The Effect Of Performance Appraisal In Improving Productivity In An Organization

Project and Seminar Material for Human Resource Management (HRM)

The Effect Of Performance Appraisal In Improving Productivity In An Organization


Abstract


This project work tries to explain the impact of performance appraisal on workers performance and in turn leading to improved organizational productivity, First Bank Plc, Ikpoba Hill Branch, Benin City. Performance appraisal is defined as “a structural formal interview between subordinate and supervisor, that usually takes the form of periodic interview (annually or semi-annually), in which the work performance of the subordinate is examined and discussed, with the view of identifying the weaknesses as strengths as well as opportunities for improvement and development”. The main objective of this research work therefore is to critically examine the impact of performance appraisal on workers performance. The research identified that low productivity is usually the negative effect of lack of performance appraisal, absence of performance appraisal brings about staff low job performance. The output of every organization depends on how well and how much the performance of the employee is appraised and evaluated. The data collected were presented in tables where necessary percentages were computed. The hypothesis was tested using Chi-square and contingency table. The questionnaires were well designed and the reliability and validity of the information was done by the project supervisor before 100 copies of produced and distributed to the organization under study. Out of the total questionnaire distributed, 50 was duly completed and returned for further findings for the research work. The research therefore recommended that to be able to obtain a reliable appraisal of the employee, supervisors should make it a point of making periodic notes on each of the persons to be appraised.


Chapter One


Introduction

1.1 Background of the Study

In any evaluation of the condition necessary for the growth and survival of an organization, the role of performance appraisal is a strategic factor. It is believed that both the individual and the organization need to know how well actual performance is contributing to the accomplishment of the job plans, the staffing plan, and ultimately the overall strategic plan of the organization. In addition, the individual employee requires feedback relative to his or her own goals development, as well as that relative to management’s expectations on improving productivity. Performance appraisal is a formal and systematic assessment of an employee to determine the degree to which the employee is performing his/her job effectively. It is usually made in a prescribed manner of specific intervals such as quarterly, bi-annually or even annually. Each employee at one time or the other wants his immediate boss or more still his employer to assess his on-the-job performance, and where necessary give him guidelines or advice for improving his efficiency.

An effective performance review system serves these general purposes. In other words, as Nwachukwu (1985) puts it, the essence of performance appraisal is to give information for the promotion, demotion, transfer, pay increase, training and development and discharge of an employee on improving productivity. Secondly, it provides employees with constructive on how they are performing in their jobs as viewed by their managers, thus leading to increased productivity. Therefore, in any organization, manpower remains the most prominent and the most valuable assets among other factors of production. It is this reason performance appraisal is given recognition as a tool to improve organizational activities on improving productivity.

Performance appraisal is one of the basic tools that make workers to be very effective and active at work. A critical look out on this may bring about the need for motivation, allowances, development, training and good human relationship in an organization.

Performance appraisal is defined as “a structural formal interview between subordinate and supervisor, that usually takes the form of periodic interview (annually or semi-annually), in which the work performance of the subordinate is examined and discussed, with the view of identifying the weaknesses as strengths as well as opportunities for improvement and development” Decenzo and Robbins, (1995: 358).

The essence of performance for most organizations is delivering products and services that meet or exceed customer expectations, thereby creating a competitive advantage so that customers are retained and market share is increased (Sasson, Alvero& Austin, 2006). Another view is that a performing business is one that maximizes shareholder value, thus maximizing the difference between input costs and revenue (Copeland, 1994). This is often a controversial statement since organizations in Europe and Japan expect a balance between all the stakeholders (Copeland, 1994:97), and is supported by the view of Neely, Adams and Kennerley (2002) as part of their Performance Prism which includes all the stakeholders and not only the shareholders.

Two more general definitions of “performance” are that performance is a “…particular action, deed or proceeding / the execution or accomplishment of work, acts, feats, etc.” or “the manner in which or the efficiency with which something reacts or fulfils its intended purpose” (Dictionary.com, 2010). These definitions show that it is about performing work in an efficient way. This compares with the very simple but clear definition provided by Dunnette and Fleishman (2000) that performance is “…the results or outcomes of work”, thereby opposing it to behaviour.

