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EFFECT OF PERFORMANCE MANAGEMENT ON EMPLOYEE PERFORMANCE

ABSTRACT

This study explored the effect of performance management on employee performance. The general objective of the study was to determine the effect of performance management practices on employee productivity with a focus on Nigeria Flour Mill. This study used the descriptive research design. The study adopted a quantitative approach on the effects of performance management practices on employee productivity. The dependent variables included performance appraisals, reward systems and performance feedback, and the implications on employee productivity as the independent variable. The target population comprised of 108 Nigeria Flour Mill employees in Lagos, Kaduna and Kano branches in Nigeria. Stratified sampling was used to divide the population into two strata. Descriptive statistics was utilized as a data analysis tool. The demographic profiles of the respondents were analyzed using percentages and frequencies. Inferential statistics such as correlation and regression analysis established the relationship between dependent and independent variables. The study concluded that effective performance management practices gives employees opportunity to express their ideas and expectations for meeting the strategic goals of the company.  Performance management practices could be an effective source of management information and renewal.  The use of reward system has been an essential factor in any company's ability to meet its goals. Effective feedback on performance measurement may translate to improved employee productivity.  Feedback enables the employees to be made aware of what exactly is expected from them. The study recommends that the performance management practices should be optimized to improve employee performance. Performance reviews should be focused on the contributions of the individual employees to meet the organizational objectives.

CHAPTER ONE

INTRODUCTION

1.1    Background to the study

 Organizations are run and steered by people. It is through people that goals are set and objectives are accomplished. The performance of an organization is thus dependent upon the sum total of performance of its members. The success of an organization will therefore depend on its ability to measure accurately the performance of its members and use it objectively to optimize them as a vital resource (Biswajeet, 2009). In the present highly competitive environment, organizations have to ensure peak performance of their employees continuously in order to compete and survive at the market place effectively (Prasad, 2005). Performance of an individual can be defined as the record of outcomes produced as specified job functions or activities during a specified time period (Bernardin, 2007). It can also be seen as a set of outcomes achieved during a certain period of time and does not refer to the traits, personal characteristics, or competencies of the performer.

Performance management on the other hand can be defined as a systematic process for improving organizational performance by developing the performance of individuals and teams (Armstrong, 2012). According to Briscoe and Claus (2008) performance management is the system through which organizations set work goals, determine performance standards, assign and evaluate work, provide performance feedback, determine training and development needs and distribute rewards. Performance management is a process involving performance planning, performance managing, performance appraisal, performance rewarding and performance development (Deb, 2009). Performance appraisal can be defined as the formal assessment and rating of individuals by their managers (Armstrong, 2012). Performance appraisal as an element of performance management is often carried out to reveal individual employee’s contribution to the overall organizational objectives. To drive this notion home Biswajeet (2009) asserted that people do not learn unless they are given feedback on the results of their actions. For corrective actions to take place feedback must be provided regularly and it should register both successes and failures.

1.2     Statement of the study

The process of managing the performance of employees in an organization is often vague, the areas of performance for which an individual is responsible are often unclear and evaluations are often not based on actual performance but on the perceptions and judgment of an employee’s immediate boss.  Therefore, an ill-conceived and ill-considered performance management system could create tensions in the organization. The process of measuring and subsequently actively managing organizational and employee performance in order to improve organizational effectiveness is currently seen as critical to the onward survival and development of organizations (Inyang, 2008). It may be positively dangerous simply to copy schemes used in other organizations, and worse still to copy methods simply because it is the managerial fashion (Agarwal, Angst and Magni, 2009). It is on this background that this research seeks to examine the effect of performance management on employee performance with a special reference to Nigeria Flour Mills PLC.

1.3   Objectives of the Study

The primary aim of the study is to examine the effect of performance management on employee performance. Other specific objectives shall include:

(i) To examine the relationship between performance management and employees’ attitude to work.

(ii) To explore the nexus between performance management and organizational performance.

(iii) To examine whether performance appraisal reveals employees’ actual strengths and weaknesses in the organization

(iv) To examine the methods adopted in the organization to measure employee performance.

(v) To suggest ways by which performance management could be used to  enhance employee performance.

1.4   Research Questions

The research project beam a searchlight on the following research questions:

a. What is the relationship between performance management and employees’ attitude to work?

b. How does performance management affect organizational performance?

c. Does performance appraisal reveal employees’ actual strengths and weaknesses in the organization?

d. What are the methods adopted in the organization to measure employee performance?

1.5   Research Hypotheses

The researcher intends to test the following hypotheses;

Hypothesis 1

Ho: There is no significant relationship between performance management and employees’ attitude to work.

H1: There is a significant relationship between performance management and employees’ attitude to work.

Hypothesis 2

Ho: Performance management is not a significant predictor of organizational performance.

H1: Performance management is a significant predictor of organizational performance.

Hypothesis 3

Ho: Performance appraisal does not reveal employees’ actual strengths and weaknesses in the organization.

H1: Performance appraisal reveals employees’ actual strengths and weaknesses in the organization.

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