EFFECTS OF PERFORMANCE MANAGEMENT SYSTEM ON EMPLOYEES’ PERFORMANCE: A STUDY OF FIRST BANK AND ZENITH BANK NIGERIA PLC

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 ABSTRACT

The study evaluates the effects of performance management system on employees performance of First Bank and Zenith Bank Nigerian Plc, (2012-2017). The specific objectives of the study were to: ascertain the effect of performance evaluation on employees performance, ascertain the effect of training and development on employees performance and find out the impact of organisational reward and compensation on employees performance in First Bank and Zenith Bank Nigeria Plc. The study adopted survey research approach. The population of the study consists of employees in First Bank and Zenith Bank Nigerian Plc Abia State branches. Primary and secondary data were used. Stated objectives were analysed using descriptive statistics, Multiple Regression analysis were used to test the hypotheses. Major findings revealed that: performance evaluation of First Bank and Zenith Bank Nigerian Plc have positive effects on their employees performance. Training and development programmes of First Bank and Zenith Bank Nigerian Plc have positive effects on their employees performance, and reward and compensation system of First Bank and Zenith Bank Nigerian Plc have positive impacts on their employees performance. The study concluded that performance management have a significant and positive effects on employees performance in First Bank and Zenith Bank Nigerian Plc within the periods covered by the study. The study recommended that First Bank and Zenith Bank Plc managers and supervisors should make performance evaluation more transparent, and the culture of rewarding excellent performers should be imbibed in the banks performance evaluation programmes. The organisation should constantly review their training and development programmes to ensure that these programmes are in attune with current developments in the sector in order to update their employees skills with the speed of development in the sector. The need for bank management to regularly review their remuneration packages to reflect current economic realities were also highlighted.







TABLE OF CONTENTS

Title Page                                                                                                                                                                          i

Declaration                                                                                                                                                                      ii

Certification                                                                                                                                                                    iii

Dedication                                                                                                                                                                        iv

Acknowledgements                                                                                                                                                         v

List of Tables                                                                                                                                                                   iv

Abstract                                                                                                                                                                            v

 

CHAPTER 1: INTRODUCTION

1.1           Background of the Study                                                                                                                  1

1.2           Statement of the Problem                                                                                                                3

1.3           Objectives of the Study                                                                                                      4           

1.4           Research Questions                                                                                                                           5

1.5           Research Hypotheses                                                                                                                       5

1.6           Significance of the Study                                                                                                                  6

1.7           Scope of the Study                                                                                                                             7

1.7.1      Unit scope                                                                                                                                           7

1.7.2      Content scope                                                                                                                                    7

1.7.3      Geographical scope                                                                                                                           7

1.8           Limitations of the Study                                                                                                    8

1.9           Definition of Terms                                                                                                                            9

CHAPTER 2: REVIEW OF RELATED LITERATURE

2.1               Conceptual Review                                                                                                                            11

2.1.1         Concept of performance management system                                                              11

2.1.2         Concept of employee’s performance                                                                                            15

2.1.3         Determinants of employees performance                                                                                    18

2.1.4      Processes of performance management system                                                         25

2.1.5         Purposes of performance management system                                                            37

2.1.6      Principles of performance management system                                                         39

2.1.7         Types of performance management system                                                                                40

2.1.8         Organisational effectiveness and performance management                                                  43

2.1.9         Performance management for career growth                                                                              46

2.1.10        The relationship between performance management system and

employee performance                                                                                                                47

 

2.1.11     Training and development and employee productivity                                                52

2.1.12     Reward system and employee performance                                                                                56

2.1.13     challenges of performance management system                                                                        60

2.2               Theoretical Review                                                                                                                           68

2.2.1         Goal setting theory                                                                                                                            68

2.2.2      Expectancy theory                                                                                                      70

2.2.3         McGregor theory X and theory Y                                                                                                    72

2.2.4         Abraham Harold Maslow’s theory of need                                                                                   72

