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IMPACT OF PERFORMANCE APPRAISAL SYSTEM ON

EMPLOYEES PRODUCTIVITY IN A TELECOM SECTOR


OF PAKISTAN

By
SAMI ULLAH
BBS (HR)

INSTITUTE OF MANAGEMENT SCIENCES, PESHAWAR

2014-2016
IMPACT OF PERFORMANCE APPRAISAL SYSTEM ON
EMPLOYEES PRODUCTIVITY IN A TELECOM SECTOR
OF PAKISTAN

SAMI ULLAH

A thesis submitted to the faculty of the Institute of Management Sciences,

Peshawar, in partial fulfilment of the requirements for the degree of BBS

(HR)

INSTITUTE OF MANAGEMENT SCIENCES, PESHAWAR

2014-2016

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CERTIFICATE OF APPROVAL

I certify that I have read the report tilted as Impact of Performance Appraisal System

on Employees Productivity in A Telecom Sector of Pakistan by Sami Ullah that in

my opinion this work meets the criteria for approving a thesis submitted in partial

fulfillment of the requirements for the BBS (HR) at the Institute of Management

Sciences, Peshawar.

Supervisor:
Name: DR. WASIF JAMAL
Designation: Faculty Member

Signature: _________________

Coordinator Research &


Development Division
Name: DR. SALEEM GUL

Signature: _________________

iii
DECLARATION

I hereby declare that the research submitted to R&DD by me is my own original

work. I am aware of the fact that in case my work is found to be plagiarized or not

genuine, R&DD has the full authority to cancel my research work and I am liable to

penal action.

NAME: Sami Ullah

DATE: ____/____/2016

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DEDICATION

I dedicated this humble effort to my Respectful Parents, Brother Mr. Tehseen Ullah

(Shaheed) and limitless love, patience, encouragement and the help. I also want to

mention my beloved friends without whom this achievement would not be even

possible and also my helping supervisor as I found him well-disposed throughout my

research report which helped me a lot in accomplishing this important task.

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TABLE OF CONTENTS

CERTIFICATE OF APPROVAL ........................................................................... III


DECLARATION....................................................................................................... IV
DEDICATION............................................................................................................. V
TABLE OF CONTENTS ......................................................................................... VI
CHAPTER1 ................................................................................................................ 1
INTRODUCTION........................................................................................................ 1
1.2 PROBLEM IDENTIFICATION:................................................................................. 3
1.3 PROBLEM STATEMENT: ....................................................................................... 5
1.4 RESEARCH QUESTION: ........................................................................................ 6
1.5 RATIONALE OF THE STUDY: ................................................................................ 6
1.6 OBJECTIVES OF RESEARCH.................................................................................. 6
1.7 SIGNIFICANCE ..................................................................................................... 7
CHAPTER2 ................................................................................................................ 9
LITERATURE REVIEW ........................................................................................... 9
2.1 PERFORMANCE APPRAISAL ................................................................................. 9
2.2 PERFORMANCE APPRAISAL SYSTEM (PAS) ...................................................... 10
2.2.1 Objectives of Performance Appraisal System (PAS) ............................... 14
2.3 EMPLOYEE PRODUCTIVITY ............................................................................... 15
2.4 PERFORMANCE APPRAISAL SYSTEM & EMPLOYEES PRODUCTIVITY ............... 19
2.5 THEORETICAL FRAMEWORK ............................................................................. 22
2.6 HYPOTHESIS: .................................................................................................... 22
CHAPTER3 .............................................................................................................. 23
METHODOLOGY .................................................................................................... 23
3.1 SAMPLE............................................................................................................. 23
3.2 INSTRUMENT AND MEASURES ........................................................................... 23
3.3 PROCEDURE ...................................................................................................... 23
CHAPTER4 .............................................................................................................. 25
RESULTS AND ANALYSIS .................................................................................... 25
4.1 DEMOGRAPHIC .................................................................................................. 25
4.2 RELIABILITY ANALYSIS .................................................................................... 29

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4.3 CORRELATION ................................................................................................... 30
4.4 REGRESSION ..................................................................................................... 31
CHAPTER5 .............................................................................................................. 34
CONCLUSION & RECOMMENDATIONS .......................................................... 34
5.1 CONCLUSION..................................................................................................... 34
5.2 RECOMMENDATIONS ......................................................................................... 35
5.3 LIMITATIONS ..................................................................................................... 36
5.4 FUTURE RESEARCH ........................................................................................... 36
REFERENCES ........................................................................................................... 38
QUESTIONNAIRE.................................................................................................... 46

