Effect of Performance Appraisal On Emplo PDF

Barkha Gupta et. al.
, Journal of Management Research and Analysis (JMRA)

Available online at http://jmraonline.com
ISSN: 2394-2770, Impact Factor: 4.878, Volume 05 Issue 02, June 2018, Pages: 151-158
EFFECT OF PERFORMANCE APPRAISAL ON EMPLOYEE

PRODUCTIVITY IN AN AUTOMATION SOLUTION COMPANY
1
Barkha Gupta and 2 Dr. Swarna Parmar
1
(Research scholar, Jiwaji University, Gwalior (MP))
2
(Assistant Professor, SOS in Management, Jiwaji University, Gwalior (MP))
Abstract: Performance appraisal is a key component of HRM almost in every organizations and one of the
most vital responsibilities for human resource and line managers/supervisors. The focus of this research is in the
area of performance appraisals system. The research study has been conducted to determine the effect of
performance appraisal on employee productivity in an Automation solution company situated in Greater Noida,
India. The research design of this thesis is of descriptive nature. The study adopts survey strategy and used self-
administered questionnaire to gather data from employees. Out of 170 populations, 60 employees were
randomly chosen as a sample. Correlation and multiple regression statistical tools were used for data analysis.
The study found that goals and objectives setting, performance rewards given to employees and performance
appraisal feedback all three independent variables of performance appraisal influenced employee productivity
that is taken as a dependent variable. Study found that set goal motivate employees to achieve target, rewards
given to employees for their positive result and feedback help to identify the strength and weaknesses of
employee.
Keywords: Performance appraisal, rewards, performance, performance appraisal feedback
1. INTRODUCTION
Great manpower can create a good organization and productive employees can contribute effectively in
organization. Motivated employees help organization to achieve its goals. Hence, the organization should
continuously ensure that motivation of employees boost timely. Performance appraisal doesn't benefit only
employees Organization that utilization the consequences of performance appraisal to distinguish zones of
quality and opportunity can profit also. Performance appraisal can provide a sign of zones of training need and
in addition provide direction for initiative advancement, performance improvement and succession planning.
The present emphasis is on supervision of employees or the manager who should make a decent attempt to assist
their subordinate with achieving organization and individual roles appointed by performance appraisal
programs. Performance Appraisal is the systematic evaluation of the performance of employees and to
understand the abilities of a person for further growth and development. Performance appraisal serves as a
motivational force that helps employees for greater performance.
Performance appraisal is one of the most common management practices utilized in all organizations
worldwide. Each and every company utilize performance appraisal as a tool for getting knowledge about the
employee and take effective decisions about specific employee. A performance appraisal (PA), additionally
known as a performance evaluation, performance review, (career) development discussion. Employee appraisal
is a method by which the job performance of an employee is reported and evaluated. it can be depicted more
productive and less proficient employees systematically and discover the proper training need to improve the
employees performance. In short, performance appraisal is an estimation of how well somebody performs job-
relevant tasks.
Performance Appraisal (PA) is a part of Human Resource Management and it is one of the most
important functions of HR managers. It include identifying, measuring, influencing and developing job
performance of employees in the organization for set norms and standards for a particular period of time in
order to achieve various goals and Objectives. Employees should be committed towards set targeted desired
standards of job performance and they should improve job performance for long term sustaining profitable
growth .Employees This involves getting optimum use of the available knowledge, skills and abilities in the
workforce to optimize employee productivity and give an organization a competitive advantage.
The motivation behind of performance appraisal is to assess employees‟ performance as unbiased as
possible. The results of the performance appraisal are used in setting the direction for the individual
performance development by bringing out both performance strengths and weaknesses and subsequently
developing action plan to facilitate the desired development. A well planned performance appraisal system
ought to create criteria for successful performance, give performance feedback and empower a more fair reward
