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Impact of Performance Appraisal System on Employees Motivation

Background of the Study

The research under view is conducted to examine the impact of Performance Appraisal System (PAS) on the overall motivation of the employees at Karachi Port Trust (KPT) organization. Performance appraisal system is among the ancient management practice that is used to evaluate performance of employees in the organizations (Grint, 2007; Tripathi, 2001). In past two decades, performance appraisals have been mainly studied as an element of ‘HR bundles’ in the research of Strategic HRM (Ngo et al., Bjorkman and Fun, 2002). Lately, performance appraisal has been marked as an integral part of human resource development as it helps in taking important decisions like promotion, compensation, termination, feedback & communication, training & development. PAS can also serve as a motivational tool as it involves in appraisal interviews, counseling, participation in goal setting and work planning (Rao, 2009; Pareek& Rao, 1992).

Motivation, which is one of highly studied notion, has been contended with different thoughts by different scholars and practitioners. According to Mullins (2005), motivation is a steering power to achieve some objective. Robbins and Judge (2013) describe motivation as the process that constitutes an individual’s strength, direction and continuation of efforts toward achieving an organizational goal. There is a broadly accepted opinion that motivation can generate a positive working environment where as lack of motivation or individual’s negative insight can adversely affect the overall performance of an organization. Therefore, credit of positive work performance can be given to motivation. Motivation issues, among other things, are inspired by performance appraisal. Some scholars like Herzberg (1968, 1987) and Mullins (2005) Thomas and Bretz (1994) claim that employee’s motivation is dependent on the manager’s conduct and attitude toward the employees. If performance appraisals are observed as biased, the advantages can reduce rather than boosting employee’s motivation and performance. Thus, biased evaluation in PAS can result in de-motivated employees.

Karachi Port Trust (KPT) Profile

Karachi Port Trust (KPT) is a government organization that controls the operations of the Port in Karachi, Pakistan. It was established in 1886. KPT is currently handling more than 12 million tons of fluid freight and approximately 26 million tons of dry payloads. The Karachi Port is regulated by a Board of Trustees, including Chairperson and 10 Trustees. The Chairperson is nominated by the Federal Government and is additionally the Chief Executive of Karachi Port Trust. The remaining 10 Trustees are similarly selected from general society and the private segment. The five open division trustees are designated by the Federal Government. (Wikipedia)

There are around 24 departments in KPT. The present strength of officers is around 300 and approximately 4900 employees. However, to maintain the smooth HRM pyramid of KPT and to organize them into effective and efficient workforce, it was considered prudent to induct new talent in the organization.

Human Resource department is using automation concepts. The amalgamation of personnel information system with payroll, pension, ACR, leave, promotion and recruitment into one whole solution has significantly improved the delivery of information, quality of human resource selection and promotion as well as provides the quick financial details for pension etc. ACRs of all officers are processed through computerized system. Personnel information and photographs of all officers and employees have already been fed into this computerized system. The performance appraisal of employees is conducted by managers periodically but employees do not become a part of any decision making process.

Statement of the Problem

Performance appraisal has a great association with employee’s motivation. In order to achieve the best performance, it is necessary for any organization to cultivate a better motivation in the mind and soul of employees through efficient PAS. It has been noticed that without a clear purpose of effective PAS, there is no motivation at all to employees and no organizational success (Bartol and Martin, 1998; Jabeen, 2011). The previous world over research conducted recently on the topic have found that there is a positive and significant relationship between performance appraisal and motivation (Jabeen, 2011; Berehanu, 2014; Malik and Aslam, 2013; Selvarajan and Cloninger, 2012; Salau et al., 2014).

Most of the Pakistani organizations are facing a common issue of achieving an appropriate level of employee motivation, loyalty and retention. Among different causes responsible for this challenge, poor application of performance appraisal system is one of its kinds. Karachi Port Trust, being no exception, is also facing similar problems. Despite having a well-defined performance appraisal system in place, it is quite difficult for the organizations to keep the workforce suitably trained and motivated. However, there are limited researches conducted in the case of KPT. Even those which are conducted in context to KPT, fail to exactly ascertain the influence of performance appraisal system on employee’s motivation. Having this core rationale in mind, it has been established that there are few issues related with the efficient practice of PAS in KPT. Thus, this study tries to highlight the major drawbacks and challenges of PAS at KPT and examine its impact on employee’s motivation.

Research Questions

The following research questions created the foundation upon which the study was conducted:

  • What is the link between performance appraisal and employees motivation?
  • What is employees’ insight of performance appraisal system at KPT?
  • What are the challenges of performance appraisal system at KPT?
  • Whether the performance appraisal system at KPT is effective in raising the motivation level of employees or otherwise?

Research Objectives

The overall aim of the study is to examine the influence of Performance Appraisal System (PAS) on employees’ motivation at KPT Organization. The study attempts specifically to:

  • Establish the relationship between PAS and employee motivation.
  • To evaluate employees’ insight of the appraisal system at KPT.
  • To identify the challenges of performance appraisal at KPT.
  • Investigate the impact of PAS on employees’ motivation.
  • To find out and recommend different ways to improve prevailing PAS at KPT.

Significance of the Study

This study would highlight the importance of an unbiased, logical and effective performance appraisal system for enhancing the motivation level of the employees in an organization. It also emphasizes employees’ comprehension and appreciation of the performance appraisal system enforced at KPT and its influence on their motivation. It would focus on how performance appraisal can be more effective which would enable management to acquire a wider perception of human resource management process.

Scope of the Study

This study focuses on defining performance appraisal as a motivational tool in HRM. The study will include all the cadres working at major departments of KPT. Accordingly, desired number of respondents will be selected from all these sections.

Limitations of the Study

This study is only limited to Karachi Port Trust Organization which is located at West Wharf Road Karachi.

The time frame available to complete the study did not allow a thorough investigation into the study. Moreover, the response of managers/employees of many departments of KPT was also not checked due to the time limitation.

The reliability of few respondents may lead to inaccurate conclusion if false information was provided by them. Some respondents were reluctant to give feedback.

Thesis Structure and Overview

The study comprises six chapters, a list of references and appendices.

Chapter 1 (Introduction) discusses the background of the study, a brief introduction of the KPT organization, statement of the problem, research questions, research objectives, significance, scope and limitation of the study.

Chapter 2 (Literature Review) gives the overview of previous studies and researches carried out on the subject to gain an understanding of the research topic.

Chapter 3 (Research Methodology) tells that the nature of the research is quantitative and data will be collected through questionnaires and will be examined by using statistical tools.

Chapter 4 (Analysis) shows findings from the data through use of statistical tools and its interpretation and analysis.

Chapter 5 (Critical Debate) contains an analytical discussion on the study drawn from the literature review and comparing it with the findings of this study.

Chapter 6 (Conclusion and Recommendations) constitutes deductions and suggestions as well as recommendation for further study.

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