PERFORMANCE MANAGEMENT AND EMPLOYEE PRODUCTIVITY OF BANK EMPLOYEES: A STUDY OF GUARANTY TRUST BANK PLC, NIGERIA

CHAPTER ONE
INTRODUCTION
1.1  Background to the Study
Performance Management (PM) has been one of the most positive and crucial developments in the field of management. In most organizations, both public and private, the issue of survival and growth depends largely on the productivity of its employees, who must be well trained to conform to the demands of modern day skill requirements for effective performance (Obiora, 2014). The implication of this is that employee’s performance should be managed in such a manner that the best in them is realized. As such, performance management is indispensable to the growth and progress of not only the organization but also, the individual workers. According to Armstrong (2006), performance management is a systematic process of improving organizational performance by developing the performance of individuals and teams. Jackson (2009) defines performance management as a formal structured process used to measure, evaluate and influence employees’ job related attitudes, behaviors, and performance results.
Performance management helps direct and motivate employees to maximize their efforts on behalf of the organization in the public and private sector. In early 2013, more than 1,000 companies worldwide shed light on global performance management practices by participating in Mercer’s Global Performance Management Survey. As evidenced by the high rate of participation, it is clear that performance management continues to be of critical interest worldwide (Mercer’s Global PM Survey, 2013). In France, Performance Management was first introduced in the Directorate General for Taxes (DGI) specifically designed to respond to two main concerns, Grapinet (1999). First, as tools meant to ensure consistency in a decentralized context and second, as tools to enhance pressure on the entire services network in order to improve productivity among employees.
Introduction of Performance Management in Africa was influenced by challenges emanating by African countries trying to regulate and improve the productivity of employees. According to a study by Gichuki (2014), in search of improved quality and productivity of employees, the South African government introduced several initiatives on Human Resource Management. The concept of performance management is often adopted in the private sector due to the profit maximization focus and the potential to generate income is maximal compared to their counterparts in the public sector. Barclays Bank of Kenya, for instance uses customer driven performance standards as the basis for goal setting in order to motivate its employees to perform. Such standards include performance appraisals, incentive compensation, trainings and resource allocation with strategic plans. The top management of the bank focuses most of its attention on the above to ensure that the goal towards Performance Management is understood and utilized in order to meet and exceed customer expectations (Kimani, 2011).
Bloom, Dorgan, Dowdy & Van Reenen (2007) concluded that it is only by having strong and effective management practices in place that multinational companies have been able to replicate the same standards of performance across different regions, cultures and markets. Today, they are reaping the benefits of this effort in terms of higher productivity, better returns on capital and robust growth. This goes to show that well laid out structures can be replicated and still be effective in different regions hence promoting productivity. There is an increasing body of work, that argues that the use of performance management practices, that take into account comprehensive employee recruitment and selection procedures, employee development and training, can improve the knowledge, skills and abilities of an organizations employees, while at the same time increase their motivation, reduce malingering and enhance the retention of quality employees as well as increase their productivity (Odhiambo, 2015). Appraisal of employee‘s performance has a direct impact on organizational productivity. A person‘s skills and knowledge has to be appraised and coached so that his or her job productivity improves, leading to the achievement of organizational objectives (Cunneen, 2006).
The Performance Management and Appraisal System must ultimately transform the prevailing culture to one that is committed to providing service in a manner that is user friendly, and delivered with professionalism and integrity, to the benefit of the wider society. The essence of performance appraisal therefore is to determine and as well reward good performance, correct distortions in performance and identify training needs. Thus, the information obtained from employee appraisal is used for promotion, demotion, transfer, pay-rise, training and development depending on each employee’s capacity and productivity level Obiora (2014). This is because productivity measures how well resources are combined and utilized to accomplish specific desired result. Arnold and Feldman (2010) view performance management as a control mechanism, and that reward management is managerial attempts to gain control over the efforts side of the wage effort bargain which mirrors their unilateral control of the wage side.
Rewarding motivates the positive emotion of employees, such as satisfaction and commitment. Thus, the effectiveness of pay-for-performance has a direct influence on high levels of productivity and desirable work attitudes. According to Schneier et al. (2007), the rewarding performance phase includes three activities: personnel development, linking to pay and identifying the results or employee productivity. Managers of every business organization are charged with the responsibility to motivate their employees to achieve organizational goals. Most organizations wonder how they can sustainable performance among its employees. This means looking at what can be done to encourage the employees to give their best through various reward systems in whatever work they do in the organization (Armstrong, 2001). Igbokwe-Ibeto (2011) observed that people do not take their work seriously in many instances because people do not like what they are doing. This nonchalant attitude to work is independent of geo-political zones, rural-urban residence, religious affiliation, sex or age. This opinion if properly examined suggest that in many cases, they see themselves as birds of passage, such notion and feeling is even worsened by the fact that performance appraisal and productivity management is not taken serious in most organizations.