system. Aside from this if performance appraisal system is fail so it‟s give unhealthy environment of work, less
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Barkha Gupta et. al., Journal of Management Research and Analysis (JMRA)
satisfied employees, grievance in employees etc., and it‟s directly effect on employees as well as organization
performance.
Manager of every organization have responsibility to motivate their employees for better job
performance. A proper goals and objectives setting for employees provide them performance rewards timely and
performance appraisal feedback to enhance their skill and knowledge help to improve employee‟s productivity
on their work place. Employees‟ productivity can be check by quality of services of employees and employees
output appraisal.
The chosen company is an Automation Solution Providing Company, situated in Greater Noida. As all
company this company is also profit oriented and has several employees working in various departments.
Periodically, performance appraisal is done to assess the employee‟s contribution to the organization and
determine what remedies the employer takes. Employees of this company also work on side of client and some
time they work with different time schedule. The company provides on the job training to their new employees
and also provides training to existing employees for new targeted projects.
The organization use MOB (Management By Objective) Method for performance appraisal in their
organization. The use of management objectives was first widely advocated in the 1950s by the noted
management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are
results-oriented. That is, they try to quantify employee performance by inspecting the degree to which
predetermined work objectives have been met. Generally the objectives are built up mutually by the supervisor
and subordinate. An important part of the MBO is the measurement and the examination of the employee‟s real
performance with the standards set. Preferably, when employees themselves have been included with the goals
and objective setting and picking up the right course of action to be followed by them, they will probably satisfy
their duties.
2. DEFINITIONS
1. Dale S. Beach, "Performance appraisal is systematic evaluation of the individual with respect to his or her
performance on the job and his or her potential for development".
2. Dale Yoder, ''Performance appraisal includes all formal procedures used to evaluated personalities and
contributions and potentials of group members in a working organization. It is a continuous process to
secure information necessary for making correct and objective decisions on employees."
3. STATEMENT OF THE PROBLEM
The essential point of each business organization is to accomplish its destinations, objectives or targets
effectively. So as to accomplish this, there is the need to focus around performance appraisal. Most of the
companies in the competitive market come up short since their specialists perform underneath standard for they
are not encouraged to work harder. Directors and workers are the existence blood of each business association.
In the event that management does not put much into the welfare of their workers, issues will undoubtedly
emerge prompting modern strike activities, low commitment to work, low confidence and low efficiency of
products and services. Appealing examination frameworks are set up by some business associations to help
encourage their employees. When employees are motivated, their performance show in productivity. Workers
endeavor hard by pooling together skills, knowledge and efforts to achieve maximum output.
4. OBJECTIVES OF THE STUDY
The objective of the study was to identify the effect of performance appraisal system on employee
productivity in an automation solution provider company in Greater Noida.
The specific objectives of the study were:
i) To determine the effect of goals and objective setting in performance appraisal used in organization on the
employee productivity.
ii) To determine the effect of performance appraisal rewards used in organization on employee productivity.
iii) To determine the effect of performance appraisal feedback used in organization on employee productivity.
5. RESEARCH HYPOTHESES
The hypotheses of the study were:
(i) H01: There is no significant relationship between goals and objective setting of performance appraisal used
in organization and employee productivity.
(ii) HO2: There is no significant relationship between performance rewards given to employees used in the
organization and employee productivity.
(iii) HO3: There is no significant relationship between performance appraisal feedback used in organization and
employee productivity.
6. LITERATURE REVIEW
Armstrong (2006) mentioned that high performance can be achieved by appropriate behaviour,
particularly discretionary behaviour, and efficiently leveraging essential knowledge, skills and competencies.

