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ABSTRACT

This research was conducted to explore the factors involved in making performance
appraisal successful. For conducting this research we used questionnaires. This
research sample size was 91. Statistical tools used, were correlation and regression.
The study showed that there is a positive relationship among job satisfaction,
feedback, importance to appraisal and success of performance appraisal. There is
Impact of job satisfaction and importance to appraisal on the success of performance
appraisal.

Key words: performance appraisal, job satisfaction, importance to appraisal,


feedback.

INTRODUCTION

Performance appraisal is a structured formal interaction between a subordinate and


supervisor, that usually takes the form of a periodic interview (annual or semi-
annual), in which the work performance of the subordinate is examined and
discussed with a view to identifying weaknesses and strengths as well as
opportunities for improvement and skills development of an employee.
Performance appraisal should also be viewed as a system of highly interactive
processes which involve personnel at all levels in differing degrees in
determining job expectations, writing job descriptions, selecting relevant
appraisal criteria, developing assessment tools and procedures, and collecting
interpreting, and reporting results.

No matter what type of business or group you are in, having a performance appraisal
system is a good idea. Even if organization have only one employee, that formally
review staff on a regular basis. Performance appraisal contributes to the overall
welfare of the organization. If it is done properly, performance appraisal is a very
effective tool to improve performance and productivity. It helps individuals to do
better, raises self-esteem and motivation.

To make the performance appraisal much effective, there should be clear objectives
for doing performance appraisals and everyone in the organization should
understand why it is being done.

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Literature Review

There is a growing debate about the appraisal process and utility of appraisal
systems for evaluating employees. Employee performance appraisal is vital and
vigorous management tool that makes difference in the organizational performance.
Employee performance appraisal is the method by which supervisor provides
ongoing feedback to subordinates about their performance, set objectives for
improvement, coaches employees, and produce a written evaluation of
performance. The goal of the appraisal is to foster staff development, increase
communication between mangers and the employees, and provide valuable feedback
to employees about their performance and recommend strategies for continued
professional growth. But if the goal is not achieved it has a negative effects on the
employees’ performance. Janice Lagan-fox, Jennifer Waycott, Marri Morizzi and
Louise McDonald (October 1998) conducted a research on predictors of
participation in performance appraisal. According to them, “attitude towards, and
support of, performance appraisal in general, perception of the consequences of
performance appraisal, satisfaction with the supervisor, anticipated feedback, and
awareness and knowledge of the system in the place in organization, were important
in predicting decision to adopt or reject the performance appraisal scheme”. They
also mentioned in their research that supervisors rarely gave formal or informal
feedback to employees and satisfaction with feedback is primarily determined by the
satisfaction with the supervisors. When the objectives are clearly defined the
employees will better able to understand that based on what tasks have been
evaluated. In their study it appeared that the employees that are more satisfied with
their supervisors believed that the supervisor was aware of the employee
performance standards and helped the employees to improve their performance.
Performance appraisal is an important tool to measure the performance of
employees and its worthiness is not neglected in any sector. Chris Metcalf (February
2001) conducted research on the importance of performance appraisal and staff
development for graduating nurses. According to him, “net benefit for employers is
improved quality outcomes, increased job satisfaction by the staff and cost-effective
usage of the resources. The limitation of the performance appraisal however, occurs
when management and staff do not understand the principles of performance
appraisal”. Performance appraisals provide employee with direct feedback on staffs’
performance, and also support an environment in which staff develop skills in
reflecting on and evaluating their own performance. Performance appraisals have
dual purpose. Firstly, the employee is rated on how well they have performed in the
past, and secondly future goals or objectives are made that will improve
performance in identifiable areas. According to Bailey RMN (November 1998) the
performance appraisal and performance review allow management to monitor
progress of employee efforts on the regular basis. This also facilitates
communication between management and the nursing staff when feedback is
provided regularly. He said that the appraisal is an opportunity for the appraisee and
appraiser to gauge professional development needs and the availability of adequate
resources required to facilitate these. According to his research, “An approach to
measuring performance for nurse educators to seize the initiative and be proactive in
presenting their own evidence at the appraisal interview, based on the systematic,
meaningful and reflexive evidence based practice. Instead of judging human nature

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and professional activities in linear ways, appraisal systems should reflect and chart
the expansive and hostalic knowledge, skills and practice which occur in everyday
professional action. This would better enable the emergence of appraisal systems
which are supported, owned and developed by those who are assessed and
monitored by them”.

