THE IMPACT OF PERFORMANCE APPRAISAL ON EMPLOYEES' PRODUCTIVITY

1.1 Introduction

The meaning of Performance appraisal is seen to be the assessment made on a job of a worker’s production in a specified duration. As workers who happen to work in various units will affirm, there is no same appraisal performance that will exist in a firm. The many different structures and ways are attainable in many establishments. Performance appraisal is seen as a mechanism that stands in administering a place of work and a worker there in such way that an individual and/or group can attain the outlined institutional objectives (Fletche, 2001; Esu et al., 2009). It is seen also as a way performance and productivity of individual employees is assessed so as to determine his or her contribution to the development of the organization for the attainment of their main objectives (Eldman et al., 2009).

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.

1.2 Background of Study

Performance appraisal is a discussion and review of employees’ performance of given tasks and responsibilities globally. It is centred on results gotten by the employee in his/her job, not on the personality characteristics of the employee. Performance appraisal is an essential instrument for human resource management. It is a means for performance evaluation and also achieving performance enhancement among employees of an organization. As a management activity which increases the chances of achieving organizational goals, performance appraisal makes it compulsory for employees of an organization to know what is expected of them, and the indicators in which the overall productivity will be measured in order to make certain of staff progress, goal accomplishment, and organizational growth.

Performance appraisal is a regular or systematic evaluation of the performance of an employee on his current job and also in relation to future jobs that he/she may be required to take up (Hartzell, 2006). It evaluates and measures the results of the performance of employees indicating their deficiencies and potentialities so that they can improve overtime. A decent appraisal system is very important to the supervision of employees in an organization. The success of the organization depends mainly on a decent appraisal system. When there’s good appraisal system, those employees who contribute more will be effectively rewarded and they are likely to be promoted into positions of greater responsibilities (Stonner, Freeman & Gilbert, 2005).

The purpose for performance appraisal is to help enhance productivity in organizations. It will help measure the productivity of organizational members and it is quite paramount and sensitive in managing human resources, the reason is that the outcome of the output of workers helps in making the organization succeed. It is important to indicate here that some authorities use this to downsize or under-score the efforts of workers who are not their favorites. Thus, a proven performance appraisal process joints the work place and the workers together and show the workforce what they are expected to do, and where they may function appropriately in the organization. It is used together with the productivity of an employee to identify a worker’s chance for upgrading, improvement and ranking into other high ranks of offices.

Since majority of employees will like to infer the leaders’ thoughts of their output places performance assessment in a contested spot. People who work in organizations with few workers and who usually interacts between their managers and themselves, generally know what the authorities expect from them. But, in big organization, the magnitude of interaction is almost nonexistent that many workers may lack the ability to predict actually what their leaders „perspective about them might be and the outcome of their output assessment will likely result in Donli (2008).

Therefore, in Lagos State where the research was carried out, the activities that was conducted is to know the impact of performance appraisal on employees’ productivity.

1.3 Statement of Problems

Investigation revealed that low productivity is usually the negative effect of lack of performance appraisal, absence of performance appraisal brings about staff low job performance. Labour union always get into the matters of employees well being at work and also in their personal lives so that they can give their full at work. But some time it has a negative impact on performance appraisal and the management to give promotion or rise in the salary on the bases of seniority.

The basic aim of every business organization is to achieve its objectives, goals or targets successfully. Goals set by organization will only be in vain if much attention is not paid to employees’ effort or performance for successful accomplishment. In other to achieve set goals and objectives successfully, there is the need to focus on performance appraisal. Performance Appraisal should be linked to attractive incentive to employees, enabling workers to demonstrate higher productivity.

Most organizations in the competitive market fail since their workers perform below standard for they are not encouraged to work harder. Managers and employees are the life blood of every business organization. If management does not invest much into the welfare of their workers, problems are bound to rise leading to industrial strike actions, low commitment to work, low morale and low productivity of goods and services.