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CHAPTER1
INTRODUCTION

Expansion of business across the borders of the home country is the interest of every

company. Every organization want to expand their business to increase the number of

their customers to maximize their wealth. In todays business environment no one

company can operate their business in isolated environment and the concept of

creating monopoly in due to no competition is out of date. Every single company

either it is small and big have to face competition from the national and also

multinational companies. Offerings of the different companies for a single need

increases the options for customers to choose a product whatever they prefer at a low

cost. Therefore as the American and other Authors and researchers said that there is

always only one boss The Customer. They have the ultimate authority to choose a

product or services of a company which can best satisfy their need and according to

their standards. The entrance of Multinational companies to host countries completely

change the ways of business by introducing latest technologies for enhancing their

productivity and competing their competitors which also force other local companies

to change their traditional ways of doing businesses (Salleh, 2013). Further in such

situation only those companies can excel who have innovative ideas and methods for

running their business operations. For the adoption of new technologies and bringing

modifications in the products and services there is always a need of efficient and

productive employees who will further work on such technologies to provide the final

goods and services to customers according to their needs because only the adoption of

new technologies and installing new machineries and plants are not sufficient. There

is also a need of skilful and productive employees who will further work on such

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machineries and make the final product or services according to the need and demand

of customers to replace the other available options to customers in market and become

their first choice (Joseph, 2014). Without the efficient and productive employees it

only becomes the dream of an organization to achieve their main goals and set

strategies. Therefore the motivation and satisfaction of an individual employee must

be the first priority of an organization to keep their employees more motivated to gain

maximum output in response of their investment (Nieminen, 2006). As Ishaq, (2009)

argued that if the employees are not happy from the strategies that are made for

dealing with the employees than it becomes more difficult to become more productive

and easily pass from the obstacles in a market that are crated from the other

competitors. Hence the focus of employers shifts from the customers satisfaction to

the satisfaction of their employees who can further add more value to the

organizational set goals. High competition and changing behaviour of customers

towards the qualitative products and services also shifts the concentration of an

organization to increase the productivity at the individual level which can be only

possible through the satisfaction of their employees (Prasad, 2015). Every company

compete their competitors on the basis of their product of services cost and its benefits

that how a customer will be facilitated by using the offerings of their companies and

can be only possible from the employees satisfaction and loyalty with an organization

and are willing to perform in a more batter way. While looking at the other side of this

big picture if an employer fails to increase the level of their employees satisfaction

and morale it may also leads to unlikable consequences in which their intentions to

leave an organization is on top. The employees are considered as a think tank because

when more cooperative environment is provided to them, and such type of strategies

are made which concentrate more on well being of an employee they are more

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satisfied and can work in a more productive manner. Moreover when the individual

employee productivity is increases the overall performance and productivity of an

organization also increases and the organizations are more able to meet the

requirements of customers in a more productive manner.

For identifying the productivity of employees it is more important to consider the

different aspects of an individual employee that how they perceive the organizational

strategies for employees and how much they are able to perform their jobs effectively.

The motivation and satisfaction of an employee completely rely on the organizational

evaluation system that is developed for the identification of employees performance.

1.2 Problem Identification:


As discussed above the efficiency and productivity of an individual employee

becomes the key for success. Only productive employees working in an organization

are the only expedient which helps organizations to survive and compete. It is

observed and found by almost every researcher and author in the field of human

resource management that an employee become more productive and good performer

when he or she is satisfied from an organization in which they are working. While the

dissatisfied employees only work with an organization until he or she found any

handsome opportunity from the other organization. The employers can only excel

their businesses and compete through their creative and productive employees

because only employees have the direct dealings with organizational customers. If the

employees are satisfied they will be in search of creative ways and techniques through

which they can attract maximum customers towards the offerings of an organization

and become more sustainable competitive edge for an organization in front of

competitors. While if an employee is dissatisfied and has intentions of leaving an

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organization they will never become a good performer and as they found job

opportunity in other organization they are switched their job. As the most unfavorable

situation creates for an organization when their comes increase in the turnover rate of

an organization (Dinham, 2000). The author also states that with the switching of job

employees also switch their learned skills and experience which become a threat for

an organization and it also becomes impossible for an organization to increase their

productivity and performance.

In the developing economies the business opportunities are widely available than the

developing economies (Onyije, 2015). Pakistan is one among the developing

countries of the world and hence many multinationals are more interested in the

expansion of their business to our country i.e telecom. The entrance of the

multinationals to Pakistan increases the opportunities of employment, growth and

Pakistanis economy is among the developing economies of the world and per capita

income. On the other hand competition among the companies in the telecom sector

also increases and every company want to attract maximum customers and gain

maximum market shares. Further every company lying in the telecom sector

continuously focuses on their maximization of their performance and productivity for

which they are providing smart packages to their employees. Every individual person

in a society also want to work with them but from the last few years the job switching

behavior of their employees towards other organizations increases because of their

traditional ways of businesses which failed to keep them motivated and more

productive. The organizations are focusing more on the monitory and non monitory

benefits to their employees for their retention but as they got any new opportunity

they are switched to other organization and becomes a threat from the competitors

organization. Because the organizations use same performance appraisal system for

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all of their employees which do not fulfill and identify the best performance of those

employees whose work cannot be quantified. It is also observed and identified by

most of the employees that although organizations want to be a good performer and

enhance their productivity but the appraisal system that they design for the

performance evaluation is not competent enough to identify the best and productive

performer which becomes the main cause of demonization of productive employees.

The employers and supervisors are also seems to threaten the employees that as there

is high rate of un employment, therefore if they leave an organization they will hire

new and more competent employees which decreases their morale and commitment

with an organization.