Afam (2003) contributing to the above subject matter, believes that the Nigerian worker has become a pawn in the hands of exploitative capitalist. He went further to observe that workers are subjected to all kinds of ill treatments like reduction in ranks, removal of fringe benefits, pay cuts, late payment of salaries and wages and the prevalent retrenchment with or without benefits. He concluded by saying that a situation where a worker is not adequately rewarded for the cake he has painstakingly toiled to bake, is disheartening and left much to be desired, as it amounts to killing the goose that lays the golden egg. Training and development is another very important perspective in learning and growth, where managers will define the employee capabilities and skills, technology, and corporate climate needed to support a strategy. According to Kaplan and Norton (2006), organization should pay attention to assess the effectiveness of their research and development process. Then, employee retention, workforce productivity, the number of suggestions made by employees and the number of suggestions implemented could be treated as productivity measures. A well-trained employee has the ability to work in efficient and effective manner hence good work productivity.
Productivity is a measure of the efficiency of a person, machine, factory, system such as in converting inputs into useful inputs (Marsor, 2011). Employee productivity is an assessment of the efficiency of a worker or group of workers. Productivity may be evaluated in terms of the output of an employee in a specific period. Typically, the productivity of a given worker will be assessed relative to an average for employees doing similar work. Because much of the success of any organization relies upon the productivity of its workforce, employee productivity is an important consideration for businesses. Productivity sustenance is therefore a concern that many organizations are looking at addressing via various means so that employees can remain productive in the long term. Performance management therefore needs to be tested in any particular setting taking into consideration how individuals in any particular organization are motivated and the extent to which they are most effective for a particular organization (Odhiambo, 2015).
The whole essence of the management activities of an organization culminates into the system of performance appraisal adopted in that organization.  This, in turn, reflects the extent of the individual contributions and commitment of the employees in different hierarchical levels toward the achievement of organizational objectives. It is understood that an effective performance appraisal system can lead an organization to take strides towards success and growth rapidly. Conversely, an ineffective performance appraisal system can seal the fate of an organization by creating chaos and confusion from top to bottom in the administrative hierarchy. As a consequence, the chances of success and growth of that organization are doomed, Nwachukwu (2008). Mustafa (2006), and Fatile (2010), emphasized the issue of poor performance appraisal and motivation at work as the some of the causes of this national slide. They argued that poor performance and low productivity is a direct consequence of inadequate motivation and performance appraisal. In line with this proposition, Enyinta, (2001) noted that, there is general apathy on the side of the employers of labor to reward a worker who is conscientious and dedicated to his duties. Workers more often than not go on strike resulting to loss of personhours before they get their due rights.
In Nigeria, employee productivity is of great concern as institution faces the obstacles of recruiting the right staff, redundancies, retaining talent, staff development, and Performance Management process issues. Performance appraisal, Training & Development and reward system are veritable tools to act as remedies to the problems (Onyije, 2014 and Kyakulumbye, 2013). Moreover, studies conducted in the private sector indicated that employee productivity is influenced by performance management process (Gichuhi, Abaja and Ochieng, 2012; Fletcher, 2002 and Omusebe, Kimani and Musiega, 2013). Employee productivity in banks is characterized by improved quality of the service in the banks, reduced complaints, and increased number of clients and volume of sales (Oluoch, 2007). Productivity is rated by the quantity of output generated per unit of input in the banking industry and in a bank’s productivity, establishment expenses and operating expenses are regarded as input, business per branch, business per employee and operating profit per employee are deemed as output. Moreover, performance management process is a mode of creating a common idea with the intentions and goals of the organization, helping each individual employee undertake and know the role play in contributing to them (Fletcher, 2002). Unarguably, human resource is the major factor of production that creates value, influences its price and those of other factors and sets the general level of productivity, and unless employee productivity appreciably improves, an organization’s objective will not be achieved. Therefore, it follows that the process of evaluating staff performance in the organization must be reliable, unambiguous, devoid of bias and sentiment from anybody so that an effective and acceptable outcome can be achieved from it. Hence, the need for our study on performance management and employee productivity of bank employees
1.2  Statement of the Problem
Establishing an effective employee performance management system, is a major challenge for most organizations, making performance management a perennial hot topic among human resource leaders, as stated in Mercer’s Global Performance Management Survey, 2013. Consequently, companies around the world are regularly in search of best practices and new solutions for this core process. In today’s business and economic environment, some HR executives are even openly questioning whether to abolish their current performance management programs. Despite all the attention, it is difficult to find specific information on what is working and not working and how practices vary by region and industry (Mercer’s Global PM Survey, 2013).
