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Full Project – IMPACT OF PERFORMANCE APPRAISAL ON JOB SATISFACTION OF EMPLOYEES

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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 look out on this may bring about the need for motivation, allowances, development, training and good human relationship in an organization (Atiomo, 2000). Alo (1999) defines performance appraisal as a process involving deliberate stock taking of the success, which an individual or organization has achieved in performing assigned tasks or meeting set goals over a period of time. It therefore shows that performance appraisal practices should be deliberate and not by accident. It calls for serious approach to knowing how the individual is doing in performing his or her tasks.

Job satisfaction represents one of the most complex areas facing today’s managers andalthough thousands of papers and research have been conducted on job satisfaction all over the world, this has not been exhausted. Many studies have demonstrated an unusually large impact of job satisfaction on motivation of employees, while motivation level has an impact on productivity and thus on performance of many employees in various organizations.

Atiomo (2000) agrees with Fajana (1997) that performance appraisal is a system which provides organizations with a means of identifying not only what people’s performance levels are but which areas those levels need to be improved if maximum use is to be made of human resource. Banjoko (1982) explains that in many Nigerian organizations, performance appraisal is viewed and conducted solely in terms of its evaluative aspect thereby overlooking its use for facilitating growth and development in employees through training, coaching, counseling and feedback of appraisal information.

Performance appraisals are indispensable for organizations in the light of making their employees cognizant of their performance improvements and growth, their abilities and their potentials as well. Performance appraisal system has a substantial impact on other aspects of HR and the strategy of an organization in entirety. It’s the effectiveness of performance appraisals that lays bedrock for ensuring the success in matters relating to employees such as: selection, training, and employee motivation practices. It enables employees to build their own developmental goals which eventually culminate into an employee’s personal growth. Thus, there is very little doubt that a well orchestrated performance appraisal suffices in reconciling the needs of an organization and the needs of the organization’s employees (Grote, 2002). Recent studies reveal a positive impact of appraisals on organizations and also emphasize the need for appraisal systems to be vividly understandable by employees and purposes explained to them (Daoanis, 2012).

According to Banjoko (1982), performance appraisal is accorded a lesser role in Nigerian organization as more emphasis is given to selection, training, development and salary administration. This means that organizations are putting the cart before the horse and are in turn stifling genuine individual and organizational growth. It would be foolish for organizations to emphasize more on training without paying special attention to performance appraisal as Bratton and Gold (2003) writes that it is the outcome of performance appraisal that would reveal training needs. There should be a change-over on the part of organizations to start paying special attention to their performance appraisal practices and approaches.

According to Atiomo, every organization should ensure that the individual is clearly aware of what his functions and responsibilities are to make performance appraisal effective. Rao (1990) writes that performance appraisal is the process through which organization takes stock of its manpower in terms of its present performance, the aptitude and interest of each person, his strengths and weaknesses and his potential for growth. The data emerging from such an exercise constitutes the primary database for individual development and should be communicated to the subordinate.

The above comment of Rao (1990) is revealing because one of the major issues in performance appraisal is communication. If one’s performance is not communicated to him or her, there would be no way the person’s performance would improve in the subsequent future, which would definitely defeat the purpose of performance appraisal. In an industrial organization, if a supervisor fails to communicate to his subordinate in terms of strengths and weaknesses, the subordinate’s future performance would be in jeopardy. In a university system, the heads of departments, should communicate the performance of their subordinates to them at the end of every appraisal exercise and discuss the outcome of the appraisal exercise with the subordinates during performance counseling exercise in order to improve their performance in the future.

Cumming (1972) writes that the overall objective of performance appraisal is to improve the efficiency of an enterprise by attempting to mobilize the best possible efforts from individuals employed in it. Such appraisals achieve four objectives including salary reviews, development and training of individuals, planning job rotation and assisting in promotions. Mamoria (1995) and Atiomo (2000) agree that although performance appraisal is usually thought of in relation to one specific purpose, which is pay. It can in fact serve for a wider range of objectives which are; identifying training needs, improving present performance of employees, improving potentials, improving communication, improving motivation and aids in pay determination.

Performance appraisal has been considered as a most significant and indispensable tool for an organization, for the information it provides is highly useful in making decisions regarding various personnel aspects such as promotions and merit increases. Performance measures also link information gathering and decision-making processes, which provide a basis for judging the effectiveness of personnel sub-divisions such as recruiting, selection, training and compensation (Abdulkadir, 2012).

