EMPLOYEES’ PERFORMANCE APPRAISAL AS A TOOL FOR ORGANIZATION GROWTH: A STUDY OF THE NIGERIA BAG MANUFACTURING COMPANY (BAGCO) LAGOS
ABSTRACT
This study examined the relationship between employees’ performance appraisal and organizational growth. It employed the descriptive survey research method. The random stratified sample method was used to select the total numbers of 250 respondents used for the study. Data used for the study were collected through the questionnaires. Hypotheses one and two were tested using the t-test of significance method while hypotheses three to five were tested using Chi square statistics method with the help of Special Package of Social sciences (SPSS). Findings of the study showed that the tested employees of Nigeria Bag Manufacturing Company placed significant attention to performance appraisal system; there was a significant difference between Performance Appraisal of Nigeria Bag Manufacturing Company (BAGCO) and those of literature. Result further shows that Nigeria Bag Manufacturing Company managers have significant knowledge of the method of Appraisal System and a significant relationship exist performance appraisal m and organization growth.. It is recommended that individual goals should derive from strategic direction and overall company goals. These goals should be stated in measurable term so that the expectations of the employee and the manager could be aligned. Managers should have good knowledge of employees’ performance appraisal system and that performance appraisal should have a feedback.
TABLE OF CONTENT
Title page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Content vi
CHAPTER ONE- INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 6
1.3 Aims / Objective of the Study 7
1.4 Relevant Research Questions 8
1.5 Relevant Research Hypotheses 8
1.6 Significance the Study 9
1.7 Scope of the Study 10
1.8 Operational Definition of Terms 10
End of Chapter one References 11
CHAPTER TWO- LITERATURE REVIEW
2.1 Preamble 12
2.2 Theoretical Framework of the Study 12
Concept of Appraisal Performance 15
Benefits of Performance appraisal 18
Concerns and challenges of Performance appraisal 20
2.3 Empirical Review of Previous Work in the Subject of Study 25
End of chapter two References 29
CHAPTER THREE- RESEARCH METHODOLOGY
3.1 Preamble 32
3, 2 Research Design 32
3, 3 Population of the study 32
3.4 Sampling Procedures and Sample size 32
3.5 Data collection Instrument and Validation 33
3.6 Method of Data analysis 33
3.7 Limitation of the Methodology 33
End of chapter three References 34
CHAPTER FOUR- DATA PRESENTATION AND ANALYSIS
4.1 Preamble 35
4.2 Presentation and analysis of Data according to Research questions 42
4.3 Testing of Hypotheses 48
4.4 Discussion of Findings 53
End of chapter four References 56
CHAPTER FIVE- SUMMARY, CONCLUSION, RECOMMENDATION
5.0 Preamble 57
5.1 Summary 57
5.2 Conclusion 59
5.3 Recommendations 60
End of chapter five Reference62
Bibliography 63
Appendix 67
CHAPTER ONE
INTRODUCTION
1.1 Background of Study
Growth is essential to organization’s survival. Without it, the organization will find its competitive position weakened as rivals increase their hold on the market; eventually it will either suffer a declining market share or succumb to a takeover. In addition, growth offers a greater opportunity to satisfy the aspiration of the diverse interests within organization. It should be borne in mind that willingness to grow is not sufficient. Condition both within and outside the organization must be favourable to growth if this is to be achieved. The human resources have been identified as a critical factor in organization growth. Ever since the time of Abraham Taylor (1856-1951) productivity improvement in organization had been an issue of great concern (Idemobi and Onyeizugbe, 2011). It is noted that there is negative influence of group on performance. As a result Abraham Taylor broke informal group activities through spatial and work-flow designs and individual piece rate system of pay. Taylor had based his management system on production-line time studies. Instead of relying on traditional work methods, he analyzed and timed steelworkers’ movements on a series of jobs. He therefore, encouraged employers to pay more productive workers at a higher rate than others, using a “scientifically correct” rate that would benefit both company and worker. Thus, workers were urged to surpass their previous performance standards to earn more pay. Rather than quarrel over profits, both management and workers should try to increase production and by so doing, he believed, profits would rise to such an extent that labour and management would no longer have to fight over them. What this analysis seems to suggest is that the productivity of an organization is jointly determined by the efficiency with which the organization utilizes several available factors of production which invariably are scarce relative to the demand for them. In other words, organizations can only win a competitive advantage through people (Obisi (2011).
However, the importance of effective employees’ performance appraisal system cannot be underscored. In this ever increasing and competitive world, organizations can grow to the extent that people who work in such organization are supported to grow. It has been reported by researchers that many Nigerian business organization pay less attention to performance appraisal system despite the believe that management and labour had a common interest in increasing employees’ productivity in the organization, evidence in the literature also suggests that 44% of organizations worldwide use performance measurement systems as a mechanism to improve employee performance (Idemobi and Onyeizugbe, 2011). Yet, many Nigerian Organization view performance appraisal and conduct it solely in terms of its evaluative aspect thereby overlooking its use to facilitate growth and development in employees through training, coaching, counseling and feedback of appraisal information (Obisi, 2011). Nigerian business organizations need to view performance appraisal as a major management practice to assess the immediate and future relevance of their workers. By so doing, employees will contribute more to the achievement of their business organizations’ goal and objectives.
