Assessment on the Importance of Employee Satisfaction on Performance Appraisal: The case of Agar Micro Finance S.C

Abstract

Employee performance appraisal is one of the most commonly used management tools in organizations irrespective of their type, size and objective. The general objective of the study is showing the importance of employee satisfaction in performance appraisal practice within Agar microfinance. Recent research has moved away from studies of rater accuracy and rating instruments to themes of employee reactions towards performance appraisal as indicators of system satisfaction and efficiency. An assessment of performance appraisal system has been studied as a significant factor in employee acceptance and satisfaction. This study assesses the performance appraisal system of Agar embarking on the benefits of employee satisfaction with the appraisal system. Data were obtained via questionnaire from 115 participants at the head office of Agar microfinance in A.A. An interview was also held with some key personnel of Agar, particularly with employees working in administration and human resource department. The findings of the study indicated that respondents perceived the performance appraisal system as important and employees’ satisfaction is mandatory for conducive work environment. The majority of employees (96.5%) agreed that they do not know the purpose of performance appraisal system. The objective of appraisal should be made clear to all employees before appraisal takes place and employees should accept it. 67.8% of employees said that they are dissatisfied with their appraisal system. 95.6% employees claimed that satisfaction on performance appraisal system has impact on their work performance. 93% of employees said that satisfaction with appraisal system determines their commitment to Agar. 98.3% also showed that their willingness to continue working in Agar is determined by their satisfaction level on the performance appraisal system. In general, the overall view of management should advocate the accuracy of measurement and take corrective measures in the case of unfair ratings. With this context, the efforts of management were to the betterment of the appraisal system in order to gain employee satisfaction on it resulting in a reliable performance measurement.