Effect Of Employee Performance Appraisal And Motivation Strategy On Employees In The Banking Industry

Project and Seminar Material for Industrial Relations and Personnel Management

Effect Of Employee Performance Appraisal And Motivation Strategy On Employees In The Banking Industry


Employee performance appraisal and motivation goes together in determining employee and organizational performance as well as competitiveness. Many organizations have tried to promote employee motivation and performance but most of them have not followed the requirement that could promote them. This study provides effective methods of using employee motivation and performance.

The study analyses various methods and approaches to integrate them. Five hypotheses were postulated to find out if there is significant relationship between employee motivation and employee performance, employee performance appraisal and organizational performance, managers’ appraisal skill and employee motivation, and employee performance appraisal and employee training.

Questionnaires were formulated based on based on the hypotheses and 130 questionnaires were distributed to six branches of Wema bank in Lagos and Ibadan which 92% (120) of the distributed questionnaires were retrieved. The questionnaires were analyzed based on inferential statistical method of chi-square at 0.05 level of significance.

Findings revealed that there is significance between employee motivation and performance appraisal, and employees and organizational performance. The study recommends that managers and organizations should engage in effective use of performance appraisal and motivate their employees for organizational performance.

Keywords; employee performance appraisal, employee motivation, employee performance and organizational performance.

Chapter One


1.0 Background to the Study

The relationship between appraisal and motivation is one of the main concerns of an organization’s management. For organizations to achieve their stated objectives and goals, employees must have appraised based on the basis of present or past performance, relative to the organization so as to motivate them through feedback and encourage them to perform above par or put in more efforts.

A performance appraisal is the process of assessing workers performance in comparison to certain predetermined organizational standards. Performance appraisal is a formal system of measuring, evaluating and influencing an employee’s job-related attributes, behaviours and outcomes.

In some organizations, appraisal results may be used to determine relative rewards in the firm – who should get merit pay increase, bonuses, or promotions. Similarly, appraisal results can be used to identify the poorer performers who may require some form of counseling, training, demotion, dismissal or decreases in pay of the poor performance.

Interestingly, performance appraisal is a very controversial managerial issue. Some researchers have expressed doubts about the validity and reliability of the process. On the other hand, there are advocates of performance appraisal who claim that it may well be the most critical of all Performance Appraisal and Motivation.

Motivational research conducted by the theorists including Elton Mayo and Frederick Taylor, have recognized the power of recognition as an incentive performance appraisals provide employees with recognition for their work efforts. The appraisal system provides the supervisor with an opportunity to indicate to employees that the organization is interested in their performance and development. This recognition can have a positive motivational influence on the individual’s sense of worth, commitment and belonging.

Motivation is defined as a psychological process that gives behaviour purpose and direction. Motivation is seen as a very important aspect of an organization as it contributes to how well it performs. This ultimately has an effect on organizations’ corporate objective. This includes attainment of higher market share and profit maximization as a result of the employee of Permernace.

1.1 Background of Wema Bank

Wema Bank Plc was formally known as Agbonmagbe Bank and was incorporated in 2nd May 1945 as a private limited liability company. It commenced business operations as a commercial bank in the same year. The Bank was converted to a public limited liability company in April 1987 and was subsequently listed on the floor of the Nigerian Stock Exchange inJANUARY 1990.

On February 5, 2001, the Central Bank of Nigeria granted a Universal Banking License to the Bank, thus allowing the Bank to undertake a wide range of financial services to its numerous customers across the country.

The Bank has witnessed tremendous growth and development in branch network, quality of service delivery and overall financial performance in the last two decades. The bank embarked on a process of corporate transformation that has resulted in the emergence of a restructured Wema Bank PIc, strategically positioned to fully optimize opportunities in the industry.

Wema Bank Plc is adequately capitalized, her shareholders’ funds is in excess of N25billion and her asset base is N165 billion. Presently, Odu’a Investment Company Limited holds 10% equity stake in the Bank, while private individual investors and staff of the Bank own the remaining 90%.

The authorized share capital of the Bank is N7,000,000,000.00 divided into 14,000,000,000 ordinary shares of SO kobo each.

With banking operations spanning sixty years, Wema Bank PIc is reputed to the longest surviving indigenous bank in Nigeria. Wema Bank Plc is a customer-focused bank and takes delight in learning the intricacies of her customers businesses and preferences, thus her byline “Together to greater heights”.

1.2 Statement of the Problem

Most organization does not usually do employee performance appraisal and motivation and the few that does these do not use appropriate method of employee performance appraisal and motivation. The inappropriate methods used by such organizations do not allow both the employees and the organization to benefit well from the employee performance appraisal and motivation strategy used. This study tends to look at effective methods to use in appraising and motivating employee performance so that the employees can have an improved performance to cope with the changes in the banking industry using Wema Bank Plc as a case study.

