centralized Knowledge
Management approach. They are; knowledge generation (knowledge creation and knowledge
acquisition); knowledge codification (storing); knowledge transfer (sharing); and knowledge
application. Presently, Knowledge transfer is considered the nerve of the knowledge
management process within organization. Many organizations begin research about supporting
knowledge transfer rather than controlling it. Many organizations begin their knowledge
management efforts by trying to understand what, where support knowledge transfer and how
support to knowledge transfer. In supporting knowledge transfer behavior in organization, the
management must develop a mechanism which can support the favorable environment for
knowledge transfer.

Banking is an industry that handles cash, credit, and other financial transactions. Banks provide
a safe place to store extra cash and credit. Banks sell their services to earn money, and they
must market and manage those services in a competitive field. They offer savings accounts,
certificates of deposit, and checking accounts. They are financial intermediaries that safeguard,
transfer, exchange, and lend money and like other businesses that must earn a profit to survive.
Bank loans and credit mean families don't have to save up before going to college or buying a

Page 1 of 19
house. The kinds of institutions that exist in the finance industry run the gamut from central
banks to insurance companies and brokerage firms. There are different types of banks:

 Central Banks
 Retail Banks
 Commercial Banks
 Shadow Banks
 Investment Banks
 Cooperative Banks
 Credit Unions

Commercial banks play an important role in the financial system and the economy. They
provide specialized financial services, which reduce the cost of obtaining information about
both savings and borrowing opportunities. These financial services help to make the overall
economy more efficient. There are two functions of Commercial Banks:

Primary functions include accepting deposits, granting loans, advances, cash, credit, and
overdraft and discounting of bills.

Secondary functions include issuing letter of credit, undertaking safe custody of valuables,
providing consumer finance, educational loans, etc.

Association particularly banks are continually under serious challenge because of globalization
and advancement and colossal market pressures. Banking area in Bangladesh is trapped in
caught by high loan cost, overabundance of liquidity and decrease of development of credit to
private segment, intermediating lower venture, combined with poor hazard the executives,
fakeness, driven by caught administration and careless oversight bringing about lower
gainfulness to the investors. Credit and hazard the board status is additionally not acceptable
in the financial part.

2. Present State of Banking Sector in Bangladesh

As a creating economy Bangladesh has urged to build up its Banking industry to advance
monetary development. In the course of the most recent three decades or so the nation has seen
dynamite development of the banking. The banking business in Bangladesh has even gone
above and beyond by advancing money related consideration of the poor in country regions of
which microfinance and microcredit are the strategy instruments to accomplish that target. This

Page 2 of 19
has extended the monetization of the rustic economy, and as an outcome it has become more
market-arranged. Such market direction of the country economy additionally encouraged
constant asset move from provincial zones to urban zones. Presently the greatest risk to
accomplishing supported monetary development has become the financial business itself,
particularly the state-possessed banks. This is regardless of Bangladesh receiving universally
perceived financial practices, for example, Basel III Accord.

The expanded financialization of the Bangladesh economy additionally made a domain where
tremendous riches has been amassed by an area of the rich by cheating banks, specifically state-
claimed banks. It is by and large recommended that the securities exchange tricks in
Bangladesh are destined to be connected to this false budgetary practice with a definitive
objective of procuring control of different recorded organizations by bankrupting little
speculators.

The lawful framework likewise assumes a particular job to empower proprietors of cash-flow
to combine and extend their riches as we have found in the post-GFC (2007-2008 Global
Financial Crises) period in created economies. A capital-accommodating legitimate
predisposition is very clear in showcase arranged economies in both created and creating
economies. Indeed, even the national bank of Bangladesh - Bangladesh Bank, was an objective
of theft in February 2016 where US $101 million were taken from its record with the Federal
Reserve in New York. No unmistakable picture is accessible still now who were engaged with
the heist and where the cash has wound up. The heist has been portrayed as one of the greatest
bank burglaries ever. Apparently this isn't the main time cash has been taken from Bangladesh
Bank. A senior authority of the bank was sentenced in February this year for taking cash from
the bank.

