CHAPTER 1

INTRODUCTION

1.1 Background of the Study

In today’s competitive business world, it is understood that organizations can only compete with their rivals by innovating. Organizations can only innovate by managing their human resources well. The human resource system can become more effective by having a valid and accurate appraisal policy used for rating performances of the employees. Unfortunately, the number of organizations using an effective employee performance appraisal policy is limited (Yalcin, 2002).

Employee performance appraisal is a key in human resource management function which is viewed as a subset of performance management. Rao (2005) argues that employee performance appraisal is a method of evaluating the behavior of employees in the workplace, this normally include both the quantitative and qualitative aspects of job performance. It helps to identify and overcome the problems faced by the employees in their workplace (Mackey & Johnson, 2000). Although it has many benefits for the organizations, states that employee performance appraisal have the equal probability of having a bad influence on the organization as well as on employee performance (Nurse, (2005).

According to Kuvaas, (2006); employee performance appraisal or employee appraisal is a method by which the job performance of an employee is evaluated generally in terms of quality, quantity, cost and time typically by the immediate line manager or supervisor. A employee performance appraisal is a part of the process of guiding and managing career development in both private and public sectors. It involves the task of obtaining, analyzing and recording information about the relative worth of an employee to the organization (Maud, 2001).

Accurate appraisals are crucial for the evaluation of recruitment, selection, and training procedures that can lead to improved performance. Appraisals can determine training needs and occasionally, counseling needs. They can also increase employee motivation through the feedback process and may provide an evaluation of working conditions, thus, improving employee productivity, by encouraging the strong areas and modifying the weak ones (Rao, 2004).

Formal employee performance appraisal has become a widespread instrument of human resource management. Surveys reported in the 1970s and 1980s already indicated that between 74 percent and 96 percent of U.S. organizations, and a comparable proportion of British firms had a formal employee performance appraisal in place. Large, complex organizations are especially likely to conduct formal appraisals (Berry, 2003). Not surprisingly, many   firms   in   Thailand   are   vigorously   implementing   Performance Management System (PMS) to help them better manage their employee’s performance and inturn, it affects organizational performance.  Since it is the key process through which work is accomplished, it is considered the “Achilles heel” of managing human capital (Pulakos, 2009). Hence, it is very important to manage employee performance appraisal effectively.

However, in the review of past studies carried out by Ebue (2003) despite the level of work that has been done, only few studies try to discuss some specific aspects of employee performance appraisal that can affect survival of organizations.  From the foregoing therefore, this study seeks to examine the relationship between employee performance appraisal and organizational effectiveness in some selected deposit money banks in Port Harcourt.

1.2 Statement of Problem

This brings us to those problems that are associated with conducting employee performance appraisals. The process usually starts at the middle management level where it is the job of a middle level manager to appraise his subordinates or employees who are under him.  In fact every successive hierarchical level, the superiors are asked to evaluate the employees who are working under them. This can give rise to many issues that make employee performance appraisals an unpleasant task. As a result, many managers view the process of appraisal as time consuming and burdensome. To begin with employee performance appraisals can cause friction, resentment and the consequent low morale. Since appraisals are rather subjective in nature, they can also be disputed in case of negative ones.

The employee performance appraisal systems tend to have several problems. Raters‟ evaluations are often subjectively biased by their cognitive and motivational states (DeNisi & Williams, 2008), and supervisors   often   apply different   standards   with   different   employees   which   results   in inconsistent, unreliable, and invalid evaluations (Folger, 2002). In order to create better systems, researchers have traditionally focused on validity and reliability (Bretz   2002) by designing newer “forms” of employee performance appraisals (e.g., behavioral based systems that better define specific essential job functions of employees or 360-degree feedback mechanisms that allow for cross-validation via multiple raters).  However, despite these recent advances in evaluation design, critics continue to argue that employee performance appraisal systems are not consistently effective (Atkins & Wood, 2002; DeNisi & Kluger, 2000).Given the above scenario, therefore, the study seeks to examine employee performance appraisal and organizational survival so as to fill the research gap.

1.3 Objective of the Study

The main objective of the study is to examine the relationship between employee performance appraisal and organizational effectiveness employee performance appraisal and organizational effectiveness in some selected deposit money banks in Port Harcourt. The specific objectives are to:

i.        Examine the extent to which rating scale associate with organizational effectiveness in some selected deposit money banks in Port Harcourt.

ii.       Examine the extent to which ranking associate with organizational effectiveness in some selected deposit money banks in Port Harcourt.

iii.      Examine the extent to which critical incident method associate with organizational effectiveness in some selected deposit money banks in Port Harcourt.

1.4 Research Questions

The following research questions will guide this study;

i.        Does rating scale associate with organizational effectiveness in some selected deposit money banks in Port Harcourt?

ii.       Does ranking associate with organizational effectiveness in some selected deposit money banks in Port Harcourt?

iii.      Does critical incident method associate with organizational effectiveness in some selected deposit money banks in Port Harcourt?

1.5 Research Hypotheses

The following research hypotheses are postulated to guide the study.

H0: There is no relationship between employee performance appraisal and organizational effectiveness in some selected deposit money banks in Port Harcourt.

HA: There is a relationship between employee performance appraisal and organizational effectiveness in some selected deposit money banks in Port Harcourt.

1.6 Significance of the Study

This study is significant in the following ways;

Firstly, this study will be significant to shareholders of these organizations as the survival of the organization is paramount. It will also assist managers manager’s these firms even as it is in their continued survival. It will be relevant to employees in the organization. This study will add to existing knowledge in management sciences.

1.7     Scope/Limitation of the Study

The scope of this study is delimited into the followings:

Content Scope: The specific areas of organizational effectiveness the study investigated include; customer satisfaction, return on investment and return on equity.  Whereas, the areas of employee performance appraisal include rating method, ranking method and critical incidence method.

Geographical scope: This study covers an examination of strategic contributions of employee performance appraisal on organizational effectiveness of deposit money banks in Rivers State which include First Bank and Unity Bank Garrison Aba Road, Port Harcourt, Rivers State.

Unit of Analysis: the unit of analysis for this study is the employee of the selected deposit money banks at the time of the study. Hence, it is a micro level study. In carrying out an investigation of this nature the researcher must of necessity be faced with some constraints.

The time constraints, the time frame provided for this study was short.

Financial constraints. Usually, a study of this nature involved some level of expenditure therefore; finance was also a limiting factor.

Poor response from the respondent and inability to access the entire population of the study. In the next segment significance of the study will be discussed.

1.8 Definition of Terms

ADAPTABILITY: Adaptability is the degree  to  which  an  organization  has  the  ability  to  alter  behavior, structures; and systems in order to survive in the wake of the environmental change.

EMPLOYEE PERFORMANCE APPRAISAL: Employee performance appraisals are the assessment of individual’s performance in a systematic way.

PROFITABILITY: Profitability means ability to make profit from all the business activities of an organization, company, firm, or an enterprise.  It shows how efficiently the management  can  make  profit  by  using  all  the  resources  available  in  the market.

STAFF DEVELOPMENT: Staff development represents an intentional effort by supervisors and administrative leaders of student affairs to improve staff members’ effectiveness, leading to improved organization effectiveness.