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Full Project – The impact of performance appraisal on employees performance

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In every business organization, the performance of the employees is important in achieving organizational goals. The success of every business organization can therefore be attributed to performance appraisal. Performance appraisal is one of the basic tools that make workers to be very effective and active at work. A critical assessment of this may reveal the need for motivation, rewards, development, training and good human relationship in an organization.

Performance Appraisal (PA) is one of the most important functions of Human Resource managers. It is concerned with identifying, measuring, influencing and developing job performance of employees in the organization in relation to the set norms and standards for a particular period of time in order to achieve various purposes.

Employees are required to generate a total commitment to desired standards of job performance and improved job performance for sustaining profitable growth for the organization and long-term value creation for the customers (Singh et al, 2010). This involves getting optimum use of the available knowledge, skills and abilities in the workforce to optimize employee productivity and give an organization a competitive advantage.

The purpose of performance appraisal is to assess employees’ performance as objectively as possible. The results of the performance appraisal are used in setting the direction for the individual performance development by bringing out both performance strengths and weaknesses and subsequently developing action plan to facilitate the desired development (Education Insight Document, 2007).

The role of performance appraisal has gone beyond a tool for assessing employees to one that is used to reinforce the desired behavior and competent performance of the employees. Performance appraisal is the single most powerful instrument for mobilizing employees in a sophisticated and well managed organization in order to achieve strategic goals (Singh et al, 2010). It is a universal phenomenon which serves as a basic element of effective work performance which is essential for the effective management and evaluation of staff. It aims at improving the organizational performance as well as individual development. Performance appraisal is necessary to increase the performance of the employees and the organization to check the progress towards desired goals.

A well designed performance appraisal system should develop criteria for successful performance, give performance feedback and enable a more equitable reward system. Performance criteria form the basis of evaluating the employees’ performance and their contribution towards the organization goal. It consists of the desired outputs expected of employees. Performance criteria should be aligned with goals, relevant to given roles, specific and measurable, under employees control and understood and accepted by participants (Dattner, 2010).

It is based on this background that the researcher found the need for the study on the impact of performance appraisal on employee performance in a firm.

1.2 Statement of the Problem

The basic aim of every business organization is to achieve its objectives, goals or targets successfully. In order to achieve this, there is the need to focus on performance appraisal. Performance appraisal is not only considered to have a positive influence on performance of employees in an organization, but also may have a negative impact on motivation, role perceptions, and turnover if it is poorly designed or administered.

Performance appraisal should be linked to attractive incentive to employees, improving performance. 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 arise 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 strive 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.

Many Organizations have implemented performance appraisal policy to enhance employee performance. However, reports generated from their Human Resource Information Systems reveal mixed results about employee performance due to the improper implementation of the performance appraisal system. This study therefore sought to investigate the impact of performance appraisal on employee performance in a firm.

1.3 Objectives of the Study

The Main objective is to examine the impact of performance appraisal on employee performance in federal Inland Revenue Service, Katsina Branch. Other objectives of the study include

To find out if there is a relationship between motivation and employee performance.
To find out if there is a relationship between reward and employee performance.
To find out if there is a relationship between frequency of appraisal and employee performance.

1.4 Research Questions

Attempt will be made in the course of this research to answer the following research questions.

Does performance appraisal have an impact on employee performance?
Is there a relationship between motivation and employee performance?
Is there a relationship between reward and employee performance?
Is there a relationship between performance appraisal feedback and employee performance?

1.5 Research Hypotheses

Four hypotheses would be formulated in the course of this study so as to know the impact

of performance appraisal on employee performance.

H₀: Performance appraisal has no impact on employee performance

H₁: Performance appraisal has an impact on employee performance

H₀: There is no relationship between motivation and employee performance

H₂: There is a relationship between motivation and employee performance

H₀: There is no relationship between reward and employee performance

H₃: There is a relationship between reward and employee performance

H₀: There is no relationship between frequency of appraisal and employee performance

H₄: There is a relationship between frequency of appraisal and employee performance

1.6 Significance of the study

A performance appraisal program is important to employees professional development, and in meeting the organizational goals and objectives and ultimately contributing to the organization bottom line. Performance appraisal when communicated serves as an opportunity to effectively address performance problems and improve employee’s morale.

Thus, the study will encourage employees to perform better in the future. The study will provide opportunity for managers to explain organizational goals and the way employees can participate in the achievement of the said goals.

It will assist in evaluating whether human resources program implemented in the organization have been effective. Thus, the findings of the study will not only be beneficial to the personnel of the chosen organization but also to every individual. It will also: Help managers in other organizations in setting goals and targets for their employees. Help in identifying and improving the training and development needs of workers, assist in motivating employees who contribute effectively in achieving organizational goals. To help top managers on how to appraise their employees.

Students will also benefit from the study by acquiring knowledge on how performance appraisal is being conducted in an organization. This study will help educate and give them a practical view of what performance truly is, how it is performed and why it is performed. The study is aimed at educating the practitioners on how performance appraisal can be conducted effectively and efficiently such that it attains its set goals.

1.7 Scope and Limitation of the Study

 Scope of the Study

The scope of the study will cover staff/officers of selected FIRS Katsina branch where their opinions will be gotten on the impact of performance appraisal on employee performance.

 Limitation of the Study

The major limitations of the study Is the smallness in sample size since all employees of FIRS were not selected due to the financial constraints and time constraints.

1.8 Definition of Terms

The following are concepts under the research topic:

Appraisal: Impartial analysis and evaluation conducted according to established criteria to determine the acceptability, merit and worth of an item.

Bias: An inclination or preference that influences judgments from being balance.

Effectiveness: The degree to which objectives are achieved and the extent to which target problems are solved.

Evaluation: An analysis of completed or ongoing activities that determines or support management accountability, effectiveness, and efficiency.

Coaching: Extending training method to include focus on individuals needs and accomplishment.

Counsel: A suggested course of action.

Efficiency: The comparison of what is actually produced or performed with can be achieved with more or less fixed timeframe.

Goals: An observable and measurable end result having one or more objectives to be achieved with more or less fixed timeframe.

Objectives: A well defined and realistic goal set by a company that often influences its internal strategic decisions.

Performance: The accomplishment of a given task measured against pre-set known standard of accuracy, completeness, cost and speed.

Productivity: A measure of efficiency of a person, machine, and system e.t.c in converting input into useful output.

Work: A job, something done to earn money.

Anticipated Contribution of this Study

The study is significant to the researcher as part of the requirement for fulfilment of the award of Bachelors in Science in Business Administration. The study will also be significant in making the employers and employees of FIRS have an understanding of the impact of performance appraisal on employee performance in their organization and make recommendations based on the study. It will also contribute in filling the obvious gap in literature since the study’s main focus is the employees of FIRS.

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Full Project – The impact of performance appraisal on employees performance

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