ABSTRACT
This study is an empirical analysis of impact of performance appraisal on the employee productivity, using United Bank for Africa as a case study. Relationship between appraisal and employee productivity is very important, and inadequate attention to this often lead to misappropriation of reward which can adversely affect organizational growth and competitiveness. Some organizations have gone into extinction because they fail to find an apt way to measure the performance of their employees. The main objective was to see how performance appraisal can enhance productivity of the staff of the bank. The bank has numerous branches in Kaduna and Zaria which provides a reasonable number for sample. Overall, 60 staff of the bank was served with questionnaire. The study adopted chi-square technique, using data primarily sourced from questionnaires that were served to the staff. In testing the research hypothesis, it was revealed in the findings that performance appraisal has impact on employee productivity. It is however; recommended that there should be reduction in the gap between time of appraisal and reward, removal of ambiguous key performance indicators and redeployment of staff based on the outcome the appraisal.
CHAPTER ONE
INTRODUCTION
- Background to the study
Globally, management is more concerned with the effective utilization and coordination (leveraging) of resources and activities to achieve defined objectives with maximum efficiency. To that end, there is a focus of getting things done with the aid of people and other resources (technological, financial, material, intellectual or intangible). At a simple level, we might see management as the leveraging internal resources in order to attain organizational goals.
The term factors of production relates to the key factors(resources) which contribute towards making goods and delivering services- the resources organization use to create what customers want. Common factors identified so far include: land, labour, capital and enterprise. For example, a company has sites (production, warehousing etc) based on physical land; employs skilled production, sales and marketing labour, purchase raw materials (ingredients and make use of labour and machinery to create its product. The shareholders and directors of such companies take the risk of bringing the operation together, and employ directors and managers to ensure the success of the enterprise.
Wernerfelt (1984) explored the usefulness of analyzing organizations from the resource (input and transformational process) side rather than from the product (output) side. For the organization, resources and products are ‘two sides of the same coin’. Most products require the services of several resources and most resources can be used in several products. Looking at organization in terms of their resources has a long tradition in Economics; however, analysis is typically confined to categories such as labour, capital, and capital.
The traditional production theory has undergone transformation over the years. One of them is measuring the contribution of factors of production. This led to the emergence of concepts like marginal productivity of labour and capital. To this, emphasis on the actual contribution of each factor of production has been brought to the fore. Productivity is the economic measure of efficiency that summarizes the value of outputs relative to the value of inputs used to create them. The three factors critical to productivity improvements are labour, capital and management. Management are responsible for ensuring labour and capital are used effectively to increase productivity. Operation managers make decisions that are frequently oriented toward efficiency goals. Efficiency is concerned with the relationship between the result achieved and the resources used.
Organizations often find it difficult to compare their business processes with those of competitors or even other organizations with similar process. This activity is known as benchmarking- the process of identifying, understanding, and adapting outstanding practices from within the same organizations or from standing, and adapting outstanding practices from within the same organization or from other business to help improve performance.
Performance management is a process which contributes to the effective management of individuals and teams in order to achieve high levels of organizational performance. In explaining the significance of human resources to organizational performance, the majority of work in strategic human resource management has adopted the ‘resource-based’ view of the firm. According to Katou and Budhwar(2006), organizational performance is usually indicated by the indices such as: effectiveness, efficiency, development, satisfaction, innovation and quality. The ability to gain and retain competitive advantage is crucial to an organization’s growth and prosperity.
The general consensus developed among researchers is that human resource practices and human resource management systems do not lead directly to business performance. Rather they influence firm resources, such as human capital, or employee behaviours, and it is these resources and behaviours that ultimately lead to performance. It has been argued that human resource practices influence company performance by creating a workforce that is skilled, motivated, satisfied, committed and empowered. Others have suggested that the social context and organizational climate represent additional intervening factors.
Influencing human capital is aimed at increasing and improving the productivity of the human capital, and fortunately, in the modern time, productivity has become a measurable variable-performance appraisal. The performance appraisal is the periodic evaluation of an employee’s performance measured against the job’s stated or presumed requirements (Terry and Franklin, 2003). Mullins (1999) substantiates the necessity of an effective appraisal scheme by saying that it can identify an individual’s strengths and weaknesses and indicate how such strengths may best be utilized and weaknesses overcome.
