The Relationship Between Performance Appraisal System, Employee Motivation and Labor Productivity: a Study of Pesapal Organization

Abstract

The research looked at the relationship between Performance Appraisal System, employee motivation, and labor productivity at the Pesapal organization. The current performance appraisal system in many organizations lacks structure which generates discontentment among employees and supervisors as it is considered tedious, rigid and time consuming compared to the value added, thus the Performance Appraisal System is regarded as an unnecessary process rather than the important tool it is to enhance motivation and improve productivity. This study sought to find how this problem can be mitigated through exploring the relationship between Performance Appraisal System and employee work motivation, evaluating the relationship between Performance Appraisal System and labor productivity and determining how employee‟s work motivation relates to labor productivity at Pesapal organization. The study utilized correlational research design. A sample of 90 participants was used in the study. Stratified sampling was employed to select the respondents. Both descriptive and inferential statistics (Chi- square and Regression) were used to infer the sample results from qualitative data. Qualitative data was coded, analyzed and presented through narrations. The findings of this study showed that the presence of a performance appraisal system improves employee work motivation by 33.8% on average (β=.338, p=.063). Employee work motivation is significantly and strongly positively related to performance appraisal systems (χ2=3.41, p=0.0647). Respondents working in organizations with a performance appraisal system, in particular, were found to be 8.7 times more likely to have labor productivity driven by work context factors than those working in organizations without a performance appraisal system. This study concluded that employees who work in organizations that have a performance appraisal system are more likely to have labor productivity driven by work context factors than those who work in organizations that do not have a performance appraisal system.