Also, performance management need to scrutinize how outcomes are produced, in order to gain the information
required to consider what has to be done to those consequences.
According to Levy and William (2004), if participants in appraisal perceive the system to be unfair, the
feedback to be inaccurate or the sources to be incredible, they are likely to ignore the feedback they receive.
Feedback is least useful when it is inaccurate or untrue, biased due to favoritism or politics.
A study conduct in Ireland regarding effectiveness of performance appraisal system. This study aims to
analyse the effectiveness of performance appraisal system of Khan Bank and to examine how the managers and
the employees are affecting the effectiveness of the system. The research design of this thesis is of explanatory
nature with some descriptive elements. The study findings revealed a several potential impediments that are
limiting the effectiveness of the system and the managers and employees attitude towards the PA system
negatively affects the system effectiveness. The most employees are hesitant about the appraisal process to be a
worthwhile organizational practice. The PA system of Khan Bank fails to serve the employees‟ interests and
expectations of the procedures, for example: the process is not transparent, not given accurate feedback and
doesn‟t improve the relationship with manager. Researcher suggested that „the ultimate goal of performance
appraisal should be to provide information that will best enable managers to improve employee performance‟.
(Enkhjin Chuluunkhuu)
A study conduct in Nigeria on Niger Delta University to identify the effect of appraisal system in Niger
Delta University on employee productivity. Researcher conduct survey method for data collection through
stratified random sampling. Correlation coefficient was used to test the hypothesis. There was a significant
relationship between performance appraisal and employee productivity and that effective appraisal system could
boost the morale of workers especially when they are rated adequately. (O.C. Onjio)
The performance appraisal has multiple purposes, but the primary goal is to improve organizations
overall performance. It is very important to clarify the objectives that performance appraisal system is
attempting to achieve. Striving to achieve multiple objectives could become a disadvantage if it leads to
dissipation of effort, energy and lack of focus (Anderson, 1993; Rees and Porter, 2001).
Fisher (1995) warned that performance appraisal more likely to fail if employees see performance
appraisal as a stick which management has brought in, in order to generate a basis for disciplinary action. Some
managers make mistakes including the maintenance of discipline as one of the goals of a multipurpose scheme.
In addition, if employees acknowledge that their pay and chance of being promoted depend on the outcome of
the appraisal process, they may try to play down any weaknesses and eager to shine their bright side (Rees and
Porter, 2001). Consequently, it does get hard to reveal an individual‟s training and developmental needs. The
primary objectives of performance appraisal system are
7. VARIABLES USED FOR THE STUDY
1. Dependent Variable- Employees Productivity is taken as a dependent variable for the study.
2. Independent Variable- different factors of performance appraisal are taken as independent variables for the
study.
So, various independent variables are-
a. Goals &Objectives Setting
b. Performance rewards given to employees
c. Performance appraisal feedback
8. RESEARCH METHODOLOGY
8.1. Target population- The target population in the study was, all 170 employees of the automation solution
provided company situated in greater Noida.
8.2. Sampling technique- Simple random sampling method choose as a sampling technique,.
8.3. Sample size- 60 random employees of the company taken as a sample size for this study.
8.4. Research Design- Descriptive research design taken as research design.
8.5. Data Collection- Primary data have been collected with a self-administrated questionnaire with five point
liker‟s scale options. A total of 70 questionnaires were distributed. However, only 63 respondents filled their
questionnaires. Three questionnaires are incomplete so 60 is final sample size. The correlation and multiple
regression analysis were used to determine the effect of performance appraisal on employee productivity. The
hypotheses were tested at 5% significance level. And secondary data have been collected from articles, journals,
books and internet etc.
8.6. Statistical tools- correlation and regression methods used for this research study. Data analysis done by
SPSS software

