CHAPTER 1INTRODUCTION1.1 Background of the StudyIn 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 (Kuvaas, 2006). Employee Job Performance has to do with accomplishment standard of accuracy, completeness, cost and speed. Performance is seemed to be the fulfillment of an obligation in a manner that release the performer from all liabilities under the contract. This means that an employee must be properly, evaluated in term of their productivity, skills taken decision and total commitment to their job so as to enable the organization to achieved expected goals (Kuvaas, 2006).The human resource system can become more effective by having a valid and accurate appraisal policy used for rating performances of the employees. Unfortunately, in Nigeria today, the number of organizations using an effective performance appraisal policy is limited (Yalcin, 2002).Performance appraisal is a key in human resource management function which is viewed as a subset of performance management. Rao (2005) argues that performance appraisal is a method of evaluating the behavior of employees in the work place, this normally including both the quantitative and qualitative aspects of job performance. It helps to identify and overcome the problems faced by the employees in their work (Mackey & Johnson, 2000). Although it has many benefits for the organization, Nurse, (2005); states that performance appraisal have the equal probability of having a bad influence on the organization as well as on employee performance.According to Kuvaas, (2006); 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 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 (Kuvaas, 2006).Accurate appraisals are crucial for the evaluation of recruitment, selection, and training procedures that lead to improved performance. Appraisals can determine training needs and occasionally, counseling needs (Kuvaas, 2006). 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 (Kuvaas, 2006). When effective, the appraisal process reinforces the individuals’ sense of personal worth and assists in developing his/her aspirations. According to Maud, (2001); Performance helps firms, industries and nations to achieve sustainable competitive advantage. Industry is a thrust area for countries in their quest for competitiveness (Maud, 2001). It must be noted that banks which have maintained the momentum of continuous growth, and profitability showed better ratio of manpower effectiveness. Each element has crucial sub-components which serve as building blocks for productivity, (Rao, 2005).To thrive or survive, organizations need to continuously improve quality, attract more customers, and become more cost conscious (Rao, 2005). In other words, firms need to better manage their performance appraisal and increase Employee performance. Over the years, there are many practices, tools, techniques, systems, and philosophies that aim to help organizations to gain the competitive advantage of higher performance (Rao, 2005).There has been a widespread use of performance appraisal in work organizations all over the world. This widespread use of Performance Appraisal Systems (PAS) can be attributed to human resource specialists, academics and consultants who proclaim that performance appraisal is a critically needed tool for effective human resource management (Locker and Teel, 1997).Formal 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 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). Therefore, it is very important to manage performance appraisal effectively.Torrington and Hall,(1998) indicated that appraisal in the banks of Malawi is related to employee productivity because of the following reasons; they can be used to improve current performance, provide feedback, increase motivation, identify training needs, identify potentials, let individuals know what is expected of them, focus on career development, award salary increases, and solve job problems. Further he stated that performance appraisals help in a very practical way to manage an organization’s staff effectively, allow one to know what employees have achieved and can achieve, know what employees’ weaknesses are, understand how each employee’s role fits into the overall business, compare the efficiency of different staff members, set realistic goals and identify ways business can be expanded or enhanced (Kuvaas, 2006). It also allows staff to; feel valued, understand what is expected of them, understand the business they are involved in, understand their weaknesses, identify their strengths, identify areas they need further training in as well as offer opinions and insights that may improve the business as a whole (Kuvaas, 2006).Therefore, we are persuaded to say that there as a relationship between Performance appraisal and Employee Job performance. In the next segment statement of the problem will be discussed.1.2 Statement of the ProblemThis brings us to those problems that are associated with conducting performance appraisals. The process usually starts at the middle management level where it is the job of a middle manager to appraise his subordinates or employees who are under him (Rao, 2005). In fact, every successive hierarchical level, the superiors are asked to evaluate the employees who are working under them (Rao, 2005) This can give rise to many issues that make performance appraisals an unpleasant task. As a result, many managers view the process of appraisal as time consuming and burdensome. To begin with 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 (Rao, 2005).The performance appraisal systems tend to have several problems. Raters‟ evaluations are often subjectively biased by their cognitive and motivational states (Pulakos, 2009), and supervisors often apply different standards with different employees which results in inconsistent, unreliable, and invalid evaluations (Folger, 1992). In order to create better systems, researchers have traditionally focused on validity and reliability (Bretz, 1992) by designing newer “forms” of performance appraisals (e.g., behavioural-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 performance appraisal systems are not consistently effective (Atkins & Wood, 2002; DeNisi & Kluger, 2000).This study sought to examine performance appraisals and employee job performance. In the next segment objective of the study will be discussed.1.3 Objectives of the StudyThe main objective of the study is to examine the relationship between performance appraisal and employee job performance. The following objectives are to be achieved:i. To examine the relationship between rating method and employee job performance in selected commercial banks.ii. To examine the relationship between ranking method and employee job performance in selected commercial banks.iii. To examine the relationship between management by objective and employee job performance in selected commercial banks.1.4 Research QuestionsThe following research questions are posed to guide the study:i. To what extent is rating method associated employee job performance in the banking sector?ii. To what extent is ranking method associated with employee job performance in the banking sector?iii. To what extent is management by objective associated with employee job performance in the banking sector?1.5 Research HypothesisThe following research questions are postulated to guide the study:H01: There is no significant relationship between performance appraisal and employee job performance.HA2: There is a significant relationship between performance appraisal and employee job performance.1.6 Significance of the StudyThis study is significant in the following ways;Firstly, it will assist the organization to continually plan for the good of their employee’s and also make use of skilled manpower for the good of the organization.Others who will benefit from this study include managers, business organizations, higher institutions and the society in general. In the next segment scope and limitation of the study will be discussed.1.7 Scope/Limitation of the StudyThe study is delimited under the following heading: content scope, geographical scope and unit of analysis.1. Content Scope: The content scope of this study involves an investigation to ascertain the relationship between performance appraisal and employee job performance. The independent variable is Performance Appraisal measure by Rating method, Ranking Method and Management by Objective. While dependent variable is employee job performance, measures by Productivity, Effectiveness and Efficiency.2. Geographical Scope: This study is delimited in Port Harcourt Metropolis with special reference to some selected commercial Banks which include First Bank, Guarantee Trust Bank and Union Bank PLC Port Harcourt, Rivers State.3. Unit of Analysis: The unit of analysis in this research involves the individuals at the time of carrying out the study.In carrying out an investigation of this native the researcher must of necessity be faced the following constraint.This study involves an investigation of performance appraisals in relation to employee job performance. Hence it is a micro level study.1.8 Definition of TermsThe following terms are operationally defined as follows:EFFECTIVENESS: It is the capability of producing a desired result or the ability to produce desired output.EFFICIENCY: It is the ability to avoid wasting materials and time in doing something or in producing a desired result.EMPLOYEE PERFORMANCE: It is the quantity and quality of produced or services rendered by a person in doing the job.MANAGEMENT BY OBJECTIVES: It refers to the performance is rated against the achievement of objectives stated by the management.PERFORMANCE APPRAISALS: It is the assessment of individual’s performance in a systematic way.PRODUCTIVITY: It involves goal attainment. It is the successful transfer of input to output at the lowest possible cost. Productivity implies both efficiency and effectiveness.RANKING METHOD: It is one of the simplest performance evaluation methods. In this method, employees are ranked from best to worst in a group.RATING METHOD: It consists of several numerical scales representing job related performance criterions such as dependability, initiative, output, attendance, attitude etc. Each scale ranges from excellent to poor. The total numerical scores are computed and final conclusions are derived.