Therefore it is very necessary to further addressed this issue and identify the

relationship of performance appraisal system with the productivity of employees and

recommend the ways through which they can increase the productivity at the

individual level of their organization through increasing their level of satisfaction and

commitment.

1.3 Problem Statement:


For the efficient execution and bringing synergy in the processes of an organization it

is necessary to enhance the productivity at individual level by keeping their

employees satisfied and motivated. It will interns increases the chances of gaining

edge over competitors through their human resources which can neither be copied nor

imitate. Therefore exploration of important factor of Performance Appraisal System

(PAS) which can further enhance the motivation and productivity of best performers.

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1.4 Research Question:
What is the influence/Impact of Performance Appraisal System (PAS) on the

productivity enhancement of an individual employee?

1.5 Rationale of the Study:


The reason for the execution of this research study is the identification of relationship

between the performance appraisal system and the productivity of an employee and

either the appraisal system of an organization in the telecom sector increases or

decreases the productivity of an employee. This study can explain the system of

performance appraisal and also its different factors in relation to the productivity of

employees. Further this research will help the supervisors and TMTs to make their

policies by keeping in view the importance of their employees to keep them motivated

and productive. This study will also help out organizations to retain their employees

through their performance appraisal system because due to the performance

evaluation employees are rewarded. Therefore if there is capability in the performance

evaluation criteria of an organization only then they will be able to further make plans

and strategies that how they can enhance employees motivation and productivity.

1.6 Objectives of Research


There are the following major objectives that are perceived to be achieved from this

study:

To identify the association of performance appraisal system and employees

productivity.

Exploration of impact between the performance appraisal system and

employees Productivity.

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To better understand the value of an employee in the organization and to focus

more on increasing their commitment with their organization to make them

more efficient and productive.

Increase the employees satisfaction and loyalty with an organization and

decrease their intentions of switching their jobs to other organization.

Recommendations of ways which can help organizations to increase the

productivity at individual level to provide quality offerings in market and

compete competitors.

1.7 Significance
As we all know that performance and productivity of employees are the main aspects

which can leads to the organizational success. In the telecom sector of Pakistan a huge

amount invest on keeping employees motivated than any other industry. Therefore it

is also very necessary that with the monitory benefits they must also consider the

ways and techniques through which they are identifying the performance of their

employee that either it is up to the mark or not. With the help of this study

organizations will be able to know the importance of the performance appraisal

system and to also review it to further motivate and satisfy their employees and make

them more committed to the organization which will also leads to their productivity

enhancement. This study will also enable organizations to make their employees the

main focal point of their every strategy to become more productive and take active

part in the achievement of organizational main goals.

With the implementation of this study organizations lies in the telecom sector in

Pakistan will came to know that how they can retain their potential employees and

7
how they can take edge on their competitors which will be very difficult for the rivals

to imitate it.

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CHAPTER2
LITERATURE REVIEW

2.1 Performance Appraisal


Performance appraisal is the measurement that how good employees are while

performing their jobs according to the set benchmark of an organization (Mallaiah,

2009). The performance evaluation of an employee is to identify that either an

employee is performing the assigned roles and responsibilities according to the set

benchmark or not (Bowman, 2008). The author also argued that in every field every

individual person is in competition with other person to compete them and become

famous in his or her society. Same as in an organization every individual is working

for the achievement of the main goals and due to the performance evaluation every

employee get feedback that either they are performing their job best or not and also

get reward for the best performance. As Roberts, (2003) also maintain that due to the

performance evaluation organizations also come to know that who is performing their

job best and who are lacking in the achievement of organizational set standards to set

their strategies for their employees accordingly. Homayounizadpanah, (2012) describe

the appraisal of an organizational employees is the most important element of the HR

department because all the strategies related to employees started from the evaluation

of their performance that either they have to reward them for their batter performance

or to further arrange training program to bring betterment in their performance.

Joseph, (2014) pinpoint that for designing strategies for the employees of an

organization the performance appraisal of an employee helps an organization to take

right decision at the right time.

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Prasad, (2015) also argued that the Performance appraisal is an effective instrument

that is used for the measurement of employees effective performance and also provide

a guideline that which initiatives must be taken in future for the achievement of main

goals. The purpose of evaluating the performance is to administer the employees

(Singh, 2010). Organization consists of different employees having different

knowledge, skills, capabilities, experience, designations etc which make it more

difficult for appraisers to appraise the performance of employees on a single tool or

instrument (Ali, 2012). Those employees having the complex nature of job cannot be

evaluate on the same measure on which the lower management employees are

appraised.

2.2 Performance Appraisal System (PAS)


Kaplan, (1996) concluded and suggest that the organizational leaders do not rely on

the single measurement tool while evaluating the performance of an employee and

they select both non financial and financial measures for evaluating their

performance.

When the organization select more than one tool which covers different dimensions

instead of relying on the measurement tool which covers only one dimension for

measuring the performance of employees, the employees think that the organization

have the fair performance measurement system (Scott, 2009). Further the authors also

described that when the employees of an organization spend more time on building

good relationships with the organizational customers -or play efficient role in bringing

innovation in the processes of organization or development in the products and

services, it should be included in their performance measurement. Because when the

employees are evaluated on their current job description they think that the

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organization has fair measurement criteria and efficiently performs their tasks to be

rewarded for their best performance. Therefore it is concluded that according to the

perception of employees the organizational performance measurement system is fair

when their current job performance has been evaluated (Sial, 2011).

