Effectiveness of staff Performance Appraisals at the Lesotho Highlands Development Authority (LHDA) Bokang Sakoane 2020910341 Field study submitted to the UFS Business School in the Faculty of Economic and Management Sciences in partial fulfilment of the requirements for the degree of Master of Business Administration at the University of the Free State (UFS) Supervisor: Mr. L. Markham 21 November 2022 2 Declaration I declare that the field study hereby handed in for the qualification Master’s in Business Administration at the UFS Business School at the University of the Free State is my own independent work and that I have not previously submitted the same work, either as a whole or in part, for a qualification at/in another university/faculty. • I hereby cede the copyright of this work to the University of the Free State. • Note that proprietary rights in respect of intellectual property developed by the student during the course of and/or in connection with his/her studies at the UFS shall, in all respects, failing a written agreement to the contrary entered into between the UFS and the student, rest in the University (Reg A89 (f) (i)). Signed by: Bokang Sakoane Signature: _______________________ Date: ___________________________ 01 March 2023 3 Abstract The Lesotho Highlands Development Authority (LHDA) operates from five distinct geographical locations. Five distinct divisions, each with its own set of branches. There are about 388 officials. Employees from the same or different geographical areas perform the same type of work but with varying sizes. Employees complain about an unclear evaluation policy (Performance Management and Development System) and unfair implementation, leading to disengaged employees with low morale, affecting the LHDA’s overall performance. The policy is said to be implemented differently in different sections; thus, it is not consistent with regard to all staff. This study aimed to assess the effectiveness of staff performance appraisals at the LHDA by identifying and determining the factors contributing to employee performance and evaluating the impact of performance appraisal on employee performance. A semi-structured interview was used, breaking down responses from different staff from different sections with varying experiences with policy implementation. It is necessary to have an evaluation policy in place to ensure that performance is monitored for the benefit of both the employee and the employer. However, it was discovered that staff believe the policy is unclear and applied differently and unfairly to staff from different sections, negatively impacting morale and performance. The following was also discovered: the LHDA had reported poor performers, but this was not addressed as per policy, staff had been victimised during policy implementation, and they simply filled out the form without evaluating it in order to comply because they did not want to have conflicts with the supervisors. Lastly, the reward contradicts the purpose as it is so little that it is incorrect or not aligned with the performance. Based on the study’s conclusions and findings, the recommendations are that it is critical to align individual and organisational goals with a clear policy for all, that implementation is effective through engagement by introducing moderation to all staff's performance, or to initiate the 360-degree-method of performance evaluation. Finally, LHDA should explore other ways to reward performance in real terms. Keywords: Performance evaluation, rewards, motivation, employee morale 4 Dedication I want to thank the Lord in Heaven for giving me the courage to persevere this far and the strength to see this massive responsibility through. I would also like to express my heartfelt appreciation to: • Dr Liezel Massyn, who played an important role from the initial steps of my master’s degree journey. • Mr Lyle Markham, my supervisor, for his unwavering support and direction. • LHDA for allowing me to collect data from its employees and support of my boss, Mr Lebohang Moleko. • My family, for the prayers and support, my dear wife, MaReaoBoka, I thank you for everything. • My MBA classmates for the support, Jarrod Piderit and Sbongiseni Mkhungo. 5 Table of Contents Declaration ................................................................................................................................................................... 2 Abstract .......................................................................................................................................................................... 3 Dedication..................................................................................................................................................................... 4 List of Figures ............................................................................................................................................................. 9 List of Tables ............................................................................................................................................................... 9 List of Abbreviations .............................................................................................................................................. 10 Chapter 1: Introduction and Background ..................................................................................................... 11 1.1 Background of the study .............................................................................................................................. 11 1.2 Problem Statement and Research Questions ................................................................................... 16 1.2.1 Problem Statement ................................................................................................................................ 16 1.2.2 Research Questions ............................................................................................................................. 17 1.3 Objectives of the study ................................................................................................................................. 17 1.3.1 Primary Objective ................................................................................................................................... 17 1.3.2 Secondary Objectives .......................................................................................................................... 17 1.4 Preliminary Literature Review ................................................................................................................... 17 1.4.1 Performance appraisal system ........................................................................................................ 17 1.4.2 Employee motivation ............................................................................................................................ 19 1.4.3 Performance appraisal feedback .................................................................................................... 20 1.4.4 Career or staff development ............................................................................................................. 20 1.5 Research methodology ................................................................................................................................ 21 1.5.1 Research design ..................................................................................................................................... 21 1.5.2 Research paradigm ............................................................................................................................... 22 1.5.3 Sampling and targeted population ................................................................................................. 23 1.5.4 Data collection methods ...................................................................................................................... 24 1.6 Ethical Considerations .................................................................................................................................. 24 1.6.1 Permission obtained ........................................................................................................................ 24 1.6.2 Informed consent ............................................................................................................................... 25 1.6.3 Voluntary participation .................................................................................................................... 25 1.6.4 Confidentiality and anonymity ..................................................................................................... 25 1.6.5 No harm ................................................................................................................................................. 25 1.6.6 Rigour of the research .............................................................................................................................. 26 1.6.6.1 Credibility ........................................................................................................................................... 26 1.6.6.2 Confirmability ................................................................................................................................... 26 1.6.6.3 Transferability .................................................................................................................................. 26 6 1.6.6.4 Dependability ................................................................................................................................... 26 1.7 Demarcation of the study ............................................................................................................................ 26 1.8. Chapter Layout ............................................................................................................................................... 27 1.9 Conclusion.......................................................................................................................................................... 27 Chapter 2: Literature Review ............................................................................................................................ 28 2.1 Introduction ........................................................................................................................................................ 28 2.2 Performance appraisal definitions ...................................................................................................... 28 2.3 The importance of performance appraisal ..................................................................................... 29 2.4. Performance Appraisal process ......................................................................................................... 29 2.4.1 Behaviours ............................................................................................................................................ 30 2.4.2 The Performance Review .............................................................................................................. 30 2.4.3 Theories related to Performance Appraisal .......................................................................... 30 2.4.4 Control theory in performance appraisal ................................................................................ 33 2.4.5 Share Goals and Performance Appraisal .............................................................................. 34 2.5 Organisational Performance improved through Appraisal and Feedback ...................... 35 2.6 The relationship between feedback and goal-setting ............................................................... 37 2.7 Rewards on assessed performance ................................................................................................. 