Barbara Townley (May 1999) conducted a research on “practical reasons and


performance appraisal”. This researched was focused on the University of Alberta
where initially there was no formal procedures established for conducting
performance appraisal and management was interested to find whether formal
procedures would be successful or not. According to his research formal procedures
would not be successful because most of the managers carry out performance
appraisal interviews only when strong control procedures are established that do so.
Fundamental concerns involved the dislike of criticizing subordinates and resistance
to passing judgments on individuals, managers are uncomfortable. His research
indicates that management performed informal procedures of conducting
performance appraisal. Performance appraisal is an important tool to motivate the
employees as mostly salty increments are based on the performance of the employee
that is evaluated by performance appraisal. Wayne Goss (October 2000) gave speech
on performance appraisal system of public sectors of Australia. That paper examined
the use of performance related pay to motivate public servants. He said in private
sector, performance related pay is successful tool to motivate employees but in the
government sector it did not work. The key element of performance appraisal is
feedback but managers are reluctant to criticize their staff and unable to evaluate the
individual contribution to the team outcome. Most important reason of failure is the
way performance is evaluated in the public sector. Performance pay rewards are
typically based on annual appraisal rating on five-point summary rating scale.
According to him performance appraisal can have demotivating effect if the
employee is graded low then he expected. The study also found the expressed desire
by the managers for feedback that is non-quantifiable and comparable with others.
Tony Culter and Barbara Waine (June 2000) conducted research on role of the
performance related pay for teachers. This study was conducted in UK. The labor
government published green papers to modernize the teaching profession in 1998.
Teachers were appraised and paid according to their performance and their
performance includes ways in which the teacher will contribute to the team
priorities, teachers’ own professional development and overall quality of the work of
teacher and its impact on the children. Michelle Brown and John Benson (2003)
conducted research on the “reaction to performance appraisal”. According to them
increasing prevalence of appraisal made the employee feel overworked. Majority of
employees felt that pace of work had increased over the past 12 m0nths. Employees
were exhausted of intensive performance monitoring and wanted less performances
monitoring. Therefore, one of the though problem is instead of increasing employee
commitment and productivity, performance appraisal has potential to generate
negative effects for the employees and hence the organization they work for.
According to them the employees who are ranked higher will perform well but those
who are average or below average will become uncomfortable and will engage in
cognitive dissonance. They are more likely to resign themselves to current or
reduced productivity level. In order to make performance appraisal an effective tool
to motivate employees the attitude plays an important role. Aharon Tziner, Kelvin
R. Murphy and Jannette N. Cleveland (September 2001) conducted research on

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“relationship between attitude toward organization and performance appraisal
system and rater behavior”. Their research suggest, “attitudes and beliefs accounted
for substantial variance in raters’ likelihood of giving high or low ratings,
willingness to discriminate good from bad performers, willingness to discriminate
among various aspects of job performance and competing actual performance
ratings”. Michelle Brown and John S. Heywood (December 2005) conducted
research on the performance appraisal system determinants and change. According
to their research, “performance appraisal is associated with workers having shorter
expected tenure and greater influence on the productivity”. They find out that the
presence of training gives rise to the need to evaluate the success of training and this
increases the benefits from formal appraisal. Thus, they anticipated that the
provision of training will be a positive determinant of performance appraisal.
According to them, absence of performance appraisal need not mean the complete
absence of monitoring. Monitoring may happen in an informal fashion. Nonetheless,
the implementation and operation of a formal performance appraisal system involves
substantial costs and will not likely be undertaken in those circumstances in which
the anticipated gains are greatest.

