Performance Appraisal Systems and Employee Productivity in Commercial Banks in Nairobi County, Kenya
Wagacha, Kevin Njuguna
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Performance appraisal is a component of performance management which is intended to increase efficiency and productivity and provides an opportunity to continuously review agreed-upon objectives. However, some studies have called for the abolishment of performance appraisals citing numerous shortcomings that exist with performance appraisal systems. Some studies have shown that many line managers felt that performance appraisals did not add value or help achieve business objectives while many workers found it a nuisance. In Kenya, performance appraisal has been embraced by both the public and private sectors as a tool for performance improvement. Assessment of its effectiveness, however, has been hampered. This study sought to determine the effect of performance design and methods, employee perception and performance based rewards on employee productivity. The general objective of this study was to establish the effect of performance appraisal systems on employee productivity in commercial banks in Kenya focusing on those based in Nairobi County. This study was carried out at the head offices of these commercial banks. The research targeted572 workers selected from the following departments: human resource, finance, information technology and marketing. The respondents included heads of departments, section heads and supervisors. Stratified random sampling was used to determine a sample size of 115 respondents. The study used descriptive research design which involved collection of information from a common group through questionnaires to a representative sample of that group. Data collected was coded, entered and analysed using the Statistical Package for the Social Sciences (SPSS). Descriptive statistics were used in reporting and was interpreted through the use of charts, graphs and tables. In order to test reliability of the instruments, internal consistency techniques was employed using the Cronbachs Alpha Coefficient of 0.6-0.7.The study established that employees in commercial banks in Kenya were appraised by personnel in higher ranking positions than them. It was also established that performance appraisal problems are dealt with as they arise. In addition, most employees in the banking sector have a positive attitude towards performance appraisals since they create job confidence and this maximizes output. The major implication of these findings is that performance appraisals are largely a success in commercial banks in Kenya. This study recommends the continued use of performance appraisals. To further improve the performance appraisal process, this study also recommends that management adopt successful management styles that involve team building, motivation and instilling skills. In addition, the appraisal system should be evaluated periodically, performance expectations of employees clearly stated and management communicates the importance of performance appraisal to the employees.