However, what is astonishing that it took just about 21 years to determine the case.
Bangladesh's financial framework is presently looked with a moderate movement banking
emergency primarily at the administration run banks alongside some private area banks. The
Finance Minister himself a month ago said the present banking and non-banking money related
areas are in the most helpless position. The circumstance is definitely not showing signs of
improvement to a great extent because of extremely quick credit development and state
coordinated loaning and advance rebuilding. This raises the danger of a credit crunch. Six state-
claimed business banks represent just about a fourth of all bank resources in the nation. The

Page 3 of 19
administration names their CEOs and board individuals and regularly impacts them to exercises
with lamentable impacts.

The state seems to need to have malleable banks who will tune in to their diktats to loan to such
regions as foundation ventures and to purchase government bonds. Be that as it may,
unquestionably progressively detestable is the plot among business and political first class in
impacting state-possessed banks' advance distributions in support of them and these are the
ones well on the way to get defaulted. The outcome is an enormous measure of nonperforming
advance (NPL) presently evaluated to be in overabundance of Tk 1.0 trillion (US$ 12 billion)
(FE, 18/2/19). Furthermore, half of it is owed to six state-claimed banks requiring ceaseless
recapitalization of these manages an account with citizens' cash. The rest are owed to private
and remote possessed banks. The portion of NPL now remains at near 11 percent of the all-out
advance portfolio. When rebuilt and rescheduled advances are incorporated, the portion of NPL
goes up to around 20 percent.

The term NPL can be a challenged term with regards to Bangladesh as in credits are not
performing in the organizations advances were dispensed for, hence business undertakings
defaulted or near default. In fact, a credit turns into a NPL subsequent to being in default for
90 days. Be that as it may, in Bangladesh credit got for a specific business action can be diverted
into some different business movement and performing very well there or into Benaim
properties, more regrettable even cash may have left the nation out and out and put resources
into properties abroad or in a seaward financial balance. All things considered, on the off
chance that one takes cash from banks, specifically from state-claimed banks, the individual
doesn't need lose his/her not well gotten cash to another person's trick or seizure by the state.

Along these lines, a progressively precise term the situation being what it is "obligation
default''. An obligation default shows that a bank experiences issues in gathering premium and
head installments and that may prompt benefit crush, or even the conclusion of the bank.

To comprehend the outcomes of obligation defaults one needs to plainly see how business
banks work. A bank doesn't loan cash, yet makes cash when it progresses credits. The bank has
changed over one resource (money) into another benefit (the guarantee of reimbursement). In
any case, the advance presently has included an extra measure of cash. Also, that is the means
by which banks make cash. At the point when banks make cash through loaning, they just
depend on borrower's capacity to reimburse the advance with premium when it is expected. Be
that as it may, banks' capacity to make cash is compelled by capital. Interestingly, a Central

Page 4 of 19
Bank's capacity to make cash is compelled by readiness of the legislature to back it and the
capacity of the administration to impose the populace. Be that as it may, by and by most
national banks make cash utilizing their benefits. They make new cash when they purchase
new resources in open market activity or QE and when they loan to banks.

Banks likewise make cash when they purchase resources whether genuine or monetary. Joseph
Schumpeter in his book History of Economic Analysis around 60 years prior said "it
demonstrated remarkably hard for financial experts to perceive that bank credits and bank
ventures do make stores'' for example make cash. At the point when a credit is stretched out to
a client, the bank just opens a record for the client with the concurred advance sum in the
record. The client signs a legitimately enforceable agreement to reimburse the advance with
enthusiasm inside a stipulated time allotment. This comprises a future pay stream for the bank.
Presently it is perfectly clear that no cash has been removed from some other record or records.
The bank itself doesn't have any cash, yet opening the advance record, it currently has made
cash. In the event that the borrower defaults, it turns into a terrible obligation, if awful
obligation keep on raising the bank will become bankrupt and close its entryways or must get
bailout from the administration. At the point when such a circumstance stretches out to the
entire financial industry in the nation, a credit crunch follows bringing about ascents in loan
costs (loan fees in Bangladesh currently change between 13-15 percent) prompting a downturn
in the economy. There is a colloquialism that on the off chance that one owes one million
dollars to the bank the individual has difficult issue, however in the event that he/she owes 100
million dollars to the bank, at that point the bank has a significant issue, and on the off chance
that the individual owes 1000 million dollars to the bank, at that point the entire nation has a
major issue close by.