While the financial measures in the performance appraisal system is also the most

popular and widely used evaluation tool in most of the organization because the

financial measures usually focus on the profitability of an organization which is the

main goal of most of the organizations which are made for the sole purpose of profit

(Kaplan, 1998). The financial measures of the performance appraisal system provides

clear guidelines to employees on the basis of which they will be rewarded and reduce

the element of uncertainty (Jabeen, 2011). Further she also argued that the financial

measures in the performance measurement tool also lead to the favourable behaviour

of employees and their satisfaction.

In the governmental and nongovernmental organizations developing the right tool for

measuring the performance of employees is one of the most challenging issues

because organization consists of diversified people and their needs are different from

each other (Mowday, 1998). Therefore it becomes very difficult for an organization to

select such type of measurement tools that becomes the motivational factor of all

employees (Ahmed, 2011). Furthermore he also argued that when the employees are

appraised based on their current job description the employees are more motivated

and think that the performance measurement criteria in organization is right and they

are more committed towards their work and perform their tasks as efficiently as they

can. As (Arif, 2011) concluded that the performance appraisal system of an

organization is the key towards many strategic decisions that an organization have to

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take in the light of performance appraisal of an employee such as training,

development, bonuses, incentives etc to polish the skills of employees and keep them

motivated to remain in market for a longer period of time. Moreover he also

concluded that when the employees are appraised on the basis of their work they are

more willing to contribute for the achievement of the main goals and objectives of an

organization (Salau, 2014). While if in response to the hard work of an employee

when an organization select the irrelevant factors for measuring the performance of

employees they becomes de motivated and it becomes very difficult for an

organization to achieve their main goals of organization (Ahmed, 2012).

The working environment of an organization has more influence on the performance

appraisal system of an organization and makes it more effective (Omusebe, 2013).

Further when the employees perceive that the performance appraisal system can help

them promoting to the next level of the organization they perform their tasks more

efficiently and contribute more in achieving the mission and vision of an organization.

Cleveland, (2003) argued that the performance appraisal make a decision between two

persons (Employer & Employee) that either the appraised employee should be

promoted to the next level or either he or she should be fired. The main success factor

and element of the performance appraisal system of an organization is fairness (Khan,

2013). Because when employees think that the organization has fair performance

measurement criteria they will be more willing and motivated to perform their

assigned tasks in a more effective manner (Ali, 2008). Means when the employees of

an organization are motivated and satisfied they will perform their tasks more

efficiently due to which the efficiency of overall organization increases which will

help an organization in satisfying the customers of an organization efficiently and

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make them able to efficiently gain competitive edge on their competitors. Moreover

when the employees of an organization are de motivated they will not be willing to

show their best performance (Frahm, 2006).

The performance appraisal system of an organization also leads towards the intention

of employees to switch their job to other organization (Bartlett, 2004). Furthermore

the author argued that the performance appraisal should focus more on the satisfaction

of employees to keep them motivated for the longer run to gain s edge on competitors

that would be sustainable and become a market leader. Hence while designing the

performance appraisal system of an organization there must be alignment among the

goals of employees, HR department and also an organization. When the employees of

an organization are satisfied they will perform their tasks more creatively (Basu,

2002). The choice of an organization to select and use the performance measures is

critical to evaluate the performance of an employee because it significantly affects his

or her attitude such as performance, productivity, organizational commitment,

fairness, perception and job satisfaction level of an employee (Tan, 2012).

The performance appraisal system of an organization also communicates to an

employee that how much his or her task is important in achieving the main goals of an

organization (Levy, 2004). Furthermore the performance appraisal of an organization

communicate employees that how they will achieve the main goals of an organization.

The author also states that organizations must continuously review the effectiveness

of their performance measurement tool to ensure its effectiveness. As Burnes, (2004)

also recommend that as the organization become able and make an efficient

performance measurement tool its efficiency must be reviewed periodically. Further

also clarify that as the nature of job is continuously changing and there comes rapid

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changes in the organizational processes. Therefore the performance appraisal criteria

must be also review and modified after some time. For identifying the best

performance it is very necessary for an organization to have an updated performance

appraisal system (Ikramullah, 2011). The author also explained that when an

organization has the reliable source of performance appraisal of employees they will

be more able to plan and execute their strategies for bringing increase in the

performance and productivity of their employees.

2.2.1 Objectives of Performance Appraisal System (PAS)

The objectives of Performance Appraisal System must be crystal clear for every

individual employee to increase their productivity. Cintron, (2005) also enumerated

that the objectives of performance appraisal system must concentrate on identifying

the strengths and weaknesses of every single employee that could help in increasing

and maintaining their productivity through making reward or punishment strategies.

The PERFORMANCE APPRAISAL SYSTEM of an organization must have an

ability of:

Identification of those employees who have more contribution in the

achievement of organizational goals and also poor performers (Grote, 2002).