A generation ago, appraisal systems tended to emphasize employee traits, deficiencies and abilities. With the development of the employee/organization relations, modern appraisal philosophy emphasizes on the present performance and future goals. Modern philosophy also stresses on employee participation in mutually set goals with the supervisor. The underlying philosophy behind mutual setting of goals is that people will work harder for goals or objectives that they have participated in setting. The assumption is that people want to satisfy some of their needs through performing work activities that provide them with a supportive environment. They also need to perform meaningful tasks, share the objectives setting, share the rewards of their efforts and continued personal growth (Dechev, 2010). The evaluation job performance has been called by many different names throughout the years – a tool of management, a control process, a critical element in human resource allocation and many others. The first appraisal systems have been just methods for determining whether the salary of the employees in the organizations was fair or not. Later, some empirical studies have shown that reduction or future pay were not the main effects of the process. Performance appraisal was recognized as a tool for motivation and development in the United States in the 1950s (Cardy& Dobbins, 1994).
Many researchers and reputable sources criticize the importance of the performance appraisal process. They have expressed debates about the authenticity of the process. Some of them, such as (Daniels 1999), even called it useless and evil. He couldn’t see how the appraisal improves performance and characterizes it as a step of firing process. He suggests that “the best performance appraisal is one that is done every day”. Another critic, (Derven1990), explains that if the manager or supervisor is unskilled or couldn’t give accurate feedback, then the appraisal process will have only a negative effect. Because of this every organization has to make carefully structured process and have to develop managers to focus activities and efforts and enhance business performance. On the other side, some of the defenders, such as (Lawrie1990), describe the process as “the most crucial aspect of organizational life”.
Most public sector businesses have failed because of ineffective and inefficient performance appraisal system (Esu and Inyang, 2009).
In most of the public sector, the performance of staff of executing agencies or public enterprises is limited to budget monitoring and annual performance evaluation (Idemobi and Onyeizugbe, 2011). However, experts are of the view that there is no link between
performance appraisal and financial data (Pollitt and Bouckaert 2004). These organizations are required to give adequate attention to performance appraisal reviews to enhance productivity. Records also show that only a few organizations in the public sector are
making efforts to embark on a performance appraisal review with the commensurate reward system.
The employee performance appraisal is an important career development tool for the manager and employee. The manager can help guide the employee on the path to corporate advancement, and the employee gets a clearer understanding of what is expected from her in her daily job duties. Performance appraisals have a wide variety of effects on employees that managers must identify and understand.
Appraisals are checkpoints for assessing your contribution to the achievement of organisational goals, reviewing how far you have progressed in your development in the Bank and understanding your strengths and weaknesses with a view to improving on the latter, if any (Ibekwe, 2015). The outcome of performance appraisals will be used for career planning, promotion decisions and rewards. Individual performance ultimately translates to overall organisation performance. Adewale (2015) stressed that Executive management has recently invested a lot of time to review Key Performance Indicators (KPI) across the bank.
All KPIs across the bank have not only been linked to Project Alpha goals but have also tied departments together through inter-related deliverables that can only be achieved by collaboration and team work. There is a need for all staff in the bank to understand and work to achieve the goals of the bank.
The recent KPI review has also removed subjectivity in performance appraisal by introducing specific and measurable targets. As there is a need for everyone in the bank to understand well and work to achieve what is important, various assessments to ensure that the goals and objectives are achieved must be put in place.
Evaluating the relationship between the performance appraisal and productivity of employees is the main focus of this research. The rest of the research will be focused on issues relating to that.
- Statement of the problem
In a competitive industry, there is an emphasis that every business organization placed to achieve its objectives, goals or targets successfully. It is a clear fact that the objectives set by organization will only be in vain if adequate attention is not paid to employees’ effort or performance for successful accomplishment. In this regard, performance appraisal becomes a veritable tool to measure and achieve set goals and objectives successfully,
It has been established in some industries that there are variations between the reward of employee and their input in terms of organizational goal. Closing this gap becomes very important so that it the reward should be commensurate with the input. Performance Appraisal should be linked to attractive incentive to employees, enabling workers to demonstrate higher productivity.