As indicated by Bangladesh Bank, by the center of 2018 seven state-claimed and three private
division banks were running capital shortages, that required state-financed recapitalization or
bailouts of these banks to keep up open trust in the financial framework. Be that as it may, such
bailouts will make moral danger issue and prone to urge banks to proceed with such conduct.
State likewise should abstain from guiding loaning to certain particular segments or purposes
and such exercises can more readily be attempted through budgetary arrangements. The current
administrative capital prerequisites to guarantee banks remain monetarily feasible have not
yielded the ideal outcomes as reflected in numerous banks encountering capital deficiency.
That brings up the issue whether those necessities are fit for the reason. In the event that that is
the situation they should be returned to. The banking administrative system in Bangladesh

Page 5 of 19
likewise simultaneously should concentrate on relieving the danger of unfortunate behavior
and must evaluate the way of life drivers of offense. Concerning the banks themselves, they
should set up successful credit chance administration to guarantee advances are coordinated
with capacity to compensate and utilized for the reason these were expected for and must
prevent any insider loaning and alleviate any data irregularity.

3. Knowledge Management
Knowledge Management (KM) is not simply about recording and manipulating explicit
knowledge, but needs to address that, which is implicit, and from which benefit can therefore
be derived only through process rather than content. KM is primarily a business concept that
can bring increased profitability for commercial organizations. In addition, KM is the
identification of “capabilities” or “resources” that allow firms to recognize, create, transform,
and distribute knowledge within the organization. The most common definition for KM as:

“Knowledge Management can be defined as an integrated approach to identifying, capturing,

retrieving, sharing, and evaluating an enterprise’s information resources. These information
resources include databases, documents, policies and procedures, as well as the un-captured
tacit expertise and experience stored in individual employee’s heads”. Moreover, Knowledge
Management can be seen as a strategic attempt to capture information and experience of
employees and customers and store them in the database, and later disseminate this knowledge
to gain more benefit and competitive advantage. However, organizations are acquiring skills
and capability in handling internal knowledge and also applying it towards the achievement of
the organizational goals; they are looking towards new sources of knowledge that are not
necessarily found within the boundaries of the firm”. Knowledge Management and its
application are considered an imperative for achieving business success. Knowledge
Management is a set of procedures and managerial tools developed to capture, acquire,
organize and communicate both tacit and explicit knowledge of employees so that other
employees can utilize them to make their work more effective and productive and maximize
organization knowledge. Knowledge Management in business organizations need to manage
the activities of knowledge workers or the transformation and interaction of organizational
static and dynamic knowledge for products, services, and practical process innovation and, at
the same time, creating new or justifying existing organizational systematic knowledge. The
purpose of Knowledge Management is to create a common space for individuals to interact for
exchanging and creating knowledge.

Page 6 of 19
Knowledge Management applications help organizations to improve their performance and
competitiveness. Developing and maintaining Knowledge Management is vital to firm long-
term survival and success. Knowledge Management can gradually transform individual
knowledge into group and organizational knowledge, in turn, improving the stock and flow of
firm knowledge. Consequently, firms invest in Knowledge Management particularly to
accumulate business management experience and develop a sustainable competitive advantage.

