THE IMPACT OF PERFORMANCE APPRAISAL ON THE PRODUCTIVITY OF EMPLOYEES

Abstract

Organizations spend millions annually recruiting and training employees that will help meet their set goals and objectives. The major problem has been finding a way to effectively evaluate the employees’ performance, provide feedback to the employee concerning their performance, and provide the necessary training and motivation. Performance appraisal is a tool that helps organizations to realize their employees' full potential. This study sought to determine the overall effect of performance appraisal methods and performance-based rewards on employee productivity. The dependent variable for the study is employee productivity, while the independent variables are performance appraisal methods, performance-based rewards, and employee perception. The study focused on the employees of Micro Finance Banks based in Lagos, Nigeria. The employees were chosen using simple random sampling and the respondents included the supervisors, unit heads, and bank managers. The information was collected using questionnaires, and a descriptive research design was used to report and interpret the data in graphs, tables, and charts. To establish the relationship between the independent and dependent variables, a multivariate regression analysis model was used to review the data. The study suggests that performance appraisal leads to improved employee productivity and that the design and choice of appraisal techniques are very important. It also determined that recognition and feedback are vital to improving an employee’s productivity, while incentives like training and promotion have no significant impact. Financial rewards like bonuses, salary increments, and higher commissions were the preferred motivators. It recommends that organizations put effective reward systems in place to match employees’ contributions and work effort.