9. DATA ANALYSIS
9.1. Demographic profile of respondents
Table 1: Respondents’ Profile
Variables Number Percentage
1.Age
Under 18 NA NA
18 to 25 12 20
26 to 32 28 46.6
33 to 40 13 21.6
Above 40 7 11.6
Gender
Male 60 100
Female NA NA
Education level
High school or Diploma NA NA
Undergraduate 40 66.6
Postgraduate or higher 20 33.3
Work experience
Less than 1 year 8 13.3
1 year to 3 years 21 35
3years to 5 years 15 25
More than 5 year 16 26.6
Source: Developed for this research

A total of 70 questionnaires were distributed to employees of different department of the Automation
Solution Company, Greater Noida in March 2018. A total of 63 questionnaires were returned and of these 60
were usable. According to demographic profile of respondents, Age variable show that 46.6% of employees
were between 26 to 32 ages, that is highest percentage of age group show among the other age group. 21.6%
respondents were between 33- 40 ages. 20% were between 18 to 15 ages and 11.6% respondents were above 40
age. Out of 60 respondents no female were there so 100% respondents were male. In another variable that is
educational level it is clear that no respondent were there who was undergraduate or diploma holder, all the
respondents were graduate (66.6%) and post graduate or higher (33.3%). Another variable explain the work
experience of respondents that, only few respondents were less than one year experience and all the other
respondents have more than one year experience.
9.2. Reliability testing
Testing the reliability of the questions that used Likert‟s Scale showed that data from this research was
reliable with Cronbach‟s alpha value of at least 0.70. The data of the study get Cronbach‟s alpha value is 0.85,
so data is reliable for study.
9.3. Data analysis for hypothesis
9.3.1. Pearson Correlation analysis
Table 2: Summary of Result of Pearson Correlation Analyses for This Research
Variables R R- F- Std Error P- Conclusion
Value Square Statistic Estimate value
Goals & 0.50 0.25 20.03 1.75 .000 Significant at

Objective Setting p<0.05
Positive
Performance 0.53 0.28 23.4 1.71 .000 Significant at
Rewards given to p<0.05
employees Positive
Performance 0.42 0.17 12.66 1.84 .001 Significant at
appraisal p<0.05
feedback Positive

Above table show the result of correlation analysis between independent variable of performance
appraisal (goals and objectives setting, performance rewards given to employees and performance appraisal
feedback) and dependent variable employee‟s productivity. The first variable „Goals & Objective setting‟ had R
value 0.50 with P- value .000 that is significant because p value < 0.05. Thus, Goals & Objective setting in
performance appraisal was a significant predictor of employee‟s productivity. Second variable „Performance
Rewards given to Employees‟ had R value 0.53 with p value .000 that is significant because p value < 0.05.
Thus, Performance Rewards given to Employees in performance appraisal was a significant predictor of
employee‟s productivity. Third variable „Performance Appraisal Feedback‟ has R value 0.42 with p value .001
that is significant because p value < 0.05. Thus, Performance Appraisal Feedback after appraisal process was a
significant predictor of employee‟s productivity.
9.3.2. Regression Analysis
A multiple linear regression analysis conducted for determine the relationship between the employee‟s
productivity and the three independent variables of performance appraisal namely: Goals & objective setting,
performance rewards given to employees and performance appraisal feedback.
The regression model was;
Y = β0 + β1X1 + β2X2 + β3X3 + ε
Whereby:
β0 is the regression intercept;
β1 – β3 are the regression coefficients;
Y is the dependent variable (Employee‟s Productivity);
X1 = Goals & objective setting;
X2 = performance rewards given to employees; and
X3 = Performance appraisal feedback
Regression analysis output by SPSS
Table 3: Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate

1 .590a .349 .314 1.67379
a Predictors: (Constant), performance appraisal feedback, Goals and Objective setting, Performance
rewards given to employees
Source: Researcher output on SPSS
Table 4: ANOVAa
Model Sum of Squares Df Mean Square F Sig.

1 Regression 83.963 3 27.988 9.990 .000b
Residual 156.887 56 2.802

Total 240.850 59
a Dependent Variable: employees productivity
b Predictors: (Constant), performance appraisal feedback, Goals and Objective setting, Performance rewards
given to employees
Source: Researcher output on SPSS

The significance value is 0.000 which is less that 0.05 thus the model is statistically significance in
predicting how performance appraisal variables like Goals and objectives setting, performance rewards given to
employees and performance appraisal feedback influence employees productivity in automation solution
company in Greater Noida, India. This shows that the overall model was significant.

