Research On EVA Management And Performance Appraisal Of Commercial Banks

Performance appraisal, as a vital component of performance management, is the method, prerequisite and guideline of human resource management. It must be based on the current major task and the future strategy goal of the bank. Currently, the area of company management of the commercial bank is being transformed into the value management, in other words, creating more value for the dormantpartners. Accordingly, in term of the performance appraisal, the commercial bank is taking on more indicators that measure the value of the dormantpartners. As the indicator that reflect the dormantpartner value or the improvement of economic capical, the Economic Value Added (EVA) is drawing increasing attention from the commercial bank. Due to the good consideration of financial costs, risk costs and capital costs by the EVA indicator, it is a comprehensive indicator capable of reflecting the managing performance of the branches of the commercial bank, as a result, guiding them to reach the goal of maximizing the performance. Consequently, some commercial banks further emphasize the ranking of individual indicator of EVA, including EVA ranking, managing performance and the ranking of comprehensive business development, when setting the target indicators for the appraisal, so that they can stimulate the value creation. In light of this indicator, the branches of commercial bank are promoted to pay more attention on saving the financial costs, controlling the risk costs and reducing the economic costs.However, in view of the application stage of national commercial bank, EVA is currently just limited the scope of simple appraisal indicators, resulting in the limited function of it. The key component of value management should be achieved via EVA management. Under the effect of the EVA managing philosophy that the outcome should be emphasized, the present performance appraisal method, including the simple EVA appraisal indicator, can not fully meet the requirement of the management and appraisal. This study, hence, based on the theory of EVA and performance appraisal, analyzed the establishment of performance appraisal indicators under the EVA managing philosophy.This study comprises 5 chapters. The first chapter involves the backgrounds, aim, relevant content, method, the creation and deficiency of this study. In chapter 2, the review of EVA and performance appraisal theory illustrated the relevant achievements in EVA and performance appraisal theory. The third chapter, study on the EVA mechanism concentrated on the relationship between the economic costs of national commercial banks and EVA, the current application status and relevant problems. In chapter 4, the designing of appraisal indicators under the EVA managing mode, involved the investigation of setup of performance appraisal indicators under the EVA managing mode, on the basis of the limitation of current appraisal tool for the commercial banks. In chapter 5, some relevant examples from the author's company were analyzed.In this study, in term of the complexity of the performance appraisal indicators, combining with EVA, a more comprehensive method, Balanced Score card, was applied. In the newly established EVA- BSC performance appraisal indicator, the capital costs were divided into four factors, the finance, the customer, the internal managing process and study and development, therefore, the performance appraisal of each organizing department and each post was localized into individual place. Beneficially, an effective pathway to decompose the strategy goals of the commercial banks was built and the managers were capable of adjusting and controlling the managing goals of different stages though these four pathways.