Knowledge management (KM) initiatives that create business value are a major focus for many
organizations. While academics often couch Knowledge Management success in terms of
process outcomes, some argue that the organizational outcomes perspective of KM success
held by many practitioners is clearer, where Knowledge Management success is tied to its
impact on organizational performance. The success or failure of Knowledge Management
depends on how effectively an organization’s members share and use their knowledge. Thus
management of knowledge is at the core of organization’s business growth. In the light of this
reflection this special issue pays attention to two main perspectives. First, recognizing that
knowledge, likewise any other organization’s resource, needs management means to support
its allocation and development, the frameworks and tools aiming to identify, manage and assess
the critical knowledge resources for growth are focused on. Second, acknowledging that the
translation of knowledge into business outcomes requires management mechanisms, and then
considering the knowledge processes grounding the improvement of performance.

Cadre et al. mentioned that successful identification of trends requires continuous

implementation of market research as well as investment in research and development – for
this will nurture the generation of a sustained stream of competitive and innovative products
and services that in turn foster growth and profit. In the current macro-environment, it is
imperative that banks be able to transform research-generated data into information which can
then be turned into knowledge. This knowledge can then enable decision makers to engage in
appropriate action. This process is a fundamental principle of Knowledge Management.

This research identified gaps in Knowledge Management implementation and utilization in

three banks in the Bangladesh. It also sought to ascertain if there exist differences in KM
implementation and utilization between Islamic and conventional banks and, if so, what these
may be.

Page 7 of 19
 4. Knowledge Management in Banking Sector
Today’s banking system are overwhelming in greater risks arising from the global economy
recession. These banks are struggling to emerge from the economic recession and depression
by capturing and retaining much more loyal and stable customers in the financial stage. The
banking and financial sectors are fundamental drivers of innovation. Knowledge intensive
organizations like these are increasingly implementing KMS to drive forward their strategies
and improve performance. The benefits are significant related to different encouragements in
performance such as better decision making, improving the customer relationship management,
create new value through new services (innovations) and creating additional businesses.
Delivering unique products/services to customers helps to improve customer satisfaction and
sales volume, and so firms have observed the influence of knowledge development over
performance. KM implementation has provided various interrelated benefits to the banks,
rendering to utilize its resources efficiently and effectively. The result shown that effective
implementation of knowledge management application provides interrelated and multifaceted
benefits such as knowledge activities performance, process performance, employee
performance, market performance, and organizational performance that converted to
organizational performance by affecting each other directly and indirectly in banks. Banks
today, however, face many challenges which include large scale competition for customer’s
deposits, loans, increasing customer demands, shuddering profit limits, and the need to keep
up with the new financial technologies that will ease banking operations.

4.1. Knowledge Infrastructure Capability

Supportive and effective knowledge infrastructure is precursor of KM initiatives. Generally,
infrastructure management provides the infrastructural environment either depends on IT or
non-IT that supports knowledge creation and sharing capabilities. KM infrastructure can be
defined as technical, structural, and cultural factors that enable the maximization of social
capital for KM. In addition, Lee at al. suggested that KM infrastructure is composed of four
groups of KM enablers: culture, structure, management and technology.

4.2. IT Support / Technology

Technology, especially so-called information technology (IT) that enable the integration of
information and knowledge in the organization as well as the creation, transfer, storage and
safekeeping of the firm’s knowledge resource. Gold et al, stated that ‘‘Technology comprises
a crucial element of the structural dimension needed to mobilize social capital for the creation

Page 8 of 19
of new knowledge’’. IT plays a pivotal role in the knowledge transferring processes by which
organizational members are encouraging to use and apply knowledge and to take action
beneficially and productively that can build the whole point of KM. IT is not alone linked to
KM infrastructure but when combined with other knowledge resources such as knowledge
acquisition and knowledge application processes, which may will enhance organizational
performance.

IT affects the KM process in two significant ways. First, the database and data warehousing
technology enable rapid collection, storage, and exchange of knowledge on a large scale.
Various types of knowledge can be stored and accessed, including images, audio, and video,
thereby assisting the knowledge sharing process. Second, groupware and workflow technology
facilitate the integration of fragmented flows of knowledge.