2.2.5         Frederick Herzberg’s Hygiene and motivational factors theory                                 73

2.3               Empirical Review                                                                                                                                74

2.4           Summary of Literature Review                                                                                  82

2.5               Gap in the Review of Related Literature                                                                         84         

 

CHAPTER 3: RESEARCH METHODOLOGY

3.1               Research Design                                                                                                                                 85

3.2               Population of the Study                                                                                                     85

3.3               Sources of Data Collection                                                                                                               85

3.3.1         Primary Data                                                                                                                                       85

3.3.2         Secondary Data                                                                                                                    86

3.4               Sample and Sampling Procedure                                                                                                    86

3.4.1         Sample size determination                                                                                                              86

3.5               Validity of the Instruments                                                                                                             87

3.6               Reliability of the Instruments                                                                                                         88

3.7               Methods of Data Analysis                                                                                                                89

3.8               Model Specification                                                                                                                           97

CHAPTER 4: DATA PRESENTATION AND ANALYSIS                                

4.1               Data Presentation                                                                                                                              93

4.2               Effect of Performance Evaluation on Employees’ Performance in First Bank and

              Zenith Bank Nigeria Plc.                                                                                                      94

4.3               Effect of Training And Development on Employees’ Performance in First

Bank and Zenith Bank Nigeria Plc.                                                                                                   98

4.4               Impact Of Organisational Reward And Compensation on Employees’ Performance

in First Bank and Zenith Bank Nigeria Plc.                                                                                      102

4.5               Discussion of Findings                                                                                                         105

 

CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1               Summary of Findings                                                                                                                         108

5.2               Conclusion                                                                                                                                           108

5.3           Recommendations                                                                                                      109     

References                                                                                                                  111

              Appendixes                                                                                                                                         114

 

 

 

 

 

 

 

 

 

LIST OF TABLES

 

3.1       Showing coefficient of correlation of the reliability of the research instrument       89

4.1:       Showing the total number of questionnaires sampled at both banks and

the number that was return.                                                                            93

 

4.2.1:   Showing multiple regression analysis result on the effect of performance

evaluation on employees’ performance in First Bank Nigeria Plc.                 94

 

4.2.2:   Showing multiple regression analysis result on the effect of performance

evaluation on employees’ performance Zenith Bank Nigeria Plc.                 95

 

4.3.1:   Showing multiple regression analysis result on the effect of training

and development on employees’ performance in First Bank Nigeria Plc.     98

 

4.3.2:   Showing multiple regression analysis result on the effect of training

and development on employees’ performance in Zenith Bank Nigerian Plc.  99

 

4.4.1:   Showing multiple regression analysis result on the impact of

organisational reward and compensation on employees’ performance in

First Bank Nigeria Plc.                                                                                   102

 

4.4.2:   Showing multiple regression analysis result on the impact of

organisational reward and compensation on employees’ performance in

Zenith Bank Nigeria Plc.                                                                                103

 

 

 

 


 

CHAPTER 1

INTRODUCTION

1.1        BACKGROUND OF THE STUDY

Every organisation performs its task with the help of resources as men, machine, materials and money. Except human resource, other resources are inanimate, human resource utilises other resources to produce output. If human resource is absent, then other resources are useless and cannot produce anything. Thus, human resource is the backbone of any organisation in coordinating and controlling the whole activities of the organisation directly or indirectly to ensure the achievements of organisational goals. Unlike other resources, human resource can develop and sustained competitive advantage by creating values which cannot be imitated by competitors if properly horn and harness through effective performance management system. So employees are assets whose value is enhanced by performance management. Therefore, managing employee performance is an integral part of human resource management that all managers and rating officials perform throughout the year. The work of Chris (2011) testifies the fact that performance management is important as managing financial resources and programme outcomes because employee performance or the lack thereof has a profound effect on both the financial and programme components of any organisation.

