Effect of performance appraisal on employee Performance of smes in sekondi-takoradi metropolis

Abstract

This study looked at the relationship between performance appraisal and employee performance of SMEs in Sekondi-Takoradi Metropolis. It specifically analysed the impacts of performance appraisal method, feedback and rater accuracy on employee performance by relying on the goal theory and equity theory. Three research hypotheses were developed and tested to address the study‘s objectives. This study employed a quantitative approach and an explanatory research design to collect primary data using 132 valid sets of structured questionnaires out of the total issued questionnaire of 150 from selected SMEs in the Sekondi-Takoradi Metropolis. The information was then analysed with SmartPLS 3 and IBM SPSS Statistics version 26. Partial least squares structural equation modelling (PLS-SEM) was then used to analyse the data and evaluate the assumptions. Findings from the study highlight the significant of performance appraisal method, feedback and rater accuracy roles in improving all three dimensions of employee performance (i.e., goal achievement, quality of work and quantity of work). It was concluded that, performance appraisal method, feedback, and rater accuracy from performance appraisal play crucial roles in improving employee performance. The study, therefore recommends that there should be carefulness in selecting the appraisal method used in appraising, there should be regular training of appraisers, there should be clarity in rating from appraisers and appraisal discussion and counselling after results.