Effect of performance appraisal on staff performance: A case study of Agriculture Development Bank.

Abstract

The impact of performance appraisal on employees’ performance could be mixed (both positive and negative) depending on how effective and efficient the appraisal process is perceived by employees.The Agricultural Development Bank (ADB) uses the graphic rating scale annually in evaluating the performance of its employees. However, literature and observation show that the graphic rating scale method has the major drawbacks of subjectivity and low reliability. It was in response to these drawbacks that the study empirically examined the effect of performance appraisal on ADB employees’ performance. In all, 52 respondents randomly selected participated in the study through structured questionnaire and in-depth interviews. Staff of the bank responded to the structured questionnaire, while management was purposively selected to participate in the interview. Data analysis was performed using the Statistical Product and Service Solutions (SPSS) version 17. The results of the study indicate that, the appraisal system in ADB has not significantly affected the performance of employees positively, because the appraisal process has not been highly fair since there is some level of biasness and procedural injustice.The study recommends that management needs to ensure that performance appraisals are based on up-to-date and unbiased information about employee performance in order to be perceived as been procedurally just and fair by employees.