38 2.8 Types of Performance Appraisal Methods ..................................................................................... 39 2.8.1 360-Degree/Multi-Rater Performance Appraisal ................................................................ 39 2.8.2 Management by Objectives (MBO) ........................................................................................... 40 2.8.3 Graphical Rating Scale (GRS) .................................................................................................... 40 2.9 Role of performance appraisal in organisational success ...................................................... 41 2.10 Employee performance and career development .................................................................... 42 2.11 Problems in performance appraisals ............................................................................................. 42 2.12 Research Instrument ............................................................................................................................. 44 2.13 Conclusion .................................................................................................................................................. 44 Chapter 3: Research Methodology ................................................................................................................ 46 3.1 Introduction ........................................................................................................................................................ 46 3.2 Research design ......................................................................................................................................... 46 3.2.1 Research philosophy ....................................................................................................................... 47 3.3 The Research Approach ......................................................................................................................... 48 3.4 Research Strategies ................................................................................................................................. 49 3.5 Research Choices ..................................................................................................................................... 49 3.6 Sampling Strategy ..................................................................................................................................... 50 3.7 Data Collection method ........................................................................................................................... 51 7 3.8. Ethical considerations ............................................................................................................................. 52 3.8.1 Permission obtained ........................................................................................................................ 53 3.8.2 Informed consent and Voluntary participation ..................................................................... 53 3.8.3 No harm ................................................................................................................................................. 53 3.8.4 Confidentiality and Anonymisation of responses ............................................................... 53 3.9 Trustworthiness or Rigour ...................................................................................................................... 54 Chapter 4: Data Analysis and Assessment of Results ......................................................................... 56 4.1 Introduction ........................................................................................................................................................ 56 4.2 Data Presentation and Interpretation .................................................................................................... 56 4.2.1 Functional Areas ................................................................................................................................ 56 4.2.2 Responses Information from the Participants to the semi-structured interview ....... 57 4.2.2.1 Question 1.1 ..................................................................................................................................... 57 4.2.2.1 Question 1.2 ..................................................................................................................................... 58 4.2.2.1 Question 1.3 ..................................................................................................................................... 60 4.2.2.2 Question 2 ......................................................................................................................................... 62 4.2.2.3 Question 3 ......................................................................................................................................... 64 4.2.2.4 Question 4 ......................................................................................................................................... 67 4.2.2.5 Question 5 ......................................................................................................................................... 69 4.2.2.6 Question 6 ......................................................................................................................................... 72 4.2.2.7 Question 7 ......................................................................................................................................... 75 4.2.2.8 Question 8 ......................................................................................................................................... 77 4.3 Conclusion.......................................................................................................................................................... 78 Chapter 5: Conclusion and recommendations ......................................................................................... 80 5.1 Introduction ........................................................................................................................................................ 80 5.3.1 Conclusions ................................................................................................................................................... 81 5.3.2 Recommendations ..................................................................................................................................... 82 5.3.2.1 Clarity of the policy ............................................................................................................................ 82 5.3.2.2 Availability of the policy ................................................................................................................... 82 5.3.2.3 Implementation of the policy ......................................................................................................... 82 5.3.2.4 Employees’ knowledge of the policy ......................................................................................... 83 5.3.2.5 Factors contributing to employees’ performance ................................................................ 83 5.3.2.5.1 Constructive feedback............................................................................................................. 83 5.3.2.5.2 Incentives ...................................................................................................................................... 83 5.3.2.5.3 Availability of resources .......................................................................................................... 84 5.3.2.5.4 Culture and leadership ............................................................................................................ 84 8 5.3.2.6 Intention of PMDS in branches .................................................................................................... 84 5.3.2.7 The Purpose of the Appraisal System...................................................................................... 84 5.3.2.8 Substandard performance ............................................................................................................. 85 5.4 Limitations of the study ................................................................................................................................ 85 5.5 Conclusion.......................................................................................................................................................... 86 References ................................................................................................................................................................. 87 Appendix A: Semi-structured interview ..................................................................................................... 104 Appendix B: Permission to conduct research ........................................................................................ 106 Appendix C: POPIA consent .......................................................................................................................... 107 Appendix D: ethical Clearance ...................................................................................................................... 110 Appendix E: Recruitment email ..................................................................................................................... 111 9 List of Figures Figure 2. 1: Locke’s Goal-Setting Theory ........................................................................................................ 31 Figure 2. 2: Vroom’s Expectancy Theory ........................................................................................................ 32 Figure 2. 3: Simple control loop (Le and Pastukhova, 2018) .................................................................. 33 Figure 2. 4: Flowchart for Measuring the Actual Performance (Wararkar and Wararkar, 2016). ......................................................................................................................................................................................... 35 Figure 2. 5: Dimensions of 720-Degree Performance Appraisal (Manawat, 2017, p. 177) ......... 36 Figure 3. 1: The Research Onion: Framework of the research (Alturki, 2021) ............................... 47 Figure 4. 2: Participants per function divisions ........................................................................................... 56 Figure 4. 3: Number of participants on the clarity of the policy ............................................................ 57 Figure 4. 4: Number of participants on the availability of the policy .................................................. 59 Figure 4. 5: Level of responses towards the implementation of the policy ....................................... 61 Figure 4. 6: Knowledge of the performance assessment system ........................................................... 63 Figure 4. 7: Responses on the impact of evaluation on performance .................................................. 67 Figure 4. 8: Views of participants on LHDA’s PMDS ................................................................................... 70 Figure 4. 9: Responses on the implementation of incentives ................................................................. 72 Figure 4.10: Number of responses that LHDA takes corrective action on poor performance ......................................................................................................................................................................................... 75 List of Tables Table 1. 1: Performance assessment ratings ..................................................................... 14 Table 2. 1: Some of the responses on the clarity of the policy ........................................... 57 Table 3. 