They state that “… performance is the end result and behaviour is the means to that end” therefore performance is an accomplishment or output. Two fundamental dimensions of performance is efficiency (or resource utilization) and effectiveness (the meeting of requirements) (Neely et al., 2002). In these two dimensions lies the essence of productivity, namely that productivity is normally calculated as output divided by input (Productivity = Output/Input) (Latham & Wexley, 1994), such as number of products delivered in relation to resources used.


1.2 Statement of the Problem

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.


1.3 Objectives of the Study

The aims of this study are;

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

1.4 Research Question

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

1.5 Research Hypothesis

  1. Ho: Effective performance appraisal does not influence employee performance.
    Hi: Effective performance appraisal influences employee performance.
  2. Ho: There is no significant relationship between performance appraisal and Organizational Productivity.
    Hi: There is a significant relationship between performance appraisal and Organizational Productivity.

1.6 Significance of the 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, Benin City, but also to every individual. It will also;

Help managers 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 workers.
Assist in motivating employees who contribute effectively to the attainment of organizational goals and objectives.


1.7 Scope of the Study

This research work is limited the impact of performance appraisal on workers performance and in turn leading to organizational performance and productivity, using First Bank Plc, Ikpoba Hill Branch, Benin City. This therefore means that the study area in which data were obtained is First Bank Plc, Benin City.


1.9 Limitation of the Study

This project research would have been easier if not for these limiting factors:

1. Time Factor:

Time was not on the researchers to consult various sectors of the economy to review employees or given out questionnaire to various institutions on the effect of government revenue policies.

2. Finance:

This is another barrier that limited the researcher’s work.


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 provide 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. It can assist an organization, program, project or any other intervention or initiative to assess any aim, realizable concept/proposal, or any alternative, to help in decision-making; or to ascertain the degree of achievement or value in regard to the aim and objectives and results of any such action that has been completed.


1.11 Historical Profile of First Bank Plc

First Bank of Nigeria, sometimes referred to as First 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.

Chapter Five


Summary, Conclusion and Recommendations

5.1 Introduction

This chapter deals with summary of the findings, conclusions drawn on the study and recommendations to the problems of the research topic “The Effectof Performance Appraisal in Improving Productivity in an Organization”.


5.2 Summary of Findings

  1. In the findings of the study, it was realized that more male staff are employed in the organization than the female staff. This is according to the sample size chosen.
  2. It was also found out that performance appraisal influences performance positively. However, the researchers realized that performance appraisal is mostly undertaken on annual basis at the workplace.
  3. Performance appraisal is defined as “a structural formal interview between subordinate and supervisor, that usually takes the form of periodic interview (annually or semi-annually), in which the work performance of the subordinate is examined and discussed, with the view of identifying the weaknesses as strengths as well as opportunities for improvement and development”.
  4. The output of every organization depends on how well and how much the performance of the employee is appraised and evaluated.

5.3 Conclusion

It is now appropriate to draw out the main conclusions of the study.

From the study, findings and analysis showed that favouritism has not got much influence in appraising performance.

Again, it was also realized that the company uses rating scale, descriptive system and management by objective system methods of appraisal to evaluate employees. From the analysis, it was realized that management by objective is the mostly used method. Hence, it showed that appraisal is an ongoing process in the company.

Another finding also revealed that 50% of the respondents received feedback information while the rest 50% do not.

Finally, we realized from the research that performance appraisal has got much influence on job performance. In other words, it was realized that appraisal has got a positive influence on performance.


5.4 Recommendations

The following suggestions are made available to appraisers or supervisors by the researchers as per the topic researched;

  1. To be able to obtain a reliable appraisal of the employee, supervisors should make it a point of making periodic notes on each of the persons to be appraised. This is because, if one waits till the end of the period to do the appraisal, the tendency will be to forget some rather important positive or negative behaviour the appraisee showed in the course of the period.
  2. Performance feedback information should be made available to the employees so as to correct their negative attitudes towards performance.
  3. Favouritism at workplace should be reduced to its barest minimum and if possible, it should be made away with completely so as to erase the erroneous impressions and perceptions about performance appraisal.
  4. Employees’ performance should be appraised regularly in order to improve productivity. Thus, once a month is just about enough.
  5. Bad performing employees should change their attitude towards work after appraisal in order to improve productivity. This can be done by the employee being aware that their performance determines their promotion, incentives, and allowances.

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