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THEORATICAL FRAMEWORK

Independent variable Dependent variable

Job satisfaction

Importance to
appraisal Successful
Performance
appraisal

Feedback

Explanation of Independent variables

Job satisfaction

Level of employee satisfaction has a profound effect as well as relation with


Performance appraisal. If the employee is satisfied with pay structure according to his
performance, as performance appraisal provides employees with recognition for their
work efforts, it means that his performance is fairly evaluated by his supervisor. If
employee is sent for trainings and conferences on the behalf of the organization then it
means that in the performance appraisal his training needs are identified that shows
the performance appraisal is fairly assessed.

Importance to appraisal

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If the supervisor does not give importance to performance appraisal and delays it then
the employees will feel that this issue is unimportant for their supervisor. As mostly
performance appraisals are also connected with salary increment of employees. As a
result employees would become negligible in performing their best job, which will
affect the quality and productivity of work, so giving importance to appraisal is an
important factor in making the appraisal successful.

Feedback

If the subordinate reply in his appraisal that he is appreciated by his supervisor or his
supervisor continuously gives response to his efforts, then his will be motivated which
results in the success of appraisal.

PROBLEM STATEMENT

What factors contribute in making performance appraisal successful?

HYPOTHESIS

H1: Job satisfaction affects the success of performance appraisal


H2: Job satisfaction is positively correlated with the success of performance
appraisal.
H3: Successful performance appraisal depends upon the importance given to it
H4: Immediate feedback of employee is positively related to the success of
performance appraisal

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METHODOLOGY

Data Collection

The data have been collected through questionnaires. Most questions were close
ended.

Participants:

Respondents were middle managers from:


PTCL
Air Blue
PIA
Erricson

Sample Size

A random sample of 100 was selected. Of the sample, 91 responses were obtained
(response rate were 91 percent).

Statistical tools used to analyze the data

Correlation: We have analyzed the data through correlation. We have used


correlation to determine the relationship among independent variables and
dependent variables.

Regression: Regression was used to determine the impact of independent variables


on the dependent variable.

Demographics:

Age Percentage

20-30 49.5%

31-40 31.9%
41-50 11%

50 or more 7.6%

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Gender Percentage

Male 72.5%
Female 27.5%

Education Percentage

High School 6.6

Graduate 34

Higher 18.7

Post Graduate 40.7

RESULTS:

Correlation

Success of
performance Job Importance To
appraisal Satisfaction Appraisal Feedback
Success of
performance
appraisal 1.00

Job satisfaction 0.80 1.00


Importance to
appraisal 0.38 0.55 1.00
Feedback 0.52 0.69 0.77 1.00

Job satisfaction (IV) is strongly positively correlated with the success of


performance appraisal (DV). Therefore, H2 is accepted. It shows that if the level of
job satisfaction increases, the degree of success of performance appraisal also
increases. Responses of employees with in the range of 20-30 have impact on the

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results as 49.5% of our respondents were lying in that range. This shows employees
lying in this age range are satisfied with their jobs and performance appraisal.

Importance to appraisal is weakly correlated with success of performance appraisal.


If the supervisor gives more importance to performance appraisal the degree of
success of performance appraisal also increases but their relationship is not much
significant.

Feedback is positively correlated with success of performance appraisal. Therefore,


H4 is also accepted. If the supervisor provides feedback to employees through out
the year the degree of success of performance appraisal increases.

Feedback (IV) is strongly correlated with another (IV) importance to appraisal. If


supervisor gives importance to appraisal, he’ll provide timely feedback about
employee’s performance that will help them in improving their performance.
Through feedback supervisor can appreciate employees performance that can only
be possible if he gives importance to appraisal, in this way employee will encourage
and try to perform much better.

Regression

R Square 0.64
Coefficient P-
s value
Intercept 0.06 0.03
Job satisfaction 1.04 0.05
Importance of
appraisal 0.08 0.02
Feedback 0.40 0.05

The value of r-square is 0.64 it shows that the variables that we have chosen to
conduct research on performance appraisal contributed 64% to our results while
36% depends upon other factors.