Thus, performance management system has become more important in recent years because managers, especially in the banking sector are under intense pressure to improve the performance of their organisation by outsmarting their competitors and maintaining the status of Market Leader in the sector, and good organisational performance hinges on enhance employee’s performance. Enhancing employees performance does not happen automatically, it is influence by managerial standards, knowledge and skill, commitment and instituting effective performance management system that are employee’s performance oriented. For this reason, companies engage in practice of human resource management to capitalise on their manpower assets. Accordingly, performance management system enables individuals to develop their abilities, increase their motivation, job satisfaction and achieve their own benefit and that of the organisation as a whole. Performance management has been the main vehicle which managers communicates what is required from employees and gives feedback on how well they are achieving job goals. Effective performance management system evaluate and address employee developmental needs. Development in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility and improving work progress or other methods (OPM 2001). It brings together many of the elements that make up the practice of people management; learning and development. Performance management establishes shared understanding of what is to be achieved; as such, it is an essential element of a managers’ role and support meaningful relationship with individuals and teams.

Therefore, having the right performance management system is a concern of every organisation because it is an important gear of any organisation to be a front runner in the market. Leveraging on this, First Bank, and Zenith Bank Nigeria Plc, which are the premium banks in Nigeria with the vision of becoming one of the best in the world operationalises performance management oriented policies through job shadowing, coaching, counselling, mentoring, succession planning, career maps, and leadership development across all levels of employees within the organisation in order to establish outcome-oriented goals and performance targets, monitor progress, stimulate performance improvements, and communicate results to higher policy levels and the public. To that end, the need to appraise the effects that performance management system of First Bank, and Zenith Bank Nigeria Plc is having on their employees’ performance inspired the present study: Effects of performance management system on employees’ performance in First Bank and Zenith Bank Nigeria Plc within the periods under review.


1.2        STATEMENT OF THE PROBLEM

Performance management system; which typically include performance appraisal and employee development, are the “Achilles’ heel” of human resources management. Despite that, performance management system suffer flaws in many organisations, especially in the banking sector with employees and managers regularly bemoaning their ineffectiveness. Without effective performance management, there is little accountability for acceptable standard of performance as the divergence of employee performance can only be explored through effective performance management system. Besides, documentation and consistency would be in non-existence and most employees would never get any feedback about their performance, positive or negative. Also in banks, difficulties in performance management often arise because, at its core, performance management is a highly personal and often threatening process for both managers and employees. Managers are reluctant to provide candid feedback and have honest discussions with employees for fear of reprisal or damaging relationships with the very individuals they count on to get work done. While employees feel that their managers are unskilled at discussing their performance and ineffective at coaching them on how to develop their skills. This leads both managers and employees to treat performance management as a necessary evil of work life that should be minimised, rather than an important process that achieves key individual and organisational outcomes.

Be it as it may, First Bank and Zenith Bank Nigeria Plc, need highly performing individuals in order to meet organisational goals; to deliver the services they specialised in, to achieve competitive advantage and maintain their “Market Leadership” status. As such, these organisations will not smile at poor performance of employees. Thus, the need to obtain an ongoing assessment of employees’ efforts towards achieving organisational set goals and targets in order to enhance employees’ performance can’t be achieved, unless it has a lessons learnt from previous experiences, or previous gap in planning procedures that did not accomplished its missions particularly in employees’ performance. Furthermore, the existence of performance management system in First Bank and Zenith Bank Nigeria Plc, indicates to their employees that their organisation is performance oriented, and as such regularly set targets that they should archive. To bridge the gap between the desired performance and achieved performance of these employees, and to evaluate their result with the stated objectives and goals of the organisation, effective employees’ performance management system is indispensable. To that end, the need to ascertain the effect of performance evaluation, training and development, organisational reward and compensation, which are the indices of performance management on employees’ performance, and the challenges militating the effectiveness of performance management system in First Bank and Zenith Bank Nigeria Plc in order to reconcile organisational performance management system and programmes with achieved employees performance is very essential. Thus, the need for this study: Effects of performance management system on employees’ performance in First Bank, and Zenith Bank Nigeria Plc within the periods under review.