1: Some of the responses on the availability of the policy .................................... 59 Table 4. 1: Some of the responses on the availability of the policy .................................... 61 Table 5. 1: Some of the responses on the knowledge of the policy ................................... 63 Table 6. 1: Some of the responses to “factors that contribute to employee performance” . 65 Table 7. 1: Summary of keywords on the findings ............................................................. 65 Table 8. 1: Some of the responses on the results of PMDS within branches’ performance ........................................................................................................................................... 68 Table 9. 1: Some of the responses on rating the PMDS .................................................... 70 Table 10. 1: Some of the responses on rewards to encourage good performance ............ 73 Table 11. 1: Some of the responses on action on poor performance ................................ 75 Table 12. 1: Some of the suggestions from the participants .............................................. 77 10 List of Abbreviations LHDA – Lesotho Highlands Development Authority LHWP – Lesotho Highlands Water Project UFS – University of the Free State KPI – Key Performance Indicator HR – Human Resources ACCA – Association of Certified Chartered Accountants CED – Chief Executive Division SDE – Social Development and Environment DOD – Development and Operations Division FD – Finance Division CPRM – Corporate Planning and Risk Management SDT – Self Determination Theory VET – Vroom’s Expectancy Theory GRS – Graphical Rating Scale GREC – General Research Ethics Committee PMDS – Performance Management & Development System 11 Chapter 1: Introduction and Background 1.1 Background of the study The Lesotho Highlands Water Project (LHWP) is a multi-staged project that supplies water to the Gauteng province of South Africa and generates hydropower for Lesotho. The Treaty, a contractual agreement, was underwritten in October 1986. The Lesotho Highlands Development Authority (LHDA) was founded) to administer the project’s execution within the Lesotho’s boundaries (LHDA,2021). For LHDA to achieve its mandate to transfer water to South Africa, electricity generation and compensation of affected communities, it is vital that it has high-calibre employees. The key to LHDA’s success and long sustainability is having high-performance human resources who can add sustainable value by implementing its operations and achieving preplanned goals and objectives (Widisono et al., 2021). These employees need to work from within a culture of success that can imaginable motivate them to work flawlessly (Hery Winoto, 2021). It is of paramount importance that for employees to work optimally, their roles are well defined and aligned with those of the LHDA. Hery Winoto (2021) states that organisational devotion is an atmosphere in which employees align their goals with the organisation’s goals. With this alignment, the organisation can then evaluate employees’ skills, achievement, and growth, which helps to increase their overall contribution to the organisation as well (El-Gebali et al., 2019). Goals and objectives are established to reflect the mission and vision of the organisation. However, this focus ignores employees’ ability to set and achieve personal goals and objectives. Therefore, there is a need to focus on employees’ inputs and deliveries at work, as employees are not rewarded for being good dressers and talkers. Furthermore, the essence of performance appraisal is thus the ability to relate an individual’s performance to organisational pre-determined objectives (Amzat et al., 2018). The level of staff motivation, competence, and career development certainly impact a company’s performance (Widisono et al., 2021). Therefore, staff need to be rewarded for good work, career development, and training where needed (Padhaya et al., 2021). 12 LHDA has developed and is implementing a policy on staff performance appraisals. However, it was only in 2015 that the monetary factors came into being (performance bonuses). This performance appraisal was initiated to address the employer and employee’s benefits. The LHDAexecutive body formulates its key performance areas, which are the organisation’s mandate. These key performance areas are communicated across the spectrum; the divisions formulate their division’s objectives (using a document called Table 3), key performance indicators, and targets are drawn for the attention of managers and their individual staff. Managers also break Table 3 into pieces to formulate Table 5 therefore employees have a better understanding, feel and accountability of their expectations (objectives and targets) (LHDA, 2021). The organisational objectives, targets, and key performance areas have been linked to divisions through to individual employees’ respective positions. Managers usually host a division’s workshop to address sectional objectives and link those to individuals. Managers draw up individual job profiles that stipulate the job requirements, competencies, targets, and objectives. Motivation in setting these targets is considered so that employees can have a sense of achievement and monetary compensation. An agreement is then drawn up that clearly indicates the targets and key expectations that each employee must comply with. This is signed to take accountability and becomes a binding agreement to perform within the areas agreed on while also contributing to the LHDA’s mandate (LHDA, 2021). 1.1.1 Feedback Section 17.10 of the LHDA’s performance management policy states that managers and supervisors are obliged to give employees feedback during the half-year and end of the year. The feedback provided should be shared with the Human Resources office (HR). If employees are unhappy with the scores, they can indicate and may appeal (LHDA, 2021). According to Hernandez and Wang (2021), effective feedback allows for ongoing improvement in performance throughout time. Despite the importance of feedback in employee development and advancement, most supervisors find it challenging to provide and deliver feedback. 13 1.1.2 Performance improvement plan LHDA requires that the negative performance of an employee be evaluated so that such an employee performs better and contributes to the attainment of the organisation’s goals. Causes of negative performance can be evaluated by asking: if the employee have knowledge, skills, or does not have access to relevant resources (LHDA, 2021). Action is therefore taken to formulate applicable training and unlock access to resources. Status is required to ensure the action yields positive results where employees’ contributions are evaluated post training. LHDA requires all staff to complete job profile analysis and identify areas of development annually. This is done to assist the HR office in putting together the budget needed for staff training in a particular financial year. This is furthermore designed to build employees’ competencies to perform better in their roles (LHDA, 2021). According to Sabuhari et al. (2020), various elements influence an employee’s performance to improve a certain set of actions to fulfil the employee’s organisational goals in a given time frame. Employee performance refers to what employees do and do not do that affect how much they commit to the organisation. It is influenced by three primary factors: (1) individuals’ capacity to work, (2) their amount of effort, and (3) organisational support. This is inextricably linked to the fact that a flexible human resource strategy is an imperative component of a human resource management strategy that supports a company’s internal ability to benefit. It is also considered a needful requirement or prerequisite for a company’s mastery to adapt to environmental variations more quickly and effectively. 1.1.3 Assessment of performance Performance is evaluated every six (6) months. There are two (2) formal performance reviews: one at the halfway point of the year (September) and the other after the financial year (March). However, informal feedback is provided on an ongoing basis during and in between the formal review cycles. The manager/supervisor and each employee will conduct a review to monitor progress against the performance agreement and give and receive 14 feedback on the performance during the period under review (Amzat et al., 2018; LHDA performance policy, 2021). LHDA has developed a rating system to assess staff performance, ranging from poor/unsatisfactory performance to exceptional performance. Table 1.1 illustrates the ratings used to assess performance. Table 1. 1: Performance assessment ratings Rating Level of performance Description of performance 1 Poor/Unsatisfactory Performance Performance does not meet the set target. 2 Performance Partially Meets Expectations Performance is almost at the set target, with requirements almost met in terms of quality and quantity. 3 Performance Meets Expectations Performance fully meets the set targets. 3.5 Good Performance Regularly meets and occasionally exceeds set targets. 4 Performance Exceeds Expectations Performance is significantly higher than the set targets. 4.5-5 Exceptional Performance Performance far exceeds the set targets. Table 1.1 briefly explains each level of performance to assist supervisors in evaluating staff performance. This is also used to determine the need for training and the eligibility for monetary bonuses. The ratings from rating (4) “Performance is significantly higher than the set targets”, and rating (4.5-5) “Performance far exceeds the set targets,” are presumed to be too high and unachievable, subsequently demotivating employees. There is a lack of clarity about to what level or extent performance ‘exceeds targets’ and how far is ‘exceeding targets’. There is ambiguity, which makes it difficult to define the ratings and how the monetary value is attached to this rating. The assessment goes up the hierarchy as opposed to objectives coming down; supervisors may be reluctant to rate performance as high because, traditionally, managers need more explanations; they want to avoid costs in terms of bonus payouts. This may result in employees settling for less because they avoid disputes with the supervisors. In an effort to avoid such conflict, ongoing assessment is important. Amzat et al (2018) adds that there is a need for the provision of feedback throughout the year, which may keep employees on 15 track to know what to expect in the final assessment. It is important to stay in touch with performance to create a psychologically pleasant workplace for organisational performance and objectives to be attained. In order to effectively complete the performance assessment, the following phases should be undertaken. Phase 1. Self-review – An employee measures his/her performance based on the signed agreement and allocates ratings accordingly. At this stage, the employee is allowed to detail any other completed roles that were never part of the agreement. An employee must understand the nature of this assessment. Also, an employee’s assessment of his or her own ability is evidently to attain a goal (Yokoyama, 2019). It is also advisable that individual employees present substantive proof of performance goals attained. Phase 2. Supervisory review – This is the phase where the supervisor assesses performance and allocates ratings based on the agreement signed. He or she also identifies areas of development. The employee and the supervisor have a session to discuss the assessment and agree on ratings in case they differ. LHDA does this to improve performance. This is also supported in that supervisory skills include providing moral and professional support, creating a safe work atmosphere, and assisting subordinates in improving their performance. Perceptual differences, supportive behaviour, value congruity, trustworthiness, and comparable personalities also influence employee performance. 