Identification of the employees capabilities for the future job.

Identification of the most deserving employees who can best fit for the

upgraded position in an organization.

To arrange training programs for only deserving employees who have an

ability to perform in a more batter way while upgrading their positions.

To provide proper feedback on good and also poor performance of employees.

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Wesley, (2004) also identified that the PERFORMANCE APPRAISAL SYSTEM of

an organization must priorities the following objectives:

Revision of the employees performance in a specified time period that are

shown at the time of performing the assigned roles, tasks and responsibilities.

Identification of the actual performance and productivity that an employee

showed and in relation to the desired standards that were set.

Identification of employees abilities that up to which extent they are able in

performing their assigned tasks more efficiently.

Identification of employees weakness and their strengths.

Providing proper feedback on employees actual performance.

To encourage best performers.

Bringing improvement in the employer and employee relationship.

Informing employees related to the organizational expectations from

employees.

To enable HR department to arrange training programs for further

improvements in employees productivity.

2.3 Employee Productivity


The productivity of an employee refers to the output that an employee produces while

working in an organization (orevi, 2004). The productivity of employees can be

also defined as the total goods and services that an employee produces in a desired

period (Soltani, 2006). The productivity of an employee can be best define as it is the

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combination of different aspects of an employees i.e adherence, tasks fulfilment and

quality of work. The author also described that for the measurement of the

productivity of an employee it is more important to consider the punctuality of an

employee that how punctual he or she is and how much an individual is capable in

meeting the required standards of work in a specific time period. As Jehad, (2011)

also elaborate that the productivity mainly depends on the tasks fulfilment according

to the benchmark set by an organization that an employee must meet the following

standards while performing their tasks to ensure its quality. The productivity is not

only the quantity of the tasks fulfilment nor the exceeding the specified numbers of

tasks (Onyije, 2015). Carson, (2008) also argued that quality of work must be at first

priority at employees work because if an employee perform his or her job more

speedy and on the other hand the number of errors and mistakes are also high than it

become more problematic to rework on such tasks. Therefore it is very necessary for

every employee to ensure the quality of their work with the quantity of their assigned

tasks because the productivity of an individual employee leads to the overall

performance and productivity of an organization. Scott, (2001) also contend that the

employees productivity and performance helps an organization to achieve their set

goals in a more batter way.

Furthermore the authors also argued that it is only the performance appraisal in an

organization due to which it can be easily identified that either the employees are

performing their tasks efficiently or not (Iqbal, 2013). Moreover it is the only tool in

an organization which point out and inform management that what steps they should

take further to achieve their main goals and objectives in a required time period. The

evaluation of performance in organizations motivates employees to uplift their

performance and productivity in the achievement of main goals (Morrow, 2011).

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Further the author claimed that as the employees productivity is the reflection of their

efficient fulfilment of tasks therefore they must be rewarded accordingly to further

motivate them for the future. Takala (2006) also identified that the performance

appraisal helps and enabled an organization to stimulate the efficient performance of

an employee and encourage them to keep continue their efforts towards the batter

achievement of main goals according to the desired standards. The results of their

study indicate that to enhance the employees performance, the organization should

only consider their job description not the working hours of employees that how much

time they have given to the organization. The organization must adopt such

measurement tools which can efficiently measure the quality work of an employee

and do not only rely on the working hours of an employee (Bjerke, 2007). The author

holds that meeting the job requirements in an effective means of achieving the main

goals and thus the performance appraisal must be designed in a way which covers all

of its aspects to identify the most efficient performers. Selvarasu, (2014) found that

organizations considering the job description for the performance evaluation, the

employees working in that organization are more satisfied and are willing to enhance

their performance and productivity to play an active role in the execution of

organization plans for the undertaking of main goals.

Yang, (2007) conclude that the productivity of employees can be best identifies while

considering those factors which are more related to their work that they are

performing because the assigned job to every individual employee is basically the

achievement of organizational goals. As the jobs that are performed by the different

employees in an organization act as a chain and contributing to the final goals

therefore it is very necessary to keep employees motivated to perform their tasks in a

more productive manner to ensure the efficient achievement of organizational goals

17
(Tsigilis, 2006). The author also explained identifying and rewarding employees on

their best performance is the most crucial element of the human resource department

and must be in their top priorities. Further the author also recommend that as the main

theme and concept of making a separate department for the human resource of an

organization is to keep them satisfied and productive therefore employees must be the

center of their strategies to ensure and maintain the high performance and productivity

of an individual employee. When the employees productivity has been enhanced the

organizations are able to compete their competitors efficiently and gain maximum

market shares and become a market leader (Najafi, 2010).

Means the organization should focus on increasing the morale of an employee and

should take initiatives which are for the betterment and in the best interest of

employee they become satisfied and start thinking that the organization is taking care

of us and their loyalty with the organization increases, due to which they start

performing their tasks as efficiently as they can and produce quality goods and

services to the customers which interns increases the overall productivity of an

organization. As Kaydos, (2007) also argued that for every organization it is very

important to keep their employees motivated with them to perform their tasks

efficiently and achieve the main goals and objectives of organization efficiently and

compete their competitors in a most effective and efficient manner. Organizations

who wish to be the part of market for a longer period of time they accept the

importance of their employees and believe that only due to productive and efficient

employees they can gain competitive edge on their competitors and can maximize

their shareholders wealth (Dale, 2010).

