EMPLOYEES’ PERFORMANCE APPRAISAL AS A TOOL FOR ORGANIZATION GROWTH: A STUDY OF THE NIGERIA BAG MANUFACTURING COMPANY (BAGCO) LAGOS

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CHAPTER ONE

INTRODUCTION

1.1             Background of Study

Growth is essential to organization’s survival. Without it, the organization will find its competitive position weakened as rivals increase their hold on the market; eventually it will either suffer a declining market share or succumb to a takeover. In addition, growth offers a greater opportunity to satisfy the aspiration of the diverse interests within organization. It should be borne in mind that willingness to grow is not sufficient. Condition both within and outside the organization must be favourable to growth if this is to be achieved.  The human resources have been identified as a critical factor in organization growth. Ever since the time of Abraham Taylor (1856-1951) productivity improvement in organization had been an issue of great concern (Idemobi and Onyeizugbe, 2011).

It is noted that there is negative influence of group on performance.  As a result Abraham Taylor broke informal group activities through spatial and work-flow designs and individual piece rate system of pay. Taylor had based his management system on production-line time studies. Instead of relying on traditional work methods, he analyzed and timed steelworkers’ movements on a series of jobs.  He therefore, encouraged employers to pay more productive workers at a higher rate than others, using a “scientifically correct” rate that would benefit both company and worker. Thus, workers were urged to surpass their previous performance standards to earn more pay.  Rather  than  quarrel  over  profits,  both  management  and  workers  should  try  to  increase production and by so doing, he believed, profits would rise to such an extent that labour and management would no longer have to fight over them. What this analysis seems to suggest is that the  productivity  of  an  organization  is  jointly  determined  by  the  efficiency with which the organization utilizes several available factors of production which invariably are  scarce relative to the demand for them. In other words, organizations can only win a competitive advantage through people (Obisi (2011).

However, the importance of effective employees’ performance appraisal system cannot be underscored. In this ever increasing and competitive world,  organizations  can  grow  to  the  extent  that  people  who  work  in  such organization are supported to grow. It has been reported by researchers that many Nigerian business organization pay less attention to performance appraisal system despite the believe that management and labour had a common interest in increasing employees’ productivity in the organization, evidence in the literature also suggests that 44% of organizations worldwide use performance measurement systems as a mechanism to improve employee performance (Idemobi and Onyeizugbe, 2011). Yet, many Nigerian Organization view performance appraisal and conduct it solely in terms of its evaluative aspect thereby overlooking its use to facilitate growth and development in employees through training, coaching, counseling and feedback of appraisal information (Obisi, 2011). Nigerian business organizations need to view performance appraisal as a major management practice to assess the immediate and future relevance of their workers. By so doing, employees will contribute more to the achievement of their business organizations’ goal and objectives.

However, it should be borne in mind that performance appraisal system facilitates communication between the employees and their immediate supervisor by providing a structure for feedback on performance.  This demands that employees should understand the need for performance appraisal to improve productivity. Once this is understood, the employees and supervisors or managers have to define the expectations by using the job description. Also, supervisors should conduct reviews regularly during the year in order to discuss the employee’s progress toward accomplishing desired results and to address ongoing issues. Good employee relations are built upon fair and equitable treatment. It is important that treatment of employees must be based on definite standards, applied fairly and without discrimination. There are seven performance factors identified for all employees and one additional optional factor. They include communication, customer service, cooperation/teamwork, quality, productivity/core organizational/business skills, job knowledge/technical proficiency and professionalism (Wikipedia contributors, 2014). In the performance level, it should be borne in mind that manager will rate each performance factor, on a scale of 1 to 5, as it relates to employee performance. Specific, objective comments may be included to support the ratings. Managers and employees must share a common understanding of what each rating signifies, and use them consistently. There are four performance levels documented in the existing literature. The first performance level is the outstanding that is reserved for individual whose work performance is clearly and consistently superior to the standards required for the position. This caliber of performance is easily recognized by others in related areas as well as outside of the individual’s own group or function. The individual is successful in unusual and adverse situations, meets extraordinary business challenges with little or no guidance, and sets a positive example for others.