1.3        OBJECTIVES OF THE STUDY

The broad objective of this study is to evaluate the effects of performance management system on employees’ performance in First Bank and Zenith Bank Nigeria Plc. While the specific objectives are to:

      i.         ascertain the effect of performance evaluation on employees’ performance in First Bank and Zenith Bank Nigeria Plc.

     ii.         ascertain the effect of training and development on employees’ performance in First Bank and Zenith Bank Nigeria Plc.

   iii.         find out the impact of organisational reward and compensation on employees’ performance in First Bank and Zenith Bank Nigeria Plc.


1.4        RESEARCH QUESTIONS

The following research questions were answered by this research:

      i.         What are the effect of performance evaluation (performance planning, feedback/personal counselling etc.) on employees’ performance in First Bank and Zenith Bank Nigeria Plc?

     ii.         What are the effect of training and development (Seminar/workshop, stimulation techniques etc.) on employees’ performance in First Bank and Zenith Bank Nigeria Plc?

   iii.         What are the impact of organisational reward and compensation (contingency pay, thirteenth month pay etc.) on employees’ performance in First Bank and Zenith Bank Nigeria Plc?


1.5        RESEARCH HYPOTHESES

The following hypotheses were tested in null form:

HO1: Performance evaluation does not have any significant effect on employees’ performance in First Bank and Zenith Bank Nigeria Plc.

HO2: Training and development does not have any significant effect on employees’ performancein First Bank and Zenith Bank Nigeria Plc.

HO3: Organisational reward and compensationdoes not have any significant impact on employees’ performance in First Bank and Zenith Bank Nigeria Plc.


1.6  SIGNIFICANCE OF THE STUDY

The study findings will be of great significance to the banks under study (First Bank and Zenith Bank Nigeria Plc,). The findings will help them to know the impact that the organisation performance management system is having on their employees’ performance, which will also serve as a yardstick to measure the effectiveness of their training programmes in enhancing the performance of their employees. The findingswill also serve as a source of feedback to the banks on the perception of their employees with regards to performance management system implemented by the banks. The findings will illuminate on the challenges militating the effectiveness of the performance management system in these banks with practical recommendations to proffer lasting solutions. Also, through the study, practical approaches on the best practice of implementing and sustaining performance management will be provided.

To the employees, the findingswill help them to have an overview of their performance with regards to the organisational target and goal attainment. It will also help them to evaluate if their effort in promoting and achieving the goals of the organisation is commensurate with the reward system adopted by the organisations. Thefindings will also help other commercial banks in the sector to adopt and operationalized effective employees’ performance management system that will enable them to harness the ability of their employees to remain competitive within the sector. The central thesis of this study will also serve as a useful guide to government, non-governmental organisations and other private sectors on issue of employees’ performance management system that will serve their organisational goal and structure. Furthermore, the study will add to available scholarly material on the topic which will serve as a guide to students and potential researchers’ embarking in similar studies.


1.7  SCOPE OF THE STUDY

This research focused on the effects of performance management system on employees’ performance in First Bank and Zenith Bank Nigeria Plc.

1.7.1      Unit scope

The research involvedall the employees of First Bank and Zenith Bank Nigeria Plc, in Abia State Nigeria. Thus all the branches of First Bank and Zenith Bank Nigeria Plc, in Abia State Nigeria were reached in eliciting information for the study.

1.7.2      Content scope

The study focused its interest on how performance management system of First Bank and Zenith Bank Nigerian Plc have affected the performance of their employees within the periods under review.