However, it should be borne in mind that performance appraisal system facilitates communication between the employees and their immediate supervisor by providing a structure for feedback on performance. This demands that employees should understand the need for performance appraisal to improve productivity. Once this is understood, the employees and supervisors or managers have to define the expectations by using the job description. Also, supervisors should conduct reviews regularly during the year in order to discuss the employee’s progress toward accomplishing desired results and to address ongoing issues. Good employee relations are built upon fair and equitable treatment. It is important that treatment of employees must be based on definite standards, applied fairly and without discrimination. There are seven performance factors identified for all employees and one additional optional factor. They include communication, customer service, cooperation/teamwork, quality, productivity/core organizational/business skills, job knowledge/technical proficiency and professionalism (Wikipedia contributors, 2014). In the performance level, it should be borne in mind that manager will rate each performance factor, on a scale of 1 to 5, as it relates to employee performance. Specific, objective comments may be included to support the ratings. Managers and employees must share a common understanding of what each rating signifies, and use them consistently. There are four performance levels documented in the existing literature. The first performance level is the outstanding that is reserved for individual whose work performance is clearly and consistently superior to the standards required for the position. This caliber of performance is easily recognized by others in related areas as well as outside of the individual’s own group or function. The individual is successful in unusual and adverse situations, meets extraordinary business challenges with little or no guidance, and sets a positive example for others. Results significantly exceeded performance standards/objectives over a sustained period. Second is the expectation that explains how individual exceeds most requirements of the position, including all key areas. This rating demonstrates a level of accomplishment that goes beyond reasonable and demanding standards, particularly in key knowledge, skills and abilities. Performance is characterized by high achievement and the individual demonstrates planning and execution of all routine functions and most major functions with minimal guidance. Third, achieves expectations describes how individual demonstrates a level of accomplishment that clearly fulfills expectations and at times exceeds them. It reflects good, solid and consistent performance. Has demonstrated ability to execute and control routine functions and several major functions with occasional guidance. Four, minimally meets expectations shows how individual demonstrates a level of accomplishment that is below the standards of performance and does not meet or marginally meets the requirements. This individual demonstrates an inconsistent level of achievement and requires more direction and guidance than normally expected for routine function.
In developed world, performance appraisal has been used to exposes the strength and the weakness of the staff on the job especially in developed world (Per. Com, .2013). In these countries, performance appraisal practice is done without the appraisers attaching themselves to the exercise unlike developing countries where the exercise is said to be unproductive and affect organizational goals. For every organization to constantly realized its set goals, it is important that performance appraisal must become a regular exercise and must occupy central role/or function of the management. The unbiased practiced of performance appraisal will make all organizations to face keen competitions and challenges at local, national and international levels. That is, performance appraisal is must become a tool to measure the status of any organization across board. Hence, this study seeks to examine performance appraisal as a management tool, exercise or practice to determine the retention, promotion of staff and productivity of Nigeria Bag Manufacturing Company (BAGCO). The company pioneers the manufacture of woven polypropylene sacks thus contributing to economic growth and development. The company seems to be efficient in resources use. As noted by Oluwo (2014) BAGCO’s In-Plant Training has so far accounted for 95% of its middle level manpower needs. External training programmes are also conducted to meet new challenges in the industry.
Most undeniably, empirical evidence has shown that many organizations in Nigeria have not given adequate attention to performance appraisal review as a tool for improving performance even when recent studies suggest that performance reviews benefit organizational performance in both private and public sectors (Asamu, 2013; Kolawole, Komolafe, Adebayo and Adegbroye, 2013; Obisi, 2011; Dechev, 2010 to mention but few).
Undeniably, many Nigerian Organization view performance appraisal and conduct it 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 (Obisi, 2011). Worst still, it is reported that most of the managers and employees have only a few positive things to say about performance appraisal and many of them even dislike it. Hence, performance appraisal is accorded a lesser role in Nigerian organization as more emphasis is given to selection, training, development and salary administration. This seems to imply genuine individual and organization growth are stifled because of the seemingly wrong approach. In essence, the inability of organization to install an effective performance appraisal strategy has hindered them from achieving competitive advantage which they require more now than ever before. It is further pointed that appraisal processes are not systematic and regular and often characterized by personal influences occasioned by organizations preoccupation to use confidential appraisal system which hinders objectivity and fairness. Effective performance management is essential to ensure that a business is operating effectively and is on track to achieve strategic goals. On this note, this study seeks to assess the casual relationship between appraisal performance and organization growth.