Regression results shows that job satisfaction has significant impact on the success
of employee performance appraisal. So, H2 is accepted. Success of performance
appraisal is expected to increase by 1.04 units if job satisfaction is increases by 1
unit. The p-value shows that 95% probability of being correct that the variable is
having some effect. Importance to appraisal has also impact on the success of
performance appraisal but its impact is significant. Therefore, H3 is accepted that
shows impact of importance given to appraisal on success of performance appraisal.
Success of performance appraisal is expected to increase by 0.08 units if the
importance to appraisal is increase by 1 unit and the P-value shows that the

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probability of being correct is 98% that shows impact of importance given to
appraisal on success of appraisal. The results also indicates that success of
performance appraisal is expected to increase by 0.40 units if feedback increases by
1 unit and probability of being correct is 95%..

FINDINGS:

After applying the tests “correlation and regression” we came up with these finding.

• The results shows that job satisfaction has affect on performance appraisal. So,
H1 is accepted.
• According to the results, job satisfaction is positively correlated with job
satisfaction. Therefore, H2 is accepted.
• Importance given to performance appraisal also have affect on the success of
performance appraisal as determined by results. So, H3 is accepted.
• Immediate feedback is positively correlated with success of performance
appraisal. Therefore H4 is accepted.

LIMITATIONS

• Hesitations among employees to fill questionnaires.


• Lack of seriousness of employees while filling questionnaires.
• To conduct a research time is an important factor. Time was also constraint in
our research.
• Another limitation is that, questionnaire which is very common method for
conducting research, it would be better that if we conduct seminars on our topic,
so that we could get the real picture/exposure of successful performance
appraisal in corporate world and then our research would be more authentic

CONCLUSION

Organizations use performance appraisal to fairly evaluate the performance of the


employees to keep the employees happy and get the quality work from them.
Therefore, organizations considered it as an important tool. From the research we
came to know that job satisfaction, importance to performance appraisal and feedback
are positively correlated with success of the performance appraisal. Job satisfaction
and importance to appraisal also have impact on the success of the performance
appraisal. So, if an organization wants to make its performance appraisal system
successful then it has to give importance to these factors. By improving these factors
performance appraisal can be made successful.

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RECOMMENDATIONS

• From our results we came to know that performance appraisal of employees, is


important for keeping the employees satisfied with their jobs. So management
should consider appraisal as an important tool.

• We suggest that organizations should provide timely feedback to employees


about their performance that will help them to improve their performance as
well as to make performance appraisal successful.

• Supervisors should give importance to appraisal which will encourage the


employees who have been trying to perform well.

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REFERENCES

• Lagan-fox, Janice., Waycott, Jennifer., Morizzi, Maree., McDonald,


Louise (October 1998). Predictors of participation in performance
appraisal: A voluntary system in blue-collar environment. International
journal of selection and assessment, 6, 249-260.

• Townley, Barbara (May 1999). Practical reason and performance


appraisal. Journal of management studies, 287-306.

• Goss, Wayne (4-5 October). Managing for results- appraisal and reward

• Brown, Michelle., Benson Jhon (Rated to exhaustion? Reaction to


performance appraisal process”. Industrial Relations Journal, 67-81.

• Cutler, Tony., Wayne, Barbara (June 2000). Mutual benefits and


Managerial control? The role of appraisal in performance related pay
for teachers. British Journal of educational studies, 48, 172-182.

• Tziner, Ahoran., Murphy, Kevin R., Cleveland, Jeanette N (Sept 2001).


Relation between Attitudes towards Of Organization and Performance
Appraisal Systems and Rating Behavior. International Journal of
selection and assessment, 9, 226-239.

• Metcalf, Chris (Feb 2001). The importance of performance appraisal


and staff development: A graduating nurse's perspective. International
Journal of Nursing Practice, 7, 1-54.

Rmn, Bailey (Nov 1998). The tao of professional appraisal: how to remain
content and calm during the appraisal interview. Journal of Nursing
Management, 6, 6-379.

• Brown, Michelle., Heywood, Jhon S (Dec 2005). Performance appraisal


systems: Determinant and change. British Journal of Industrial
Relations, 659-679.

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