Attractive appraisal systems are established by some business organizations to help motivate their employees to strike hard to be recognized and rewarded. Once employees are motivated, their performance reflects on productivity. Employees strive hard by pooling together skills, knowledge and efforts to achieve maximum output. Hence the essence of this paper is to find out the part played by performance appraisal.

1.4 Aim and Objectives of Study

The aim of the study is to scrutinize the impact of performance appraisal on employees’ productivity using First Bank PLC as a case study. In achieving this aim, the following specific objectives were laid out as follows:

1. To examine the relationship between performance appraisal and employees’ productivity
2. To help managers review past performance and improve current performance.
3. To provide employees with necessary information pertaining to recognition of their work.
4. To know if performance appraise enhances productivity.
5. To examine the ways in which performance appraisal has impacted employees performance

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Does performance appraisal have positive impact on employees’ performance?
• How often are employees appraised at the work place?
• Is performance appraisal an ongoing process in the company?
• Is feedback information received after performance appraisal?
• Is performance appraisal helpful in identifying strengths and weaknesses?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: Effective performance appraisal does not influence employee performance.
• H1: Effective performance appraisal influences employee performance.

Hypothesis Two

• H0: There is no significant relationship between performance appraisal and job outcomes.
• H1: There is a significant relationship between performance appraisal and job outcomes.

1.7 Significance of Study

The findings of the study will not only be beneficial to the personnel of the chosen organization for the study, which is First Bank Plc, Lagos State, but also to every individual. It will also;

1. Help managers in other organizations in setting goals and targets for employees to achieve through proper supervisory control by line managers.
2. Aid in identifying and improving the training and development needs of workers.
3. Assist in motivating employees who contribute effectively to the attainment of organizational goals and objectives.

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

1.8 Scope of Study

The scope of the research is focused on the impact of performance appraisal on workers performance and in turn leading to organizational performance and productivity, using First Bank Plc, Ikeja Branch, Lagos State. This therefore means that the study area in which data were obtained is First Bank Plc, Lagos State.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. Research material: availability of research material is a major setback to the scope of the study.
4. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
5. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.10 Definition of Terms

Appraisal: A formal assessment, typically in an interview, of the performance of an employee over a particular period.

Human Recourses: These are human beings used in the production process. They could still be called employees or provider of labour.

Compensation: This is the reward or payment gain to the provider of labour. A labourer disserves his wages. Compensation could also be retired to as remuneration.

Separation: This is a process whereby an employee is returned to the wider society from where he was taken from, probably as a result of old age, non-performance or misconduct

Job evaluation: This is the systematic method of appraising the work of each job in relation to other jobs in the organization.

Effectiveness: Effectiveness is the capability of producing a desired result. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression.

Efficiency: A level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of outputs. Efficiency relates to the use of all inputs in producing any given output, including personal time and energy.

Exploitation: The process of being able to use a company’s natural resources such as adverts, covering of event, publicity of event for the attainment of profit maximization.

Management: Is the effectiveness and optimum used of human and material resources to achieve a goal.

Responsibility: Is a person who is reliable and able to carryout various duties imposed on him/her by the establishment.

Evaluation: Evaluation is a systematic determination of a subject’s merit, worth and significance, using criteria governed by a set of standards.

1.11 Historical Background of First Bank PLC

First Bank of Nigeria, sometimes referred to asFirst Bank, is a Nigerian bank and financial services company. It is the country’s largest bank by assets As of June 2013, the bank had assets totaling approximately US$21.3 billion (NGN:3.336 trillion). The bank’s profit before tax, for the twelve months ending 31 December 2012 was approximately US$542.5 million (NGN:86.2 billion). At that time, the bank maintained a customer base in excess of 8.5 million individuals and businesses. First Bank of Nigeria has solid short and long term ratings from Fitch, the Global Credit Rating Company, partly due to its low exposure to non-performing loans. The bank has strong compliance with financial laws and maintains a strong rating from the Economic and Financial Crimes Commission of Nigeria.