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Those industries who face rapid changes, organizations frequently arrange training

programs for their employees to familiar employees with the new change and to also

teach the ways through which they can show their best performance in the

achievement of their tasks easily (Kuo, 2010). The author stated that most of the

employees in an organization are more reluctant for adopting a change but if once

they adopt the change, they become more capable to perform their tasks in a ways

which can further enhance their productivity.

2.4 Performance Appraisal System & Employees Productivity


Green, (2004) also execute their study on the performance evaluation system of an

organization and explore that while designing the performance appraisal for

employees every organization must keep in mind their main objectives which they

want to achieve from it. Further it is also very necessary to include those factors in the

performance appraisal system which reflects the productivity of most of employees to

ensure the effectiveness of their measurement tool. As for the enhancement of

employees productivity the appraisers must be aware from the job of every employee

and the also their desirable outcomes to design their performance appraisal system

accordingly (Selvarajan, 2011). Further the desirable elements can be achieved if an

organization has the right measurement tool for the the evaluation of employees

productivity because when the performance appraisal do not cover the different

aspects of employees performance they are appraised as lower performers. Flaws in

the performance appraisal system of an organization badly effect the productivity of

employees (Naqvi, 2011). As Frahm, (2006) also maintain that when the higher the

efficiency of the measurement tool for the evaluation of performance higher will be

productivity of employees. While if the performance evaluation tool is lacking the

19
ability of efficient measurement of the employees efficient performance the factor of

demonization among employees increases which leads to different adverse

consequences such as job switching, lack of motivation for showing efficient

performance, increase in the personal interest instead of organization interest etc.

Roberts, (2003) also described that when the performance of an individual employee

is not measured accurately their loyalty with an organization decreases and are not

willing to maintain their efficient performance. Poon, (2006) also stated that to keep

employees productive it is more necessary to provide them a proper feedback related

to their performance. The author claimed that organizations focusing more on their

measurement tool are more able to increase the effectiveness of their employees and

they can easily provide their offerings according to the desires of their customers.

Moreover at the section of recommendation author states that the morale of

employees can be efficiently increased when they are appraised from the right

measurement tool and can best describe their proficiencies (Gichuhi, 2012).

Although designing a perfect appraisal tool for an organization is more challenging

task for the human resource managers due to diversified roles and responsibilities of

the workforce (Jafari, 2009). However when once they become successful in the

development of measurement scale which has an ability to identify and describe the

performance of employees they become able to cover the different aspects of their

job. Different job challenges are faced by an organization but it must be overcome in

such a way that at one side it cover its problems and also enhance the productivity

concerns (Palaiologos, 2011). Employees working at the higher positions and having

complex nature of jobs also want to be appraised to further get recognition which

make the performance appraisal system more complex because their performance and

productivity cannot be measured as like other employees (Bodur, 2010). The author

20
also explained that the nature of employees holding the higher posts is more

conceptual in nature which makes its measurement more complex.

Dinham, (2000) focus on those issues that are more related to the productivity and

performance measures of employees that are more strengthen due to the job

description. The author states that while designing the performance appraisal system it

is more necessary for the appraiser to have a complete command and must be aware

from the every single aspect of the employees job description to design the

performance appraisal accordingly. The author explain that the job description list

down all the roles, duties and responsibilities that are an organization want to be

fulfilled to achieve their main aims. From the revision of different perspectives the

author conclude that the performance appraisal system must be the strength nor the

weakness of an organization to keep their employees motivated for the enhancement

of their productivity and retain them to compete their rivals.

21
2.5 Theoretical Framework
IND DEP

2.6 Hypothesis:
H1 : There is a significant relationship and impact of performance appraisal system

on the productivity of employees.

22
CHAPTER3
METHODOLOGY

3.1 Sample
For this study the sample size was 150 and the potential respondents were the

employees from telecom sector of Pakistan in Islamabad in which 131 were returned.

The questionnaires were personally distributed among the potential respondents

through convenient sampling technique in which 131 were backed. For this study a

questionnaire based survey was conducted because this study is the primary research

therefore the researchers composed the data through a questionnaire.

3.2 Instrument and Measures


The 5-point likert scale questionnaire was used for the collection of data from the

potential respondents. The questionnaire consists of three parts. The first part of the

questionnaire contains 5 questions related to demographics, then the second part

contains 12 questions related to independent variable performance appraisal system

(Cintron & Flaniken, 2005) and the final part contains 7 questions related to

dependent variable (Employees Productivity) (Poona, 2006).

3.3 Procedure
The questionnaire was specifically designed for this study which has been adopted

from the previous studies of different authors Cintron, (2005) and Poona, (2006) to

gather relevant information from the respondents regarding this study. All variables

were answered on 5-point lickert scale having different labels to check the capacity of

the answers. To get the valid response from the respondents the questionnaires was

personally distributed among the potential respondents of the selected sample to

23
identify that either the organization is focusing on their performance appraisal system

for improving the productivity of their individual employee or not? After the

collection of the gathered data it was then further analysed through Statistical Package

for Social Sciences program (SPSS) which is a powerful tool and use for the analysis

of such type of data.