Results significantly exceeded performance standards/objectives over a sustained period. Second is the expectation that explains how individual exceeds most requirements of the position, including all key areas. This rating demonstrates a level of accomplishment that goes beyond reasonable and demanding standards, particularly in key knowledge, skills and abilities. Performance is characterized by high achievement and the individual demonstrates planning and execution of all routine functions and most major functions with minimal guidance. Third, achieves expectations describes how individual demonstrates a level of accomplishment that clearly fulfills expectations and at times exceeds them. It reflects good, solid and consistent performance. Has demonstrated ability to execute and control routine functions and several major functions with occasional guidance. Four, minimally meets expectations shows how individual demonstrates a level of accomplishment that is below the standards of performance and does not meet or marginally meets the requirements. This individual demonstrates an inconsistent level of achievement and requires more direction and guidance than normally expected for routine function.

In developed world,  performance appraisal  has been used to exposes  the strength  and  the  weakness  of  the  staff  on  the  job especially  in  developed  world  (Per.  Com, .2013). In these countries, performance appraisal practice  is done without the appraisers attaching themselves to the exercise unlike developing countries where the exercise is said to be unproductive and affect organizational goals.  For  every  organization  to  constantly  realized  its  set goals,  it  is  important  that  performance appraisal must  become  a regular exercise and must occupy central role/or function of  the  management.  The  unbiased  practiced  of  performance appraisal will make  all  organizations  to  face  keen  competitions  and challenges at local, national and international levels. That is, performance appraisal is must become a tool to measure the status of any organization across board.  Hence, this study seeks to examine performance appraisal as a management tool, exercise or practice to determine the retention, promotion of staff and productivity of Nigeria Bag Manufacturing Company (BAGCO).  The company pioneers the manufacture of woven polypropylene sacks thus contributing to economic growth and development. The company seems to be efficient in resources use. As noted by Oluwo (2014) BAGCO’s In-Plant Training has so far accounted for 95% of its middle level manpower needs. External training programmes are also conducted to meet new challenges in the industry.

Most undeniably, empirical evidence has shown  that many organizations in Nigeria have  not  given adequate attention to performance  appraisal review as a tool for improving performance even when recent studies suggest that  performance reviews  benefit  organizational  performance  in  both private and  public  sectors (Asamu, 2013; Kolawole, Komolafe, Adebayo and Adegbroye, 2013; Obisi, 2011; Dechev, 2010 to mention but few).

Undeniably, many Nigerian Organization view performance appraisal and conduct it solely in terms of its evaluative aspect thereby overlooking its use for facilitating growth and development in employees through training, coaching, counseling and feedback of appraisal information (Obisi, 2011).  Worst still, it is reported that most of the managers and employees have only a few positive things to say about performance appraisal and many of them even dislike it. Hence, performance appraisal is accorded a lesser role in Nigerian organization as more emphasis is given to selection, training, development and salary administration. This seems to imply genuine individual and organization growth are stifled because of the seemingly wrong approach. In essence, the inability of organization to install an effective performance appraisal strategy has hindered them from achieving competitive advantage which they require more now than ever before. It is further pointed that appraisal processes are not systematic and  regular  and  often  characterized  by  personal  influences  occasioned  by  organizations preoccupation to use confidential appraisal system which hinders objectivity and fairness. Effective performance management is essential to ensure that a business is operating effectively and is on track to achieve strategic goals. On this note, this study seeks to assess the casual relationship between appraisal performance and organization growth.

1.2             Statement of Problem

Many organizations in Nigeria businesses have failed because of ineffective and inefficient performance appraisal system (Obisi, 2011). The performance of staff of executing agencies or public enterprises is limited to budget monitoring and annual performance evaluation. However, experts are of the view  that  there  is  no  link  between  employee  performance  and  organization productivity or growth  (Idemobi and Onyeizugbe, 2011). These organizations are required to give adequate attention to performance management reviews to enhance productivity.