Low productivity is usually the negative effect of lack of performance appraisal, absence of performance appraisal brings about staff low job performance. Labor union always get into the matters of wellbeing at work and in their personnel so that they can give their full at work. However, sometimes it has a negative impact on performance appraisal and the management to give promotion or raise in their salary on the bases of seniority. The basic aim of any business organization is to achieve its objectives, goals or target successfully. Goals set by organization will only be vein if much attention are not paid to employee’s efforts or performance for successful accomplishment. In other to achieve set goals and objectives successfully, there is the need to focus on performance.
Performance appraisal should be link to attractive incentive to employees, enabling workers to demonstrate higher productivity. Also, modern organization are making very significant changes in their reward systems in order to better fit the dynamic, highly competitive business environment. Firms increasingly are using things such as skill bases pay, which reward employees for the number and types of skills they possess instead of the type of job they have. Similarly, there is strong movement to at risk reward where employee pay is tied to performance. Under this system, the employee bonus does not become part of his or her base pay. Instead, the bonus must be re-earned each year. These changes and numerous others are design to help offset rewards costs by gains in productivity, and to develop more flexible workforce. Reward cost have risen sharply in recent years, primarily because of escalating benefit costs. According to Sarvadi (2010), firms that do not match or exceed the reward level of their competitors will have difficulty attracting and retaining top workers. Properly measuring performance ensures that a reward program pays off in terms of business goals since reward have a real cost in terms of time and money. Taylor, (1984) suggest that feedback is essential for organizational effectiveness and that a lack of feedback can lead to anxiety, inaccurate self-evaluations, and a diversion of effort toward feedback gathering activities.
Moreover, effective performance feedback has the potential to enhance employee engagement, motivation, and job satisfaction, (Aguinis, 2011). It is necessary to analyze and understand the feedback, which is always ignored, and its complexities. Feedback may improve performance under some conditions. However, in other conditions, feedback may not affect performance or even prove detrimental to performance, (Locke & Latham, 2000). According to this perspective, it further indicates that a number of factors, including characteristics of the feedback source and message, and timing issues such as the amount and frequency of feedback employees received attitudinal outcomes of feedback Coaching is an important tool in learning and development.
Training is a very important part of the human resource development (HRD) activity of human resource management practice. For employees to carry out their duties effectively and efficiently they must have the relevant skills, knowledge, values, attitudes and competencies and well as understand their organization’s culture. More often, newly employed do not have all the competencies usually required for successful or excellent performance on their jobs. Again, while on the job, employees need to be updated through training and development to acquire competencies they did not have at the time of appointment. This is why an organization might need training and development department, often referred to as Human Resource Development (HRD). When suitable job candidates have been selected and appointed, they must be given the appropriate orientation and in addition, they must be trained and developed to meet their career needs of the organization. This implies that, if they are not trained and developed, thwy will not meet the needs of the organization. According to Gichuki (2014), Performance Management has not achieved its intended purpose of improving employee productivity. It is not clear which part of the performance management cycle is responsible for poor productivity of employees in the banking sector.
Performance management sets expectations for employee performance and motivates employees to work hard to meet the organization expectations. Moreover, performance management system provides a completed and professional management process for organizations to assess the performance results of organizations and employees. There seems to be a gap between Performance Management theory and actual practice and this is the gap that this study aims to fill by assessing the effects of performance management on employee productivity of bank employees; A survey of Guarantee Trust Bank (Plc) Nigeria.
1.3  Objectives of the Study
The broad objective of this study is to examine the effect of performance management practices on the productivity of bank employees in the Nigerian banking sector, a case study of Guarantee Trust Bank (Nigeria) Plc. The specific objectives are:
1. To investigate the influence of performance appraisal on employee performance in Guarantee Trust Bank (Nigeria) Plc.
2. To determine the effect of reward system on employees motivation in Guarantee Trust Bank (Nigeria) Plc.
3. To examine the influence of performance feedback on employee commitment to organizational goal and objective in Guarantee Trust Bank (Nigeria) Plc.