1.1.4 Recognition and reward Based on the performance appraisal/evaluation outcome, employees are rewarded as individuals for their performance. At the same time, their contributions to attaining organisational objectives are also acknowledged. This reward is monetary based on agreed- on ratings of the assessment of the performance of each employee (LHDA, 2021). LHDA is no exception. According to Noorazem et al. (2021), bonuses are paid to recognise and motivate employees for their exceptional efforts throughout the year; they also state that bonuses serve as an incentive for employees to outperform low performers in the organisation. 16 1.1.5 Management of poor performance If an employee’s performance is substandard, the relevant supervisor/manager must provide systematic restorative/corrective or advancement support to help the employee revamp. Disciplinary action may be taken if the preceding steps do not provide the intended results. The procedure to be followed must adhere to the disciplinary measures established in the Lesotho Labour Code, 1992, as well as Section 27 of the LHDA performance management system manual. Vanesa et al. (2019) argue that the more disciplined individuals are, the better the organisation’s performance will be. Human resource management relies heavily on discipline. They further describe it as a disciplinary process for correcting or punishing employees who breach the company’s policies or procedures. It has been reported within LHDA that most employees have conflicts with their supervisors, which are brought on by performance appraisals. The HR manual indicates that the process can lead to conflicts if it is not conducted professionally and when supervisors do not want to be fair and misuse their supervisory powers (LHDA, 2021). The flecked/indicated misuse of power transforms supervisors into corporate psychopaths; as stated by Boddy (2014), who further held that torments are liable for abusive supervision and rising levels of conflict at workplaces. 1.2 Problem Statement and Research Questions 1.2.1 Problem Statement The problem at LHDA is the lack of clearly defined ratings that attract monetary value and the lack of accuracy and fairness experienced while undertaking the performance appraisal process. This may impact employees’ contributions and commitment towards achieving LHDA’s mandate. LHDA has reported cases where supervisors’ discretion in assessing performance has brought conflict that resulted in low staff morale. If this problem is not addressed, employee morale and commitment will decrease, leading to high employee turnover and can negatively influence organisational success. If employees are demotivated, their productivity and commitment towards achieving organisational goals are lowered (Widisono et al., 2021). It is, therefore, important to have a clearly defined appraisal process. It is also important to provide continuous feedback prior to the formal appraisal performance of the organisation (Amzat et al., 2018). 17 1.2.2 Research Questions 1. How effective is the performance appraisal system at LHDA? 2. What are the staff members’ perceptions of the performance appraisal system at LHDA? 3. What impact does the performance appraisal have on LHDA staff (does it add motivation that enhances performance or not)? 1.3 Objectives of the study 1.3.1 Primary Objective To evaluate the effectiveness of the staff performance appraisal system at the (LHDA). 1.3.2 Secondary Objectives The secondary objectives are as follows: • To provide an overview of employee performance appraisal. • To identify and determine factors that contribute to employee performance at LHDA • To assess the impact of the performance appraisal on employees’ performance and make suggestions for improvements within LHDA. 1.4 Preliminary Literature Review Below are definitions/explanations of the performance appraisal system and components that build up a comprehensive and complete performance appraisal system. 1.4.1 Performance appraisal system In today’s global economy, the performance appraisal system is frequently recognised as one of the most important functions of human resource management. A successful performance appraisal system serves as a catalyst for improving an organisation’s human resource management. The systematised, recurring, and unbiased evaluation of an employee’s knowledge of topics relevant to his or her current job and prospective for advancement is known as performance appraisal (Padhaya et al., 2021). One of the most significant human resource management procedures is performance appraisal. It refers to a method of evaluating an employee’s performance using clearly established appraisal criteria. Furthermore, performance appraisal is designed to improve 18 individual performance and connect individual goals and behaviours with the business’s strategic goals (DeNisi & Murphy, 2017). Employee performance appraisal is a critical component of administration in achieving an organisation’s goals (Khaliq et al., 2018). It is therefore important to assess the value that employees bring to the organisation that assists in accomplishing the organisational goals and objectives. A strong and successful performance appraisal programme is a necessary managerial tool for rewarding or disciplining employees based on their performance. It allows management to distinguish between inefficient and productive employees based on their output (Khaliq et al., 2018). The efficaciousness of a performance management system is based on how deftly employee and company goals are aligned. Consistency and good results are ensured by carefully implementing an effective performance management system. It is critical to consider the impact of employees on motivation, engagement and retention during such an appraisal (Awan et al., 2020). According to Carol and Florah (2019), a study on organisational fairness in the performance appraisal system and work performance among organisations found that performance appraisal criteria significantly impact employee productivity. A seemly appraisal is allied to good job management, promotions, rewards, bonuses and salary increases. Furthermore, performance appraisal has been allied to distributive justice, with inferences for how the relationship in appraisal affects employee performance. Distributive justice in this context refers to the perceived fairness in the employee performance assessment and the belief by employees that outcomes are equitable Performance appraisal combines goal-setting theory, control theory, and expectation theory. This entails developing an action plan, defining forms of controls on the implementation of the plan, and ensuring that the set targets are challenging enough to motivate employees with the rewards at the end. Equity theory is crucial when determining how fair and equitable an organisation’s performance management system is in terms of procedures, interactions, and distributions (Awan et al., 2020). 19 1.4.2 Employee motivation A policy based on understanding the factors that influence employee performance is required to increase organisational performance (Jumady in 2020, as cited in Nurlina and Jumady, 2021, p. 45). Understanding employees as individuals, encouraging them to be motivated at work, and showing gratitude for their accomplishments are ways to increase employee satisfaction. Every business desires high-quality employee work to earn considerable revenue and profit. Excellent and high-quality human resources will influence the productivity of a corporation. Human resources are the most important aspect of the overall operation of a company (Musthafa, 2021). Employee motivation is defined as motivation based on the idea that everyone has the same set of demands and thus prescribes the traits that should be present in the workplace. A person's internal or external motivation mechanism that inspires excitement and vigour to pursue a particular course of action could come from within or outside of them. The motivation process begins with a physiological or psychological lack of needs that trigger a behaviour or drive toward a certain goal (Sitopu et al., 2021). According to Latief et al. (2018), if a person is highly motivated, she/he will perform at the highest level possible on the job, and vice versa. If an employee is not motivated to work,she/he will be unable to develop new ideas to help the organisation meet its goals. This is why motivation is critical for all employees, as they will each work hard within a psychologically safe environment, which, ultimately, will yield optimal results. Based on the explanations of the preceding theories, workplace motivation can be defined as an effort to encourage oneself to do the work and channel all of one’s knowledge so that the company’s objectives can be met. Inspiration for work and the desire to carry out action, according to Wibowo (2016), as cited in Widisono et al (2021), is motivation. A person's motivation can come from a variety of sources. Motivation is a condition that drives employees to reach their objectives. It consists of various parts, including guiding, generating, demonstrating intensity, and maintaining, all of which are long-term and have objectives. According to the Three Needs Theory, 20 motivation is measured by three factors: achievement, affiliation, and power (Widisono et al., 2021). A person's motivation is an urge to take action to attain a specific objective. The word “motivation” derives from the Latin word motive, which means “impulse,” “stimulus,” or “driving force”. Motivation can also be defined as an internal and external condition that arouses us to act, pushes us to pursue specific goals, and keeps us interested in specific activities (Febrianti and SE, 2020). 1.4.3 Performance appraisal feedback Employee behaviour can be changed with the help of employee performance appraisal. Conversely, performance evaluations provide an environment where everyone is encouraged to share their burdens. It also assists people in setting and achieving meaningful objectives. Employees believe that performance appraisals provide constructive feedback in a positive and friendly manner (Chatterjee et al., 2020). Employees receive evolving informal feedback from their bosses on the job, as well as the formal appraisal process. Employees are more receptive to informal feedback and are more likely to improve their performance as a result. Employees’ overall performance may be improved if a greater focus is placed on this informal assessment rather than the official appraisal process as said by the Association of Certified Chartered Accountsnts (ACCA, 2021). According to Caruth (2018), there is a preliminary for clear-based performance feedback to employees and a system for tracking feedback sessions. This is discerning in identifying errors and swiftly implementing remedial actions that have a basal impact on the organisation. Giving employees felicitous and decisive feedback is regarded as an ideal path to actualising the organisation’s goals (Baruch, 2016). 1.4.4 Career or staff development The concept of career development is a neutral concept. Experts frequently define career as a process or a concept that is neither static nor finished. Career development is a job function that assists employees in planning their future careers in the organisation so that 21 both the organisation and the employees can grow to their full potential, increasing individual work abilities and achieving the career goals they desire (Rahayu and Widyanty , 2021). Fair treatment in the workplace, concern for direct superiors, information about numerous promoting options, interest in being promoted, and level of satisfaction are some of the characteristics and indicators of career development, according to Shaputra and Hendriani (2015). 