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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