Effects of performance appraisal systems on employee performance of multinational companies in Nairobi County

Abstract

To gain a competitive advantage in a rapidly changing global economy, multinational firms are increasingly promoting high levels of employee performance through conducting effective performance appraisals. Performance appraisal is therefore a critical and strategic human resource practice adopted by many Multinational corporations to evaluate and continuously improve the performance of employees and the organization. The aim of this study was to analyze the influence of performance appraisal systems on employee performance of multinational companies in Nairobi County. The specific objectives included to establish the performance appraisal methods used by multinational companies in Nairobi County, to analyze the influence of perceived appraisal effectiveness on employee performance of multinational companies in Nairobi County, to examine the influence of perceived appraisal fairness on employee performance of multinational companies in Nairobi County , to analyze the influence of perceived quality of appraisal feedback on employee performance of multinational companies in Nairobi County, to determine the joint influence of perceived appraisal effectiveness, perceived appraisal fairness and perceived quality of appraisal feedback on employee performance of multinational companies in Nairobi County. The main data collection tool that was used was the questionnaires with a target population of 285 employees of multinational companies with a presence in Nairobi County. Descriptive statistics, correlation analysis and multiple correlation analysis were used to analyze the data. On the influence of performance appraisal systems on employee performance perceived appraisal effectiveness, perceived appraisal fairness and perceived quality of appraisal feedback were all significant in explaining changes in employee performance. Results on the combined influence of performance appraisal systems on employee performance however showed that perceived quality of appraisal feedback had a significant positive influence on employee performance while perceived appraisal effectiveness and perceived appraisal fairness were not statistically significant. The study however had limitations as it only focused on three performance appraisal variables and limited employee performance to accomplishment of job related and organizational goals.