24
CHAPTER4
RESULTS AND ANALYSIS

4.1 Demographic
FREQUENCY TABLE

TABLE 4.1.1

Fig 4.1.1

The table and the respective pie chart is representing the demographic variable gender

of respondents. From the analysis of the data it is clearly identified that in this

research study total one hundred and thirty one respondents took part and provide

their suggestions in which ninety four were male respondents and the total number of

female respondents were thirty seven.

25
TABLE: 4.2

Fig 4.1.2

The table and the pie chart is representing the age group of respondents. The table is

showing different age groups of one hundred and thirty one respondents in which

twenty seven respondents are lying the age group of 18-25, fifty respondents are in

26-35 years, thirty six are in 36-45 years of age and the remaining eighteen

respondents have the age of 46 years or above.

26
TABLE 4.1.3

Fig 4.1.3

The table and the respective chart reveal the frequency distribution of respondents

education level. The total number of the participants in this research study are one

hundred and thirty one in which forty eight respondents have done their graduation,

sixty eight respondents have their master, twelve respondents have completed their

MS or MPHIL and only three respondents have took doctrine degrees.

27
TABLE: 4.1.4

Fig 4.1.4

Table 4.1.4 and its accompanying pie chart is showing the frequency distribution of

respondents with respect to their designation. The table reveals that out of the total

131 respondents, 28 or 21.4% respondents were on the post of officers (HR,

Marketing, finance or operational officers), 25 or 19.1% are assistant to managers,23

or 17.6% were managers and 55 respondents were doing their jobs on other posts such

as CSR, PROs etc.

28
4.2 Reliability Analysis
RELIABILITY STATISTICS

4.2.1 SCALE: Performance Appraisal System

4.2.2 SCALE: EMPLOYEES PRODUCTIVITY

4.2.3 SCALE: OVERALL

The reliability analysis is used for the main purpose to confirm that either the scale

that is adopted for this study is reliable or not. From the reliability analysis it can be

also identified that either the results of the collected data are reliable or not. The

overall reliability is showing the value of cronbachs alpha as 0.885 which is above

0.60 which confirms the authenticity of the questionnaire.

29
4.3 Correlation

The correlation analysis is used to identify the impact of performance appraisal

system on employees productivity. The table reveals the value of .810** with a

significant value 0.000 which confirms that the performance appraisal system is

positively related to the productivity of employees. Therefore it is confirmed that the

performance appraisal system of an organization is a significant factor which

stimulate the employees productivity.

30
4.4 Regression
TABLE 4.4.1

The regression analysis is used to confirm the relationship between the selected

variables.

The table of model summary as mentioned above exhibit the value of R which is

representing the relationship of performance appraisal system with the Productivity of

employees, R square value is representing the variance. The value of R is 0.810 which

shows a very strong relationship of performance appraisal system with the

productivity of employees. Means when the performance appraisal system is

strengthened the productivity of employees will be positively influenced. Further the

R Square value is 0.656 which means that there will comes sixty five percent change

in the productivity of an individual employee if an organization brings a slighter

change in the performance appraisal system.

The value of Standard Error is 0.36440 which is also very less and confirming the

strong relationship of performance appraisal system and Employees Productivity.

31
TABLE 4.4.2

The significance value appears in the annova table is 0.000 which is less than the

0.05. Hence it also confirms the significant relationship of performance appraisal

system with the employees productivity. The value of significance is acceptable up to

0.05 in every study. When the value of significance decreases the level of significance

between the selected variables increases while if the value of significance exceeds

from the 0.05 the level of significance decreases.

32
TABLE 4.4.3

The coefficient table also shows the relationship and its significance. In the above

table the beta value appears 0.810 as appeared in the table of model summery and

correlations with a significance value 0.000. Therefore it can be easily interpret the

whole regression as there is a significant positive relationship between performance

appraisal system and employees productivity.

On the basis of above results and their interpretations it is confirmed that there is a

positive and significant relationship between the performance appraisal system and

employees productivity. Therefore the hypothesis that is assumed in the chapter 2 is

proved and hence accepted.

33
CHAPTER5
CONCLUSION & RECOMMENDATIONS

5.1 Conclusion
The exploration of the significant relationship of performance appraisal system with

the productivity of employees as it was discussed in the chapter first that bringing

increase in the productivity of employees is more crucial for the batter organizational

performance and productivity. Therefore from the different perspectives and angles it

is identified that for increasing the productivity of employees it is more important to

study the performance appraisal system of an organization. The results of this study

indicates that the performance appraisal system is positively related to the

productivity of employees of an organization. When the performance appraisal system

of an organization is strengthened the employees of that organization feel more

satisfied and put their maximum efforts in their assigned tasks achievements. Further

from the perception of the potential respondents of this study it is clarified that if there

comes decrease in the efficiency of the performance appraisal system of an

organization they got de motivation and are do not accept the extra responsibility

from an organization. The results also confirms that tools that an organization use for

the measurement of employees productivity must ensure that all aspects are being

included to increase the efficiency of the measurement tool. When the efficiency of

performance appraisal system increases the employees motivation to their work also

increases and are more willing to accept the challenging tasks that contribute more in

the organizational goals achievement. Increase in the productivity of employees

different operational procedures of an organization become more efficient because of

the creative thinking of employees for the well being of an organization. Moreover