1.4.4.1 The relationship of job performance appraisal with Career Development (H1) One strategy to advance an employee’s career is to achieve success. Job performance appraisals are also useful for determining compensation eligibility and increasing employee quality of work. According to Sumadewi and Suwandana (2017), job performance appraisal has advantages for career advancement and as a foundation for human resource planning to improve working conditions, quality, and output. The higher an employee’s performance rating, the more likely s/he is to progress in the firm (Rahayu and Widyanty, 2021). 1.4.4.2 Work experience with Career Development (H2 and H3) Experience is a learning process and the potential to behave that can be regarded as a process that leads a person to a better pattern of conduct, whether from formal or non-formal education. The length of time or working period of employees working between employers can be used to determine their work experience. Employees with substantial work experience will benefit in every job they undertake since they have experience from their prior employment; therefore, the more work experience they have, the more opportunities they will have to advance in their careers (Saraswati and Dewi, 2017). 1.5 Research methodology The research methodology section explains the study approach chosen and its associated descriptions. It also describes the target demographic, the sampling method adopted, and the sample size for gathering data that was used in this research study. 1.5.1 Research design A research design is defined as a plan for gathering, analysing, and studying data. It is also explained as a well-thought-out plan that outlines how data should be evaluated, analysed, 22 and outcomes acquired using a dialect and inference on data relationships (Carol and Florah, 2019). The qualitative research approach used in this study was chosen from the available research methods (qualitative, quantitative, and mixed-methods). Qualitative research is explained as an interpretative, naturalistic approach in which the researcher studies objects in their connatural context, striving to make sense of them and translate phenomena in respect of the interpretations that people attribute to them. It entails gathering a wide range of empirical materials, including case studies, personal experiences, introspective, interview, and observational materials, and historical, interactive, and visual communications (Aspers and Corte, 2019). As a result, LHDA employees shared their perspectives based on their personal experiences, understanding of the performance management system, expectations, and exposure from various professional experiences. This enabled the researcher to ask open- ended questions to better understand the phenomena under the performance management system. The study was conducted in-house, from within LHDA, making information more easily accessible. It was expected to be convenient, with rich information expected with limited resources. 1.5.2 Research paradigm This study took a post-positivistic paradigm perspective, defined as a pluralism that seeks to strike a balance between positivist and interpretivist perspectives. It concentrates on research issues in the framework of involving the majority’s experience and announcing the results of what the majority deems acceptable. Post-positivism includes historical, comparative, philosophical, and phenomenological viewpoints in addition to qualitative analysis (Panhwar et al., 2017). 23 1.5.3 Sampling and targeted population The policy on the performance appraisal system cuts across all levels within the LHDA; therefore, the targeted populations to gather sufficient data that will generate favourable results. The LHDA’s hierarchical structure consists of five (5) divisions, each with lower-level employees, senior officers, managers, and the head of divisions. At least each division represented its understanding, experience, importance, challenges, and perceptions of the LHDA staff performance appraisal. As of the end of September 2021, LHDA had 388 employees (LHDA, 2021). The sample size was estimated at twenty (20) participants from LHDA, with members representing all the divisions. The five divisions within LHDA are categorised as follows: 1. Chief Executive Divission (CED) – Nineteen (19) employees 2. Social Development and Environment (SDE) – Fifty-eight (58) 3. Development and Operations Division (DOD) – 156 4. Finance Division (FD) – Seventy-six (76) 5. Corporate Planning and Risk Management (CPRM) – Seventy-four (74) A purposive sample of 20 managers and senior officers representing all the divisions was used. Only participants who have been with the organisation for at least three years were assumed to know more about and have experience with the LHDA employee management system. They were deemed to make policy changes and decisions. Participants were informed that their participation was entirely voluntary and that they had consented to participate by filling out and signing the consent form. However, they could withdraw at any time if they felt the need. The semi-structured interview was sent through company email, allowing participants to respond in their free time, though reminders were sent if the time elapsed with no response. The purposeful sampling approach is a non-probability sampling method. Non-probability sampling is a method of sampling in which participants are chosen by the researcher rather than involving every member of a target population (Stratton, 2021). This is a qualitative research technique for diagnosing and classifying information-rich examples to efficiently use limited resources (Palinkas et al., 2016). This necessitates locating and choosing 24 individuals or groups of individuals who are exceptionally educated or proficient in a subject of interest (Palinkas et al., 2016). This implies that a participant’s ability to speak, express, and reflect on their experiences and perspectives is relevant (Palinkas et al., 2016). The ability to participate is crucial. 1.5.4 Data collection methods This study gathered data using semi-structured interviews, a qualitative data collection strategy in which the researcher asks participants a series of predetermined but open-ended questions. This method allowed the researcher to engage with the participants on the areas that could add value to the overall aim of this study (Evans and Lewis, 2018). Semi-structured interviews are valuable because they allow researchers to study subjective viewpoints and acquire in-depth reports of people’s experiences. As a rule, the researcher uses an interview schedule, which allows the participant to answer in their own words and explore concerns and areas that are relevant to them. Accordingly, the interview should be guided by a schedule and allow additional pertinent subjects to emerge throughout the discussion (Evans and Lewis, 2018). 1.6 Ethical Considerations According to Whitney (2021), it is critical to understand the ethical considerations that come with research before embarking on these study designs. Ethics are moral concepts that can or must be applied when conducting research. 1.6.1 Permission obtained This area involves gaining approval. The researcher must send a written request for permission to the appropriate individual or office, detailing the research study in detail (Ramrathan et al., 2017). A written request was sent to the LHDA’s Chief Executive, requesting permission to conduct this study within the LHDA. There was a response with terms and conditions that was established and followed throughout the research. 25 1.6.2 Informed consent White (2020) describes informed consent as a competent, understanding adult who authorises a professional to involve him or her in a study project as a subject. Participants were enlightened about the study’s background and the areas that could directly affect them. They were requested to sign and get a written consent form. This signed permission form indicated that the participant read and understood the terms and conditions and agreed to participate in the study. 1.6.3 Voluntary participation Informed consent informs research participants about their rights as participants in studies. The fact that participation is voluntary and that the study participant can withdraw at any time is perhaps the most crucial of these rights (Josephson and Smale, 2020). Communication with participants was done in a professional manner where they were allowed to participate at their convenient time without forcing and imposing anything on them to avoid withdrawals prior to completion of the study. 1.6.4 Confidentiality and anonymity In order to protect the privacy of human subjects when gathering, analysing, and reporting data, confidentiality and anonymity are ethical standards. The term “confidentiality” refers to the removal or alteration of any personally identifying information provided by participants and separated from the data. On the other hand, anonymity refers to the gathering of data without obtaining any personally identifying information (Allen, 2017). The information collected as a result of this study was used solely for the purposes of this study. Participants were kept anonymous, and their data was kept anonymous as well. 1.6.5 No harm To do no harm can be defined as the researcher protecting the safety, dignity, and privacy of the people with whom they work, as well as their rights to privacy, or it can be defined as avoiding imposing and suffering psychological pain on participants (Brittain et al., 2020). 26 The information obtained from participants was kept strictly confidential. It is kept in a secure location which only the researcher can access. Participants were protected from harm by keeping their data anonymous to protect their dignity and psychological well-being. 1.6.6 Rigour of the research This is the area in which research procedures are followed precisely and methodically to detect significant influences that occur during the study process. This section examines constructivist criteria for trustworthiness, which are similar to but distinct from those for validity and reliability. 1.6.6.1 Credibility The degree to which the target audience views the source to obtain expertise and knowledge in their understanding of the product/service (Djafarova and Rushworth, 2017). 1.6.6.2 Confirmability This is about the audit trail, especially in terms of tracking the entire process, from data collection to analysis. It is critical to make an overall judgement about the study’s confirmability; data and interpretations are based on occurrences rather than the researcher’s assumptions or point of view (Eldh et al., 2020). 1.6.6.3 Transferability This area is focused on generalisation from case to case or group to group, as well as whether the findings may be applied to a different situation (Eldh et al., 2020). 1.6.6.4 Dependability This focuses on the study’s research process, making it feasible to trace the audit trail. In addition to determining whether the records are correct, the product/data should be analysed to provide an acceptable baseline (Eldh et al., 2020). 1.7 Demarcation of the study The study was estimated to involve a total of twenty (20) LHDA employees, ranging from lower-level to senior officers, managers, and heads of divisions. This study aimed to assess the effectiveness of employee performance appraisal in the LHDA. The focus of this research was on human resource management. 27 1.8. Chapter Layout The research study is structured as follows: • Chapter 2: Literature review • Chapter 3: Research methodology • Chapter 4: Data analysis and interpretation • Chapter 5: Conclusion and recommendations 1.9 Conclusion The study is aimed at evaluating the staff members’ perceptions of the performance evaluation system at LHDA to establish the effectiveness of the appraisal system. This will potentially assist both the LHDA and staff members by getting the appraisal process to improve organisational goals while also enhancing staff productivity thereafter. 