Thus, IT supports KM processes such as knowledge creation, collaboration, communication,

searching, access, and systematic storage. IT contributes to the improvement of organizational
learning and performance by facilitating KM processes. ‘‘Best practices’’ embedded in IT can
support learning in order to perform work processes effectively. IT based KM processes allow
increases in the breadth and depth in knowledge creation, storage, transfer, and utilization.
Therefore, the broader the scope of the IT infrastructure is, the stronger the capability of KM
processes is. Thus, this leads to the hypothesis:

IT support positively affects knowledge process capabilities

4.3. Organizational Culture

A knowledge-friendly culture is regarded as one of the most important factors impacting KM
and the outcomes from its use. Organizational culture in KM plays a pivotal role in knowledge
creation because it effects how members learn, acquire, and share knowledge. Organizational
cultures represent the character of an organization, which directs its employees’ day to- day
working relationships and guides them on how to behave and communicate within the
organization, as well as guiding how the company hierarchy is built. Thus, an emphasis on
individual learning leads to an increased expectation of knowledge creation in organizations.
Therefore, organizations should focus on both individual learning and group learning in order
to increase organizational performance through learning. Creative organizational learning
depends on the ability of organizational members to make existing knowledge invalid and
adjust the understanding of new environments through acquiring new knowledge. Hence, the
following hypothesis can be proposed:

Page 9 of 19
Culture positively affects knowledge process capabilities

4.4. Organizational Structure

Organizational structure comprises the organizational hierarchy, rules and regulations, and
reporting relationships and is considered a means of co-ordination and control whereby
organizational actors can be directed towards organizational effectiveness. Changes in an
organization’s structure, such as moving from hierarchical to flatter networked forms, are
essential for the effective transfer and creation of knowledge in the organization. Sharing and
collaborating across boundaries within the organization and across the supply chain can be
facilitated if the organizational structures are designed for flexibility. Thus, the more
decentralized the organization structure is, the greater the possible knowledge creation and
utilization is. Thus, the following hypothesis can be suggested:

Organization structure positively affects knowledge process capabilities

4.5. Top Management Support

Top management support is considered a prerequisite for successful implementation of KM.
Top management support means the degree to which support provided from top to encourage
employees to share their knowledge. Knowledge transfer among levels may be troubled when
top management fails to communicate the importance of KM to their employees. Thus, top
management should undertake an active and compensating role to stimulate knowledge
creation and transfer.

The following hypothesis is proposed:

Top management support positively affects knowledge process capabilities

5. Employee Performance in Banking Sector

In the first growing banking sector in Bangladesh, there are 62 scheduled banks in Bangladesh
offered financial services with different stratagem and always looking for faster growth through
employee performance by all means. Performance assessment is highly important while
achieving the goals of the organization and determining the individual contributions to the
organization. The project of provide a clear guidance to the banking practitioners makers to
take further steps in achieving the organizational goal through the employee performance.

Page 10 of 19
Employee performance is a core interest for any bank as it reflects the bank productivity by
reflecting the employees ability to attain the goals as planned. Employee performance in
banking sector terms of effort extended to the job by an employee.

5.1. Institutional Commitment& Motivation and Employee Performance

Banking commitments a feeling of dedication to one’s employing of bank. Employee
motivation is defined as an inner force that moves employees to improve performance to
achieve personal and banking sector goals. In the banking industry, there is relationship
between employee motivation and employee performance. A Bank manager is more interested
in making provision for the motivation and empowerment of their employees to perform toward
the achievement to tasks. Banking industries that employee performance of any sort is a major
function of incentive obtain from the organization and there by improve and increase
productivity.

5.2. Employee Relation and Employee Performance

Employee relation is all about communications between management and employees
concerning work place decisions, grievances, conflicts, problem solutions, unions, and issues
of collective bargaining. Bad employee-employer relationship results in strike actions and
lockouts.

5.3. Compensation and Employee Performance

Employee compensation as all forms of pay or rewards going to employees and arising from
their employment. Good compensation and benefit package can motivate employees.
Motivated employees can make the bank more profitable. Bank employees are heavily
prioritizing salary more than something else. Other rewards and benefits attached to the salary
can also result in greater change in job performance.

