The Impacts of Performance Appraisal on Employees’ Job Satisfaction and Organizational Commitment: A Case of Microfinance Institutions in Ghana

Abstract

Performance appraisal is credited by researchers as a tool for spurring employees towards the attainment of organizational goals. Considering employees’ attitudes as a vital component in the attainment of organizational goals, this study investigated the impacts of performance appraisal on the job-satisfaction and commitment of employees. The study used a descriptive research design. A stratified random sampling was used to sample 200 respondents from Microfinance organizations in Ghana. The study used questionnaires as its data collection instrument. Regression Analysis and correlations were used to analyze the data collected. The study revealed that employees’ job satisfaction is positively related to and impacted by fairness in the appraisal system, linking appraisals with promotion, clarity of roles and feedback about their performance. The study also revealed that employees’ commitment is positively related to and impacted by the linkage of appraisals with salary, identification of training needs, clarity of performance appraisal purpose and employee involvement in the formulation of appraisal tools. The study recommends that organizations comply with rewards systems linked to performance levels, provide training to employees identified to be in need of training so as to further enhance the relevance of performance appraisal, and also instigate and/or maintain communication between management staff and their subordinates especially with regards to their performance.