PERFORMANCE EVALUATION IN THE BANKING INDUSTRY:

CASE STUDY OF FIRST BANK NIGERIA LIMITED

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INTRODUCTION

Performance evaluation serve multiple purposes in organizations because

they monitor workforce progress and help determine if promotions,

terminations, transfers, and training/development are warranted (Grote

2002). Simply stated, performance appraisals can help fulfil whichever role

fits the organizational culture. According to Robbins (1997), managers can

use performance appraisals for personnel decisions. He states,

“performance appraisals help highlight areas where employee skills and

competencies are deficient but can be remedied with appropriate actions”

(1997, 219). Robbins maintains that when employees’ skills are deficient,

performance appraisals can be used by managers as a criterion against

which training and development programs are validated. In the area of

training and development, performance appraisals can also serve the role

of providing feedback to employees on how their organizations rate their

performance. Another important consideration is that performance

appraisal help incentivize employees towards reward-based allocations

(Robbins 1997).

Consequently, Nigeria’s working class which consists of those who have

little control over the pace and content of their work and do not supervise

others (Ololade 2001) remains uncertain about their future in the

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workplace. In this current economic crisis, “financial markets are volatile,

unemployment insurance claims have jumped to their highest levels, and

more jobs are disappearing” (Ajiri & Ololade 2006). As managers in

corporations seek new ways to remain profitable during this current

economic crisis, Foley-2 “employees who contribute directly to the top-line

and bottom-line will become more important” (Biswas & Mahes 2008, 2).

Unfortunately, the use of well-crafted employee performance appraisals

becomes increasingly important because they can help identify top

performers and layoff poor performing employees, which also helps reduce

costs during economic crises (Public Personnel Management 2000).

When employee performance was less than a standard established by a

company, a pay decrease would result: when employee performance

exceeded management’s expectations, a pay increase would result.

Performance appraisals initially ignored employee development. According

to Korede and Appiah (2006), either a reduction in pay or a raise motivates

employees to either improve or continue to perform well. They further

opined that accurate and efficient performance measurement not only

forms the basis of an accurate performance review but also gives way to

judging and measuring employee potential effectively; performance

appraisals not only place genuine concerns on the needs of individuals but

also help organizations to:

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Determine how the job of each employee can further the overall goals

of the organization;

Examine individuals to evaluate the employee’s strengths and

weaknesses;

Identify and reward good employees to be more assiduous, in order

to foster loyalty and motivate employees to continue to achieve;

Keep employee morale high through continuous feedback;

Remain aware of the needs of the workforce to ensure employee

retention and increase productivity and innovation;

Reduce the risk of complaints and litigation by ensuring that

employees feel fairly treated and are not surprised by management

decisions; and

Identify and deal with problem employees to either turn problem

employees into valuable, productive workers or lay the groundwork

for discipline and, if necessary, termination” (2005,1/5).

Statement of the problem

Organizational success depends on employee hard work and dedication. By

using performance appraisals, employers increase their chances of

identifying deficiencies that are potentially threatening to company-wide

success (Vance 2006). In addition, when employees cannot meet

organizational standards, employers can use performance appraisals to

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more easily terminate employees for substandard work that has been

documented (DelPo 2005). When performance standards are clearly

articulated by management, employees know what is expected of them,

what their role as a part of a group and organization is, what is considered

unacceptable performance, and how organizational standards should be

achieved (Robbins 1997).

Although critics such as Gary Roberts (2003), an associate professor at the

University of Memphis and authors Saul Gellerman and William Hodgson

(2008) argue that performance appraisals are ineffective, performance

appraisals are essential for managing employee progress and performance.

Coens and Jenkins (2000) maintain that instead of abolishing performance

appraisals, organizations can “begin an organization-wide initiative of

education which helps people understand why an appraisal fails and then

together work on strategies to replace the appraisal, looking for genuinely

new ways to actually deliver on the high hopes that were placed in the

appraisal” (2000, 19). In view of this, this study beams its searchlight on

the use, effect and popularity of Performance Appraisal in the Banking

industry, with a specific focus on Wema Bank of Nigeria PLC.

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Objectives of the study

The goal of the study is to analyse issues related to performance and

confirm that organizations should use employee performance appraisals to

achieve organizational goals and objectives, and to examine corporate

responsibility with regard to employee performance. Thus, the study will

comprise of the following objectives;

1. If Performance Evaluation is used as a training tool that grows and

develops managers and employees.

2. To evaluate the disposition of employees to the concept of

Performance Evaluation in the Banking industry

3. To identify the factors that could affect the quality of the

Performance Evaluation process

4. To identify the effect of Performance Evaluation on the growth and

development of employees, management, and the bank

Hypothesis

The following hypotheses were developed for the study;

Hypothesis 1: There is no significant relationship between Performance

Evaluation, and growth of the bank.

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Hypothesis 2: Performance evaluation does not reflect an objective

assessment of the employee.

Scope of the Study

Performance is not defined by one particular measure; rather it is an

action(s) that management defines (Vikesland 2006). “Measuring employee

performance is the basis of the performance appraisal processes and

performance management”. Thus, this study covers the performance

evaluation of employees in the Banking industry in Nigeria and how it

affects the growth and development of employees. It also focuses of the

quality and nature of the Performance Evaluation process.

Significance of the Study

When performance standards are clearly articulated by management,

employees know what is expected of them, what their role as a part of a

group and organization is, what is considered unacceptable performance,

and how organizational standards should be achieved (Robbins 1997).

This study will expound the benefits, strength and importance of

performance evaluation in an organisation, with particular reference to the

Banking industry. To this end it will therefore serve as a benchmark for

financial researchers to further evaluate the effect of employer-employee

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relationship, and how it ultimately impacts the performances and growth

of the banking industry in Nigeria.

Consequentially, it will aid the Government, policy makers and

stakeholders properly articulate critical areas in HR that needs to be

improved on so as to forge a stronger workforce.

Limitation of the study

Due to administrative constraints encountered during the course of the

work the study only covered management staff while non-management

employees were left out. Furthermore, at the time of the study, only the

male management staff were accessible for the interview/questionnaire

administration.

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