28 Chapter 2: Literature Review 2.1 Introduction Chapter 2 encompasses a discussion about what performance appraisal is, why it is important, why organisations need to implement it, and how it should properly be conducted. The chapter concludes with why employees need to have a clear understanding of the whole cycle of performance management and appraisal. 2.2 Performance appraisal definitions Performance appraisal is defined as a process within the overall performance management process, comprising the formal assessment and rating of individuals by their supervisors and the evaluation of an individual’s work performance to achieve objective personnel decisions. In general, performance appraisal seeks to recognise the current skill level of the workforce (Islami et al., 2018). Performance appraisal is a systematic business procedure that compares actual and expected performance based on objective tasks with thoughts and expectations. Many organisational procedures might be included, such as performance measurement, goal setting, and incentive management. Employees’ accomplishments and shortcomings are analysed, and whether they warrant future training or advancement is determined (Moradi et al., 2017). The process of reviewing and evaluating an individual's and a team’s contribution to the attainment of the organisation’s goals is known as performance appraisal. A performance appraisal system is an important tool that a business may utilise to improve the quality of its personnel. A component of Performance Management is the Performance Appraisal system (PA). PA seeks to improve efficiency and productivity by allowing employees to regularly examine agreed-upon work objectives, subordinate work-related behaviour, and agreed- upon actions to address any inadequacies (Wagacha and Maende, 2017). However, Dagar (2014) defines performance appraisal as a process of appraising employee performance by scrutinising current performance against previously established and agreed standards that have already been discussed with employees and then granting feedback to 29 employees about their performance degree/level to improve their performance as needed by their organisation. Based on the above definitions, this study will adopt the definition Moradi et al. (2017) provided. Their definition addresses the process and complementary incentives and involves training, which is essential for the assessment’s output. However, other definitions will play a part as the study sees fit. 2.3 The importance of performance appraisal According to Raj and Manjula (2019), performance appraisal is critical in any organisation’s human resource framework. As an essential component of any organisation, performance appraisal has undergone significant modifications in response to changing employer and employee needs and practices. Different workplaces offer different challenges and opportunities to employees and employers, and as a result, the performance appraisal system varies (Mishra, 2022). Mishra, (2022) discovered that a comprehensive review of employee performance is critical for organisations to identify their potential. Performance appraisal assists an organisation in knowing the expectations of its employees. Management also must make sound decisions regarding salary increases, promotions, job satisfaction, and increasing employee morale, which in turn improves their performance. 2.4. Performance Appraisal process Performance appraisals refer to the process of evaluating job-related performance and assigning rewards based on that evaluation. This is an important part of the endavour to address of contend agency problems, motivating employees to enact in the employer’s best interests and is thus a key management practice. The question of how the process works and whether it is valuable is also debatable. For example, Cappelli and Conyon (2018) raise the question of whether performance appraisals should be viewed as a integrant of simple lawful relationships or as representation of a richer relational treaty between organisations and their employees. Cappelli and Conyon (2018) elaborate on their argument and reflect that evidence presents that performance appraisals are associated with greater levels of individual performance. 30 This is when compared to individuals in jobs without appraisals, presumably due to this ability to capture and manage open-to-interpretation aspects of performance. Therefore, there is a considerable difference between areas where performance is assessed and areas where there is no performance assessment at all. 2.4.1 Behaviours Although measuring results is important, focusing solely on results can provide an imbalanced or inadequate view of employee performance. Thus, behaviour patterns, or how a task is completed, form an important component of the planning phase (Aguinis, 2019). According to Dasanayaka et al. (2021), the major criteria for evaluating employee performance entails job-specific attitude and behaviour (e.g., features like volume, quality, knowledge, dependability, and innovation of and on work), core responsibilities of employees’ roles, and non-job-specific behaviour (e.g., promptness, dedication, enthusiasm, cooperation and persistence). This is an important consideration because PA systems are expected to include both measurable and non-commensurable aspects to provide a complete picture of the checks in place. 2.4.2 The Performance Review The greatest assessments involve a two-way conversation in which the employee evaluates his own performance and sets improvement goals. Organisations should also ensure that key performance indicators (KPIs) are clearly communicated and defined with employees and that appropriate benchmarks are in place against which employees are evaluated (Dangol 2021). 2.4.3 Theories related to Performance Appraisal This section describes the three theories that argue how motivation affects employee performance. The theories in question are Locke’s goal-setting theory, self-determination theory, and Vroom’s expectancy theory. 2.4.3.1 Locke’s Goal-Setting theory The goal-setting theory is a broad approach to motivation that emphasises the importance of establishing a goal as a source of intrinsic motivation. According to the theory, individuals 31 are more motivated and perform better when they create specific goals, accept demanding targets, and receive feedback on their performance. In other words, when goals are used as a motivator, the outcome will almost always be positive regardless of how challenging the goals are (Owoyele, 2017). Figure 2.1 depicts the setting of clear goals. Figure 2. 1: Locke’s Goal-Setting Theory A goal’s definition can be attributed to an action's objective or desired outcome. It has been discovered that clearly defined goals encourage higher performance because they create a sense of target and aim. Loosely defined goals with ambiguous boundaries, such as “doing one’s best”, do not produce the same pattern of passionate achievement. However, it is also not true that specific goals have a one-to-one relationship with high performance because goals vary in their difficulty level; however, they do reduce the level of ambiguity toward target achievement (Le and Pastukhova 2018). Goals are described as “the object or goal of an action.” Put differently, goals specify the desired end results or performance to be achieved, forasmuch as performance refers to what is actually accomplished (Van der Hoek et al., 2018). The goal-setting theory identifies three (3) mechanisms that positively influence employee performance when goals are set high: direction, effort, and persistence (Asmus et al., 2015). Firstly, goals assist employees in having a better understanding of where they are going and managing their work accordingly. Employees can then focus on a specific task and complete it rather than deferring it until another day. Setting goals increases goal-related activities, which directly impact performance (Le and Pastukhova, 2018). Secondly, employees are more motivated to complete tasks when they are performing well. According to Locke and Latham (2013), complex and challenging goals tend to produce high-performing individuals, 32 whereas setting lower goals does not produce the same results. Thirdly, commitment to ambitious goals can also lead to perseverance in goal attainment. This can not only help the road to set goals but also create a general trend in behaviour susceptible to perseverance and hardship (Le and Pastukhova, 2018). Considering the three factors mentioned above, goals are regarded as an excellent motivator. These are known as the three motivational milestones. The sphere of goal complexity cannot be satisfied with only the three traditional mechanisms mentioned above because motivation alone is insufficient for goal achievement; thus, a strategy is required (Asmus et al., 2015). 2.4.3.2 Self-Determination Theory (SDT) According to self-determination theory (SDT), strengths-based performance evaluations will make subordinates feel empowered by their supervisor and thus satisfy their psychological need for a sense of belonging. As a result of satisfying their need for connectedness, they will be more motivated to learn and improve. Need-satisfaction constructs are frequently investigated in SDT research as mediators that link specific social environments to the benefits that arise from those contexts (Van Woerkom and Kroon, 2020). 2.4.3.4 Vroom’s Expectancy Theory (VET) According to VET, people lean to act in a hedonistic fashion, preferring actions that will furnish the most significant prejudice utility. The strength of a tendency to act is proportional to the strength of the expectation that the act will result in a specific outcome (Suciu et al., 2013). Figure 2. 2: Vroom’s Expectancy Theory 33 Even when referring to objective elements, expectation is a subjective element. An employee may have all of the resources he needs to complete a task, but their expectancy will be low if s/he does not believe s/he is capable. Organisations can influence the level of expectancy by organising work in such a way that it allows for professional growth, training programmes and/or internal mobility (Suciu et al., 2013). This study will adopt Locke’s theory because it involves the goal-setting process, in which the employee participates to allow talent, resulting in ownership of the targets set. This also allows both parties to discuss the goal; thus, it is clear, and everyone is working towards the same goal. 2.4.4 Control theory in performance appraisal Le and Pastukhova (2018) introduced the importance of Control theory, which is an approach to exploring the “self-regulatory system” and functioning as a tool in conceptualising and interpreting human behaviour; it is useful in understanding how feedback and goals drive behaviour. Control theory is positioned on the concept that humans strive to keep track of their behaviour with respect to some criteria to control and govern their performance on a specific activity. Figure 2.3 simplifies this theory. Figure 2. 3: Simple control loop (Le and Pastukhova, 2018) Self-monitoring comprises comparing one’s current behaviour performance to a reference standard or set of goals. Feedback and goal-setting enable this process because (1) predefined goals or standards inform people about which direction they should move in, and 34 (2) feedback informs recipients about their current performance so that they are aware of how they are performing and whether what they are doing will result in the desired outcome. When people see a gap between their performance and the desired objective, also known as goal-performance discrepancies, they are more likely to try to close the gap by improving their performance or changing the goal (Le and Pastukhova 2018). 