Table 5: Coefficients’
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) 4.962 2.083 2.382 .021
Goals and .319 .150 .288 2.125 .038
Objective
setting
Performance .326 .146 .344 2.241 .029
rewards given
to employees
Performance .048 .163 .043 .293 .771
appraisal
feedback
a Dependent Variable: employees productivity
The regression equation will be;
Employees productivity =4.962+ Goals and objective setting*0.319 + Performance rewards given to
employees*0.326 +Performance appraisal feedback *0.048
The regression equation above has established that taking all factors into account Goals and objectives
setting, performance rewards given to employees and performance appraisal feedback) constant at zero
employees productivity in Automation solution company in greater Noida, India will be 4.511. The findings
presented also shows that there is a significant positive relationship between Goals and objective setting a
variable of performance appraisal system and employees productivity in Organization as shown by a coefficient
of 0.319. Since the regression coefficient value was more than one we can deduce that there was a relationship
between Goals & objectives setting and employee‟s productivity. Further, the relationship was found to be
significant as the p value was less than 0.05 (0.038<0.05).
In addition, there is a significant positive relationship between performance rewards given to
employees and employee‟s productivity in Automation Solution Company in Greater Noida, India as shown by
a coefficient of 0.326. Since the regression coefficient value was more than one we can deduce that there was a
relationship between performance rewards given to employees and employee‟s productivity. This relationship
was found to be significant as the p-value was less than 0.05 (0.029<0.05).
Further, the findings show that there is a positive relationship between performance appraisal feedback
and employee‟s productivity in organization as shown by a coefficient of 0.048. Since the regression coefficient
value was more than one, we can deduce that there was a positive relationship between performance appraisal
feedback and employee‟s productivity, the relationship was found to be non-significant as the p-value was more
than 0.05 (0.771>0.05).
This infers that variables of performance appraisal system positively influences the productivity of
employees in Automation solution company, Greater Noida, India
10. DISCUSSION OF THE FINDINGS
10.1. Goals & Objectives Setting in Performance Appraisal
The study sought to determine the effect of goals and objectives setting in performance appraisal on
employee‟s productivity in Automation Solution Company. It was identified that goals and objectives setting in
performance appraisal was influencing Employee‟s Productivity of Automation Solution Company, Greater
Noida, India to a great extent. Further, the study found that in performance appraisal, the participant may be
connected to performance goals, interpersonal goals, strategic goals and internalization goals. In addition, the
study found that MBO (management by objective) technique of performance appraisal was used in the company
and management first set the goals & objectives for employees who come under performance appraisal. A goal
setting is effective as long as employees accept it, and it is a visible process and a key component of PA
participation. Further, the study found that performance appraisal probably works best when formal goals,
organizational goals, and the rates' and rater's goals for PA are well-matched. The study also found that goals
and objectives mechanisms affect performance by increasing motivation to reach set goals and energize people
to expend more effort based upon the effort that is required to reach a certain goal.
10.2. Performance Rewards given to Employees
The study show the effect of performance rewards given to employees on employee‟s productivity in
Automation Solution Company in Greater Noida, India. It was identified that performance rewards given to
employees in performance appraisal was influencing Employee‟s Productivity to a great extent. Further,