1.2 Statement of Problem
Many organizations in Nigeria businesses have failed because of ineffective and inefficient performance appraisal system (Obisi, 2011). The performance of staff of executing agencies or public enterprises is limited to budget monitoring and annual performance evaluation. However, experts are of the view that there is no link between employee performance and organization productivity or growth (Idemobi and Onyeizugbe, 2011). These organizations are required to give adequate attention to performance management reviews to enhance productivity.
Research studies have shown that only a few organizations in Nigeria organizations are making efforts to embark on a performance appraisal review with the commensurate reward system. Some researchers blame this on managers who do not have adequate information on performance review techniques that could have significant impact on employees’ performance for greater organizational effectiveness (Esu and Inyang, 2009). The inability of organization to install an effective performance appraisal strategy has hindered Organizational performance and its resultant efficiency and effectiveness can only be achieved when individuals them from achieving competitive advantage which they require more now than ever before. Nevertheless, where employees job are evaluated appraisal processes are not systematic and regular and often characterized by personal influences occasioned by organizations preoccupation to use confidential appraisal system which hinders objectivity and fairness. Often organizations ignore management by objectives, critical incidents to personal prejudices. This is retrogressive as it affects the overall performance of the individual and often characterized by personal influences. This research study seeks to assess appraisal performance as a tool for organization growth.
1.3 Aims / Objectives of the Study
The general objective of the study is to examine the relationship between performance appraisal organization growths. Specifically, it is set out to:
Ascertain if Nigeria Bag Manufacturing Company (BAGCO) attaches any significant importance on performance appraisal review. Find out if any difference exists between BAGCO’s performance appraisal system and what literature reveals about appraisal system of Nigeria business Organizations. Assess the effectiveness of organization performance appraisal review in Nigeria. Examine the manager’s knowledge of performance review techniques that could have significant impact on employees’ performance for greater organizational effectiveness. Assess the relationship between performance appraisal and organization growth.
1.4 Relevant Research Questions
The following questions will guide this research study
Will Nigeria Bag Manufacturing Company place any priority to performance appraisal review in evaluating its employee job performance? Will BAGCO’s performance appraisal system differ from what literature reveals about appraisal system of Nigeria business Organizations? To what extent has the company’s performance appraisal review impacted on its productivity? Does the manager’s have any significant information about performance review techniques that could have significant impact on employees’ performance for greater organizational effectiveness? Does performance appraisal have any significant relationship with organization growth?
1.5 Relevant Research Hypotheses
The following null hypotheses will guide this study
Ho 1: The Nigeria Bag Manufacturing Company will not attach any significant importance to performance appraisal system.
Ho 2: There will be no significant difference between BAGCO’s performance appraisal system and what literature reveals about appraisal system of Nigeria business Organizations.
Ho 3 The performance appraisal system of the Nigeria Bag Manufacturing has not made any significant impact on its growth or productivity.
Ho 4: The manager does not have any significant information on performance review techniques that could have significant impact on employees’ performance for greater organizational effectiveness?
Ho 5: There is no significant relationship between performance appraisal and organization growth.
1.6 Significance of the Study
This study has implication for promoting employees’ performance for greater organizational effectiveness. It is also relevant in the true sense that it will make managers in business organization in Nigeria to give adequate attention to performance management reviews to enhance productivity. This research study will help educate employees and supervisors on the area of having communication that will provide a structure for feedback on performance. Therefore, this study will enhance employees understanding and use performance appraisal as an opportunity to improve employees’ productivity and develop his or her full potential. This research study identifies and documents the present performance appraisal review of Nigeria business organization. The awareness that this study will create would help organization to tilt to effective performance appraisal and management performance appraisal to bring about growth. Organization will have to benefit from this study by achieving its vision and objectives. Employees will also benefit through performance incentives and morale. The study will also give employees the confidence to give a good appraisal in order to \work environment. The study will help employers to properly design and implement their organization aims and objectives leading to a strong relationship between the work performance and the achievement of the organization. It will add to the growing body of knowledge.
1.7 Scope of the Study
This research study focuses on employee performance appraisal as a tool for enhancing organization growth. It covers 250 employees of Nigeria bag manufacturing company. This will be replicable to business firms or organizations in Nigeria. Obtaining materials and gathering useful information from the employees also poised some constraints.
1.7 Operational definition of Terms
The following terms were operationally defined.
Performance: An effort towards achieving a desirable end. It also shows the outcome of work done or carried out by people. Performance in this study may refer to the input-output function.
Appraisal: making a fair assessment of individual contributions or efforts. It is the evaluation of job performance.
Performance Appraisal: Performance appraisal has been described as “the process of identifying, observing, measuring, and developing human performance in organization.
Growth: achieving better rate of return and rising share market the assets.
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