Effect of Performance Appraisal on Organizational Efficiency

Introduction

1.1 Background of the Study

Organizations are all about people, as human beings constitute the most vital resource of organizations. Therefore, how these people are gotten, managed and maintained go a long way in determining the success or fatigue of organizations. However, this is the main concern of managers in modern organizations (Obi, Onyekwelu, Onwubiko and Mohammed, 2016). Human beings are crucial asset of any organization is its employees and the success of the organization depends on their performance. One of the ways to evaluate performance of an organization achievement is through routine appraisals. The importance accorded to performance appraisal systems in part arises from the nature of the current business environment, which is marked by the need to achieve organizational goals as well as remain relevant in intensely competitive markets through superior employee performance (Chen & Eldridge, 2012).

Within this context, various studies suggest that organizations can hardly control the behaviour of their employees (Attorney, 2007). The organizations can however control how employees perform their jobs. Formal performance appraisal is a human resource management (HRM) practice that has attracted considerable attention from both practitioners and scholars (Fletcher, 2001). The interest in the implementation of formal performance appraisal systems stems from the fact that such practice may accomplish a wide variety of functions. These functions may include the monitoring of employees, the communication of organizational values and objectives to workers, the evaluation of hiring and training strategies, and the validation of other human resource management practices (Baron & Kreps, 1999). Performance appraisal systems are widely used in organizations around the world as a means of evaluating employee performance, setting performance standards, identifying training and development needs, and making decisions related to promotions, rewards, and compensation. The effectiveness of performance appraisal systems in achieving organizational goals and enhancing employee performance and motivation has been a subject of considerable research and debate among scholars and practitioners.

The concept of organizational efficiency is related to issues such as the ability of an organization to access and absorb resources and consequently achieve its aims (Federman, 2006). As Gigliotti (1987) said, a unit which is individually ineffective in terms of cooperation with the rest of the organization is doomed to failure. Organizational efficiency is the proficiency of the organization at having access to the essential resources. achieve skills and self-esteem in order to control the new environment and find security and support. Abbah, (2014) an organization is effective to the degree to which it achieves its goals. An effective organization will make sure that there is a spirit of cooperation and sense of commitment and satisfaction within the sphere of it influence”.

The impact of performance appraisal on organizational efficiency extends beyond individual performance to team and organizational effectiveness. Research by DeNisi and Pritchard (2006) and Pulakos and O’Leary (2011) has highlighted the role of performance appraisal in fostering a culture of continuous improvement, accountability, and performance excellence within organizations. By establishing performance standards, monitoring progress, and identifying areas for organizational learning and development, performance appraisal contributes to the overall efficiency, effectiveness, and competitiveness of the organization.

1.2 Statement of the Problem

Performance appraisal is a procedure to evaluate how individual personnel are performing and how they can improve their performances and contribute to overall organizational performance(Baguli, 2014). In addition to the positive effects of performance appraisal on organizational efficiency, scholars have also examined potential challenges and limitations associated with performance appraisal systems. Issues such as rater bias, subjectivity, and lack of reliability and validity in performance assessment have been identified as potential barriers to the effectiveness of performance appraisal (Murphy and Cleveland, 1995; Cardy and Dobbins, 1994). Moreover, the perceived fairness and transparency of performance appraisal processes can impact employee perceptions of organizational justice, trust, and commitment, thereby influencing organizational efficiency (Cropanzano and Greenberg, 1997; Colquitt et al., 2001).

In Nigeria most of the performance appraisal exercise /program are not well designed and focused. Management of organization tends to view it as a punitive measure. This makes it lose its objective sand focus, performance appraisal no longer seek to actualize its objective of correcting deviations, hence increasing productivity and jettison all hindrance that tends to hinder productivity. But it is being used as and jettisons all hindrance that tends to hinder productivity. But it is being used as a tool for subordination oppression, victimization and exploitation. Despite the veritable return at performance appraisal to many organizations, the societal value system has subdued it objectivity and its attendant’s outcomes. This makes most of our performance more subjective than objective.

1.3 Objectives of the Study

The study’s overall purpose is to examine the effect of performance appraisal on organizational efficiency (a case study of Nigeria Brewery, Onitsha, Anambra State). The study, on the other hand, focuses on achieving these precise goals.

Determine whether employees performance appraisal system is implemented in Nigeria Brewery, Onitsha, Anambra State.

Determine whether there is a significant relationship between performance appraisal and organizational efficiency.

Determine the performance appraisal techniques required to promote organizational efficiency in Nigeria Brewery, Onitsha, Anambra State.

Determine the impact of performance appraisal on organizational efficiency in Nigeria Brewery, Onitsha, Anambra State.

1.4 Research Questions

The following questions guided the study:

Is employees performance appraisal system is implemented in Nigeria Brewery, Onitsha, Anambra State?

Is there a significant relationship between performance appraisal and organizational efficiency?

What are the performance appraisal techniques required to promote organizational efficiency in Nigeria Brewery, Onitsha, Anambra State?

What is the impact of performance appraisal on organizational efficiency in Nigeria Brewery, Onitsha, Anambra State?

1.5 Research Hypothesis

Ho: There is no significant relationship between performance appraisal and organizational efficiency.

Ha: There is a significant relationship between performance appraisal and organizational efficiency.

1.6 Significance of the Study

This study is a very important one and most significant in any organization to its growth and success, performance appraisal has been a strategic means which many organizations uses to motivate and enhance productivity in an organization. Performance appraisal serves as a “prima facie” evidence on the staff input or work force to the organization as well as her performance. The study will emphasize on the need for performance appraisal of workers in other to boost organizational efficiency.

1.7 Scope of the Study

The study focuses on the effect of performance appraisal on organizational efficiency. The study will be conducted in Nigeria Brewery, Onitsha, Anambra State.

1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.

1.9 Definitions of Terms

Performance Appraisal:

Refers to the systematic evaluation of an employee’s performance within an organization.

Efficiency:

A level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of outputs. It also relates to the use of all inputs in producing any given output, including personal time and energy.

1.10 Organization of the Studies

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.