4. To explore the extent to which training and development influence employee efficiency in Guarantee Trust Bank (Nigeria) Plc.
1.4   Research Questions
1. How do performance appraisals influence employee performance in Guarantee Trust Bank (Nigeria) Plc?
2. How do reward systems influence employee motivation in Guarantee Trust Bank (Nigeria) Plc?
3. How do performance feedbacks affect employee commitment to organizational goal and objective in Guarantee Trust Bank (Nigeria) Plc?
4. How does training and development affect employee efficiency in Guarantee Trust Bank (Nigeria) Plc?
1.5  Research Hypotheses
The following hypotheses were tested at 0.05 level of significant:
H0 : There is no significant influence of performance appraisals on employee performance in Guarantee Trust Bank (Nigeria) Plc.
H0 : There is no significant influence of reward systems on employee motivation in Guarantee Trust Bank (Nigeria) Plc.
H0 : There is no significant effect of performance feedbacks on employee commitment in Guarantee Trust Bank (Nigeria) Plc. H0 : There is no significant relationship between training and development and employee efficiency in Guarantee Trust Bank (Nigeria) Plc.
1.6  Operationalization of Variables
The aim of this study is to examine the effect of performance management on the productivity of bank employees in Nigeria. This was carried-out by using Guarantee Trust Bank Plc as a case study. To achieve this, two (2) variables were used in this study, which included the Independent and dependent variable. The independent variable = Performance Management (PM) The dependent variable = Employee Productivity (P) The proxies used to measure the Independent variable Performance Management (PM) were performance appraisal (PA), reward system (RS), performance feedback (PF) and training and development (TD). While for the dependent variable Employee productivity (P) were employee performance (EP), employee motivation (EM), employee commitment (EC) and employee efficiency (EE).
1.6  Scope of the Study
The study focused on the effect of performance management practices at the head office of Guarantee Trust Bank (Nigeria) Plc. on the employee’s productivity. It specifically sought to determine the effects of performance appraisals, reward systems, performance feedbacks, training and development on employees’ performance, motivation, commitment and efficiency. The study is carried out at Guaranty Trust bank Plc head office at No. 279 Ajose Adeogun Street, Victoria Island, Lagos. The study focused on the management and nonmanagement staff of the bank. A census of 141 employees was used for the investigations.
1.7  Significance of the Study
This study will add to the body of knowledge on performance management and particularly as regards Guarantee Trust Bank (Nigeria) Plc. The information on the subject of performance management and productivity is scanty and many sources do not offer current information therefore this research will play a crucial role in providing current information. Policymakers and stakeholders in the human resource management function such as government, employers and organizations such as Central Bank of Nigeria (CBN) can use the findings of this research to formulate policies, procedures and devise best in class methods of increasing employee productivity from the findings of this case study. The findings of this study can also be used, in formulating performance management systems. The study will provide the human resource departments with an assessment of the performance management tools and provide a basis for improvement and provide constructive feedback on how best to attain organization goals and objectives.The findings of the research will provide crucial information to human resource managers of concerning the best ways of increasing employee productivity within the organization.
1.8  Definition of Operational Terms
Performance Management: This refers to a mechanism used by organizational leaders and their employees to develop work exceptions and goals, deliver and receive performance feedback, identify development needs and evaluate performance (Gichuki, 2014)
Productivity: The quality, state, or fact of being able to generate, create, enhance, or bring forth services. It is the effectiveness of productive effort as measured in terms of the rate of output per unit of input.
Performance Appraisal: This is a system of measuring the performance of an employee to determine its level of meeting an established standard (Ubeku, 1984:12).
Employee: This is the workforce, human element of production in creation of economic goods or services (Murphy, 1995:6)
Reward Systems: This is organized set of rules in providing personal satisfaction to employees who excel in attaining individual goals and contribute towards attainment of organizational goals
Human Resource practitioner: This is a specialist who coordinate the activities of others for organizational efficacy and set goals, and oversees the human resources functions in the organization (Feris, 1991:88).
Human resources: These are human beings used in the production process. They could still be called employees or provide of labor.
Efficiency: A level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of outputs. Efficiency relates to the use of all inputs in producing any given output, including
personal time and energy. Training: This is concerned with organizational activity aimed at bettering the performance of individuals and groups in organizational settings. It is the official and ongoing educational activities within an organization designed to enhance the fulfillment and performance of employees.
Management: Is the effectiveness and optimum use of human and material resources to achieve an organizational goals and objectives.