PERFORMANCE EVALUATION

IN THE BANKING INDUSTRY:

CASE STUDY OF FIRST BANK
NIGERIA LIMITED

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INTRODUCTION

Performance evaluation serve multiple purposes in

organizations because they monitor workforce progress and

help determine if promotions, terminations, transfers, and

training/development are warranted (Grote 2002). Simply

stated, performance appraisals can help fulfil whichever role

fits the organizational culture. According to Robbins (1997),

managers can use performance appraisals for personnel

decisions. He states, “performance appraisals help highlight

areas where employee skills and competencies are deficient

but can be remedied with appropriate actions” (1997, 219).

Robbins maintains that when employees’ skills are deficient,

performance appraisals can be used by managers as a criterion

against which training and development programs are

validated. In the area of training and development,

performance appraisals can also serve the role of providing

feedback to employees on how their organizations rate their

performance. Another important consideration is that

performance appraisal help incentivize employees towards

reward-based allocations (Robbins 1997).

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Consequently, Nigeria’s working class which consists of those

who have little control over the pace and content of their work

and do not supervise others (Ololade 2001) remains uncertain

about their future in the workplace. In this current economic

crisis, “financial markets are volatile, unemployment insurance

claims have jumped to their highest levels, and more jobs are

disappearing” (Ajiri & Ololade 2006). As managers in

corporations seek new ways to remain profitable during this

current economic crisis, Foley-2 “employees who contribute

directly to the top-line and bottom-line will become more

important” (Biswas & Mahes 2008, 2). Unfortunately, the use of

well-crafted employee performance appraisals becomes

increasingly important because they can help identify top

performers and layoff poor performing employees, which also

helps reduce costs during economic crises (Public Personnel

Management 2000).

When employee performance was less than a standard

established by a company, a pay decrease would result: when

employee performance exceeded management’s expectations,

a pay increase would result. Performance appraisals initially

ignored employee development. According to Korede and

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Appiah (2006), either a reduction in pay or a raise motivates

employees to either improve or continue to perform well. They

further opined that accurate and efficient performance

measurement not only forms the basis of an accurate

performance review but also gives way to judging and

measuring employee potential effectively; performance

appraisals not only place genuine concerns on the needs of

individuals but also help organizations to:

• Determine how the job of each employee can further the

overall goals of the organization;

• Examine individuals to evaluate the employee’s strengths

and weaknesses;

• Identify and reward good employees to be more

assiduous, in order to foster loyalty and motivate

employees to continue to achieve;

• Keep employee morale high through continuous feedback;

• Remain aware of the needs of the workforce to ensure

employee retention and increase productivity and

innovation;

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 • Reduce the risk of complaints and litigation by ensuring

that employees feel fairly treated and are not surprised by

management decisions; and

• Identify and deal with problem employees to either turn

problem employees into valuable, productive workers or

lay the groundwork for discipline and, if necessary,

termination” (2005,1/5).

Statement of the problem

Organizational success depends on employee hard work and

dedication. By using performance appraisals, employers

increase their chances of identifying deficiencies that are

potentially threatening to company-wide success (Vance 2006).

In addition, when employees cannot meet organizational

standards, employers can use performance appraisals to more

easily terminate employees for substandard work that has been

documented (DelPo 2005). When performance standards are

clearly articulated by management, employees know what is

expected of them, what their role as a part of a group and

organization is, what is considered unacceptable performance,

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and how organizational standards should be achieved (Robbins

1997).

Although critics such as Gary Roberts (2003), an associate

professor at the University of Memphis and authors Saul

Gellerman and William Hodgson (2008) argue that performance

appraisals are ineffective, performance appraisals are essential

for managing employee progress and performance. Coens and

Jenkins (2000) maintain that instead of abolishing performance

appraisals, organizations can “begin an organization-wide

initiative of education which helps people understand why an

appraisal fails and then together work on strategies to replace

the appraisal, looking for genuinely new ways to actually

deliver on the high hopes that were placed in the appraisal”

(2000, 19). In view of this, this study beams its searchlight on

the use, effect and popularity of Performance Appraisal in the

Banking industry, with a specific focus on Wema Bank of

Nigeria PLC.

Objectives of the study

The goal of the study is to analyse issues related to

performance and confirm that organizations should use

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employee performance appraisals to achieve organizational

goals and objectives, and to examine corporate responsibility

with regard to employee performance. Thus, the study will

comprise of the following objectives;

1. If Performance Evaluation is used as a training tool that

grows and develops managers and employees.

2. To evaluate the disposition of employees to the concept of

Performance Evaluation in the Banking industry

3. To identify the factors that could affect the quality of the

Performance Evaluation process

4. To identify the effect of Performance Evaluation on the

growth and development of employees, management, and

the bank

Hypothesis

The following hypotheses were developed for the study;

Hypothesis 1: There is no significant relationship between

Performance Evaluation, and growth of the bank.

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Hypothesis 2: Performance evaluation does not reflect an

objective assessment of the employee.

Scope of the Study

Performance is not defined by one particular measure; rather it

is an action(s) that management defines (Vikesland 2006).

“Measuring employee performance is the basis of the

performance appraisal processes and performance

management”. Thus, this study covers the performance

evaluation of employees in the Banking industry in Nigeria and

how it affects the growth and development of employees. It

also focuses of the quality and nature of the Performance

Evaluation process.

Significance of the Study

When performance standards are clearly articulated by

management, employees know what is expected of them, what

their role as a part of a group and organization is, what is

considered unacceptable performance, and how organizational

standards should be achieved (Robbins 1997).

This study will expound the benefits, strength and importance

of performance evaluation in an organisation, with particular

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reference to the Banking industry. To this end it will therefore

serve as a benchmark for financial researchers to further

evaluate the effect of employer-employee relationship, and

how it ultimately impacts the performances and growth of the

banking industry in Nigeria.

Consequentially, it will aid the Government, policy makers and

stakeholders properly articulate critical areas in HR that needs

to be improved on so as to forge a stronger workforce.

Limitation of the study

Due to administrative constraints encountered during the

course of the work the study only covered management staff

while non-management employees were left out. Furthermore,

at the time of the study, only the male management staff were

accessible for the interview/questionnaire administration.

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