THE IMPACT OF PERFORMANCE APPRAISAL ON EMPLOYEE SATISFACTION AND MOTIVATION IN BANKING SECTOR OF PAKISTAN

Abstract

Organizations consider the Performance Appraisal System as an important tool for human resource management. However its effectiveness remains a challenge for immediate supervisors and employees because of the motivational and behavioural factors. The prime objective of Performance appraisal is to motivate employees and to enhance the overall organization competence and productivity. This study investigates the performance appraisal impact on employee satisfaction and motivation in banking sector of Pakistan. It examines the importance of items under proposed appraisal factors i.e. appraisal fairness and outcome, employee participation and supervisor and subordinate relationship, among the employees of the selected bank. The results proposed that appraisal fairness is correlated with supervisor and subordinate relation and appraisal fairness is also correlated with employee participation. The research revealed that fairness perception aids in building trust and confidence on the whole appraisal process and make the process transparent. Transparency is the essence of performance appraisal system. Appraisal fairness leads to employee adoption of the performance appraisal process, and has strong influence on employee satisfaction. Appraisal fairness also depends on employee engagement in appraisal process and supervisor subordinate relationship. It is concluded that employee engagement in the appraisal process creates an atmosphere of mutual cooperation and support between employees which result in reducing conflict and building a positive working environment to enhance productivity.