THE IMPACT OF EMPLOYEE PERFORMANCE APPRAISAL ON THE ACHIEVEMENT OF ORGANIZATIONAL GOAL IN THE BANKING INDUSTRY (A CASE STUDY OF KEYSTONE BANK LTD)

ABSTRACT

Impact of Performance Appraisal on Employees’ Job Performance using Keystone Bank Limited as case study. The main objective of the study was to determine whether performance appraisal has any impact on job performance of employees and the extent of such impacts. In service industries e.g. Bank s, the service is fast, more efficient, and product are delivered on time leading to customer satisfaction and more profit are achieved. The researcher adopted the primary method of data collection through the use of structured questionnaire.  Research show that performance appraisal has positive impact on employees’ job performance. Moreover, the respondents all agreed that the Behavioural Checklist and Scales Appraisal System was the best appraisal system to be adopted by an organization. Based on the-research findings, the researcher recommends among others that organization and employees must have a clear idea of where the organization is going and employees must understand how their job contributes to the goals of the company. Besides, employees must be given the needed trainings to ensure they have the skills needed to perform their work. Finally, the researcher further recommends that supervisors must give feedback to employees about their performance on regular basis not just at formal appraisal times.

TABLE OF CONTENTS

Title Page    …      …      …      …      …      …      …      …      …      i

Approval    …      …      …      …      …      …      …      …      …      ii

Certification         …      …      …      …      …      …      …      …      iii

Dedication …      …      …      …      …      …      …      …      …      iv

Acknowledgement         …      …      …      …      …      …      …      v

Abstract      …      …      …      …      …      …      …      …      …      vi

Table of Contents          …      …      …      …      …      …      …      …      vii

List of Tables       …      …      …      …      …      …      …      …      ix

List of Figures

CHAPTER ONE: INTRODUCTION

1.1     Background of the Study        …      …      …      …      …      …      1

1.2     Statement of the Problem        …      …      …      …      …      5       

1.3     Objectives of the Study    …   …      …      …      …      …      6

1.4     Research Questions       …      …      …      …      …      …      6                                 

1.5     Research Hypotheses     …      …      …      …      …      …      7

1.6     Significance of Study     …      …      …      …      …      …      8

1.7     Scope of the Study        …      …      …      …      …      …      9

1.8     Limitations of the Study          …      …      …      …      …      …      10

1.9     Operational Definition of Terms       …      …      …      …      11

          Profiles of Keystone Bank Limited   …      …      …      …      11

          References …      …      …      …      …      …      …      …      13

CHAPTER TWO: REVIEW OF LITERATURE

2.1     General Framework on Performance Appraisal   …      …      14

2.2    History and Evolution of Performance Appraisal                   …      15

2.3    Objectives of Performance Appraisal         …      …      …      …      25

2.3.1           Potential Rating Scale Appraisal Errors/Problems      27

2.4     Techniques of Performance Appraisal        …      …      …      …      30

2.5     Performance Appraisal and Job Performance                …      …      41

2.5.1  Determinants of Performance Capacity      …      …      …      41     

2.6     Performance and Managerial Leadership Styles            …      42

2.6.1 Basic Managerial Philosophies         …      …      …      …      …      43

2.6.2   Golden Rule Management      …      …      …      …      …      45     

2.7     Classification of Appraisals    …      …      …      …      …      45

2.7.1  Performance Appraisal Method in Keystone Bank Ltd           …      49

2.8     Advantages of Performance Appraisal to an Organization     …      51

2.9     Summary of Review of related Literature   …      …      …      55

References  …      …      …      …      …      …      …      …      56

CHAPTER THREE: RESEARCH METHODOLOGY

3.1     Introduction         …      …      …      …      …      …      …      61

3.2     Research Design   …      …      …      …      …      …      …      61

3.3     Sources of Data    …      …      …      …      …      …      …      62

3.4     The Population of the Study   …      …      …      …      …      63

3.5     Sample Size Determination and Sampling Technique    …      63

3.6     Description of Research Instrument …      …      …      …      64

3.7     Method of Data Analysis        …      …      …      …      …      …      65

3.8     Validity of Research      …      …      …      …      …      …      65

3.9     Reliability of Research Instrument    …      …      …      …      66

References …      …      …      …      …      …      …      …      69

CHAPTER FOUR: PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

4.1     Data Presentation and Analysis        …      …      …      …      …      71

4.2     Testing of Hypotheses One     …      …      …      …      …      82

4.3     Testing of Hypotheses Two    …      …      …      …      …      84

4.4     Discussion of Findings  …      …      …      …      …      …      85

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1     Summary of Findings    …      …      …      …      …      …      87   

5.2     Conclusion …      …      …      …      …      …      …      …      88

5.3     Recommendations         …      …      …      …      …      …      …      89

5.4     Contribution to Knowledge     …      …      …      …      …      91

5.5     Area of Further Research        …       …     91                    

Bibliography       

Appendix A

Questionnaire

LIST OF TABLES

Table 1:    Sex of Respondents                  …      …      …      …      …      72        