34
with the increase in employees productivity the firms become more able to analyze all

those uncertain situations that may badly effect the performance of different

processes. The employees productivity also enabled an organization to gain

competitive edge through their employees. Furthermore when an organization

continuously review their performance measurement standards and bring need

changes in the existing performance appraisal system employees are appraised fairly

and their employees they feel happy are and think that an organization is taking care

of them and start thinking that they are the main important part of an organization due

to which they feel proud to be the part of an organization and put more efforts for the

success of an organization.

Therefore the assumed hypothesis H1 has been accepted.

5.2 Recommendations
The stronger relationship and impact of the performance appraisal system and

employees productivity increases its importance for an organization. The appraisal

system is found to be more significant therefore every single organization lying in the

telecom sector of Pakistan if it has large or smaller in size must consider their

performance appraisal system to keep their employees motivated and productive.

Every HR manager must consider their performance appraisal system as the key

source of increasing the productivity of every employee working in an organization.

Further HR managers must also need a continuous periodic review of the performance

appraisal system of an organization to confirm that either the performance appraisal

system has still all those competencies that can enhance the morale and satisfaction

level of an employee to increase the productivity of their employees or not. From the

analysis of the data collected from the respondents confirms that employees who

35
perceive the organizational performance system incompetent their motivation level

towards their tasks fulfilment tends to be decreased and their intentions to switch their

job to other organization also increases. It interns decreases the productivity and

performance of employees which leads to more adverse consequences such as

wastage of time due to rework, decreases in the quality and performance of work,

failure in the achievement of organizational set goals, loosing competitive edge and

the most importantly wealth minimization of share holders wealth.

Therefore it is very necessary for every HR manager and employer to include all those

factors which can best describe the job of an individual employee to keep them

motivated and loyal because when an employer found the performance appraisal

system of an organization fair and competent they feel more satisfied from the

strategies of an organization. In other words it can be also said that organizations must

design their performance appraisal system for their employees in a way that it can best

meet the perception of every employee working and creating additional value for their

organization.

5.3 Limitations
During the execution of this study there were the main limitation of time and financial

resources and the data is collected from only Peshawar. Therefore the results may not

be generalized to the wider population.

5.4 Future Research


In future studies it is recommended to all those researchers who are also interested in

the study of employees productivity through performance appraisal system that the

36
data must be collected from the maximum cities of Pakistan to increase the

genralizibality of the results of the study.

37
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45
QUESTIONNAIRE

Name: _____________________________

Gender: Age:

Male

Female 18-25 36-45

26-35 46 &

Education Level: Above

Designation:

Graduation MS /
MPHIL

Masters PHD
Officer Manager

Assistant to Other
Please select the appropriate and give your Manager
agreement/disagreement towards a
statement. 1 = Strongly Disagree, 2= Disagree, 3= Neutral, 4= Agree, 5 =
Strongly Agree.

Statements 1 2 3 4 5

Performance Appraisal System

It demands too much time and effort from supervisors.

The organization has clear standards for the evaluation of all employees.

The validity of the ratings is enhanced by supervisory efforts to accurately


rate all employees.

Negative feedback can de motivates an employee.

Performance appraisals interfere with the more constructive coaching


relationship that should exist between a supervisor and his/her staff.

46
Statements 1 2 3 4 5

Managers and staff provide input in the design, development, and choice of
criteria used in the appraisal.

The performance appraisal system is periodically reviewed and changed to


insure its effectiveness.

The best workers receive the highest evaluation scores.

The performance appraisal is well designed and leads to better


performance and work quality.

I receive regular and timely performance feedback beside the annual


performance review.

The information provided by my supervisor during my performance


feedback is sufficiently detailed.

I am satisfied with my performance feedback.

Productivity

The performance appraisal system helps me to analyze my productivity.

The performance appraisal system facilitate creative thinking to help solve


problems.

I feel satisfied at work because of the right performance appraisal system.

The performance appraisal system encourages me to continuously develop


and improve my productivity.

Performance appraisal system provide constructive feedback regarding


areas for improvement.

I feel my productivity has improved because of the performance appraisal


system.

My performance appraisal increases my productivity.

47
Turnitin Originality Report
PAS and productivity by Sami Ullah
From aaa (Temp Class)

Processed on 08-Dec-2016 11:52 PKT


ID: 749791212
Word Count: 7231

Similarity Index
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Student Papers:
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Sources:

1
2% match (student papers from 12-Jan-2015)
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2
1% match (student papers from 22-Jul-2014)
Submitted to Higher Education Commission Pakistan on 2014-07-22

3
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< 1% match (Internet from 14-Jun-2009)
http://www.opwall.com/Library/Indonesia/Indonesia%20Marine/FINAL%20thesis_Pilgrim.

pdf

48

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