1.3 Aim and Objectives of the Study

The aim of the study is to determine the significance of employee performance appraisal and motivation on employees in the banking industry.

The objectives are:

  1. To determine the significance of employee performance appraisal on employee performance.
  2. To find out the relationship between motivation strategy and employee performance.
  3. To examine the significance of performance appraisal on organizational performance.
  4. To investigate the relationship between managerial appraisal skills and employee motivation.
  5. To examine the relationship between employee training needs and performance appraisal.
  6. To determine the skills required for appraising employee performance.
  7. To provide plausible recommendations on how performance appraisal can be improved.
  8. To investigate how needs and need satisfaction operate to influence such variable as performance.
  9. To examine the behaviors of employees when the goals set before them are not realistic.
  10. To check how performance appraisal is conducted in Wema Bank Plc.

1.4 Research Questions

This aspect answer salient questions that will bring into focus issues that need and required adequate answers to justify the objective of the study. They are:

  1. Does performance appraisal method have any effect on employee performance?
  2. Does motivation strategy have any effect on employee performance?
  3. Is there any significant effect of performance appraisal on organization Performance?
  4. Can poor managerial skill on performance appraisal affect employee Motivation?
  5. Can employee training needs be detected through performance appraisal?

1.5 Statement of Hypotheses

Hypothesis 1
  • Ho; There is no significant relationship between the organizational performance appraisal method and employee performance.
  • HI; There is significant relationship between the organizational performance appraisal method and employee performance.
Hypothesis 1
  • Ho; There is no significant relationship between employee motivation and employee performance.
  • HI; There is significant relationship between employee motivation and employee performance
Hypothesis 3
  • Ho; There is no significant relationship between employee performance appraisal and organizational performance.
  • HI; There is significant relationship between employee performance appraisal and organizational performance.
Hypothesis 4
  • Ho; There is no significant relationship between managerial appraisal skills and employee motivation.
  • HI; There is significant relationship between managerial appraisal skills and employee motivation
Hypothesis 5
  • Ho; There is no significant relationship between employee performance appraisal and employee training.
  • HI; There is significant relationship between employee performance appraisal and employee training.

Where Ho is the full hypothesis and HI is the alternative hypothesis.

1.6 Significance of the Study

Performance appraisals and motivation are seen as a very vital aspect of the organization between they have psychological effect on employee performance which definitely contributes to the organization performance. This ultimately has an effect on the organization’s corporate objectives which include the attainment of higher market shares and profit maximization as a result of individual performance.

Motivation is worth analyzing because it seems to be a very complex and confusing concept because people have different attitude and goal. Therefore, appropriate motivation should be given to individual employees.

Frequently, performance appraisals are not objectively conducted. This often leads to bad result, employee dissatisfaction, lack of employee motivation, unhealthy organization, inter-alia.

The result of appraisal will provide the management the information needed whether to train, develop, praise, motivate through competence (promotion), or recognize the appraisee’s effort.

Hence, performance appraisal will allow managers to make good judgements that will be helpful to both the organization and the employees.

1.7 Scope of Study

The research topic is restricted to the financial industry. The case study as discussed in the company background is Wema Bank and six of its branches in Lagos and Ibadan will be used for gathering responses from her employees. The participants are limited to white collar employees in the branches selected.

1.9 Definition of Terms

The terms in this study may be stated in technical terms and therefore needs to be defined:


Appraisal means evaluating an employee’s current or past performance relative to the person’s performance standards. It is a formalized system and systematic assessment of an individual’s potential and identification of training needs.

Appraiser / Evaluator

Is a person who examines how well an employee is doing or has performed in his or her job.

Appraisee / Evaluatee

Is an employee whose performance is being Examined .


Is a person who has entered into an agreement or works under a contract with an employer whether the contract is for manual labor or clerical work or is expressed or implied or oral or written in a contract of service to execute any work or task.


An employer is a person who enters into a contract of employment to employ a person as a worker either for himself or for another person.


Is a body that runs the activities of an organization


This is a unit where a person can put in his performance to get satisfaction in any area and to seek the accomplishment of stated goals and objectives. It is the coming together of people to achieve positive result or reward.


It is a driving force that stimulate an individual i.e a worker into an action he or she would not have exhibited in other to achieve organizational objectives.


This is the action that people put into their jobs. It is an effort an employee put into whatever he or she might be doing and the efforts are determined by his or her abilities which later bring about a positive or negative reward.