Table 2:    Marital Status  …  …      …      …      …      …      …      73

Table 3:    Educational Qualification of Respondent    …      …      72

Table 4:    Position of the Respondents in the Bank …          …      …      74

Table 5:    Are you conversant with the performance appraisal

exercise in use at the Bank       …      …      …      …      74           

Table 6:    If  yes, does the performance exercise  measure

                  Performance of employees for pay rise, promotion

                  and training purposes     …     …      …      …      …      75

Table 7:    The performance appraisal in place at the Bank is

                  such that heavily compensates good performance

                  and discriminates against poor performance?      …       …      75

Table 8:    The performance appraisal in place at the Bank is a

motivator for performance of daily activities        …      …      76     

Table 9:    Will you advocate for a complete change of the

                  appraisal system presently in use at the bank       …      …      76

Table 10:   My Supervisors/Manager carries me along in the

                  appraisal process from beginning to end     …      …      77

Table 11: In your opinion is personal recognition adequately

                  given to individual performance with regards the

                  appraisal system presently in  place  …      …      …      77     

Table 12: To further drive performance within the bank will you

                  suggest an entirely different system of performance

                  appraisal      …      …      …      …      …      …      …      77     

Table 13: If your answer above is yes, what system

                  will you suggest to be put in place     …      …      …      78     

Table 14: Is the reward system fair enough to motivate you in

the performance of your duties …      …      …      …      78

Table 15: Communication and feedback is very evident and

                  adequate in the performance appraisal exercise    …      79              

Table 16: Does the performance appraisal exercise continuously

evaluate and measure your performance over the entire

appraisal period…          …      …      …      …      …      …      79

Table 17: Does the appraisal exercise give rise to opportunities for

training and development         …      …      ..        …      …      80

Table 18: Has performance appraisal over the years translated the

company into a positive work environment          …      …      80

Table 19: Showing incentive and fringe benefits available to

the respondents and their satisfaction/dissatisfaction

level    …      …      …      …      …      …      …      …      81

Table 20: Does the Bank have a formal statement such as key

                  Business indicators (KBI) to serve as constant reminder

                  on what is expected of each employee         …      …      …      81

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Employee’s performance appraisal is one of the most critical functions of a leader/manager and is a basic expectation of anyone in a supervisory role. In many organization staff are being appraised to ascertain how much each person contributed to the achievement of corporate goals and objectives. The major objectives are usually profit maximization and service delivery. Performance Appraisal System has been found to act as strong and indispensable Machinery for increase in organizational productivity, organizational peace and harmony and organizational position in its environment Brown, M., J.S. Heywood (2005:43).

          According to Schoenfeld and Shaw (1996) “the evaluation of performance is the control mechanism that provides not only feedback to individuals but also an organization assessment of how things are progressing. Without performance information, managers of the organization can only quess as to whether employees are working towards the right goals, in the correct way and to the desired standard. Performance Appraisal according to then is a means of knowing if employee behaviour is consistent with the overall strategic focus and a way for bringing to the fore any negative consequences of the strategy behavior link” Kuvaas, B. (2006:17).

          In their own view Hicks and Gullet (1973 states that “all persons in organization have personal objectives and each person expects that participation in the organization will help him achieve his personal objectives.

          Therefore performance appraisal becomes a means of aligning the objectives of the individual employees with the organizational objectives. According to Frankline (2003), there are several reasons for performance appraisal exercise they are to:

To provide feedback to the employee, To clarify job expectations, To determine training needs, To diagnose performance problems and  Merit pay or salary adjustment.

Other reasons for performance appraisal according to Akpata (2001) are to provide feedback to the supervisor and input for administrative decisions i.e. promotion, tenure, future employment etc.

According to Ubeku (1984:188) “performance appraisal is basically concerned with a review of individual performance during a set period to identify his area of strength and weakness and establish targets for him to achieve within the overall corporate objectives of the organization.

Moreover Nwachukwu (1988:165) stakes that performance appraisal is the determination of how effective an individual has performed the job for which he was hired. In many cases any one can aptly say that performance appraisal is a periodic and systematic assessment of the work, a compliment of an employee either by himself or his superior in other to impact his effectiveness and adequacy on the job.

Performance appraisal is one of the management tools designed to achieve organizational objectives contributing to the subject matter. Orugbo (1978:24-25) states that individuals in an organization have their own objectives which they hope to achieve through the organization, hence their reason for their placing much reliance or being effectively appraised.

However, Khan (2006) warnes that an ineffective performance appraisal can seal the fate of an organization by creating chaos and confusion from top to bottom in the administrative hierarchy. As a consequence, the chances of success and growth of that organization are bleak.

A Survey by Cleveland et al (1989) shows that performance appraisal has the greatest impact on salary administration, performance feedback and identification of strengths and weakens. However, the impact of appraisal on employee overall performance it yet to be empirically studied.

In keystone Bank Nigeria Limited each staff is appraised to highlight the members good performance and also mention some areas where they have not fared well. The training needs of the staff member’s are also identified. The fact that personnel are to be appraised makes then work very hard.

Staff that are rated highly in Keystone Bank Ltd are given staff an edge over others in terms of promotion. Those that do not measure up during appraisal exercise often not promoted. They are also not placed to work in places that need high intelligence e.g. credit and marketing department.

Management in organizations generally agrees that one of the key factors in developing a smooth functional and efficient firm is the full utilization of its human resources.

Management of workforce is not different from other areas of operation, expect that while other key areas of operation focus on issues like machinery or finance, human resource focus on the most important resources of business the personnel.

The performance management-process is thus an integrated concern that helps to ensure that employees are aware of what is expected of them and how their contribution fits into the big picture as follows: