EFFECT OF EMPLOYEE APPRAISAL ON PERFORMANCE IN UKULIMA SAVINGS

AND CREDIT COOPERATIVE SOCIETY IN NAIROBI COUNTY

KANDIE K DISMAS

A RESEARCH PROJECT SUBMITTED TO THE SCHOOL OF CO-OPERATIVES AND

COMMUNITY DEVELOPMENT IN PARTIAL REQUIREMENT FOR THE AWARD
OF BACHELOR OF CO-OPERATIVE BUSINESS (HUMAN RESOURCE OPTION) IN
THE CO-OPERATIVE UNIVERSITY OF KENYA.

MARCH, 2024

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 DECLARATION
DECLARATION BY THE STUDENT

I declare that this research project is my original work and has not been previously submitted to
any institution or examination body.

NAME: KANDIE K DISMAS Reg No.: BCBC01/0227/2016

Sign: Date:

APPROVAL BY THE SUPERVISOR

NAME: Dr. Wilson Metto

Lecturer: The Co-operative University of Kenya

Sign: Date:

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 DEDICATION
This project research is dedicated to the Almighty God who is my source of inspiration, courage,
strength and existence.

I also dedicate it to my parents and the entire family for their support and encouragement during
my time of study.

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 ACKNOWLEDGEMENT

I give special thanks to my supervisor Dr. Metto for his guidance and suggestions that shaped
and made this project a reality.

I sincerely appreciate my family for their great encouragement, motivation, support and
understanding during my studies in collage and during writing of my research.

Finally, I give thanks to the almighty God because this project won’t be a success if it were not
for his grace and protection.

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 TABLE OF CONTENTS
DECLARATION.............................................................................................................................ii

DEDICATION...............................................................................................................................iii

LIST OF FIGURES.......................................................................................................................vii

LIST OF TABLES.......................................................................................................................viii

ABSTRACT...................................................................................................................................ix

CHAPTER ONE..............................................................................................................................1

INTRODUCTION...........................................................................................................................1

1.1 Background Information........................................................................................................1

1.3 Objectives of the Study..........................................................................................................6

1.4 Research Questions................................................................................................................6

1.5 Significance of the Study.......................................................................................................6

CHAPTER TWO.............................................................................................................................8

LITERATURE REVIEW................................................................................................................8

2.1 Introduction............................................................................................................................8

2.2 Theoretical Review................................................................................................................8

2.2.1 Comprehensive View of Performance Appraisal.........................................................11

2.2.2 Approaches to Assessing Performance Appraisal........................................................12

2.3 Empirical Review................................................................................................................13

2.4 Conceptual Framework........................................................................................................15

CHAPTER THREE.......................................................................................................................17

RESEARCH METHODOLOGY..................................................................................................17

3.1 Introduction..........................................................................................................................17

3.2 Research Design..................................................................................................................17

3.3 Target Population.................................................................................................................17

3.4. Sampling Techniques..........................................................................................................17

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 3.5 Research Instruments...........................................................................................................18

3.5.1 Instrument Validity and Reliability..............................................................................19

3.6 Data Collection....................................................................................................................19

3.7 Data Analysis.......................................................................................................................20

3.8 Research Ethics....................................................................................................................21

REFERENCES..............................................................................................................................22

LIST OF FIGURES

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Figure 2.1 Conceptual framework.................................................................................................16

LIST OF TABLES

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Table 3.1 Sample Size...................................................................................................................18

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 ABSTRACT
Performance appraisal is the sporadic evaluation of an employee’s performance measured
against the job’s stated or reputed requirements. Performance appraisal has been linked to
employee motivation and effectiveness in service delivery. The purpose of this study was to
determine the effect of performance appraisal on the employees’ performance in Ukulima Sacco.
The objectives of the study were; to determine the effect of job satisfaction on employee’s
performance, find out the effect of employee motivation on employee’s performance and to
identify the effects of career progression on employee’s performance. The study adopted a
descriptive study in which it targeted all the 100 staff from the main branch of Ukulima Sacco in
Nairobi. The study sampled 30 respondents. The study used self-administered questionnaires to
collect data. The data was then analyzed using descriptive statistics such as mean, mode and
percentages. Inferential statistics mainly the regression analysis was used to measure the
correlation between employee performance which is the dependent variable and the independent
variables (job satisfaction, motivation and career progression). The study established that the
performance appraisal applies through impartial compensation and management support,
employees’ productivity has been enhanced through job satisfaction. The study further
established that the performance appraisal practices have enhanced employee motivation through
the performance reward system, fair compensation and the working environment. The results
revealed that performance appraisal enhanced the employee career progression through career
growth, link between performance and employee goals in the organization and the link between
reward and performance. The study recommended that: the organization should look for best
practices of performance appraisal that will be appealing to the employees. The organization
should also enhance the rewarding system in the organization with the aim of retaining top talent
through best practices and generate more opportunities for growth within the organization to
enhance employees’ career development to maintain its standards as a high performing
organization.

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 CHAPTER ONE

INTRODUCTION
1.1 Background Information
An organization must remain highly competitive in order to excel in today’s ever changing
market place. For this to happen employees must be highly motivated and the appropriate
operational structures be in place. Equally important is customer satisfaction through quality
services and superior products and therefore it is imperative to underscore the significance of
measuring employees’ morale and seek to maintain a work force which is self-driven and is goal
oriented. Pulakos, (2009) rightly observes the importance of a highly motivated human resource.
She states that employees’ performance is indeed the performance of the organization.

To manage an organization is a very complex issue. However, key to appropriate management of

a whole organization is addressing the employees’ performance through quality performance
review exercises (Prasad, 2005). This is now a departure from the common belief that in an
organization the main issues of maximizing performance are by driving members to excel
without necessarily addressing the employees job satisfaction. Biswajeet (2009) rightly noted
that since the organization will only succeed when performance of employees is measured
accurately, it is therefore imperative to apply performance scale which should take into
consideration employee motivation, customer satisfaction, effective market strategies,
profitability and productivity, Chan and Lynn (1991). These elements are the main inter-play
which determines how well the organization is or will perform.

To better understand performance in an organizational setting, factors such as job description,

role specification and the time factor should be considered. Bernardin (2007) adds also that there
has to be a clear time in put specification. Personality traits, individual tastes or skillfulness are
not particularly important when it comes to our understanding of the term performance. Learning
is key to the effectiveness of any organization. Successful organization places strong emphasis
on providing employees corrective measures where need be and healthy feedback to maintain a
positively engaged setting. As well each individual appreciates to see that he or she is considered
a valued contributor to the sum-total of the organization’s overall performance.

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Performance appraisal systems which include but not limited to the selection, training
procedures, recruitment evaluation of employees, will be necessary in order to help the
organization achieve the objectives. The accuracy of the selected appraisal systems is highly
significant in guiding the organization on what needs to be improved or maintained as well as
counseling needs of employees (Pulakos, 2009). It can also increase employee motivation
through the feedback process and may provide an evaluation of working conditions, thus,
improving employee productivity, by encouraging the strong areas and modifying the weak ones.
When effective, the appraisal process reinforces the individual’s sense of personal worth and
assists in developing his/her aspirations. Until recently performance appraisal was not a major
area of focus for organizational performance. This is true when one considers that it is only in the
early 1970s that attempts to provide a systematic framework and formal approach was
introduced. Subsequently this field has seen increased efforts in seeking a standardized approach
to performance appraisal as more and more organizations begin to appreciate employees’
satisfaction as key to an organization’s success.

According to Maund (2001) employees’ satisfaction can determine how the organization will
succeed in its’ objectives. These objectives are in turn influenced by what needs to happen for
the organization situation which increase or affect negatively employees’ satisfaction. In order to
determine main areas of improvement such as appropriate training and promotions, organizations
are continually seeking the performance appraisal standardized tool. Performance development
reviews enhance the managing of organizations employees practically and effectively. The
managers are able to know their employees’ capabilities through their achievements and the
potential that they have, know their strengths and shortcomings, help understand the contribution
of individual employee’s performance to the corporate whole, make comparisons of team
members, agree on specific measurable, accurate, realistic, time bound goals and objectives and
identify ways of growing the business or improving on processes. They allow staff to; feel
valued, understand what is expected of them, understand the business they are involved in,
understand their weaknesses, identify their strengths, identify areas they need further training in
as well as offer opinions and insights that may improve the business as a whole. It cannot be
stressed enough the significance of performance appraisal system however on the other hand this
is considered the weakest in management of employees (Pulakos 2009).

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How individuals or teams accomplish the organizations’ goal is generally what we may call
performance (Armstrong 2001). However, it is important to understand results alone are not the
only relevant items in performance but other considerations such as the methods or strategies
applied by the employee to achieve the stated goals are equally vital (Mooney 2009). The
significance of comparing an employee’s past and present job output standards has been
highlighted in the definition of performance presented by Dessler (2005). Another way of
looking at performance appraisal suggests the importance of evaluating an individual’s current
performance with a view to improving their future performance which according to Grubb
(2007) contribute to the overall organizational performance. Beach (2001) added that
performance appraisal should be related to an employee’s actual and potential output capacities
through systematic evaluations. Another dimension was added by Gungor (2011) who brings out
the issue of employees’ motivation. He correctly states that each person has the capacity to
improve their behavior depending on the motivation levels toward specific goals thus
underscoring the commonly held perception that the achievement of goals is significantly
determined by the employee’s motivation level.

In order to appropriately assess how well individuals output contributed to the overall
achievement of goals and objectives of Ukulima Sacco, the organization begun applying the
employee performance appraisal system. This application has given the Sacco base level criteria
for all its’ operations which in turn provides pointers toward areas needing improvement.

It is worth noting that management and subordinates’ communication approaches are detrimental
to successful outcomes toward goal-achievement. Defining individual role expectation according
to the expected outcome by the business together with a teams’ participants ability to
communicate effectively at all levels impacts the overall performance. To this end Ukulima
Sacco seeks to apply the performance appraisal approach to provide merit driven incentives
where appropriate. Top-down communication and dialogue are encouraged as guided by the
Sacco appraisal systems derived from Ukulima Sacco value-based performance standards;
Ukulima Sacco Performance Development Learner Guide (2013). This study is designed to
investigate the effect of performance appraisal on the employees’ performance in Ukulima
Sacco.

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1.2 Statement of the Problem
The purpose of the study is to determine to what extent Ukulima Sacco employees have
embraced performance appraisal as a key business strategy for creating a performance driven
culture. Contemporary challenges faced by organizations today are pushing organizations to seek
for employee satisfaction which in a big way determines the organizations’ ability to deliver
services. In this regard commercial institutions such as Ukulima Sacco are seeking for
appropriate performance appraisal systems and tools in order to remain on the competitive edge
or to excel in all aspects of their core business.

More recently research data is showing the critical need of using these appraisal systems in order
to maintain a highly motivated staff, which as pointed out earlier employee satisfaction
significantly influences the organizations overall performance (Ahn 2001; Ittner, Larker, &
Randall, (2003); Lawson, Stratton, & Hatch, (2001) and Sandt, J., Schaeffer, U. & Weber, J.
(2001). The relationship between employee contentment on the job and performance appraisal
was highlighted by Ahn (2001) and Lawson et al (2001) while the significance of motivation was
addressed in the works of Sandt et al (2001).

Waal et al (2004) in his study established that performance review was related to the employee’s
productivity in the delivery of expected results. One of the performance management systems
that is widely used by the organizations is the employee performance appraisal. Employees’
performance development review is an essential organizational strategy for enhancing consistent
high performance in employees and as a result the organizational goals and objectives are
achieved. As to the value placed by the employees on the quality of the appraisal processes,
researchers have emphasized the need for excellent data recording and include the employees
comment when all the details have been gathered and endorsed through signatures by the
management hierarchy. Employees detests a below par appraisal process (Maund 2001).

Ukulima Sacco measures employees’ performance through targets which are allocated to all
branches and departments. They are then distributed among staff of the various branches and
used to appraise each staff on three-monthly basis. The process of rating performance is done
through open dialogue in a one-on-one proper quality review meeting with the team leader. As
part of the review colleagues seek for feedback from each other through the 360-degree
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multisource feedback system and review of employee’s performance carried out quarterly,
Global Standard Performance Development (2010).

Consistency check meetings provide leadership teams in each business area with the opportunity
to ensure that all performance rating decisions are fair and consistent and are justified in the
context of the business performance delivered by the team. Through this method of
benchmarking consistency checks help to ensure that rating decisions are robust, fair, informed
and adequately differentiated. The ability of the employee to achieve the targets maximizes
possibilities for career development and growth; it maximizes the likelihood of receiving greater
reward and recognition in terms of bonuses. However, as it is often the case with most human
situations the laid down procedures are sometimes not appropriately applied despite there being a
Ukulima Sacco Performance Development Learner Guide which should guide the Sacco’s
expected accurate assessing of correlation between performance appraisal and employee
performance.

Interest performance management, performance contracting, appraisal and measurement have led
to some quality studies being conducted in East Africa. Following extensive research on
International Organizations in this region, Mwema and Gachunga (2014) found out that to
increase employee productivity, organizations employee appraisal should be guided by assessing
how well targets, accomplishment, organizations goals, time and efficiency have been used and
measured.

Additional findings underscored the values placed on training and development, skills and
competence and effectiveness in communication factors which researchers found were of high
influence potential to organizations’ goal achievement (Njogu 2008). Another study conducted in
financial institutions in Kenya, looked at the relationship between performance improvement and
performance appraisal. The researcher concluded that service delivery and profitability were
highly influenced by performance appraisal (Ndegwa 2007).

While these studies are beneficial to the researcher, they were either done in international
organizations or looked at the effect of performance appraisal on the organizations’ performance.
None however has highlighted the effect of performance appraisal on the employee performance

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in the financial institutions hence a knowledge gap. This study therefore sought to fill this gap by
determining the effect of performance appraisal on the employee performance with major focus
on Ukulima Sacco.

1.3 Objectives of the Study

The following were the objectives of the study:

i). To determine the effect of job satisfaction on employees’ performance Ukulima Savings
and Credit Co-operative Society
ii). To find out the effect of employee motivation on employees’ performance in Ukulima
Savings and Credit Co-operative Society
iii). To identify how career progression affects employees’ performance Ukulima Savings and
Credit Co-operative Society

1.4 Research Questions

i). How does performance appraisal feedback affect employee performance at Ukulima
Savings and Credit Co-operative Society?
ii). In what ways does performance appraisal process affect employee performance at
Ukulima Savings and Credit Co-operative Society?

iii). In what ways does a performance appraisal goal affect employee performance at Ukulima
Savings and Credit Co-operative Society?

iv). How does performance appraisal method affect employee performance at Ukulima
Savings and Credit Co-operative Society?

1.5 Significance of the Study

This study aims at growing knowledge on performance appraisal to allow organizations to
evaluate their employees with a view to providing strategies for constructive improvement. This
will also highly reflect the implication of consistence performance appraisal by starting a better
understanding and appreciation between employer and employee by highlighting areas of mutual

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interest. Finally, the study will bridge a gap between human resource appraisal information and
performance review system by adding a fresh field-based data on reward performance.

1.6 Scope of the Study

One of the leading Co-operative Society with vast experiences and countrywide coverage is
Ukulima Sacco. This study thus focused on performance appraisal as human resource activity in
Ukulima Savings and Credit Cooperative society and how this affects the employee
performance. The employee performance was measured in terms of job satisfaction, employees’
motivation and employee career progression. The study was mainly done in Nairobi.

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 CHAPTER TWO

LITERATURE REVIEW
2.1 Introduction
This chapter presents review of theoretical literature followed by empirical literature. The
chapter also presents the theoretical framework and the conceptual framework.

2.2 Theoretical Review

Theories are formulated to explain, predict, and understand phenomena and, in many cases, to
challenge and extend existing knowledge, within the limits of the critical bounding assumptions.
The theoretical framework is the structure that can hold or support a theory of a research study.
The theoretical framework introduces and describes the theory which explains why the research
problem under study exists.

Before diving into the empirical and analytical discussions about performance appraisals it is
important to situate the argument within a theoretical context. First because the researcher was
examining how performance appraisal affects employees’ performance, the researcher examined
the different theories that deal with performance appraisal systems, job satisfaction and
motivation. This includes theories that deal with fairness at work such as the Organizational
Justice Theory and Social Justice Theory.

This research was based on the organizational justice theory advocated by Greenberg (1987).
Byrne and Cropanzano (2001) define organizational justice as the study of fairness at the
workplace. Most of the researches conducted on organizational justice support the fact that there
are two main categories of fairness at work; with a third one proposed by researchers without a
very clear definition. Most of the researchers are agreeable with Distributive justice which is the
primary type of justice. Distributive justice is focused on the repercussions of the performance
review discussions, agreed ratings and action plans between

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a team leader and a team member. On the other hand procedural justice is concerned with the
effectiveness of the processes of performance development reviews that are used to measure the
performance of individual employees.

Numerous researches carried out in the last twenty years are underpinned on the first two
primary categories as observed by Byrne and Cropanzano (2001). According to Bies and Moag
(1986) Interactional Justice which is a third form of justice though not clearly defined is
concerned with how team leaders interact and treat their team members. Generally there should
be guiding principles in place that form the foundation for the culture an organization aims to
foster. A third type of justice is often referred to as interactional justice. This was generally
researched further by Bies (1987) by adding an element of social justice to interactional justice.

The primary social justice theory was advocated by Adams (1963) and Homans (1961). The one-
on-one dialogue between a team leader and a team member is accepted as fair if their output is
proportional to the rewards for excellent performance. The best way to ensure that performance
is measured accurately is to have put together a robust performance development plan. Clearly
defined actions against specific, measurable, accurate, realistic and time bound objectives and
detailed specific deliverables will ensure that measurement becomes easy. Initial researches were
concerned with this fairness of allocating resources for instance how much an employee earned
and resource allocation to business units. This was later referred to as distributive theory derived
from the ‘equity’ theory; reason being it was concerned with resource allocation or subdivision.

Further researchers observed that if the procedure of performance development review is

accepted by the employees, they will accept unfair allocation of resources to a certain extent.
Successfully navigating the way through this part of the process will ultimately ensure that
performance review work for employees and for the corporate whole. This

phenomenon is what is defined as procedural justice as advocated by Cropanzano & Folger,

(1991); Greenberg, (1990); and Leventhal, (1980).

Numerous researches have been undertaken on the process of performance appraisal and the
fairness of outcomes. The areas covered consist of evaluating the review systems to test
dependability and the feedback employees give on the fairness of review outcomes whether it is

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rewards, promotions, training or dismissals. Most researches are in reference to various studies
conducted by Thibaut and Walker (1975) that examined systematically employees’ perception of
the validity of the review outcomes especially when they are negative and diverse methods of
resolving them. Subsequent studies by Leventhal (1980) investigated the two primary categories
of justice; distributive and procedural to consist other components such as specified distributive
techniques and other underlying procedural elements apart from monitoring the performance
appraisal systems. In the present dynamic and competitive business environment organizations
should be more flexible and should therefore keep improving the performance review system to
make it more aligned to the specific organizational and individual goals and objectives.

Later research by Brockner (2002) investigated the impact that favorable results and fair process
has on those who make decisions, the employee’s acceptance of the decision and the corporate
whole. The investigations adduced that if the performance review procedures are strictly
followed to the letter; then the employees’ acceptance is lower as opposed to when there is a
certain degree of unfairness in the procedure. Suggestions by Brockner, Siegel, Daly, Tyler and
Martin (1997) are that fairness of the process does not affects the people’s perception of the
ratings of performance and the outcome thereafter but the extent to which employees embrace
and accept other factors considered in the review systems such as the key

performance indicators. There is a general feeling that in service delivery it is not

possible to capture all that an individual employee does on a scorecard hence it becomes tricky
on how performance is measured.

Organizational justice theory was first applied to performance development reviews by

Greenberg (1986). One of the research questions was ‘what makes a performance review
discussion fair’. Greenberg investigated whether the rewards one receives are the basis of an
acceptable and fair review or it is the process of decision making or both. He suggested seven
subdivisions underpinned on the two primary types of fairness namely procedural and
distributive justice. These consist of team leader’s proactively meeting with the team member
where actions to help raise the bar in terms of performance are agreed, an open dialogue in a one
on one formal quality review meeting where progress is discussed and way forward defined,

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appeal process in case of dissatisfaction with the rating, the traits of a rater such as being
consistent in the application of organizational performance standards and how well the team
leader understands the job performance being measured.

The other two factors included in the distributive category are; the actual rating of an employee’s
performance and rewarding of performance such as pay raise and promotions to a more
challenging role. In large organizations consistency check meetings are held after the reviews to
provide leadership teams in each business area with an opportunity to ensure that all performance
rating decisions are fair and consistent and are justified in the context of the business
performance delivered by the team.

2.2.1 Comprehensive View of Performance Appraisal

Evaluation of the performance is part of management policy in most organizations. It is
perceived therefore that the process of setting up appropriate evaluation systems will include
implementing, communication and managing of the situations where the subordinates are
working.

Employees are primary contributors to goal achievement and fulfillment of objectives. Their
input toward the success of the organization can be measured in structured settings or
unstructured situations (Carroll & Schneier, 2002). The findings become the property of the
organization and must be conducted within specific time limits and must also include a persons’
traits and behavior rating Coens and Jenkins (2000)

Strong suggestions were accented by Karol (2006) which invited a consideration for a meeting
between manager and subordinate for the purposes of reviewing the past and projecting future
involvement. In most cases performance appraisal process may include many components.
Suggestions have included as many as thirteen interfacing factors, (Landy and Farr 2000), while
others have narrowed down to four basic involvements (Mohrman, Resnick-West and Lawler
2003). These four include clarifying what the process is or should be, actual assessment,
communicating the outcome both to the organizational systems and to the individual being
reviewed. Other researchers have identified rightly the additional legal component and

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appreciation systems for the employees (Latham and Wexley 2001). They have also observed the
value added by preparing the observers adequately.

One item most ignored and should be considered from the onset is that due to the structured
nature of the process and the expected outcomes some tension do exist between the person
conducting the evaluation and the one to be assessed and therefore has very low motivation when
being done (Folger and Lewis 2003).

The twofold contributions of the appraisal system will affect both the high rated employees and
the not well performing employees. In essence promotions, merits and commendations are
guided by the results from assessment. On the other hand those who do not score highly may find
themselves on the opposite even in some cases being laid off or demoted. A word of caution on
this latter remark is that an organization needs to understand the rights and conditions of an
employee as stipulated in the employment contracts. Failure to

take this into consideration may result in law-suits which have the potential of hurting the
organization badly.

2.2.2 Approaches to Assessing Performance Appraisal

The success of performance review systems evaluation is yet to be given due attention by
researchers which means the effectiveness of the systems are yet to be fully tested. Consistency
check and dependability of performance appraisal systems is an area for researchers to focus on
in order to keep improving, controlling and managing it to serve its purpose effectively.

Mohrman, Resnick-West and Lawler (2003) states that the most important indicators in the
efficacy of the performance review system is the purpose for which it has been implemented. An
efficient performance review system has the following characteristics; : helps to calculate pay:
ascertains and communicates decision pertaining to pay ; provides both developmental and
constructive information and support; enhances the definition and goal setting for future work
and mutual tasks; performance development plans are agreed and this information stored, the
employees efforts in meeting the business objectives are registered and allow the team member
to provide feedback about the performance discussion and working conditions and helps the

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employee to understand their role and how they are able to align their efforts with the
organization objectives.

Establishing standardized systematic evaluation procedures and clearly communicating appeals

will further increase performance effectiveness. This provides an opportunity for employees who
perceive unfair treatment or judgement to defend their cause (Roberts, 2001, Bernardin & Beatty,
2004, Greenberg & Tyler, 2007).

Mohrman, Resnick-West and Lawler pointed out that team leaders need to provide constructive
feedback to team members in the right way to ensure motivated teams and great performance. No
one is perfect hence if feedback and coaching is promptly provided it

enables employees develop their full potential. Feedback may include giving praise for work
well done, giving encouragement to build confidence, discussing the areas where extra effort is
needed or where work needs to be done in a different way and clarifying immediate priorities.
Ultimately feedback and coaching must enable employees develop to their fullest potential if it
becomes part of a daily routine rather than when performance development review time comes
around.

How employees view the systems is equally significant with reference to evaluations ratio
potential outcomes as observed by Mohrman and Lawler (2003), DeVries, Morrison, Schullman
and Gerlach (2004). It has also been pointed out elsewhere by Giles and Mossholder (2000) on
the need to establish acceptable scales which are to be perceived as fair and accurate by the
employees during performance appraisal evaluations.

2.3 Empirical Review

Regular performance development reviews as a goal-oriented plan are a powerful tool of
fostering high performing organizations such as schools. There are many setbacks in the
institutions of learning hence performance development reviews enhance recognition and
rewarding of excellent performance. It motivates staff to do their best in anticipation of being
recognized and rewarded for their efforts. Cole (2002) observed that when challenges such as

13
training needs and working conditions are addressed the teachers will perform optimally and
deliver for the organization.

Major focus has been to diversify the training to include learning on the role, emphasizing the
importance of sessions of learning both in house and organized workshops and team building
events, Emojong (2004). These learning sessions could produce better results if they considered
the participation of the employees on how they should be facilitated, who the facilitators should
be or what should be taught.

Technological advancement in today’s world as observed by Scott and Finch (2005) has
improved performance development reviews especially in big organizations though this idea has
also been adopted by the small medium firms. This is whereby the employee performs self-
assessment using the desktop computer or laptop and the manager reviews and comments on the
core objectives under review. Biases can be avoided by employing standard ratings and through
the 360-degree multisource feedback from colleagues.

Khan (2007) notes that the current employees’ role is the most important factor to determine
whether to grant promotion or not. Openness and accountability on the review procedure
motivates the employees to perform well in their roles if they perceive that the outcomes and the
processes are fair. Team leaders and team members are therefore able to focus on strategic
planning on the key areas that require attention and enhancement. The organization and the
individual employees are protected from partial treatment and enhance continuous and timely
feedback. Performance review and feedback should be customized to the organization’s
objectives, goals and values considering the employees dreams and career aspirations. More
researches in this area are required to test whether the above is in existence in organizations.

Effective performance reviews have the following components; including organizational goals
and objective as part of performance review discussions and the expected contribution by the
employee; underpinning performance reviews on exact role of the employee; providing regular
feedback and coaching to help employees put extra effort on their performance for instance
giving the employee a more challenging role and offering guidance and support (Fletcher 2004).

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Performance development reviews should be given due attention by both the appraisers and the
appraise where feedback on performance is provided on a daily basis to the appraise and it is
expected that the appraise should consistently stretch to high standards of

performance thus improving the overall organizational performance. Additionally in the dynamic
business environment performance development review systems require consistent monitoring
and necessary changes to be aligned with the organizational goals and objectives hence the need
for this research.

According to DeNisi and Pritchard (2006) organizations should have components in the
performance development reviews that can motivate employees to double their efforts and
enhance their contribution to the organizational goals and objectives. In reviewing the perception
of fairness of employee’s research shows that this has not been addressed appropriately by most
organizational justice studies documented in other countries or diverse populations (Colquitt,
Conlon, Wesson, Porter and Ng 2001). Therefore, the objective of this research is to begin to
address these gaps in the literature. It is generally suggested that employees will readily support
performance reviews that seem accurate in terms of performance measurements to enhance their
consistent contribution to the organizational goals and objectives in subsequent reviews.

The reviewed literature looked at aspects of the performance management on employee

performance. For instance Cole (2002) highlighted the challenges training needs had on the
performance of employees and how working conditions influenced the performance of the
employees. Another literature on the effect of training was highlighted by Emojong (2004) where
he found that learning sessions produced better employee results. Another focus on the aspects of
performance appraisal was by Khan (2007) who noted that openness and accountability in the
review procedure motivates employees to perform.

However, review by Scott and Finch (2005) demonstrated that performance appraisal indeed
influenced the employee performance. However, while the review highlighted the importance of
performance appraisal on employee performance, none of the review

15
highlighted the effect of performance appraisal on the Sacco employees’ performance hence a
knowledge gap.

2.4 Conceptual Framework

The conceptual framework below will help in this study by organizing and addressing the effect
of performance appraisal on employees’ performance in Ukulima Sacco. In the conceptual
framework the researcher demonstrates that the adoption of performance appraisal will enhance
the employee job satisfaction as the evaluation will lead to compensating employees based on
their efforts and competencies. The appraisal will lead to employees’ motivation as appraisal will
lead to recognition of individual employees’ efforts. Employees’ career advancement will be
enhanced through constructive and developmental feedback by identifying key capabilities and
areas that can be improved through training.

Figure 2.1 Conceptual framework

Job satisfaction

 Job security
 Staff turnover
 compensation Employee Performance

Motivation

 reward system
 management system
 sales growth ˗ Productivity
˗ Effectiveness
Career progression
˗ Customer satisfaction
 Promotions
 Training and development

16
 Independent Variables Dependent Variable

Source: Author, 2021

CHAPTER THREE

RESEARCH METHODOLOGY
3.1 Introduction
This chapter presents all the aspects of the research methodology to be used in this study. It is
organized into the following sections: research design, target population, sampling technique,
research instruments and design, data analysis and ethical consideration.

3.2 Research Design

This study will adopt descriptive research design in investigating the effect of performance
appraisal on employees’ performance in Ukulima Sacco. Descriptive survey design according to
Kothari (2003) is a powerful form of quantitative analysis. This design will be preferred because
it enables the researcher describe the area of research and explain the collected data in order to
investigate the differences and similarities with the frame of reference within a given period of
time (Mugenda and Mugenda, 2003). Additionally, the method allows the researcher to collect
information from the participants in the environment accustomed to them which results in a
description of the data, whether in words, pictures, charts, or tables. Moreover, much of the data
collected from the respondents will be quantitative in nature. This design gave the researcher a
comprehensive picture of the variable relationship since the method is the only means of
accurately measuring.

3.3 Target Population

The target population in this research will comprise all the employees of Ukulima Sacco in
Nairobi main branch.

17
3.4. Sampling Techniques
The study will use simple random sampling design to select the main branch in Nairobi from the
list of FOSA branches provided by the Ukulima Sacco human resource department. The study
will then use stratified simple random sampling to select a sample of respondents from the main
branch out of a sample size of employees. This will represent 30% of the target population
according to the recommendations by Mugenda and Mugenda (2003). Stratified sampling will be
used as it makes it easier to classify the sample into two main categories; managers and
subordinates.

Table 3.1 Sample Size

Permanent Managers Subordinates 50% Total sample

employees subordinates

3.5 Research Instruments

Research instruments consisting of questionnaires should be developed by the researcher to be
used to collect the data. According to the study conducted by Orodho (2004) questionnaire has
the ability to measure in support or object a particular viewpoint. A five-point structured Likert
scale questionnaire will be used to collect the data and averages, percentages and correlation
analysis used. When responding to a Likert questionnaire item, respondents should be specific
about their level of agreement or disagreement on a symmetric agree-disagree scale for a series
of statements. Thus, the range of agreement or disagreement captures the depth of their feelings
for a given statement.

Questionnaires will be divided into four sections. Section one sought demographic information
about the respondents such as gender, age, experience, level of education and status in the
organization. The second section sought information on the effect of employee job satisfaction
on employee’s performance. Section three sought the information of the effect of employee

18
motivation on employee’s performance and the last section sought information on the effect of
career progression on employee’s performance in Ukulima Sacco.

3.5.1 Instrument Validity and Reliability

Validity is the degree to which a test measures what it purports to measure (Borg and Gall 2003).
To test the validity of the questionnaires, the study will seek expert judgment from the
supervisors who shall sought to validate and enhance the value and content of research
instruments. Any statement in the questionnaire that will be found to be unclear in eliciting
relevant information will be modified and restructured.

Reliability is a measure of the degree to which a research instrument yields consistent results or
data after repeated trials (Mugenda and Mugenda, 2003). The test retest will be used to establish
instrument reliability. The researcher will administer the questionnaires to the same group of
persons after a period of one weeks. Computation of the correlation between the scores of the
two sets will be carried out and coefficient obtained will became the reliability estimate for each
of the items to be tested.

3.6 Data Collection

The researcher shall administer a questionnaire to the respondents personally. The researcher
shall book appointments with the management of the respondent Sacco branches and notify them
of the mission and purpose of the study and ask for permission to be allowed to administer the
questionnaires to the employees. Drop and pick method will be the most appropriate due to the
fact that the Sacco employees are usually busy. The researcher should therefore leave behind the
questionnaires for the respondents to complete at their own free time but to be collected at an
agreed time.

3.7 Data Analysis

Data will first be edited to identify and eliminate errors made by respondents. Then Coding
should be done to translate question responses into specific categories. Coded items will be
analyzed with the aid of Statistical Package for Social Sciences (SPSS) software. Descriptive
statistics such as means, modes, percentages and standard deviation will be used to analyze the
data. These shall be used to show the distribution of responses. The presentations will be done in
the form of tables, figures and charts.

19
Linear regression analysis will be used to establish the relationship and magnitude between job
satisfaction, motivation of employees and career progression (independent variables) and
employee performance (dependent variables). According to Green and Salkind (2003) regression
analysis is a statistical process of estimating the relationship between variables. It includes many
techniques for modeling and analyzing several variables, when the focus is on the relationship
between a dependent variable and one or more independent variables. More specifically,
regression analysis helps one understand how the typical value of the dependent variable changes
when any one of the independent variables is varied, while the other independent variables are
held fixed. The regression analysis results will be presented using regression model summary
tables, Analysis of Variance (ANOVA) table and beta coefficient tables.

3.8 Research Ethics

The researcher should guarantee confidentiality of the information that shall be given by the
respondents. This will be done using the information without mentioning their specific names or
the branch of the Society. The respondents should also be informed of their rights to participate
in the study.

20
 REFERENCES
Ahn, H. (2001). “Applying the balanced scorecard concept: an experience report”, Long Range
Planning (Vol. 34).

Armstrong, M. (2001). Key Strategies and Practical Guidelines.

Armstrong, M. (2001). Performance Management. Key Strategies and Practical Guidelines.

London: Kogan Page.

Armstrong, M. (2006). A handbook of Human Resource Management Practice. London: Kogan

Page .

Bacal, R. (2001). Performance management. New York: McGraw-Hill.

Bernadin, P. (2007). Performance Appraisal in Organization Today. USA: McGraw-Hill.

Bernardin, H. J., & Beatty, R. W. (2004). Performance Appraisal. Assessing Human Behavior at
Work. Boston, MA: Kent.

Biswajeet, P. (2009). Human Resource Management (PHI Learning).

Carroll, S. J., & Schneier, C. E. (2002). Performance Appraisal and Review Systems. The
Identification, Measurement and Development of Performance in Organizations.
Glenview, IL: Scott, Foresman.

Coens, T., & Jenkins, M. (2000). Abolishing Performance Appraisals. San Francisco: Berrett-
Koehler Publishers, Inc.

Cole, G. A. (2002). Personnel management for organizations. London: Kogan page.

Dessler, G. (2005). Human Resource Management. New Jersey: Prentice-Hall.

Kothari, C. R. (2003). Research Methodology. Methods and Techniques, 2. New Delhi.: Wishwa
Prakashan.

Landy, F. J., & Farr, J. L. (2000). The Measurement of Work Performance. Methods, Theory and
Applications. Orlando, FL: Academic Press.

Maund, L. (2001). Introduction to Human Resource Management. Theory and Practice. New
York: Palgrave.
21
Mugenda, O. M., & Mugenda, A. G. (2003). Research Methods, Quantitative and Qualitative
Approaches. Nairobi, Kenya.: ACT S Press.

Prasad, L. M. (2006). Human Resource Management. Sultan Chand & Sons: Educational
Publishers.

Pulakos, E. D. (2009). Performance Management. A New Approach for Driving Business Results.
United Kingdom: Wiley-Blackwell.

S, & Taylor, M. S. (2003). Due process in Performance appraisal. A Quasi –Experiment in

procedural justice, Administrative science quarterly, 40(3), pp.495-523.