Aside the reward for input, it is important to note that that some of the reasons why an employee may not perform is because reasons like job satisfaction and organization’s policies. 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.
- Research questions.
The research id to provide answers to the following questions;
- What are the various ways in which managers can assess training development needs of employees?
- What are the measures available for management to be able to attract and retain suitable employees through performance appraisal?
- How can managers review past performance and improve current performance?
- How can employees with necessary information pertaining to improving their capacities work?
- Objectives of the study
The objectives of the research could be viewed as listed below:
- To contribute to management’s capacity to assess training development needs of employees.
- To help management efficient in attracting and retaining suitable employees through performance appraisal.
- To strengthen management’s ability to review past performance and improve current performance.
- To update employees with necessary information relating to their enhancing capacity to get reward and move up higher in an organization.
- To help management explore the various appraisal tools available, and their pros and cons.
1.5 Hypothesis of the Research
The null hypothesis signifies that there is no relationship between performance appraisal and employee’s productivity, while the research hypothesis signifies that a relationship exists between performance appraisal and employee’s productivity.
H0(Null Hypothesis); Performance appraisal has no impact on employee’s productivity.
Hi(Research Hypothesis); Performance appraisal has impact on employees’s productivity.
At the end of the research, position will be taken to prove and disprove either of the two hypotheses
1.6 Significance of the study
At the end of this research, it is expected that the findings of the study will not only be beneficial to the personnel of the chosen organization and also the management of the chosen organization. In addition to that, it is part of the conditions the researcher must meet before being awarded Masters degree. The significance are highlighted as;
- Help management in other organizations in setting goals and targets for employees to achieve through proper supervisory control by line managers.
- Aid in identifying and improving the training and development needs of staff.
- Assist in motivating employees who contribute effectively to the attainment of organizational goals and objectives.
- Help management to know how to appraise the performance of their workers and various appraisal techniques available.
1.7 Scope and limitation of the study
Since it is a research based on case study, United Bank for Africa will be the focal point. Brief history and description of the activities of UBA will be highlighted in Chapter three-Research Methodology.
In carrying out this research, there are factors that affect the researcher in one way or the other, but that that does not mean that the research cannot stand the test of time. Some of the challenges are highlighted as follow;
- The difficulty in shuttling Kaduna-Zaria to get feedback from staff of the bank.
- Inadequate time to carry out the research or study.
- Reluctance on the part of the respondents to give all the needed information with fear of exposing their management.
- Inadequate funds to support the study or research.
1.8 Definition of operational terms
What is Appraisal?
An appraisal : is a valuation of people, project work etc with the intention of assigning value to it by an authorized person
Appraisal method: is the tool used by the authorized person to evaluate people, work, property etc which normally have a designation from a regulatory body governing the jurisdiction of the appraiser
Management: is the organization and coordination of the activities of a business in order to achieve defined objectives.
Reward: is the Cor-faced of an employment relationship.
Reward System: is the instrument used to increase employees’ productivity.
Performance evaluation: formal determination of an individual’s job-related actions and their outcomes within a particular position or setting.
A Performance Appraisal: is a systematic and periodic process that assess an individual employee’s job performance and productivity in relation to certain pre-established criteria and organizational objectives.
Training: is the act of increasing knowledge and skill of an employee in doing a particular job.
Performance Management: is the systematic process by which an agency involves it’s employees, as individuals and members of a group in improving organizational effectiveness in the accomplishment of agency mission and goals.
Productivity: is a measure of the efficiency of a person, machine, factory, system, e.t.c in converting inputs into useful outputs
Performance Management Measurement
Encompasses the assessment of performance and results achieved by individual employees, groups of employees or teams, and entire organization.
Redeployment: it giving an employee a chance to work in another unit or place with the intention of maintaining job security for the employees.
Development: involves the process by which manager and executives acquire not only the skills but competence in their present job also capacity for future managerial task increasing scope.
Halo Effect: is cognitive bias in which an observer’s overall impression of a person, company etc influences thoughts about that entity’s character or properties.