correlation and regression table show the positive relationship between dependent and independent variable. The
organization has a reward system for good performance and for target achieved performance. Organization gives
salary increment, promotion, appreciation in front of all, etc. as a reward after performance appraisal. For better
and continues positive result timely monitoring of appraisal system was done in organization. In addition, the
organization had properly defined performance indicators for key processes, products and services and the
indicators are monitored and discussed regularly.
10.3. Performance Appraisal Feedback
The study shows the effect of performance appraisal feedback on employee‟s productivity in
Automation Solution Company, Greater Noida, and India. It was established that feedback in performance
appraisal influences the employee‟s productivity in company to a great extent. According to Heslin, Latham &
Vande Walle (2005), performance appraisal process is incomplete without the feedback given to the employee
about his appraisal and his performance. The study also found that company recruits qualified staff according to
its needs. Further, staff members at automation Solution Company are aware about goals and objectives on
organizational level and individual level also. Employees are trained and they know how they can achieve goals
and objectives. The study also found that company communicates the beneficiaries and their feedback is
analyzed and used to improve internal processes to their employees. The study also established that members of
staff are open to change and innovation and managers monitor performance in their area of responsibility.
Additionally, the organization has access to free or affordable information that may help to improve
performance (e.g. through the internet, public libraries). It is a solution provider company; it is provide software
solution to different client on their location. Client feedback also include in the appraisal of employees. An
accurate and constant feedback and coaching is a key to increase employee‟s productivity and motivation.
11. TESTING OF HYPOTHESIS
There were 3 null hypotheses to be tested. This was done based on the results of Table 6. The results
are given below.
11.1. Testing the first hypothesis
H01: There is no significant relationship between goals and objective setting of performance appraisal used in
To test this null hypothesis, a full regression model was fitted as shown in Table 5. The coefficient of
Performance criteria was tested at 5% significance level and found to significant (p-value=0.038<0.05). This
indicates goals and objective setting have a significant relationship with employee productivity.
11.2. Testing the second hypothesis
H02: There is no significant relationship between performance rewards given to employees used in the
To test this null hypothesis, a full regression model was fitted as shown in Table 5. The coefficient of
Performance criteria was tested and the p-value=0.029<0.05. This indicates that performance rewards given to
employees has a significant relationship with employee productivity.
11.3. Testing the third Hypothesis
H03: There is no significant relationship between performance appraisal feedback and employee productivity.
To test this null, hypothesis, a full regression model was fitted as shown in Table 5. The coefficient of
Performance appraisal reward was tested and the p-value=0.771<0.05. This indicates that performance appraisal
feedback does not have a significant relationship with employee productivity.
12. CONCLUSIONS
The study revealed that effectively designed and implemented performance appraisals system can bring
lots of benefits to the organization and its employees. However, it is demonstrated by the several researches that
many organizations fail to put the system into practice effectively and it is often viewed negatively by both
employees and managers. And this has negative impact on the process of system. So regular monitoring and
proper communication regarding appraisal process is must for organization performance.
In this study we sought to investigate the effect of Performance appraisal variables like goals and
objective setting, performance rewards given to employees and performance appraisal feedback on employee
productivity. We used correlation and regression analysis in the data analysis. The study found that goals and
objective setting in performance appraisal influences employee productivity and this productivity directly give
impact on organization performance. , performance appraisal probably works best when all the decided goals
and objectives like formal goals, organizational goals, and the rates' and rater's goals for performance appraisal
are set properly. Goals and objectives setting mechanisms affect performance by increasing motivation to reach
set goals.
It is quite interesting to note that employees realize little benefit after a performance appraisal.
Company provides rewards to employees for their achievement. Further where performance appraisal indicate

negative results and establishes some weaknesses the employees are agreed to a low extent that they are taken
for further training for their betterment.
The study further concludes that there is a positive relationship between performance appraisal
feedback and employee productivity but it is not significant according to data analysis. So company need some
focus on that issue because feedback provides actual position of employees work. Feedback is must for
employee productivity. Promotions, increment, job enrichment, training need, etc. all are based on performance
appraisal feedback, so it is must for productivity of employee.
BIBLIOGRAPHY
 Bagul D.B (2014).,”A research paper on- Study of Employee‟s Performance appraisal system”, An
international peer reviewed scholarly research journal for Humanity Science & English language,”vol. 1,
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 Gichuhi Anne Wanjiru, Abaja Poti Owili, Dr Ochieng Isaac, “Effect of Performance Appraisal on
Employee Productivity; A case study of Supermarkets in Nakuru town, Kenya”, Asian Journal of Business
and Management Sciences Vol. 2 No. 11 ,pp. 42-58, ISSN: 2047-2528
 George N. Root, A project report on “Effects of Performance Appraisal on Employee productivity; A study
of Power Holding Company, ABA, http://smallbusiness.chron.com/effects-performance-appraisals-
employees-17558.html
 K. Ashwathappa (2008),”Resource Management Text & Cases”, Chapter: Performance Appraisal
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 Othman Norfarizal (2014),A thesis on ”Employee performance appraisal satisfaction: A case evidence from
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 http://performance-appraisal.com/results.htm

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Barkha Gupta et. al.

, Journal of Management Research and Analysis (JMRA)

EFFECT OF PERFORMANCE APPRAISAL ON EMPLOYEE

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Source: Developed for this research

Goals & 0.50 0.25 20.03 1.75 .000 Significant at

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Model R R Square Adjusted R Square Std. Error of the Estimate

Source: Researcher output on SPSS

Model Sum of Squares Df Mean Square F Sig.

Residual 156.887 56 2.802

Source: Researcher output on SPSS

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