5.4. Physical Work Environment and Employee Performance

One of the fundamental human requirements is a physical working environment that allows
people to perform their work optimally under comfortable conditions. Today’s working
environment differ from the past; it is due to the advancement of technology and the variety of
roles played by the banking employees. Working environment also impacts on job satisfaction.

5.5. Training & Development and Employee Performance

Training and development is defined as any effort to improve current of future employees,
skills, abilities, and knowledge. Training is intended to modify individuals, skills or attitude.

Page 11 of 19
Thus, basic purpose of training is to help employees build their skills which will increase their
performance and ultimately it will lead towards greater organizational productivity. As a result
Training & Development has significant effect on employee performance in banking industry
of Bangladesh.

5.6. Promotion and Employee Performance

Promotion system of the nationalized commercial banks and also examined views of the
respondent employees in this regard. The promotion system could not reasonably satisfy a large
number of employees and officers working in the nationalized commercial banks. Promotion
policies and practices in the public and privet sector banking in Bangladesh.

5.7. Job Satisfaction and Employee Performance

Job a positive emotional state resulting from the pleasure a worker derives from the job. The
job satisfaction has significant influence on employee performance, in the public and private
sector bank employees in Bangladesh. Job Satisfaction has significant effect on employee
performance in banking industry of Bangladesh.

6. Bangladesh Bank Planning Employee Performance in Banking

Sector
The main function of this measure the performance of employees. Employees are the main
resources in the modern time. Qualified applicant is more powerful than unqualified applicant
employees. So performance measured of employees is the necessary policy to make employees
as an important element, but this policy is new in HR department of Bangladesh Bank. At
present Bangladesh Bank follows PMS (performance Management System) which is included
by some Phases and they are:

 Performance planning for the job

 Performance ERB (Event, Behavior and Result)
 HYR (Half Yearly Review)
 APF (Annual Appraisal Form)
 ACR (Annual Confidential report)

6.1. Performance Planning for the Job

At first Deputy General Manager Set up the goal to give the strategy of the Bangladesh Bank
which is supplied to the department and then that department takes the step to set up the goal

Page 12 of 19
how to achieve the goal according to the division goal. Time should be fixed by the HOD. To
measure the performance of the employee, there is a systematic rating system after setting the
goal to evaluate the employee’s performance.

6.2. Performance ERB (Event, Behavior & Result)

Any Employee can show any positive attitude to fulfill his objective but if there are any
negative attitude which indicate his negative performance, this attitude would be shown in the
EBR form to evaluate his performance and then department will take step to give them
coaching, counseling, training and so on to improve their quality.

6.3. HYR (Half-Yearly Review)

HYF would be done in the middle of the year to evaluate his or her working completion
schedule. If any employee shows any negligence while completing his duty then tanning or
threat is to be complete the work within the remaining time.

6.4. APF (Annual Appraisal Form)

In this process performance is to be calculated annually i.e. at the end of the year. ACR (Annual
Confidential Report) would also include in this form.

6.5. ACR (Annual Confidential report)

Annual confidential reports of the bank servants are written with a view to adjudge their
performance every year in the areas of their work, conduct, character and capabilities. The
system of writing confidential reports has two main objectives. First and foremost is to improve
performance of the subordinates in their present job. The second is to assess their potentialities
and to prepare them for the jobs suitable to their personality. Confidential reports are of
immense importance in the career of a bank servant, efficiency of service, for the work,
conduct, character and capabilities of the officer reported upon can be accurately judged from
the recorded opinion.

In this method Bangladesh Bank gives the promotion to the employees in their rating
performance. After receiving the APF form for the final measurement, an arbitration
moderation committee is to be made by the HOD to make the system more logical through
biased information. In between the department if there are any linkage, then upper level
authority makes a committee EMT (Executive management team) to reduce such linkage and
then the department achieves the actual rating which they desire.