Is reaching the highest level of performance with the least expenditure of resources. It is the output resulting from a given resources input at a given time.

Employee Training

Employee training is an organizational effort aimed at helping an employee to acquire basic skills required for the efficient execution of the function for which he is hired.

Employee Development

It deals with the activities undertaken to expose an employee to perform additional duties and assume positions of importance in the organizational hierarchy.


It is the compensation given to an employee in exchange for


Is a movement to a higher or more important ranks or position.

1.9 Organisation of the Study

The study contains five chapters:

  • Chapter 1: Includes the introduction, brief, history of the bank, statement of theproblem, objective s of the study, research questions, statement of hypo theses, scopeof the study, significance of the study, definition of terms and the organization of thestudy.
  • Chapter 2: Contains the review of relevant literatures and relevance of the theories.
  • Chapter 3: Comprises the restatement of research questions and hypotheses, research design, population of study, sample and sampling procedures, data collection instrument, data collection procedure for data analysis and limitation of the methodology.
  • Chapter 4: Contains the respondents’ characteristics and clarification presentation and analysis of data according to research questions presentation and analysis of data according to test of hypotheses and the discussion offindings.
  • Chapter 5: Includes the summary of findings, conclusion and recommendations.

Chapter Five

Summary, Conclusion and Recommendations

5.0 Summary

The main objectives of this research work were to: (i) determine ifperformance appraisal method has any effect on employee performance. (ii) find out the relationship between motivation strategy and employee performance (iii) examine if performance appraisal has any effect on organization performance (iv) investigate if poor managerial skill on performance appraisal have effect on employee motivation (v) examine if employee training needs can be detected through performance appraisal. These objective were achieved.

With respect to the data analyzed as regards employees of WEMA Bank Plc., It was discovered that a formalized systematic appraisal scheme could improve future performance of staff and can form the basic review of financial reward and career. It was also discovered that performance appraisal is closely linked to three broad components of human resources management system: discipline, reward and personnel development, all of which are motivational factors or instruments that makes the employees to act in a particular positive action in preference to others in a persistence way. In other to achieve stated objectives, many literatures from the work of managers and experts were carefully and adequately reviewed and presented based on the variable in the subject matter.

For a good study, five hypotheses were formulated and the significance of the relationship was then tested at 0.05 level using the chi-square test.

In summary, it was discovered that there is a significant relationship between performance appraisal and employee performance, as well as between employee motivation and employee performance, hence, financial industries are encouraged to continue an effective use of performance appraisal and motivation system.

5.1 Conclusion

From the findings, it can be concluded appraisal encourage employee feedback to the employer. This implies a two-way communication that fosters good relationship and enhances productivity, thereby enhancing employee motivation. It is also observed that employee performance improves when they take active roles in developing objectives.

In addition, it is observed and concluded that employees play much value to employee shareholding and longtime service award. They also appreciate increment in salaries and put much effort into their jobs as a result of salary increase.

With employee performance appraisal, hidden potential, special difficulties, and sometimes hazards are sometimes discovered by the management and a desirable result is achieved when the management responds to it appropriately.

It is also concluded that employees whose opinions are recognized and motivated by managers allow for good bargaining during performance appraisal process. Moreover, employee performance appraisal enables manager to understand the reason for the gap between the employee’s actual and required performance. In addition, insufficient and ineffective training could be revealed through the use of performance appraisal.

5.2 Recommendations

As a result of the fact that most employees ofWEMA bank are not motivated by the income they receive because it is not high, the researcher recommends that the management increase the reward and salary of its employees in a way that justifies their hard work.

Some employees don’t want to work but they want to receive pay. So that such employees perform the responsibilities for which they are hired, effective performance appraisal should be carried out at least once in a year to detect them and make good decision about them.

Top management should establish the right roles and processes, set clear goals and relevant measures and review progress at every stage (Dauda and Akingbade 2011). It is therefore strongly recommended that performance of employees be evaluated frequently, say every quarter of the year so that the management can easily detect the problems encountered by the employees while on duty.

So as to eliminate bias of evaluators, it is strongly advised that the 3600approach of appraisal be used rather than just a unit of the organization appraising its staff. Customers should be given the chance to rate employees who attend to them because they actually know those who are efficient in attending to them.

In addition, it is recommended that the bank does all it can to retain its employees so as to reduce the rate of attrition. Motivation and appraisal of performance are sure ways to reduce attrition rates.

Since no research is a continuous process, the researcher recommends that other researchers start from the end of this research because peoples’ knowledge gets broadened everyday and what the world sees as being exceptional today can be a common thing in the future.

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