Appraisal Practices and Employee Performance in Microfinance Banks in Nairobi County Kenya
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Date
2021
Authors
Odenyo, Nicholas Ouma
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Globally, employee performance remains a concern to many organizations. Organizations, particularly
microfinance banks, use appraisal practices and their effective execution as a crucial staff development
approach. Given the challenges of employee performance in microfinance institutions, embracing
performance appraisals becomes critical as a means of recognizing and rewarding employee effort at
work, as well as assisting in the detection of potential performance problems, while facilitating good
work practices, cultivating professionalism, and supporting employee growth needs. The specific
objective of this study was to see if there was a link between employee performance and appraisal
processes in Microfinance Banks in Nairobi County, Kenya. The research study was done in Faulu
Microfinance Bank. The study's obejectives were to determine the effects of target setting on employee
performance, the role of evaluation on employee performance, the communication practice in the
appraisal process and how it affects employee performance, and to investigate the corrective action
practice in the microfinance sector and its relationship with employee performance. The research was
guided by Goal Setting Theory, Expectancy Theory, and Social Cognitive Theory. In this study, a
descriptive research design was adopted. The target population was 343 people, with 102 people
responding to the survey. A stratified random sampling strategy was adopted by the researcher. Data was
gathered using questionnaires. The surveys' reliability and validity were tested in a pilot study. Response
frequencies, percentage means, and standard deviation values were calculated using descriptive statistics
data analysis and the Statistical Package for Social Sciences (SPSS). Finally, a Multiple Linear
Regression Model was used to estimate the effects of the independent variables on the dependent
variable. The findings of the study were presented using tables, pie charts, and graphs. The findings of
the study indicated that the microfinance bank has mechanism that ensures appraisals are done in a
structured way that has clarity to the employees and that when the employees are involved right from the
beginning, communication is aligned to expectations, participants are sufficiently trained and corrective
action is aligned to employee performance models. The findings showed that proper and effective
appraisal practices will serve to promote a positive culture and environment for employee performance.
The study therefore recommended that Faulu Microfinance Bank and other microfinance institutions
should seek to ensure that peer to peer or 360 degrees appraisal is adopted so that employees can receive
feedback from one another as compared to top- bottom feedback. It also recommended that the
microfinance bank should not only involve the employees but also seek to incorporate their views in the
overall business strategy. This can lead to the ownership of the goals and objectives of both individuals
and organization. The study further recommend training for the parties involved in the appraisal process
so as to develop and promote an attitude that is open and receptive to feedback and change.
Description
A Research Project Submitted in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Business Administration, School of Business, Kenyatta University, November, 2021
Keywords
Appraisal Practices, Employee Performance, Microfinance Banks, Nairobi County, Kenya