2.4.5 Share Goals and Performance Appraisal Employees are directed to improve productivity through shared goals. Employees are motivated to achieve the organisation's vision by setting clear, attainable, and mutually agreed-upon goals. Employee motivation thus has the following advantages: employee demands will be satisfied, job satisfaction will rise, productivity will rise, employees will learn new skills, and employees will be more disciplined and dynamic (Uddin and Arif, 2016). Motivation is a fundamental aspect of an organisation’s performance since it avails to keep the work flowing in a commanding way. Employees who are motivated are valuable assets to any company. Furthermore, all internal and external driving forces that bring about an individual to conduct a task, which sets the limits and forms of that task, and causes actions to be immersed toward obtaining specific goals are referred to as motivation (Brhane and Zewdie, 2018). 2.4.6 Types of Motivation There are two types of motivation: intrinsic and extrinsic, which can influence an employee's performance. It is thus argued that motivation is an important aspect of getting the most out of employees; therefore, it is a manager’s responsibility to understand the effect of each of the above motivators and the system in place between them; that is, how internal motivators lead to external motivators and vice versa (Owoyele, 2017). Paais and Pattiruhu (2020) further describe the two types of motivation: intrinsic motivation is associated with self-satisfaction, which can be manifested through achievement, recognition, acceleration, work itself, responsibilities, and personal growth, while extrinsic motivation arises when there are external triggering factors, such as security, work conditions, company policy, status, compensation, and interpersonal relationships. 35 2.4.7 Communicating the standards or goal Wararkar and Wararkar (2016) indicated that the employee should not be responsible for determining what is expected of him or her. It is important to note that simply transmitting information one way will not result in profit for anyone; communication should be two-way. Wararkar and Wararkar (2016) further clarified that gathering information about the actual performance is necessary to determine it. The concern should be what to measure and how to measure it, which can be accomplished through four methods: personal observation, statistical reports, oral reports, and written reports. Each has advantages and disadvantages; however, combining them increases the number of input sources and the profitability of receiving reliable information. Below is a flowchart for measuring the performance. Figure 2. 4: Flowchart for Measuring the Actual Performance (Wararkar and Wararkar, 2016). 2.5 Organisational Performance improved through Appraisal and Feedback Organisations today use performance appraisal to improve employee efficiency and effectiveness in work environments. Management can identify the need for motivation, set goals and objectives, train employees, and provide feedback on performance through the system of performance appraisal (Kihama and Wainaina, 2019). According to George (2016), employees today require continuous and regular evaluation, training, motivation, and feedback. In addition, performance appraisals help to develop people, improve structure performance, and feed into business design. The 720-degree 36 appraisal system evaluates employees’ performance on a 360-degree scale. It is the most recent appraisal technique that associates the degree activity with the worker's performance, which is the most challenging part of the Performance Appraisal Method. Until now, this evaluation system has ranged from 90-degree to 720-degree. Previously, the companies used a 360-degree system. The 720-degree Performance Appraisal, as the name implies, is a recently introduced concept and an integrated method in which an employee’s performance is evaluated from 360 degrees and timely feedback is provided (Patil and Dalvi, 2019). The 720-degree performance appraisal assesses an employee from all perspectives and provides constructive and promtly feedback to warrant that the person can meet the goals set before the next appraisal. In other words, a 720-degree appraisal is essentially a 360- degree appraisal repeated twice. A second 360-degree appraisal is performed at regular intervals and compared to the results of the first 360-degree appraisal (Jency, 2016). Similarly, according to Mishra (2022), a 720-degree performance appraisal is primarily a 360-degree appraisal done twice and an evaluation of an employee from all angles, with prompt and effective feedback to ensure that the employee can accomplish the mission before the next appraisal. Sujith (2017) also indicated that the 720-degree performance appraisal is an embedded method of performance appraisal in which an employee’s performance is evaluated from a 360-degree (management, coworkers, self, and customers), and timely feedback is provided; performance is measured again depending on the targets that are set. Figure 2.5 below demonstrates the 720-degree performance appraisal. Figure 2. 5: Dimensions of 720-Degree Performance Appraisal (Manawat, 2017, p. 177) 37 It covers all aspects of appraisal, including pre-appraisal feedback, self-appraisal, peer or colleague appraisal, customer appraisal, managers, and post-appraisal feedback as follows (Manawat, 2017, p. 177): • Pre-feedback – This is done after gathering feedback from the various aspects or people with whom the employee interacts. The employee’s performance is evaluated, goals are established, and feedback or training is provided to assist the employee in meeting the goals. • Self – Employees are given the opportunity to express their thoughts, evaluate their strengths and weaknesses, and judge their own performance through self-evaluation. • Peers – Feedback from peers allows the assessment so that an evaluation is made to see if an employee is a team player, cooperates and works in harmony with others. • Customers – This assessment enhances customer service delivery and quality as the customer assesses the employee providing the service. • Manager – Managers evaluate the performance and attitude of the employee. • Post-appraisal feedback – A 720-degree performance appraisal is a step up from 360-degree appraisals. The performance is evaluated, and feedback is provided based on the target set in the pre-appraisal. Timely feedback and guidance aid in motivating employees to improve their performance. 2.6 The relationship between feedback and goal-setting The direct relationship between goals and feedback was highlighted by Lee (2017). Clear goals help judge performance more fairly, and the employee receives more reasonable feedback as a result. Setting goals allows individuals to get better feedback from their environment, which leads to more efficient techniques/more relevant corrective actions. It was also established that neither of them (goal and feedback) could be effective in the absence of either feedback or clearly defined goals. If one of the elements is missing, the error cannot be detected. Thus no actions to change/improve the situation can be undertaken. Feedback is also essential in enhancing employee performance because it motivates employees when they receive encouraging feedback about their responsibilities and behavioural patterns. This was also probed, and it was discovered that the feedback environment was significantly associated with employees’ effective and useful commitment and motivation (Lee, 2017). 38 According to the goal-setting theory, distinct and stretching and demanding goals and pertinent feedback contribute to elevated and enhenced task performance (Ahuja et al., 2018). Mirado (2019) explored appraisals from the perspective of individual development, remarking that appraisal provides the feedback required for discussing strengths and weaknesses as well as working to improve attitudes. A developmental appraisal approach recognises that the goal of a manager is to improve job behaviour and attitude rather than simply evaluate past performance. One of the most significant advantages of an appraisal programme is the ability to improve performance on a solid foundation. 2.7 Rewards on assessed performance A good performance appraisal system should be perceived as a link between the reward an employee expects and his or her productivity. Such a connection can be considered as the individual’s productivity = individual’s performance appraisal = expected reward. The connections need to be as strong as possible; if any of them fail, the employee will not obtain the potential benefits. Equity and fairness should also be prioritised in compensation administration so that individual employees give their all at all times (Ugoani, 2020). Extrinsic and intrinsic rewards may be included in reward schemes. Extrinsic rewards are items such as monetary compensation and favourable working conditions that an employee receives as part of the job. These components drive employee performance through the expectation that there is a reward coming to an end. Intrinsic rewards refer to the satisfaction that comes from actually doing the job, such as personal fulfilment and a sense of contributing to society; employees get motivated through self-determination, which enhances performance (ACCA, 2022). Ekhayemhe and Oguzie (2018) argued that intangible or psychological rewards, such as gratitude and acknowledgement, play an important role in motivating employees and improving their performance. Extrinsic rewards are significant rewards such as pay, bonuses, fringe benefits, and promotions. Employee dedication is also examined in terms of how rewards and recognition influence it. 39 A proficient motivating scheme is regarded as indispensable for motivating and retaining employees. Motivation, which is presumed to be the central mechanism explaining the effects of compensation on turnover intentions, is divided into sovereign motivation and controlled or inhibited motivation. Autonomous motivation refers to engaging in an activity with complete free will and choice, whereas inhibited motivation refers to behaviour in response to an externally or visibly produced inducement (Mustafa and Ali, 2019). Kuvaas et al. (2018) argue that motivational trait tends to be lower when payoff is used as the prime driver for inspiring employees at work. Payoff can contribute to motivational quality if the way in which the level of pay is ascertained is understood to be fair and just. The reward system is critical in any organisation because it is the process that controls human attitudes within the organisation. It helps to assert performance with reference to current goals and determines the feasibility of people joining and being retained in their organisation. It also impacts how much effort is put into developing the organisation’s future capabilities. When this is used correctly, a reward system can result in a captivating attitude in an organisation. On the other hand, if a reward system is used incorrectly, it can lead to an organisation’s rapid demise (Obiekwe, 2016). 2.8 Types of Performance Appraisal Methods The next section focuses on the different types of performance appraisal methods. 2.8.1 360-Degree/Multi-Rater Performance Appraisal A 360-degree rating system is an gauging method that considers the opinions of assorted groups of observers that interact or network with the company’s work force. Principals (managers and supervisors), companions, coworkers/peers, and consumers are examples of reviewers. The procedure also considers the employee’s perception of himself, earning it the title of diverse-sources, various-raters, and full-circle evaluation system. In addition to the subject matter, this system should encompass four crucial assessments: self-perusal, immediate superior evaluation, inferior/subordinate evaluation, and peer assessment (Grund and Przemeck, 2012). In spite of the proficiency of this full cycle appraisal systems, numerous problems are encountered in the literature that precludes such systems from being effective. According to 40 Idowu (2017), using a sole type of articulation domain, such as numeric values or semantic, 360-degree confines the capability to collect the depth and complexity of facts provided by observers. Furthermore, reasonable analysis of the end results is difficult since quantitative evaluations do not invariably accurately symbolise qualitative facts. 