Scott , M. F., & Finch, E. (2005). Effective Management Appraisal for schools. Nairobi, Kenya.

22
 APPENDICES

APPENDIX I: LETTER OF INTRODUCTION

Dear Sir/ Madam

I am a student at The Co-operative University of Kenya, as part of requirement to graduate with

a degree in Bachelor of Co-operative Business (Human Resource Management) I am conducting
a study Title: EFFECT OF EMPLOYEE APPRAISAL ON PERFORMANCE IN
UKULIMA SAVINGS AND CREDIT COOPERATIVE SOCIETY IN NAIROBI
COUNTY

For this reason, I humbly request you to assist in filling the attached questionnaire to the best of
your knowledge. The information that you will provide is strictly for academic and shall not be
used for any other purpose and your names shall not appear in this study. Your input will go a
long way to facilitate this research study.

Thank you

KANDIE K DISMAS

BCBC01/0227/2016

23
APPENDIX II: QUESTIONNAIRE
Section A: Demographic Information

1. What is your gender?

Male Female

2. What age group do you fall under?

20- 25 years 26-31 years

32- 37 years 38- 43 years

44- 49 years 50 years and above

3. What is your highest level of education?

High school and below College

Graduate Degree Post graduate

4. What is your status in the organization?

Manager Employee

5. How many years have you completed in the organization?

Below 5 years 5 – 7 years

Over 10 years 8 – 10 years

24
Section B: Study Variables

Performance Appraisal Feedback

6. Do you agree that performance appraisal feedback affect employee performance at

Ukulima Savings and Credit Co-operative Society?

Yes No

Briefly explain your answer

………………………………………………………………………………………………
…………………………………………………………….
………………………………………………………………………………………………
….…………………………
7. To what extent does performance appraisal feedback affect employee performance at
Ukulima Savings and Credit Co-operative Society?

Very Great Extent Great Extent

Moderate Extent Little Extent

Very Little Extent

8. Please indicated your opinion on the following statement on performance appraisal

feedback at Ukulima Savings and Credit Co-operative Society?
Strongly Agree Disagreed Strongly Not Sure
Agree Disagreed

25
 Does performance appraisal
have impact on employee
performance in your
organization

Performance appraisal
feedback is implemented in
your organization
Performance appraisal
feedback is used for improving
staff performance

Performance appraisal
feedback is used for improving
next section appraisal

Does staff in your organization

look forward to performance
appraisal feedback

Performance Appraisal Process

9. Does performance appraisal process affect employee performance at Ukulima Savings

and Credit Co-operative Society?

Yes No

Briefly explain your answer

………………………………………………………………………………………………
………………………………………………………………………..
………………………………………………………………………………………………
………………….

26
10. To what extent does performance appraisal process affect employee performance at
Ukulima Savings and Credit Co-operative Society?

Very Great Extent Great Extent

Moderate Extent Little Extent

Very Little Extent

11. Please indicated your opinion on the following statement on performance appraisal
process at Ukulima Savings and Credit Co-operative Society?

Strongly Agree Disagreed Strongly Not Sure

Agree Disagreed

As a member of the staff

do you look forward to
performance appraisal in
your organization

Are staff able to express

their grievances after
performance appraisal in
your organization

Is staff promotion
associated with
performance appraisal
process in your
organization

27
 Performance appraisal
process is a two-way
process in my organization

Performance Appraisal Goals

12. Does a performance appraisal goal affect employee performance at Ukulima Savings and
Credit Co-operative Society?
Yes No
Briefly explain your answer
…………………………………………………………………….
………………………………………………………………………………………………
…..
………………………………………………………………………………………………
……………….
13. To what extent does a performance appraisal goal affect employee performance at
Ukulima Savings and Credit Co-operative Society?

Very Great Extent Great Extent

Moderate Extent Little Extent

Very Little Extent

14. Please indicated your opinion on the following statement on performance appraisal goal
at Ukulima Savings and Credit Co-operative Society

Strongly Agree Disagreed Strongly Not Sure

Agree Disagreed

28
 Is organization training
policy linked to
performance appraisal
goal?
Does performance
appraisal goal identify staff
training needs in your
organization
Performance appraisal
goals are used for
improving staff
performance
Performance appraisal
goals are well documented
in HR Policies
Does your organization
achieve performance
appraisal goals after the
process

Performance Appraisal Methods

15. Does performance appraisal method affect employee performance at Ukulima Savings
and Credit Co-operative Society?

Ye No
s
Briefly explain your answer
…………………………………………………………………….
………………………………………………………………………………………………
…..
………………………………………………………………………………………………
……………….

16. To what extent does performance appraisal method affect employee performance in your
organization?

29
 Very Great Extent Great Extent

Moderate Extent Little Extent

Very Little Extent

17. Please indicated your opinion on the following statement on performance appraisal
method at Ukulima Savings and Credit Co-operative Society

Strongly Agree Disagreed Strongly Not Sure

Agree Disagreed
Does performance
appraisal system in your
organization add value to
employee performance?
Does performance
appraisal method identify
staff training needs in
your organization
Performance appraisal
method used in my
organization is easily
understood by staff
Do agree that performance
appraisal system adopted
in your
organization is effective

Thank you for participation in answering this questionnaire

30
APPENDIX I: WORK PLAN

31
32
APPENDIX III: BUDGET

33