1.2 Statement of the Problem

Performance appraisal is credited with encouraging employee loyalty, fostering teamwork, impacting other Human Resource functions positively and also positively involved in employee motivation. Owing to the role these factors play in attaining organizational goals, many organizations invest in Performance appraisals. However, researchers also cite loopholes in the appraisal system and also warn of the dangers it poses to management and their subordinates. They also assert a seeming unanimous (employees and their supervisors alike) dissatisfaction with Performance appraisal.

Most organizations in the competitive market fail because 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.

Again, workers of most organization complained over the years of lack of motivation, ill treatment, poor employee welfare scheme by employers, which have resulted in higher labour turnover rate and termination of employment contracts as well as low performance on the part of the workers.

Furthermore, the fact still remains that machines no matter how sophisticated they are, it cannot effectively be utilized in the absence of human factor which is the human resources that possess skills, knowledge, techniques of its operation. This makes it important for a vibrant, quality and professional human resources to be adopted. Hence the approach human resources management becomes paramount.

1.3 Aims and Objectives of the study

This research work examines impact of performance appraisal on job satisfaction of employees and the objectives of this study include to:

examine the effect of performance appraisal on employee job satisfaction.
measure the performance appraisal of human resource management in an organization.
review the strategic steps taken by human resource management in enhancing job satisfaction.
examine the challenges encountered by human resource management in the process of performance appraisal.

1.4 Relevant Research Questions

The relevant research questions are buttressed below:

How does performance appraisal affect employee job satisfaction?
How can the performance appraisal of human resource management be measured in an organization?
What are the strategic steps taken by human resource management in enhancing workers performance?
What are the challenges encountered by human resources management in the process performance appraisal?

1.5 Relevant Research Hypotheses

The following hypotheses were developed for the study:

Hypothesis 1:

H_o: There is no significant relationship between performance appraisal and job satisfaction.

H₁: There is significant relationship between performance appraisal and job satisfaction.

Hypothesis 2:

H_o: Human resource management does not contribute to employee job satisfaction

H₁: Human resource management contribute to employee job satisfaction

1.6 Scope and Limitation of the Study

The work examines impact of performance appraisal on job satisfaction of employees and the objectives with a view to explore Caleb University, Imota Lagos. In addition, the study covers what human resources management is, its components, functions, objectives as well as how it performance appraisal.

Some perceived constraints may be encounter by the researcher in the course of carrying out the research work. The limitations are as follows:

Inadequate material: Inadequate material constituted one of the limitations of the research work. The non-availability of materials like journals, textbooks etc the research study.
Finance: The researcher also may encounter some financial constraints which will contribute in limiting the work in the sense that fund available was not enough to carry out the research to a logical conclusion.
Time: Time is also another factor or limitation that may affect the research work. The limited time may not give the researcher enough opportunity to do more rigorous work.

1.7 Significance of the Study

When performance standards are clearly articulated by management, employees know what is expected, what is considered unacceptable performance, and how organizational standards should be achieve. This research work is useful and relevant to the entire society, as it helps organizations and other sectors of the economy in knowing and appreciating the roles performed by human resources in enhancement of organization efficiency as well as how best to manage these human resources.

To this end it therefore serves as a benchmark for financial researchers to further evaluate the effect of employer-employee relationship, and how it ultimately impacts the performances and growth of the tertiary institutions in Nigeria.

Consequentially, it aids the Government, policy makers and stakeholders to properly articulate critical areas in human resources that needs to be improved on so as to forge a stronger workforce via the implementation solid performance appraisal.

1.8 Definition of Terms

Performance Appraisal: A performance appraisal is a systematic and periodic process that assesses an individual employee’s job performance and productivity in relation to certain pre-established criteria and organizational objectives.

Organization: An organization is a social group which distributes tasks for a collective goal.

Environment: Environment (systems), the surroundings of a physical system that may interact with the system by exchanging mass, energy, or other properties.

Human recourses: These are human beings used in the production process.

Influence: Influence is the action or process of producing effects on the actions, behavior, opinions, etc., of another or others.

Management: This is defined as the rational process if combining and utilizing the physical material and financial resource in an efficient and effective manner in order to achieve set objectives of the organization.

Performance: A performance, in performing arts, generally comprises an event in which a performer or group of performers behave in a particular way for another group of people, the audience. Choral music and ballet are examples.

Productivity: Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input.

Resources: These are things that a country or an organization or individual uses especially to raised the level of output or wealth.

Workforce: This has to do with the sum-total of individuals that works in a particular organization

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