2.8.2 Management by Objectives (MBO) This is referred to as a program of evaluation based on results. In more detail, from an MBO outlook, the goals of the performance management system are conjointly defined by several core stakeholders, including inferiors and supervisors. There are various steps in a typical MBO appraisal management system. The process involves the establishment of distinct goals for the employee. A work plan detailing how the goals will be accomplished is being developed. The employee is at that time granted permission to undertake the advanced implementing plan. This empowers for an objective evaluation of performance. Corrective actions are taken in scenarios deemed necessary, and fresh future goals are defined (Idowu, 2017). The MBO method was found to furnish weighty benefits to both the organisation and the employees in terms of efficaciousness. Remarkably, the MBO approach animates objectivity, grants two-way feedback, and provoke employees to improve their yield. Similarly, Rahman et al., (2020) emphasise that the MBO tactic, when decently administered, assists in instituting a performance management system based on transparency as well as efficiency. A condemnatory examination of the MBO research revealed that this sort of performance appraisal management is not without flaws. One of the major drawbacks of this technique is that it does not allow supervisors to see how employees deal with every conceivable situation during a given work period (Bipp and Kleingeld, 2011). 2.8.3 Graphical Rating Scale (GRS) GRS does not have a completely standardised format, but it consists of a list of job performance dimensions, job-relevant human characteristics, and an evaluative continuum on which supervisors are asked to indicate their judgements about target employees. For Idowu (2017), propotions can be used to assess an employee’s work quality. This 41 propotion/scale evaluates an employee's expertise to meet specifications, presumptions, and intended end products continuously. The rating range can be utilised to determine whether an employee makes profitable use of available plans and work programe and completes tasks on time. Furthermore, the workman’s job apprehension can be evaluated. These enclose job-related adroitness acquired through learning/education, professional experience, and on-the-job coaching. Although ratings are effective in some cases, they can suffer from systemic advantage, excluding pertinent indicators of performance, resulting in an inability to truly reflect the employees’ full value (Woods, 2012). 2.9 Role of performance appraisal in organisational success Supervisors and employees can use performance appraisals to assess strengths and faults in employee work. They provide a forum for supervisors and employees to deliberate the employee’s personal objectives. It improves management-employee kindred, promotes assignment satisfaction as well as increases employees’ sense of commitment to the organisation. Performance appraisals rate workmen with reference to their productivity in today’s ruthless economy. Suppose the appraisal operation is solemn and well-articulated. In that case, members will have a exceptional apprehension of their chores and responsibilities, as well as direction on how to revamp their productivity. Performance assessments are additionally critical for stimulating employees, developing demeanours and behaviours, conveying and positioning individual and corporate goals, and establishing strong management-employee rapport (Cesário and Chambel, 2017). Tahsildari et al., (2015) indicate that the process approach focuses on internal procedures and general operations within a company, such as the work environment and employee satisfaction. A total of 165 semi-structured interviews were distributed to the population. The data collected were analysed using factor analysis, validity, correlation, and acceptance tests. According to the findings, training, employee participation, performance appraisal, and job description all significantly impact organisational effectiveness. 42 2.10 Employee performance and career development Career development positively affects employee performance (Ali et al., 2019). Career development is an important factor in achieving personal goals. Career development is defined as whether or not people are appreciative of their work, whether or not their principals are pleased with the work, and whether or not people feel complacent in their jobs. Employee advancement activities and advancement fostered a constructive career attitude in employees, which could lead to improved employee performance. Career advancement aims to embolden and enhance a career path that allows for a wide range of mobility. Employee satisfaction improves as a result of career development, which in turn improves performance (Ali et al., 2019). 2.11 Problems in performance appraisals The performance judgement implementation has been criticised on account of commentators’ deficiency of adroitness and awareness, prejudiced, partisanship, absence of constant documentation, and an impotence to furnish timely commentary. Employees’ viewpoints of the appraisal arrangement are baneful, and they are unsatisfied with the assessment practice’s application in to practice. Managers naturally dislike criticising a subordinate and frequently mistrust the employee appraisal instrument (Sajuyigbe, 2017). According to Kampkötter and Sliwka (2014), there are five types of problems in performance appraisal: an unfair perception of the performance appraisal system, the use of inconsistent criteria, which could result in bad attitudes toward the appraisal system, unskilled appraisers who have little or no communication skills and thus are unable to perform thorough performance feedback, the lack of tools targeted at enhancing the performance appraisal system, and finally this remains as the lack of the performance management system. Each of these will be elaborated on in the next sections. 2.11.1 Unfairness in performance appraisal Adams’ proposed Equity Theory can explain the perception of fairness (1965). The unequal input-output ratios of the individual and the referent other will contribute to both parties’ feelings of unfairness. Both parties will react interpersonally or psychologically to the unfair situation due to their discomfort (Krishnan et al., 2018). 43 2.11.2 Use of inconsistent criteria Performance appraisal critics question the process’s overall validity. Employees perceive the process to be divisive and counterproductive to organisational development. Some critics argue that using ratings in employee performance appraisals creates arbitrary divisions among employees. It should be noted that such practices are more popular among supervisors than among employees (Rasch, 2004). 2.11.3 Unskilled and lack of communication on the PA process Iqbal et al. (2013) have argued that performance appraisal cannot add value if appraisers are inexperienced in the process and that appraisers must not lack communication skills because they cannot achieve effective performance through the appraisal, leading to a negative attitude toward the appraisal system. 2.11.4 Problem with promoting feedback Promoting feedback adoption has long been a business concern. Unclosed loops occur when employees fail to act on the feedback for various reasons, such as receiving comments after the end of the performance cycle or employees lacking the motivation to strive for improvement (Carless, 2019). Na-Nan et al. (2020) argue that equity transpires when management is cogent, transpicuous, and equable, whilst inequality also transpires when the governing bosy is fruitless, ambiguous, and uncheckable. Fairness comprises three components: (1) Procedural justice refers to employees’ perceptions of fairness regarding the suitableness of rating mechanism in which reviewee can voice their views and arrogate feedback. Assessment outcomes are transpicuous and honest, and the judgement formula is not unfair with binary merits. (2) Relational equity is people's thoughts of the execution over the appraisal phase, spotlight reporting, fidelity, ethics, and perspicuous appraisal ambitions. (3) Outcome equity entails being satisfied with appraisal outcomes that are commensurate to work end products. If the results fall short of the employees’ expectations, they will feel betrayed. 44 The observers’ lack of proficiency, failure to understand the appraisal purpose, bias in opposition to appraisees, bias on appraisal, abuse of power, and use of their yardstick without regard for the organisation’s criteria cause problems with performance appraisal. Furthermore, some appraisers show favouritism (i.e., primarily embrace their close employees), use their own high merits for assessing or judging the reviewees, and do not provide appraisal feedback to the appraisees (Iqbal et al., 2019). Performance appraisal systems have several issues where evaluations become more influenced by raters’ subjectivity and motivational state. Supervisors can use different criteria for assessments that are untrustworthy and inconsistent. For instance, some employees will be evaluated based solely on their recent activities rather than their entire performance period, whereas others will be evaluated based on negative evidence that is more noticeable than positive ones, a phenomenon known as “recent behaviour bias.” Supervisors can sometimes be “Personal Bias” and have an adverse impact on various employees, directly impacting the assessment results. Many other issues with the evaluation could be identified, such as weighted average, leeway, strictness, Halo-and-Horn error effect, and the subterfuge of the analysis (Touma, 2022). 2.12 Research Instrument The survey/semi-structured interview was chosen as the research tool. It was suitable for the research study because it needed to collect reasonable data from the sample in a short amount of time. This method was also chosen because the researcher needed to ensure that the responses were objective. It is critical that valid opinions and attitudes be expressed. The instruments will be discussed in more detail in Chapter 3. A semi-structured interview is a formal structured method of collecting data in which each participant is asked the same questions (Peck and Gonzalez-Franco, 2021). Appendix A provides questions for the interview process followed in this study. 2.13 Conclusion This chapter described performance appraisal definitions, processes, and feedback control theory in performance appraisal. It also discussed the relationship between feedback and goal-setting, as well as how rewards are managed based on assessed performance. It 45 further explored the types of performance appraisal in the field and the role of performance appraisal in organisational success. Employee performance and career development, problems in performance appraisals, and the importance of performance appraisals were also discussed. Furthermore, the chapter discussed other studies done to support the research objectives that support the empirical investigation. 46 Chapter 3: Research Methodology 3.1 Introduction This chapter describes how the research investigation problem discussed in Chapter 1 was investigated. The chapter outlines a systematic approach to addressing the research objectives. As a result, research ontology, epistemology, design, sampling data collection, statistical techniques, and ethical concerns are addressed. 3.2 Research design Hancock et al. (2018) define research design as a plan that outlines the underlying structure for integrating all necessary aspects of a quantitative study to ensure credible results, free of any bias and as generalisable as possible. The research design is vital in any research project. It