1.7.3      Geographical scope

Geographically the study were conducted in Abia State Nigeria. Abia State is an abbreviation of four of the state’s densely populated regions Aba, Bende, Isuikwuato and Afikpo. It is one of the thirty-six (36) states that constitute the Federal Republic of Nigeria. Aba people are of the Igbo ethnic group who predominates much of the south-eastern part of Nigeria. Their traditional language is Igbo. English is widely spoken and serves as the official language in governance and business. Abia is 2.4mm people are mainly Christians. Abia state consists of seventeen (17) Local Government Areas. They are: Aba north, Aba south, Arochukwu, Bende, Ikwuano, IsialaNgwa North, IsialaNgwa South, Isuikwuato, Obingwa, Ohafia, OsisiomaNgwa, ugwunagbo, Ukwa, East, Ukwa West, Umuahia North, Umuahia South, Umunneochi.

Abia State, which occupies about 5,834 square kilometers. The southern part of the state lies within the riverine part of Nigeria. It is low-lying tropical rain forest with some oil-palm brush. The southern portion gets heavy rainfall of about 2,400 millimetres (941n) per year especially intense between the months of April through October. The rest of the state is moderately high plain and wooded savannah.

Crude oil and gas production is also a prominent activity, as it contributes to 39% of the GDP. The manufacturing sector only account for 2% of the GDP. Agriculture, which employs 70% of the second economic sector of Abia with its adequate seasonal rainfall, Abia has much arable land that produces yam, maize, potatoes, rice, cashews, plantains, karo and cassava. It is on  this background that First Bank and Zenith Bank Nigeria Plc, branches are located in Abia State.


1.8           LIMITATIONS OF THE STUDY

The limitations encountered by the researcher in completing the study were mainly during the field survey. Owing to the nature of the banking sector in Nigeria, their employees are mainly engrossed with their duties with little or no time left to attend to other matters, so the researcher who adopted personal questionnaire administration and collection find it difficult to get required information within a reasonable timeframe. It was very challenging to visit all the branches of First Bank and Zenith Bank Nigeria Plc in Abia State on more than three occasions in order to get a completed questionnaire.

Furthermore, the study focused on performance management system and employees’ performance. First Bank Nigeria Plc uses a performance system known as “People First Management System (PFMS)” in scoring employees performance which are documented and used for administrative purposes. The researcher made all the efforts to obtain these documents within the periods covered by the study in order to use it for analysis, but all the efforts of the researcher were refuted by the organisation management on the reason that it is “Organisational Secret”. Also working out the spreadsheet of the data obtained through the completed questionnaires and analysing the data posed some challenges to the researcher.


1.9           DEFINITION OF TERMS

The followings are the operational definition of terms in this study:

Employees: an employee is an individual who provide labour to an organisation and are paid for his/her services.

Employees’ performance: Employee performance is what an employee does or does not do, it could include: quantity of output, quality of output, timeliness of output, presence at work, cooperativeness with organisational goals. It can also be seen as a record of outcomes achieved, for each job function, during a specified period of time in the organisation.

Performance: Performance is the act or process of performing a task or an action that involve a lot of effort in an organisation with a specified period of time. It is the accomplishment or outputs/outcomes of a task undertaken, it also involve doing the work effectively so as to achieve predetermined goals in an organisation.

Performance evaluation: Performance evaluation is a process by which employees are formally assessed at regular intervals. The process is conducted as to identify efficient employees, grant award, and motivate them to have better performance. It can also be seen as a process of assessing and communicating with employees in how they can improve their performances.

Performance management system: Performance management system is a holistic process bringing together many activities that collectively contribute to the effective management of individuals and teams in order to achieve high levels of organisational performance. Performance management is a process for ensuring employees focus on their work in ways that contribute to achieving the organisation's mission. Performance management is a strategic approach to delivering successful results in organisations. This is done through improving performance and developing talents as well as building capacity of staff.

Reward system: Reward systems are  the monetary, non-monetary, and psychological payments that an organisation provides for their employees. It is a fundamental function of human resource management that deal with the assessment of job values, the design and management of payments, performance management, employees’ benefits and pensions including the management of rewards procedures.


 

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