Research studies have shown that only  a  few  organizations in  Nigeria organizations are  making  efforts  to  embark  on  a  performance  appraisal  review  with  the commensurate reward system. Some researchers blame this on managers who do not have adequate information on performance review techniques that could have significant impact on  employees’  performance  for  greater  organizational  effectiveness  (Esu  and  Inyang,  2009). The inability of organization to install an effective performance appraisal strategy has hindered Organizational performance and its resultant efficiency and effectiveness can only be achieved when individuals them from achieving competitive advantage which they require more now than ever before. Nevertheless, where employees job are evaluated appraisal processes are not systematic and regular and often characterized by personal influences occasioned by organizations preoccupation to use confidential appraisal system which hinders objectivity and fairness. Often organizations ignore management by objectives, critical incidents to personal prejudices. This is retrogressive as it affects the overall performance of the individual and often characterized by personal influences. This research study seeks to assess appraisal performance as a tool for organization growth.

1.3       Aims / Objectives of the Study

The general objective of the study is to examine the relationship between performance appraisal organization growths. Specifically, it is set out to:

1. Ascertain if Nigeria Bag Manufacturing Company (BAGCO) attaches any significant importance on performance appraisal review.
2. Find out if any difference exists between BAGCO’s performance appraisal system and what literature reveals about appraisal system of Nigeria business Organizations.
3. Assess the effectiveness of organization performance appraisal review in Nigeria.
4. Examine the manager’s knowledge of performance review techniques that could have significant impact on employees’ performance for greater organizational effectiveness.
5. Assess the relationship between performance appraisal and organization growth.

1.4       Relevant Research Questions

The following questions will guide this research study

1. Will Nigeria Bag Manufacturing Company place any priority to performance appraisal review in evaluating its employee job performance?
2. Will BAGCO’s performance appraisal system differ from what literature reveals about appraisal system of Nigeria business Organizations?
3. To what extent has the company’s performance appraisal review impacted on its productivity?
4. Does the manager’s have any significant information about performance review techniques that could have significant impact on employees’ performance for greater organizational effectiveness?
5. Does performance appraisal have any significant relationship with organization growth?

1.5       Relevant Research Hypotheses

The following null hypotheses will guide this study

H_{o 1:} The Nigeria Bag Manufacturing Company will not attach any significant importance to performance appraisal system.

H_{o 2:} There will be no significant difference between BAGCO’s performance appraisal system and what literature reveals about appraisal system of Nigeria business Organizations.

H_{o 3}   The performance appraisal system of the Nigeria Bag Manufacturing has not made any significant impact on its growth or productivity.

H_{o 4}:  The manager does not have any significant information on performance review techniques that could have significant impact on employees’ performance for greater organizational effectiveness?

H_{o 5:}  There is no significant relationship between performance appraisal and organization growth.

1.6       Significance of the Study

This study has implication for promoting employees’ performance for greater organizational effectiveness. It is also relevant in the true sense that it will make managers in business organization in Nigeria to give adequate attention to performance management reviews to enhance productivity. This research study will help educate employees and supervisors on the area of having communication that will provide a structure for feedback on performance. Therefore, this study will enhance employees understanding and use performance appraisal as an opportunity to improve employees’ productivity and develop his or her full potential. This research study identifies and documents the present performance appraisal review of Nigeria business organization. The awareness that this study will create would help organization to tilt to effective performance appraisal and management performance appraisal to bring about growth.  Organization will have to benefit from this study by achieving its vision and objectives. Employees will also benefit through performance incentives and morale. The study will also give employees the confidence to give a good appraisal in order to work environment. The study will help employers to properly design and implement their organization aims and objectives leading to a strong relationship  between  the  work  performance  and  the  achievement  of  the  organization. It will add to the growing body of knowledge.

1.7       Scope of the Study

This research study focuses on employee performance appraisal as a tool for enhancing organization growth. It covers 250 employees of Nigeria bag manufacturing company. This will be replicable to business firms or organizations in Nigeria. Obtaining materials and gathering useful information from the employees also poised some constraints.

1.7       Operational definition of Terms

The following terms were operationally defined.

Performance: An effort towards achieving a desirable end. It also shows the outcome of work done or carried out by people. Performance in this study may refer to input – output function.

Appraisal: making a fair assessment of individual contributions or efforts. It is the evaluation of job performance.

Performance Appraisal: Performance appraisal has been described as “the process of identifying, observing, measuring, and developing human performance in organization.

Growth:  achieving better rate of return and rising share market the assets.

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