Page 13 of 19
 7. Conclusion
Effective knowledge management may be an important basis of achieving long term
sustainable competitive advantage of banking industry. Knowledge management is a key driver
of organizational performance and a critical tool for organizational survival, competitiveness
and profitability. This assignment on the practice of knowledge management on employee job
performance has traced out positive causal relationship with knowledge management process
variables which includes knowledge creation and acquisition, knowledge filtering, knowledge
exchange and knowledge development. Thus, managing knowledge gain incredible importance
in banking industry to promoted organizational survival and gaining and sustaining competitive
edge. There is a positive relationship of knowledge management and employee job
performance. Knowledge management support encouragement in bank employee’s job
performance also cooperative role in employee’s culture as the fundamental for the success of
knowledge management initiatives in a bank.

Various theories of knowledge management has been proposed and embraced in attempt to
achieve excellence in organizations. In this report, we use main three important elements
for impact of knowledge management.

 Knowledge management in banking sector

 Employee performance in banking sector
 Employee Performance in banking sector

Knowledge Management influences ability, clarity, help, validity, incentive, and evaluation
first and foremost. The impact of Knowledge Management on human resources practices
recommended that organizations put stress on succession culture and staff empowerment
through holding seminars, conferences, taking staff to business-oriented, mentoring, and
management games. Knowledge directs effect on performance. IT is negative effect on
Knowledge Management but some effects happen. Knowledge Management is essentials and
their impact to the employee performance. In spite of the privileges for a relation among
Knowledge Management and performance, rare researchers have truly verified the survivals,
as well as the wildlife of this relation. In this paper, an encouraging impact of Knowledge
Management on employee performance is observed and verified. This termination can be
useful as a beginning step for leaders who are to apply the Knowledge Management through
their employee. Future gap looks to be a lack of studies concentrating resolutely on
estimation of knowledge management and information technology. Deliberating that both

Page 14 of 19
origins can be dynamic to the achievement of KM initiative and modern IT implementation,
exploration on these origins is mandatory. Moreover, there is a gap between the Micro level
valuation findings (Employees level) and Macro level valuation findings (Corporation level).
Combination from employee’s performance level appraisal and subsequently organization
Knowledge Management assessment could deliver a valuable opportunity for future research.

Page 15 of 19
References
 Mousavizadeh M, Ryan S, Harden G, Windsor J(2015) Knowledge management and the
creation of business value. Journal of Computer Information Systems 55: 35-45.
 Cadre Y, O'Neill KK, Blooshi AA, Al ShouqAAB,Fadaaq BHM, Ali FG (2013)
Knowledge management in Islamic and conventional banks in the United Arab Emirates.
Management Research Review 36: 388-399.
 Grant RM (1996) towards a knowledge-based theory of the firm. Strategic Management
Journal 17: 109-122.
 Spender JC (1998) Pluralist epistemology and the knowledge-based theory of the firm.
Organization 5: 233-256.
 Gao F, Li M, Clarke S (2008) Knowledge, management, and knowledge management in
business operations. Journal of Knowledge Management12: 3-17.
 Bogner WC, Bansal P (2007) Knowledge Management as the Basis of Sustained High
Performance. Journal of Management Studies44:165-188.
 Laraa F, MarquesbDP, Deveceb CA (2012) How to improve organizational results through
knowledge management in knowledge-intensive business services. The Service Industries
Journal 32: 1853-1863.
 Zack M, McKean J, Singh S (2009) Knowledge management and organizational
performance: an exploratory analysis. Journal of Knowledge Management 13: 392-409.
 Schiuma G (2012) Managing knowledge for business performance improvement. Journal
of Knowledge Management 16: 515-522.
 Drucker P (1993) Post-Capitalist Society. Harper Collins, New York, NY.
 King J (1993) Editorial notes. Information Systems Research 4: 291-298.
 Gallup SD, Dattero R, Hicks RC (2002) Knowledge management systems: An Architecture
for active and passive knowledge. Information Resource Management Journal 15: 22-27.

Page 16 of 19